Cambodian economic views from UNDP side

Excellency Keat Chhon, Deputy Prime Minister and Minister of Economy and Finance
Excellency Hang Chuon Naron, Secretary of State of the Ministry of Economy and Finance
Excellency Sok Chenda, Minister and Secretary General of the Council for the Development of Cambodia
Excellency Chea Chanto, Governor, National Bank of Cambodia
Excellencies, ladies and gentlemen
I am honoured to be here representing the UN in Cambodia and to welcome you to this important workshop on “Strengthening the response to the global financial crisis in Asia-Pacific: the role of macroeconomic policies”.
Before I begin, I would like to thank Excellency Keat Chhon and the Ministry of Economy and Finance, as well as our colleagues from the United Nations Economic and Social Commission for Asia and the Pacific, ESCAP, for hosting this timely event.
Cambodia demonstrated considerable progress in economic growth and social development in the past decade, but recently experienced difficult times, as did other countries in the region as a result of the global economic downturn. While economic growth shows signs of resumption this year, around 4 million people still live in poverty in Cambodia, and many more are near poor. Rural poor households, representing the majority of Cambodia’s population, are particularly vulnerable to the impacts of economic shocks such as this and are also affected by inequality.
The Royal Government of Cambodia defined ways to address these challenges in its Rectangular Strategy Phase II and the Update of the National Strategic Development Plan that was recently passed by the Senate. An important achievement in this respect has also been the progress in strengthening social protection for the poorest and most vulnerable – implementation of systematic measures in this area would represent a further important milestone in lessening hardship and vulnerabilities for those most affected.
The crisis highlighted a number of challenges for Cambodia. In particular:
 How to mitigate the impact of similar economic downturns on vulnerable groups
 How to mobilize additional domestic financial resources
 How to coordinate macroeconomic policies to make them most effective
 How to enhance the country’s competitiveness and diversify its economy, and
 What structural reforms need to be made to preserve sustainable economic growth in the future.

Last year UNDP commissioned a synthesis study, “Global Financial Crisis and the Asia-Pacific Region”, incorporating evidence and experiences from a number of countries in the region. The study revealed that the global crisis has indeed adversely affected developing Asia, and some countries have been especially badly hit. At the same time, unlike many other regions of the world, on the whole, developing Asia is showing evidence of the ‘recovery’ that appears to be faster and more pronounced in this region. In this context, the potential for sharing experiences and learning within the region is truly enormous, and can provide invaluable insights and solutions, not only for immediate recovery, but also for longer-term improvements in countries’ resilience to shocks and in the protection of the most vulnerable populations.
Last year, the UN in Cambodia, with technical support from UNDP, teamed up to assess the impacts of the global economic downturn on Cambodia and to identify policy responses with the potential to address not only the immediate crisis, but also the longer-term strengthening of the economy. Drawing on the specialised expertise of each member of the UN family, we published The Global Economic Downturn: Opportunity or Crisis? in November of 2009. The UN’s ability to work together on comprehensive analysis and policy support tools such as this enables us to share a set of strategic policy recommendations with Government, development partners and other stakeholders as we work together to find concrete responses to these challenges.
This report provided a useful snapshot of how the Cambodian economy fared the economic downturn, but its findings were also incorporated in the UNDP Regional synthesis report on the crisis, giving us a clearer picture of how the entire region had been affected.
The report also outlined recommendations to help Cambodia emerge from the crisis with a stronger and more resilient economic base. Some of the key findings included: the need to diversify the economy, both in goods and in markets; provision of a comprehensive and nationwide social safety net system, particularly targeting the most vulnerable; and educational reform to match education and training programmes to the skills needed in the marketplace. By addressing these challenges, we can work to build a stronger economy that is more resilient to external shocks. From a development perspective, one of the most crucial factors is ensuring there is a nationally integrated social protection system in place to support vulnerable Cambodians facing sudden shocks such as the global economic downturn.
Investment in social safety nets now will have positive effects for Cambodia long after Cambodia’s economy has fully recovered. It is the UN’s view that a strong social safety net system should complement other measures taken to strengthen the country’s economy, such as a trade diversification strategy, as well as effective monetary, fiscal and macroeconomic policies.
Such as system could include conditional cash transfers, labour-based public works schemes and food for work, civil service pensions and health insurance. Already, informal social safety net programmes are being implemented by Government, development partners and civil society. But there are limited formal programmes in place.

At the beginning of the economic downturn, the Royal Government asked the UN to assist in developing a comprehensive national social safety net system for Cambodia. Our work with Government on social safety nets is one of our proudest success stories and we look forward to Government’s endorsement of the strategy. Addressing these priorities will go a long ways toward strengthening Cambodia’s economic foundation and reducing the country’s future vulnerability.
Excellencies, ladies and gentlemen,
The economic downturn threatened Cambodia’s progress in reducing poverty, which is the first of the Millennium Development Goals. We remain concerned about the effects that the current global economic crisis will have on achieving these Goals. As Cambodia regains its economic momentum, we need to work harder than ever to ensure these goals are reached. Over the past two years – as in many countries in the region and around the world – Cambodia has suffered significant job losses, particularly in the garment and construction sectors. We have also seen a reduction in household income for many homes. In this context, we should not only be concerned about the 30 percent of Cambodians who live in poverty – we must also consider those who live just above the poverty line. Poor and near poor households that suffered losses of income and savings as they struggled to get through the recent lean times will take time to rebuild and recover.
The UN Development Assistance programme for 2011-2015 focuses our energies in the last five years until the MDG target date of 2015 to look at how we can support the Royal Government to achieve its targets by localising progress assessments, and tailoring efforts to meet local needs.
But we understand that this cannot be done in isolation. A strong economy, as well as good governance, are the necessary foundations on which we can build. This is why workshops like this one are so important. Over the next three days, we will examine aspects of monetary, fiscal and exchange rate policies that can be streamlined to help the country prepare for the future.
Importantly, the workshop also provides an opportunity for participants to learn from neighbouring countries’ experiences, to discuss best practices, and understand why some policies may work in some contexts, but not in others. I am pleased to note that discussions will take this knowledge exchange a step further – we will also explore opportunities for enhanced cooperation across countries in the region, to enhance capacities to effectively mobilize financial resources for long-term development.
The UN in Cambodia remains committed to working with the Royal Government of Cambodia to ensure that the poorest and most vulnerable are not left behind as the Cambodian economy regains its place among the fastest growing in the region.
I wish you a successful workshop.

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