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(Cartoon by Sacrava) |
By Neou Vannarin and Simon Lewis
The Cambodia Daily
Reporting that the country had achieved better than expected economic growth last year, Prime Minister Hun Sen on Wednesday targeted a rapid expansion of the country’s rubber industry and predicted that almost 1 in 10 Cambodians would soon be working in rubber.
Delivering the keynote speech of the 2013 Cambodia Outlook conference in
Phnom Penh, Mr. Hun Sen said that the government had revised upward its
estimate for gross domestic product (GDP) growth during 2012 from 7 to
7.3 percent, owing to garment exports, the service sector and
agriculture.
“The future outlook of Cambodia is positive, with projected annual
growth of more than 7 percent over the medium term,” the prime minister
said, adding that inflation was 2.5 percent in 2012 and was expected to
reach 4 percent this year.
In a wide-ranging 45-minute speech, Mr. Hun Sen set out for government
officials, business people, and nongovernmental organizations his
vision for Cambodia’s energy supply, improved infrastructure and
increased agricultural output.
That vision involves increasing cash crop exports including rice,
cassava, maize, soy beans and rubber, and increasing the capacity to
process crops in country, he said.
“Agriculture continues to play a crucial role in boosting our gross
domestic product, employment, and contributing to rural poverty
reduction,” Mr. Hun Sen said.
“In achieving our commitment to the diversification of agricultural
production, rubber in particular is proving to be an increasingly
valuable industrial export crop for Cambodia, contributing to both
latex and timber exports.”
According to figures provided by Mr. Hun Sen, rubber plantations now
account for 1.2 million hectares of the 1.5 million hectares of land
the government awarded to private companies under its controversial
economic land concessions.
Human rights groups, however, have estimated that far more land, at
least 2 million hectares, has been distributed by the government as
private concessions.
So far, Mr. Hun Sen continued, about 300,000 hectares of rubber has been
cultivated, and about 100,000 people are employed harvesting the crop.
“In the next five years, 70 percent of the rubber plantations will be
cultivated and 840,000 hectares of rubber plantation will be tapped for
latex, employing 1.3 million people,” Mr. Hun Sen said, adding that not
just large firms benefit from the rubber industry, as about 45 percent
of plantation land is owned by smallholders.
Land concessions for rubber in eastern provinces are often granted on
areas covered with forest, drawing complaints that the plantation
owners—many coming from Vietnam—are more interested in felling the
precious timber on their concessions than planting rubber.
Mr. Hun Sen said that despite the government’s land concession policy,
which he officially put on hold last year amid growing criticism of the
land-grabbing associated with the practice, Cambodia now has 9.2
million hectares of forest cover, about 54 percent of the total land
mass.
“This shows that the government balances the need to create jobs for
poverty reduction and the need to protect the environment due to the
fact that rubber trees are considered part of the forest coverage,” the
prime minister said.
During Cambodia’s colonial period, large French-owned rubber
plantations, employing cheap Cambodian labor, were established in the
same parts of the country. Hang Chuon Naron, secretary of state at the
Ministry of Economy and Finance, told Wednesday’s conference that
Cambodia’s contemporary rubber industry would soon eclipse its
historical size.
“Exports are now 50,000 tons, so it’s a record export from Cambodia, even compared to the prewar [period], the 1960s,” he said.
“Cambodia will expand that further because right now, more than 1
million hectares are covered with rubber and 1 hectare produces around 1
ton of rubber, meaning that in the next say five or 10 years, Cambodia
will export more than 1 million tons of rubber.”
International Monetary Fund resident representative Faisal Ahmed told
the conference that Cambodia’s economy had the potential to grow at 7
or 8 percent for the medium term, but said the economy was still
vulnerable to outside shocks.
“I think the big challenge for Cambodia is going to be…how do you create
fiscal space by having more revenue for the government,” he said.
“Second is to help to ensure financial stability, and third would be,
how do you create this inclusive growth, create a virtuous cycle, create
incentives?”
Srinivasa Madhur, director of research at the Cambodia Development
Resource Institute—which co-hosted Wednesday’s conference with the ANZ
Royal Bank—said Cambodia’s rapid development had left the country with a
disparity between the rich and poor.
Mr. Madhur pointed out that Cambodia had a “relatively high” score of 0.38 on the Gini Coefficient—a measure of inequality.
“It’s quite high among [comparable] countries but we don’t see any huge
trend up or down,” he said, noting that while poverty reduction had been
“significant,” more than half of the population, 53 percent, are still
earning below $2 per day.
Chan Sophal, president of the Cambodian Economic Association, asked
whether “peace and stability” are alone “good enough” engines for
Cambodia’s development, and pointed to poor governance as a potential
pitfall for growth.
“In the past, they have been…sufficient conditions,” Mr. Sophal said.
“The private sector could employ labor, export garments to the U.S.,
…more tourists come to visit Angkor Wat…people can work the land. Banks
and investors come in with the dollar, aid [is granted] with the
dollar…. Growth was inevitable in the past years,” he said.
In response, Mr. Madhur said Cambodia’s poor reputation for
corruption—it is ranked 157th out of 176 countries in Transparency
International’s 2012 corruption perception index—need not take
priority over other issues, such as improving infrastructure and
education.
“If you are also focusing on them and then just going too much [to focus
on improving] governance, that will actually not help either,” he said.
“The relationship with growth and corruption is not [well] understood.”
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