5th Asia Economic Forum Asias Challenges and Opportunities during the time of Global Economic and Fi

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5th Asia Economic Forum Asias Challenges and
Opportunities during the time of Global Economic
and Financial Crisis
Plenary Session III Financial Crisis' Impact on
the Millennium Development Goals
The Financial Crisis Affect and Governments
Policy Measure

• H.E Dr. Son Koun Thor
• Advisor to Samdech Prime Minister Hun Sen
• Vice-Chairman of SNEC

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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.

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• In generation, this global financial and
  economic crisis have impacted to Cambodias
  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

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II- Governments 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

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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.

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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.

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• 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.

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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.

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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.

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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.

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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.

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• 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 RDBs capital to USD13 million
  for pilot project in Agriculture supporting
  especially Rice.
• RGC provided credit line of USD15 million
  including USD 3 million is RDBs counterpart fund
  to Rural Development Bank (RDB).

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• 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.

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• 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.

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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.

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• 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.

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• 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.

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Thank You for your attention!