From fields to factories, Cambodian workers suffered through a tough year in 2001, but the Ministry of Commerce is estimating a slight increase in economic growth for 2002.
Commerce officials met last week to discuss the country’s economic performance over the past year and to discuss methods to continue economic development and improve the living conditions of Cambodia’s poor.
Trade statistics issued by the ministry estimate a 5.5 percent economic growth rate for 2002, a slight increase over 2001’s 5.4 percent rate.
International Monetary Fund economists at the end of 2001 pegged the growth rate at 5.4 percent, but said at the time it would not be enough to have an impact on poverty reduction. In order to compete with a population growth rate of between 2 percent and 3 percent, Cambodia needs an economic growth rate of 6 percent or 7 percent, experts say.
Meanwhile, a global economic downturn in 2001 accelerated by the Sept 11 terrorist attacks in the US slowed Cambodia’s two main economic engines: Tourism and the garment industry. Both are still growing, but slower than in years past.
The two sectors account for about one-fifth of Cambodia’s overall economy, so an increase of 10 percent in both sectors would make the Commerce Ministry’s estimated growth for 2002 attainable, said Sok Hach, an economist at the Cambodian Development Resource Institute.
Garment production rose to the $1.1 billion mark in 2001, an increase of about $127 million over the previous year.
Cambodia’s industrial labor force decreased in 2001 to 195,500 workers, including registered workers abroad, the Commerce Ministry reported. Of that total, about 182,000 were garment factory workers.
The increase in garment export value in 2001 was due to the production of higher quality goods, said Roger Tan of the Garment Manufacturers Association of Cambodia.
About 40 factories closed last year, so employment in the garment sector decreased. It was likely laborers worked more overtime, analysts said.
Tan said the number of garment factories in Cambodia was unlikely to increase in 2002. “If we don’t see a decrease, we will be very happy,” he said.
Employment in the tourism sector showed an increase, said Nuth Nin Doeurn, secretary of state for the Ministry of Tourism.
About 80 percent of Siem Reap workers have jobs either directly or indirectly generated by Angkor Wat, he said.
Visitor arrivals in 2001 increased about 29 percent over 2000, Nuth Nin Doeurn said, noting that number showed a sharp decrease in growth rate compared to recent years.
The economy will likely enjoy an increase in infrastructure activity, thanks to road and hydroelectricity projects for which the government is working hard to lure private investors with build-operate-own schemes, said Senaka Fernando, manager of PriceWaterhouseCoopers in Phnom Penh.
He called the government’s growth estimates “quite realistic” overall.
Direct investment, measured by the number of companies registered with the Commerce Ministry, dropped 12.76 percent in 2001 to 704 companies, 334 of them foreign.
Cambodian producers are still suffering from an influx of imported products that can be made locally, according to the Ministry of Commerce report. Due to a battered infrastructure, an undeveloped market system and access to world market information, locally produced goods still face problems competing both in quality and price compared to imports of the same goods, the report stated.
According to the report, production of local food and beverages decreased nearly 14 percent in 2001, while other agricultural products like pepper and cashews dropped dramatically—40 percent and 50 percent, respectively.
Rice farmers are facing difficulties getting their harvest to market, where it competes with cheaper Thai rice, the report said.
The farmers, who are often at the mercy of the markets because they work through middlemen and have no access to market information, have problems consistently keeping competitive rice in the markets, the report said.