Economic policy unavoidable

Economic policy unavoidable

Personality campaigns and populist policies have taken centre stage in this election campaign while a variety of economic issues have taken a back seat, analysts say.

Regional and global shifts affecting domestic conditions will need close attention from policymakers. Foreign investors will no doubt keep one eye on Election Day to monitor the extent that the “political stability” at the forefront of Cambodia’s advertisement to foreign investors is disrupted, if at all.

After the election is decided, the incoming government will need to refocus its energies on the vital issue of how Cambodia can ensure sustained and equitable economic growth.

A lack of economic policy debate is not uncommon, according to You Sokunpanha, a Cambodia-based economic analyst, as politicians prefer appealing to voters' emotions.

“If you do a big dive into their platform, they do talk about the economy.… The thing is, they are in extremely general terms, and probably there is not too much to separate what the two main parties are proposing,” Sokunpanha said.

Rising labour costs in China present new opportunities for wealth creation, employment and tax revenue via investment flows for Southeast Asia.

With great opportunities, however, comes responsibilities, analysts say. Human rights, land ownership, equal wealth distribution and even national identity will require attention as the economy grows.

While both parties encourage foreign investment, there are some subtleties in their approach. For the CNRP, attracting the “right” kind of foreign investor that helps stimulate production is at the heart of its foreign investment discussion. They say eliminating the expensive cost of corruption and enforcing the rule of law will create a more welcoming investment environment.

“We would like [to attract] more Western companies, [and] Japan,” CNRP spokesman Son Chhay said.

Chhay said as an opposition party they could not ignore the relationship with China, but said the government’s current relationship with Chinese investors needs more scrutiny. Expensive loans combined with timber and mineral extraction “is not benefiting the country”, he said.

The CPP, which has campaigned heavily on the country’s rapid growth of the past decade, will continue to promote a “first come, first serve” basis for foreign investors, encouraged by tax holidays and low-cost labour.

Privileged duty-free access to the United States and European Union remains a selling point, while the integration of ASEAN markets in 2015 is used to gain access to neighbouring countries.

Controversial economic land concessions would be outlawed by the CNRP, which says the strategy favours the wealthy and promotes industrial agricultural activities that do little in terms of local job creation.

The CPP says land concessions still have their place in the transfer of skills and technology.

ASEAN integration is just around the corner. As borders open up for trade, conditions affecting least developed countries like Cambodia, such as maturity of industry and labour migration, require government attention.

“The challenge is that Cambodian workers will have to catch up with those in ASEAN,” said Srey Chanthy, president of the Cambodian Economic Association, adding that more highly skilled jobs may be taken by workers from neighbouring countries.

Both parties echo the same sentiments relating to the maturity of the workforce. Their responses to this, however, are slightly different.

Ek Tha, a spokesman for the Council of Ministers, looks to foreign investment to help plug the gap.

“I am calling on American investors to invest in Cambodian education,” he said.

Foreign investment in education is welcomed, says Chhay, but the CNRP would also look to domestic incentives to enhance the quality of education.

“We will pay the teachers properly, and secondly we will have a proper curriculum, and then we will increase the education budget,” he said.

Cautious of a lower productivity base than that of its neighbours, the CNRP would like to push back the date of ASEAN integration from 2015 to 2018, “because we are not ready,” Chhay said.

Sokunpanha, the analyst, says that regardless of clear economic policy, the relationship between investor and government in unlikely to change in the short term.

“This codependence is not an ideal situation but it definitely is pretty stable,” he said.

phnompenh post