Cambodia’s finance minister: Fintech may play critical role in supporting financial inclusion

07 Aug 2018  2106 | Cambodia Travel News

What have been Cambodia’s greatest economic strides since you became finance minister five years ago?
During the last five years, the Royal Government of Cambodia has made impressive achievements, stemming from prudent macroeconomic management, pro-growth economic policies and comprehensive reforms. Cambodia was named Asia’s new tiger economy and attained lower-middle-income status in 2016 due to strong economic growth. The country has sustained a high economic growth rate and GDP per capita jumped from $1,044 to $1,427 [during my term], reflecting a better living standard. Cambodia’s growth has also moved in an inclusive pathway, which has led to a rapidly growing middle class that represents an attractive market for trade and investment – something which is crucial to safeguarding and reinforcing the growth.

Our revenue collection has also remarkably increased in the past five years to be on par with regional peers, while the government has increased spending on infrastructure, education, skilled labour, health and agriculture with the aim of enhancing public service delivery and economic productivity. We’ve seen rapid economic expansion within a stable macroeconomic environment. Inflation has been contained at around 3%; the exchange rate has been stable; and government’s debt level remains low at around 30.1% of GDP last year, for example.

Prominent reforms, namely the Public Administrative Reform and a sequential Public Financial Management Reform Programme, have been promising. The tax system has been streamlined and modernized, taking advantage of the latest innovations in ICT and making tax paying services relatively more convenient and less time consuming – thus encouraging tax compliance.

Financial inclusion in Cambodia has grown significantly in recent years, with the National Bank of Cambodia estimating in 2016 that 71% of the country’s population had access to financial services while 59% use formal banking services

What have been the greatest challenges you’ve faced during your term?
Despite these achievements, the government has been well aware that several challenges still remain, such as slow speed of economic diversification, raising wages, high logistics costs, higher electricity costs compared to neighbouring countries and a shortage of skilled labour. In this sense, the government has been proactive to address these challenges.

To diversify our economy, the government has revised the Law on Investment and Incentive Schemes to attract capital-intensive industries and to promote the expansion of existing investment. We have also decided to reduce the electricity tariff gradually from 2019 for industrial and commercial users with the aim of reaching a level comparable to neighbouring countries.

To bring the cost of doing business down, the government has invested heavily in main infrastructure such as building a new expressway, expanding [Preah Sihanouk] seaport and enlarging all national roads connected to main economic hubs and neighbouring countries. At the same time, the government has been promoting trade facilitation by implementing the National Single Window [customs portal], simplifying and automatising customs procedures both on valuation and clearance, and revising agencies’ stationing at international border checkpoints and ports.

We have also been active in promoting small and medium enterprises [SMEs] by setting up SME banks and introducing incentive schemes for SMEs. To address the shortage of skilled labour, the government has increased the budget for education and vocational training by more than threefold.

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