Download H.E. Son Koun Thor

5th Asia Economic Forum
“ Asia’s Challenges and Opportunities during the time
of Global Economic and Financial Crisis ”
The Financial Crisis Affect and Government’s Policy Measure
H.E Dr. Son Koun Thor
Advisor to Samdech Prime Minister Hun Sen
Vice-Chairman of SNEC
I- Financial Crisis
The world economy has gone through deep
changes since the end of 2007 caused by the
increase in oil prices and the real estate crisis
in United State.
In 2008, oil price were rising had caused the
prices of food, especially rice and also caused
the of many other goods to increase. This
has created inflationary on the world economy
including Cambodia.
In generation, this global financial and economic
crisis have impacted to Cambodia’s financial and
economic systems, especially the decline in the
sources of financing and private investment
capital outflow, the fall in demand in key
Cambodian markets and reducing tourist visit to
Cambodia. As a result, the most vulnerable
sectors to the crisis are :
– Garments
– Tourism
– Construction and Real estate
II- Government’s Policy Measures
1- Macroeconomic Policy:
1-1 Monetary and financial policy
1-2 Fiscal policy
1-3 Policy to mobilize and increase disbursement of
Official Development Assistant (ODA)
2- Measures related to Structural and Sectoral Reforms:
2-1 Garment sector
2-2 Tourism sector
2-3 Agriculture sector
1-1 Monetary and Financial Policy
RGC
continues
implementing
prudent and flexible policies to keep
inflation under check and to ensure
stability in financial sector especially
the robust banking system such as
regularly monitoring and ensuring
the health of banking system,
ensure the solvency and the strength
of commercial banks.
1-2 Fiscal policy
In order to compensate the drop in
private investments, RGC has to
introduced a stimulus package to the
extent it can afford to support and
stimulate growth in the ways that
would not adversely affect economic
stability, especially the management
of inflation, as well as to effectively
mobilize additional resources from
the development partners.
In 2009 expenditures policy, the RGC
gave priority to increasing public
investment in physical infrastructure
including
transportation,
irrigation,
increasing agriculture output, reducing
manufacturing costs and implementing
social safety nets.
Nevertheless, The RGC is vigilant in
monitoring the implementation of the
budget-on both expenditure and revenue
side.
1-3 Policy to mobilize and increase
disbursement of ODA
In 2009, RGC mobilized approximately
USD 1 billion in ODA, which was
highest outcome in its effort to attract
Official Development Assistance from
development partners. This cooperation
financing is one of the important
instruments to reduce the impacts on
Cambodia from financial meltdown and
global economic downturn.
2-1 Garment sector
RGC still see the possibility and need to improve procedures
and to reduce barriers and difficulties in doing business
which can help reducing production and transportation costs
and also seeks sources of financing for business activities,
diversifying markets and coordinating between employers
and workers.
RGC looks for appropriate budget and establish fund to
provide scholarships for special skill training including
the provision of short-term training to our young and
lay-off workers.
2-2 Tourism Sector
RGC pays greater attention to
strengthening tourism sector over the
short, medium and long terms, by
ensuring peace, security, political stability,
social order and tourist safety; building
more infrastructures; improving legal
framework and institutional capacity;
developing human resources; and
diversifying tourist market.
2-3 Agriculture sector
In order to support Agriculture, RGC
continue to enforce zero tariff policy on
importing agriculture materials such as
seeds, fertilizers, pesticide and agricultural
equipments etc.
RGC is drafting legal procedures for
investment projects in agriculture especially
investment projects in agriculture produces
processing such investment projects in rice
stockpiling and processing.
• RGC has given serious thoughts to the
factors of production costs and output
as well as capacity in purchasing,
stockpiling and processing Cambodian
rice.
• RGC has increased RDB’s capital to
USD13 million for pilot project in
Agriculture supporting especially Rice.
• RGC provided credit line of USD15
million including USD 3 million is RDB’s
counterpart fund to Rural Development
Bank (RDB).
• RGC is establishing “Agriculture Support and
Development Fund” which is managed by
RDB to support private sector especially SME,
on a number of targets including :
– Providing short-term credit for collecting
paddy/rice from farmers at appropriate
price to maintain price stability and ensure
food security.
– Providing medium-term credit to rice millers
to increase capacity in stockpiling, drying
and processing.
• RDB has successfully implemented
this special loan of RGC to the
farmers associations which started
since 2005 in the amounts of USD 2
Million and increased to USD 4
Million in 2006, USD 6 Million in 2007
and up to USD 16 Million in 2008.
Expected result
“ Transforming Cambodia into White
Gold-Rice exporter ”
(The vision of Samdech Hun Sen, Prime
Minister of Cambodia)
•Rice millers have ability to compete with
the neighboring dealer in buying paddy.
• To set up rice market which enabled farmer in
avail themselves of precise price of paddy and
market as well as enable rice miller to collect
paddy for better storage facility to ensure
domestic supply, national food security and
export.
• Rice miller has capacity of milling process and
export.
• To take immediate action in preventing from
sudden change of rice price.
• To participate in Emergency Food
Assistant Project living surround Tonle
Sap Basin Provinces.
The Rural Development Bank has
provided a soft loan to the Green
Company to build rice milling facilities to
mill rice for export and local
consumption.
Thank You for your attention!