Thursday, November 13, 2008

In Cambodia: Officials Get Practical Advice to Face Global Financial Crisis

By Véronique Salze-Lozac’h

Veronique Salze-Lozac’h is the Regional Director for Economic Programs in Cambodia. She can be reached at

“We feel that too often, we are floating with the tide, but we want to be more active, we actually want to learn how to swim,” explained H.E. Ung Huot, Chairman of the Cambodian Senate’s Commission on Economy, Planning, Investment and Environment.

In the midst of what we can now call an international financial and economic crisis, more than 140 Cambodian senators, parliamentarians, and Government officials — but also students and businesspeople — gathered in Phnom Penh to discuss economic policy reforms and learn from the experience of their neighbor, South Korea.  They gathered at a seminar organized by the Cambodian Senate and The Asia Foundation on November 6th in Phnom Penh.

Worried about the impact of the crisis on the country’s economic development and keen to learn more about potential measures and reforms to support growth in Cambodia, they were attentive to Dr. Kwon Okyu’s (Korea’s former Deputy Prime Minister and Minister of Economy) presentation.  On his first trip to Cambodia, Dr. Kwon Okyu did not offer any magic formula but rather common sense and practical advice for Cambodian policy-makers. Stressing that the Government and the National Assembly must jointly establish an efficient policy-making procedure, he used  Korea’s unique experience to draw a few key lessons for constructive, coordinated actions. Two of these lessons are especially relevant in this time of economic uncertainly.

The first, which Cambodia has already begun to implement is the necessity of engaging in international trade by developing free trade agreements and entering trade alliances, as the World Trade Organization (WTO).  Memberships offer market opportunities, but also opportunities to implement reforms essential for economic growth.  Currently, Cambodia is creating the legal framework expected by international trade organizations by drafting and passing more than 40 new laws.  To fulfill their role in passing the laws, the Parliament and the Senate must develop a better understanding of why their participation is necessary and what is at stake.  The message is strong: the current international crisis is not a time for defaulting to protectionism, but rather a time to be serious about economic reforms and international cooperation.

The second, Cambodia has to prepare for potential conflicts of interest that may arise among the many different players involved in economic reform. Policy changes, such as markets opening for agricultural products, decentralization, or labor-management relations, can have very sensitive political implications, especially in a climate of increased competition among exporters and decreasing demand from importers. The Government may push for reform, while some of  the National Assembly’s constituents maybe harmed by it. In this climate, more transparency and dialogue is needed to help make reform acceptable. Dr. Kwon Okyu encouraged the Cambodian parliamentarians to engage in close consultation with government think tanks, academia, businesses, and various interest groups.  The Korean Government method has been to use special committees to build consensus around particularly important policy issues and to build common ground for policy reform. A culture of transparency and research, and clear communication, are key elements for consensus–building on policy reforms.

Korea has moved, in less than half a century, from one of the poorest countries to the 13th largest economy in the world. Dr. Okyu’s advice was well received by his Cambodian audience. Korean investors have been among the most active foreign investors in Cambodia, Korean tourists flock to Angkor Wat, and Korean-Cambodian trade is rapidly developing. At a time when too many banks, insurance companies, or enterprises are drowning in an uncontrollable ocean of globalized risks, there may be opportunities for Cambodia and other developing countries to check their lifebuoys and learn how to swim.

1 comment:

Blogger said...

eToro is the ultimate forex broker for rookie and advanced traders.