A visiting Japanese economist urged Cambodia Tuesday to develop human resources, infrastructure and free trade zones in order to survive in a global economy.
Motoshige Ito, a professor at Tokyo University and a member of the Economic Strategy Council to Japanese Prime Minister Yoshiro Mori, said it is vital that Cambodia find niches and develop free trade zones guaranteeing tax-exempt import and export rights to compete with more senior Asean countries.
Otherwise, he said, all the wealth from the Asean Free Trade Agreement might be concentrated in Thailand and Malaysia.
“The key to Cambodia’s economic development is how to strategically use Sihanoukville” as an industrial and commercial hub, Ito said in a seminar on economic development strategy attended by more than 100 government officials. The “global economic environment is not helpful to Cambodia…it must develop free trade zones,” he said.
Cambodia has plans for free trade zones in Sihanoukville and Kompong Chhnang, but only minimal progress has been made on establishing these plans.
Free trade zones are being planned with Thailand in Poipet and Koh Kong and are expected to be established by the middle of next year, said Sok Siphana, secretary of state with the Ministry of Commerce.
“Cambodia cannot stand alone” in the global market, he said.
Ito also said Cambodia needs to take advantage of its agriculture-based economy and develop more agri-businesses for export. It also needs to better promote its available labor force to attract more manufacturers from Thailand rather than lose valuable contracts to China.
Sok Siphana agreed, saying, “We need to develop more of a strategic alliance with Thailand, taking advantage of Cambodia’s [special trade status] and cheaper labor costs.”
Ito was in Cambodia as a short-term expert sent by the Japanese International Cooperation Agency. He has helped shape economic strategies in Japan.
Ito said Japan’s rapid economic growth after World War II didn’t happen by chance, but through strategic economic policies that protected Japan’s local industries while gradually integrating the country into international markets.
“We had nothing when World War II was over. Everything was destroyed like Cambodia,” Ito told participants. He said Japan also suffered from various trade barriers and no foreign investments. In that sense, he said, “Cambodia is in a much better position.”
Ito said Japan’s economy has increased 15-fold between 1955 and 1990, with an average 8 percent annual growth. Behind the growth, he said, was the effective use of domestic savings in investments and an emphasis on human resource development. The fixed exchange rate of 360 yen per $1, equal income distribution with marginal taxation and strong support of smaller enterprises are other policies that helped the success, he added.
Learning from lessons in Japan’s development, Ito said, a country like Cambodia, which has a small domestic market and limited resources, should invest more in education to produce better human resources and improve infrastructure by developing ports, roads, electricity and water supplies to attract foreign investors and lure international trade.
