Presentation Transcript

1. Greater Mekong Investment Policy Forum 28-29 March 2012 CAMBODIA’S ECONOMY AND INVESTMENT REGIME presented by CHEA VUTHY Deputy Secretary General of the Cambodian Investment Board Council for the Development of Cambodia
2. economic DEVELOPMENT
3. Robust economic growth High economic growth during the decade before the onset of the global financial crisis.
4. Economic Transformation 2012 marked 20 years of economic development in Cambodia, since the formation of the Royal Government of Cambodia in 1993; a transformation from planned to market economy. GDP grew from 2.5 billion in 1993 to 12.9 billion in 2011 and is expected to reach 14.3 billion in 2012. Per capita GDP grew from $229 to $909 in 2011 and is expected to reach $987 in 2012. Population increased from 10.8 million to 14.5 million in 2012. Inflation dropped from 150% in 1993 to 7.4% during 1994-98; to 0.7% during 1999-03, then to 8% during 2004-08. The share of industry increased from 12.6% to 23.1%. The share of agriculture decreased from 45.3% to 33.6% The share of services reduced from 39.4% to 37.7%.
5. Economic Transformation Government revenue increased from 290 billion Riels ($123 million) or 7.6% of GDP to 7,604 billion Riels ($2 billion) 13.5% of GDP. The number of people living under poverty lines fell from 50% in mid-1990s to 25% at present. Stock of public debt and publicly guaranteed debt in nominal terms is 28% of GDP end-2010, of which 49% is held by multilateral agencies and 51% - by bilateral creditors (of which 24% is non-rescheduled debt with US and Russia). Debt stock in NPV is 20% (the benchmark of 40%) Now Cambodia is a small, albeit open economy with liberal market policies. Cambodia is located among the highly growing economies of South-East Asia.
6. Economic reconstruction The rehabilitation phase, 1993-1998: The rudiments of a market economy were established, with the introduction of private property. The Khmer Rouge was a threat to peace. The economy grew on average by 6.3% per annum. The reconstruction phase, 1999-2003: Political stability, democratic institutions were rebuilt, regained international recognition, reforms focusing on macroeconomic management, public financial management and financial sector reforms, and rehabilitation and reconstruction of physical infrastructures, especially the national road network. The economy grew on average by 8.8% per annum.
7. Economic takeoff The economic take-off phase, 2004-2008: Second generation reforms, implementation of the first phase of the Public Financial Management (PFM) reform program and continued investment in provincial and rural roads. Economic growth during 2004-2008 averaged 10.3%. Impressive Track Records: macroeconomic stability; poverty Reduction; employment creation; strengthened competitiveness; productivity.
8. Rapid Growth of the Banking Sector As of March 2012 there are 31 commercial banks, 7 specialized banks, 32 licensed microfinance institutions, 29 registered microfinance institutions and around 60 unregistered NGOs. Bank deposits (BD): $347 mil. in 2000; $914 mil. in 2005; $2,296 mil. in 2007; $3,192 mil. in 2009 and $4,030 mil. in 2010. Deposits increased by 19% from $4 billion in Dec 2010 to $4.8 million in 2011. Credit to the private sector increased by 28% from $3.3 billion in December 2010 to $4.2 billion in 2011. Non-Performing Loans (NPL) dropped to less than 3% in 2011.
9. Microfinance The microfinance sector in Cambodia has played a leading role in expanding the reach of the financial sector to the rural poor. The sector has experienced rapid growth over the last five years, reaching 1.3 million borrowers and 1.1 million savers in 24 provinces. Deposits increased by 32% to US$1.26 billion in 2011 from US$952 million in 2010, while the total loan portfolio grew by 41% to US$916 million in 2011 from US$648 million in 2010. NPL declined from 1.3% to 0.4%.
10. Credit to Private Sector (Million US$) Credit to the private sector increased only by 6% in Dec. 2009 (y-o-y), as commercial banks are reluctant to extend loans; in Dec. 2010 it increased by 26.6% and by 28.5% in Aug. 2011.
11. 2011 in a snapshot Economic growth in 2011 was affected by the flood. Nonetheless, the Cambodian economy posted a 6.9-percent growth in 2011. Agriculture is estimated to grow at 3.3% in 2011, compared to 4% in 2010; Industry posted a 14.3% growth in 2011, compared to -13.6% in 2010. Garment production exceeded the pre-crisis level and estimated to grow by 14.3% in 2011. The services sector expanded by 5% in 2011, compared with 3.3% in 2010.
