Excellencies Mr. President,
Excellencies Mr. Prime Minister,
Ladies and Gentlemen,
It is our privilege and honour to participate as an observer in the meeting of the ASEAN Heads of Government and the Heads of Government of Cambodia, Laos, and Myanmar for the first time. On behalf of the Royal Government of Cambodia and on behalf of Samdech Hun Sen, the Second Prime Minister, I would like to express our sincere gratitude to H.E. Banharn Silpa-Archa and the Royal Government of Thailand for inviting us to attend this important and well-observed summit and for the warm welcome and kind hospitality extended to our delegation.
In my address today, I shall concentrate on the efforts that the government has been achieving and steps that are being taken to improve the environment climate in Cambodia. But first, I would like to take this opportunity to thank ASEAN for helping bring peace, democracy and stability to Cambodia after over twenty years of war, internal strife and social upheaval.
Under a wise and respected leadership of His Majesty King Norodom Sihanouk, Cambodia has entered a new and brighter era. The era of national reconciliation, reconstruction and integration of Cambodia into the world community. We left behind us the horror past of destruction and isolation. The Cambodians must not suffer the same horrible experience again. His Majesty the King and the Royal Government of Cambodia are committed to embark on national reconstruction and development to achieve lasting peace, stability and democracy in Cambodia.
Cambodia has embarked on the market-oriented economy system in furthering development of the country. We have made significant progress in our reconstruction and rehabilitation since the formation of the Royal Government two years ago.
Overall macro-economic performance has been good despite adverse events, including severe flooding followed by drought in 1994. As a result, the output grew slightly over 5% in 1994. The GDP grows 7% this year and is estimated to grow 7-8% annually during the next three to five years.
The Royal Government of Cambodia is maintaining tight limits on bank financing of the budget and the public enterprise sector and introduced minimum reserve requirements for commercial bank deposits in 1993. As a result, the Government was able to contain inflationary pressure while ensuring sufficient availability of credit for the private sector. In 1992, the economy was experiencing inflation in the range of 180%. We have brought the inflation down to just over 20% in 1994. The objective is to bring the inflation down to a level similar to trading partner countries of around 5%. The inflation in 1995 is 7%.
With regard to trade and exchange rate policy, the Royal Government continued to follow a market-oriented exchange rate policy with a view to unifying the official and pararell exchange rates. Since early 1994, the spread between the official and free market rates has been kept to no more than half percent. The exchange rates also have been very stable since 1993.
To expand and encourage more trading facilities, the Royal Government abolished the import license system, eliminated quantitative import restrictions, and eliminate export licenses except for logs, sawn timber, precious metal and stones, and antiquities, We will review our tariffs to prepare for the smooth transition into the ASEAN Free Trade Area.
As part of foreign investment policy, the Government passed a new and bilateral investment law in 1994. The main goal of this law is to streamline the foreign investment regime and provide generous and competitive incentives to investors in order to create employment to rural and urban areas to satisfy the basic needs of the population and enhance their standard of living. The Government also established a “One Stop Service” -the Council for the Development of Cambodia – to facilitate and interface with potential investors. Since the new investment law was promulgated in August 1994, we have attracted more than US$ 2 billion worth of private investment in Cambodia.
With our outward-looking economy and the political commitment to integrate Cambodia into the regional and world community, we firmly believe that Cambodia will become a useful member of ASEAN in the near future. Cambodia is endowed with abundant natural resources and fertile lands that, if exploited properly, can be cultivated to support the need of the entire ASEAN countries. Agriculture will dominate the Cambodian economy because 75-80% of the population is making their living from this sector. We will strive to be the center of excellence for food production to meet the demand of ASEAN nations. In this regard, we would like to seek your support and cooperation to achieve this win -win vision for Cambodia and ASEAN. I would like to take this opportunity to inform you that for the first time in 25 years, Cambodia will be a net exporter of rice again this year.
We are living in a borderless world where international trade and economic cooperation is very essential. However, this should not prevent regional or subregional cooperation between partners sharing common natural endowment and resources. Similar circumstances and challenges in the Mekong 6, comprising South China (Yunnan province), Myanmar, Thailand, Laos, Vietnam and Cambodia, represents more than 50% of the future ASEAN 10 and is not a random grouping of countries defined as a region. Rather, ours is gathering driven by the fact that some part of each of our economy is tied directly to a shared resource, a shared opportunity – the Mekong River. The economic hexagon will be one of the fastest growing in the region and in the world. So while we try to function independently as nations, we also need to work together for everyone’s benefit. In this context, Cambodia can alleviate itself by bringing into the picture, the Mekong 6 and the economic benefits of this grouping. In short, the Mekong 6 or the four members can together play an important role in the continued growth of ASEAN. This will bring about various synergies between ASEAN and Mekong 6 and provide a win-win formula. This arrangement could then be used as a prelude for an ASEAN-Mekong 6 collaboration.
With the assistance from the multilateral institutions such as Asian Development Bank, World Bank and bilateral funding agencies and strong participation of the private sector, Cambodia is rebuilding its physical infrastructure that is critical to increase in trade and investment with the region and the world.
The Royal Government of Cambodia is committed to become a full member of ASEAN in the near future. We are strengthening the legal framework in order for Cambodia to become a state of law and developing our human resources so that we may become an effective, efficient and productive member and partner of ASEAN. We feel confident that we can count on you to assist us in the building of a free, prosperous and dynamic Cambodia.
Thank you for your kind attention.