By Hoem Seiha
Trekking through a long, hard time of global economic and financial crisis form the midst 2008 to the late 2009, Cambodia saw a gradual shift in winds: the signs emerged optimistic for 2010 and 2011.
According to East Asia and Pacific Economic Update 2010 by World Bank, by the end of 2009 more than doubled were agri-business exports, especially milled rice and rubber. While tourism sector, especially air tourist arrivals, swelled, domestic credit and foreign direct investment (FDI) started to rise up.
Now that the signs seemed to lift up Cambodia's economy in these particular sectors, World Bank reveals preliminary growth of 4.4 percent in 2010 and projection of 6 percent in 2011. Nonetheless, concerns over the forecast are the insecurity of global to recover, capacity of the economy to diversify, and limited scope in credit to strengthen recovery.
Although other sectors were sensitive to external stimuli such as this global crisis and easily impacted, according to Cambodia Economic Watch 2010 by EIC, agriculture remained strong and was a main bright spot for Cambodia to protect itself against the crisis.
According to ministry of agriculture, the country produced estimated 7.3 million tons of rice available for supporting the whole country for two years, 2009 and 2010, yet still a surplus of 3.1 tons for the export.
However, agriculture still depends heavily on unpredictable rainfall which could be prospected only modest growth of 4 percent in 2010. Therefore, Douglas Broderick, resident representative of UNDP, suggested that international donors increase farm aid in order to save Cambodian economy, Reported Reuters.
'A fertile agricultural sector produces white gold to set Cambodia apart and propel its economic growth,' said Broderick.
As agriculture is on its way to help the country to recover from the crisis, tourism sector is also seen to pick up itself from the dump. According to a release from Ministry of Tourism, total visitors rose 6.36 percent annually, including air-arrivals of 5 percent.
'South Korea and Vietnam are the main sources for tourists arriving in Cambodia, with 39 percent and 22 percent, respectively,' reads the release. Taiwanese visitors rose high, 41 percent, while Japan rose 2.6 percent more and Australia, 8 percent more.
However, the kingdom saw a drop in visitors from the United States and China, both of which are the prominent visitors to the country. Though China has recovered strongly from the crisis, the drop was unexpectedly 20 percent compared to 10 percent of the US.
Positively, Mohan Gunti, an adviser to the Cambodian Association of Travel Agents, told the Phnom Penh Post, 'This year, we are confident of increasing tourism arrivals to Cambodia because the country has an advantageous relationship between quality and price, good customer service and a diversity of offers,' adding that there is much to see in Cambodia.
Another driver for the recovery from the crisis is financial sector, especially FDI. According to Key Indicators, though FBI inflows shrank by -35 percent accounting for US$ 515 millions in 2009, it is projected to increase by US$ 725 millions in 2010 and US$ 800 millions in 2011.
In response, Cambodia should set policy and agenda to sustain and benefit from the recovery. Asked at the World Bank's Headquarter, Hout Chea, economist at World Bank in Cambodia said, 'Since our economy is still narrow, we export more than 60 percent of our products, especially garments, to one country [the US] only,' continuing that the important point is that we need to diversify our economy, continue structuring reforms, and make it competitive so that we can compete [garment export] with other similar countries to reach the US market.
'I think we should basically diversify exports,' he said, 'not focusing on only one country but to capture the market namely EU market, and particularly market in the region like Japan, Australia, and Korea.'
