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ADB 50th Anniversary Essay Competition

First Best Essay

ADBs Development Impact in Cambodia


and Possible Areas of Future Cooperation

University: Royal University of Phnom Penh


Student Name: Sokhom Panhavuth
Cambodia has been named as one of the fastest growing economies in the world
and has enjoyed such a high and sustainable growth rate that averaged more than 7 percent
over a decade. With the notable development of garment and footwear manufacturing, the
surge in construction and the rise of the service sector, Cambodia has moved from a low-
income country to a lower-middle-income country in 2015. In particular, the Royal Government
of Cambodia has launched the Industrial Development Policy in an attempt to boost the
countrys industrial development, aiming at maintaining and promoting the economy with
high and sustainable growth. However, Cambodia cannot achieve social and economic
development without the assistance of development partners, especially the ADB. In this
regard, the ADB has been a leading development partner for Cambodia since 1966 with the
aim of improving the economy and reducing poverty in Cambodia. Despite the fact that
Cambodia has embarked on a new chapter as an emerging market economy, Cambodia still
faces a lot of new challenges regarding the development issues, and Cambodia needs
effective solutions from ADB to solve these problems. Thus, this essay intends to discuss
the ADBs development impacts in Cambodia, Cambodias pressing development issues
today, and how can ADB address the development issues and better support Cambodias
development priorities.

Since joining the ADB in 1966, Cambodia has received $2.65 billion in loans, grants,
and technical assistance for the development of social and physical infrastructure, public
sector management, private and finance sector development, and natural resource
management and conservation (ADB, 2015). Regarding rural development, ADB has helped
build and reconstruct rural infrastructure, aiming at boosting transport connectivity and rural
access. For example, the Phnom Penh to Ho Chi Minh City Highway and the Primary Roads
Restoration projects, which was completed in December 2005, rehabilitated about 665 km of
primary road network and bridges, paving the way for further economic integration by easing
the movement of trade and people within the country, as well as between Vietnam,
Cambodia, and Thailand (ADB, 2007). In addition to the reconstruction of rural infrastructure,
the ADB approved projects between 2010 and 2014, intending to supply 96,000 rural
households with access to improved water supply, sanitation, and electricity (ADB, 2015).
Through these projects, the ADB has assisted Cambodia in enhancing rural development,
which is a cornerstone of development of the economy.

ADBs assistance in reforming Cambodias education sector has shown a resounding


achievement. Indeed, the ADB has strongly supported the Cambodian government in
improving the education sector through many projects and programs. Notably, ADB
supported EEQP (Enhancing Education Quality Project), with the total budget of the project
amounting to USD 33.38 million. ADBs grant accounted for USD 27.10 million and the
contribution of the Cambodia government was USD 6.28 million. The goal of this project is to
strengthen the quality of school education by carefully targeting support for the education
system management and development, teacher professional development, and strengthening
secondary education (Ministry of Education, Youth, and Sport, n.d.). In 2014, Cambodia
received USD 30 million in loans from the ADB for a five-year program in support of job
training and employment prospects for women and poor people in the country (Woods,
2014). These programs, provided by ADB in the education sector, play a very important role
in supporting Cambodias socioeconomic development.

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Although Cambodia has seen a lot of progress in economic development, there are
development challenges that Cambodia is still facing today. One of the major pressing
development issues in Cambodia is the agricultural sector. Although Cambodias economy is
based primarily on agriculture, the growth in agriculture rose just slightly 0.2% as a result of
drought (ADB, 2016). In addition, agriculture in Cambodia is still largely contingent on
traditional methods, especially for rice farming. Particularly, the majority of Cambodian
farmers rely on rainfall and they can only grow just one crop a year. Indeed, most farming is
very vulnerable to climate change that has adversely affected crop production (Ros, Nang, &
Chhim, 2011). With the lack of modern technology in agriculture, the lack of farmers
knowledge, the limited access to credit, and the shortage of irrigation systems in some rural
areas, farmers are unable to maximize their agricultural output, which leads Cambodia to
face a lower agricultural productivity, compared to neighboring countries. These contemporary
issues will remain a key challenge for Cambodia to maintain its competitiveness in a global
market.

A low level of the education system is still a critical issue, impeding the pace of
economic development in Cambodia. Despite the radical reform of Cambodians education
system for the past 2 years, there are only 30% of young people who can finish high school
owing to lack of funds and expectation of low economic return in education (ADB, 2016). In
higher education level, Cambodia is facing a huge challenge with respect to the quality and
skills of students. This contributes to a mismatch between the supply of labor skills and the
demand of employers in the labor market. In addition, the majority of Cambodian students
tend to overlook the study of STEM education, which is deemed very important for the future
development of Cambodian human resources.

