PM Launches Grand Plans to Transform Industry

Prime Minister Hun Sen on Wednesday launched an ambitious 10-year development plan that the government hopes will transform Cambodia’s “weak” and labor-intensive industrial sector into one comprised of diversified businesses with a highly skilled workforce.

Speaking to diplomats and business leaders at his “Peace Palace” in Phnom Penh, Mr. Hun Sen said the current state of the country’s industrial sector put the country at a disadvantage.

Prime Minister Hun Sen speaks at his 'Peace Palace' on Wednesday during the launch of the Cambodia Industrial Development Policy 2015-2025. (Khem Sovannara)
Prime Minister Hun Sen speaks at his ‘Peace Palace’ on Wednesday during the launch of the Cambodia Industrial Development Policy 2015-2025. (Khem Sovannara)

“In general, we found that Cambodia’s industrial sector remains weak, as reflected by its simple and narrow-based structure,” he said. “It is highly concentrated in apparel, construction and food-processing industries, and mostly family-based with limited competitive advantages to access international markets.”

“Furthermore, it is also a labor-intensive industry with simple production processes,” he said.

But under the Cambodia Industrial Development Policy 2015-2025, the prime minister said, all that would change.

“We are fully convinced that the industrial sector has more potential to become a new and more dynamic engine for further driving Cambodia’s economic growth,” Mr. Hun Sen said.

To meet its goals, according to a policy briefing, the government has identified four priorities—the development of the agro-industry; small and medium enterprises (SMEs); transport and logistics; and skills training and worker development.

The briefing said that by addressing these priorities, the government hoped, firstly, to increase the share that industry contributes to the gross domestic product (GDP) to 30 percent by 2025. In 2013, the industrial sector contributed 24.1 percent to the GDP, according to the briefing.

The second target aims to diversify the country’s exports, with goals to increase non-garment manufacturing exports to 15 percent of total exports by 2025, and agriculture-processing exports to 12 percent, the briefing said.

Thirdly, it added, the government hopes to formalize the vast majority of Cambodia’s many SMEs over the next 10 years.

To facilitate the planned increase in industrial activity, there will also be a focus on the development of transport and logistics.

Sok Chenda Sophea, secretary-general of the Council for the Development of Cambodia (CDC), which will oversee the implementation of the policy, said by telephone that the CDC would track the progress of the policy and make quarterly reports to the Council of Ministers.

“We started the job from when the policy was approved [in March] and after its official launch, we will expand our work,” he said.

According to Mr. Chenda Sophea, the CDC estimates that the policy’s four priorities will have begun to materialize in about three to five years.

“We believe that if we work hard, we will see results on the key things in a short period of time,” he said.

Transport Ministry spokesman Nou Vatanak said the Japan International Cooperation Agency and a Chinese company, which he said he could not recall the name of, were in the midst of performing a study on how best to build expressways to link Bavet City, Phnom Penh and Sihanoukville—thereby facilitating industrial expansion.

Mr. Vatanak said the study was expected to be complete by early next year.

“We intend to build expressways as transport infrastructure that will require fast driving, because only expressways can help supply goods on time or regularly,” he said.

Mr. Vatanak said fences would surround the expressways to keep out unauthorized traffic and that residential areas would not be built around them.

“Thailand and Vietnam have already constructed these expressways, so Cambodia cannot miss the construction,” he said. “Our country is in the middle and is a transit country, so we have to connect with them.”

Hean Vanhan, deputy director-general of the Agriculture Ministry’s general directorate of agriculture, said that as part of the policy, his ministry would set up areas similar to special economic zones, but for farming.

“What we will do is study proper locations to establish agro-industrial gardens or production gardens,” he said, adding that they would help push the total export of processed agricultural products to 12 percent by 2025, a 4 percent increase compared to the projected total for this year.

Rami Sharaf, CEO of World Bridge, a Cambodia-based group of companies involved in international trade and development, said funding for the policy would come from the private and public sectors, as well as from foreign direct investment.

“I think the entire country is on serious catch-up mode, and if we are not ready with this catch-up mode, we may lose potential and opportunity,” he said. “At least now we have a policy and some milestones.”

(Additional reporting by Chris Mueller)

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