Stronger economic growth for Cambodia in 2012

SINGAPORE: Cambodia's central bank expects economic growth in 2012 to accelerate to its fastest pace in four years.

The director general of the policy-setting institution told Channel NewsAsia that new investments in agriculture and banking will lead the way.

Garment-making has been a mainstay of Cambodia's fledgling economy. It has ticked over at between six and seven percent annually for the past four years.

But, the government is now turning its focus back to the land in the hope that rice growing and other farming produce will lift growth closer to eight per cent, making it among the world's fastest growing economies.

According to a source from the International Monetary Fund, Cambodia's yearly average GDP growth rate over the last ten years is 7.7 per cent.

The Asian Development Bank's growth projection for Cambodia in 2012 is 6.5 per cent.

National Bank of Cambodia's Director General, Nguon Sokha, said: "One of the priorities of the government is to develop the agriculture sector. At the moment, growth is driven by garment sector, tourism sector and construction. Cambodia is an agriculture land so we need to develop based on our natural resource."

ASEAN economies are expected to grow some 5.5 per cent this year. And with more foreign direct investment (FDI) coming into the region, the Asian Development Bank said emerging markets like Cambodia should leverage off China's increasing presence in the region and make better use of the regional connectivity in order to fully realise its growth potential."

More than 50 per cent of Cambodia's FDI comes from China but there are impediments that must be addressed.

Asian Development Bank's Assistant Chief Economist, Cyn-Young Park, said: "Cambodia faces significant infrastructure deficiency in both physical and soft infrastructure. Cambodia has already expressed that there are some skills mismatched in various areas. They are trying to invest a lot in vocational training that really matches the jobs that are being created for the future."

More of such jobs may soon be found in banking, which has relatively liberal foreign ownership rules compared to its neighbours.

Mr Sokha said: "There are a lot more interest from foreign investors to enter the banking industry in Cambodia given the good economic potential, macroeconomic stability and political stability. We need to balance between the need to establish a fair competition in the banking sector in order to reduce the cost in using the financial services for our consumer. But at the same time, we also need to look into the components, like risk management."

But with other frontier markets like Myanmar opening up, Cambodia may have new competitors for that foreign money.

- CNA/fa .