Another pressing development issue facing Cambodia today is the lack of information
on economic integration that hinders the growth of Cambodians private enterprises. With the
arrival of AEC, there is a growing competition among ASEAN members regarding SME
sector. Nowadays, there is still a barrier for Cambodian enterprise, especially small and
medium enterprises (SMEs) to have perfect information about entering export markets. This
make many Cambodian enterprises oblivious of their products quality, price, packaging, and
design (as cited in Chaisrisawatsuk, 2008, pp.351-394). This constraint stems from the
limited support from the Cambodian government regarding market access and commodity
prices in foreign markets. Consequently, many SMEs will not be able to compete in the
international market, which is deemed to be a great loss for both SMEs and government to
seize the opportunity of export markets.

In an attempt to promote agricultural development in Cambodia, ADB, in this regard,


plays a vital role in supporting Cambodian government to initiate new projects that can
address agricultural issues, especially in rice production and help Cambodia to achieve the
target of exporting 1 million tons of rice in the future. At the same time, ADB has to continue
to provide more funds and technical assistance to Cambodia so as to strengthen the
competitiveness of Cambodias agriculture. In fact, Cambodia has slightly benefited from its
large-scale agricultural land due to inadequate supply of irrigation systems, deficiency of
capital, lack of market access, and lack of rural physical infrastructure. Therefore, Cambodia
cannot capitalize on its large-scale farm land, which results in the slow growth of agricultural

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sector. With sufficient funds and technical assistance supported by ADB, it is widely believed
that Cambodia will be able to enhance agricultural productivity and diversity of crop
production that are the key contributors to rural poverty alleviation.

Another of Cambodias top development priorities is to invest more in the education


sector in an effort to develop human capacities. To promote inclusive economic growth,
Cambodia needs to invest a lot of money in building human resources who are considered
as a catalyst for future development of the economy. In this sense, the ADB, along with the
Cambodian government, have to keep on working closely together to effectively address the
education system issues, especially in higher education. Furthermore, the ADB should
contribute to encourage young Cambodian students to choose STEM subjects for their
future careers, which will soon become sought-after positions in Cambodia. To diversify the
economy with new higher value added activities in the production chain, Cambodia really
needs more engineers, more scientists, more doctors, more IT specialists, and more
economists to develop the country so that STEM education is in great demand for the future
of Cambodia. In this case, ADB should provide more scholarships or loans with a very low
interest rate for Cambodian outstanding students who aim to study STEM subjects at the
university. It does not only benefit Cambodian students but it also helps to boost Cambodia
to be a thriving county in the future through ADBs financial assistance.

Addressing the issue of a shortage of information on economic integration can be


problematic. However, there are some possible solutions to deal with this problem. It is very
important that ADB can assist Cambodian SMEs in a variety of ways to help them receive
perfect information on economic integration in export markets. First, ADB can cooperate
closely with relevant ministries in Cambodia, namely the Ministry of Commerce and the
Ministry of Industry and Handicrafts. The main purpose of this cooperation is to adopt new
policies that can be used to promote more information on economic integration for
Cambodias SMEs so that they can maintain their products competitiveness in terms of
price, quality, design, and packaging in export markets. Second, the ADB, together with the
Government of Cambodia, should fund and encourage R&D (Research and Development)
programs, which plays a very essential role for the private sector. In this regard, R&D serves
to promote more innovation, knowledge, and creativity to strengthen Cambodias enterprises
in a competitive export market. In this current context, Cambodia still needs both ADBs
financial and technical assistance in pursuit of promoting the competitiveness of Cambodias
SMEs and the importance of economic integration in export markets.

Cambodias high economic growth over the last decade has proved that Cambodia is on the
right track. With ADBs assistance since 1966, Cambodia has made significant progress in
its overall socio-economic development. In spite of these achievements, Cambodia still faces
some pressing development issues which need to be solved. Improving the agricultural
sector, investing in education, and enhancing the private sector are very important for
Cambodia to promote inclusive economic growth and reduce poverty in the long run. To
reach these goals, more cooperation between the ADB and the Government of Cambodia
has to occur to strengthen Cambodias development and help Cambodia translate economic
growth into poverty reduction in the future.

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References

Asian Development Bank. 2015. Asian Development Bank Fact Sheet. Manila: ADB.

Asian Development Bank. 2016. Asian Development Outlook 2016 Asia Potential
Growth. Manila: ADB

Chaisrisawatsuk, S. (2008). Thailand and Its Cooperative Development Strategies for


CLMV. in Sotharith, C. (ed.), Development Strategy for CLMV in the Age of Economic
Integration, ERIA Research Project Report 2007-4, Chiba: IDE-JETRO, pp.351-394.

Ministry of Education, Youth, and Sport: Enhancing Education Quality Project. (n.d.).
Retrieved August 16, 2016, from http: //www.moeys.gov.kh/en/eeqp.html

Ros, B., & Nang, P., & Chhim, C. (December, 2011). Agricultural Development and
Climate Change: The Case of Cambodia.
Retrieved August 20, 2016, from
http://khmerstudies.org/wp-content/uploads/2013/06/12.-Climate-Change-CDRI.pdf

Woods, B. (2014, September 29). ADB loans govt $30 to train women for jobs. The
Cambodia Daily.
Retrieved August 20, 2016, from
https://www.cambodiadaily.com/archives/adb-loans-govt-30m-to-train-women-for-jobs-68571/

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