12. Balance of Payment The current account deficit is estimated to narrow in 2011 to 11.9% of GDP; Domestic exports totaled to USD 5.3 billion in 2011, an increase of 6% compared to 2010; Exports of garments and textiles totaled US$ 3.9 billion, an increase of 31% compared to 2010; Retained imports of goods amounted to US$ 6.9 billion, an increase of 3% compared to the previous year’s imports; After having posted a surplus of US$ 143.2 million in 2010, the balance of payments surplus continued in 2011.
13. INVESTMENT REGIME :policy framework for investment
14. Private Sector Development Strategy Investment Climate: Law on Investment – August 1994 Amendment of Law on Investment (2003) and its sub-decree 111 ANKr.BK (27 September 2005) Automatic approval - One Stop Service Bilateral Investment Treaty (BIT) Trade Facilitation : Single administrative document, Single Window, Risk Management (Sihanouvillle Port) Trade Sectoral Wide Approach (Trade SWAp) Government-Private Sector Forum: Participatory approach Special Economic Zones (SEZ)
15. Law on Investment Investment Incentives 20% Corporate Tax Tax holidays: Trigger period +3years+n; 6y <TH<9y Full Import Duty Exemption Investment Guarantee Equal treatment of all investors No requirement of local equity participation No price controls on products or services No restriction on forexconvertibility Free remittance of foreign currencies abroad
16. Bilateral Investment Treaties (BITs) Signed BITs Under negotiation Australia Austria China Croatia Cuba Czech France Germany Indonesia Japan (14/06/ 2007) Kuwait Lao PDR Myanmar Ukraine Arab Rep of Egypt Russia Libya Great Britain & Northern Ireland Algeria Bulgaria USA Qatar Hungary Malta Bangladesh Iran Turkey Belgium-Luxembourg Economic Union Malaysia Netherlands N. Korea OPEC Pakistan Philippine ROK Singapore Switzerland Thailand USA (OPIC) Vietnam
17. Mechanism of the Government-Private Sector Forum G–PSF Bi-annual meetings Rice Export WG Law, Tax, and Governance WG Agriculture and Agro-Industries WG Tourism WG Manufacturing and SMEs WG Banking and Fin. Services WG Energy and Infrastructure WG Trade Facilitation and Export Processing WG Industrial Relations WG Interaction with the Private Sector: through the Government Private Sector Forum, and the Steering Committee on Private Sector Development and its sub-Steering Committees, the RGC is in regular dialogue with the private sector, and seeks to address their concerns. 17
18. Sub-Steering Committees on Investment Climate and PPI H.E. Mr. KeatChhon Deputy Prime Minister Minister of MEF Sub-Steering Committee on Trade Facilitation H.E. Mr. Cham Prasidh Senior Minister Minister of MOC Sub-Steering Committee on SME H.E. Mr. SuySem Minister of MIME Sub-Steering Committee on Corporate Governance Development H.E. Dr. Aun Porn Moniroth Minister attached to the PM Secretary of State of MEF Policy and Strategy Mechanism Steering Committee on Private Sector Development H.E. Mr. KeatChhon Deputy Prime Minister Minister of MEF Sub-Steering Committee for Private Sector Development
19. Lawsand Regulation in addition to those laws required by its accession to WTO, Cambodia has adopted laws covering topic such as : Law in progress: Commercial Contracts Competition Law on the Establishment of the Commercial Court Law on Anti-dumping, Countervailing Duty and Safeguard Law on Business Association, Cooperatives Law on Competition (Final Draft) Law on Union Regulations on Sanitary and Phyto-sanitary Measures (SPS) Commercial enterprise Insolvency Secured transactions Commercial Arbitration Transportation Civil Aviation
20. SEZ : Diversification Policy Sub-decree on the Establishment and Management of SEZs was adopted in December 2005. 22 SEZs have been authorized and are being developed by private investors/operators. Five SEZs are currently in operation, the remainders are in various stages of development. Reasons for operation within a SEZ: Better infrastructure One Stop Services/SEZ Zone Administration Recent data suggest that the pace of investment in the zones is accelerating. Draft of SEZ Law under completion
21. Cambodia’s Special Economic Zones No Activities Under Construction Operational Sihanoukville Port SEZ Kampot SEZ
22. Thank you
23. k>G>k k>G>k k>G>k k>G>k k>G>k k>G>k k>G>k CDC CDC CDC CDC CDC CDC k>G>k CDC k>G>k CDC k>G>k CDC k>G>k CDC k>G>k CDC k>G>k CDC k>G>k www.cambodiainvestment.gov.kh CDC k>G>k CDC k>G>k CDC k>G>k CDC k>G>k CDC k>G>k CDC k>G>k CDC CDC CDC k>G>k k>G>k k>G>k k>G>k k>G>k k>G>k k>G>k CDC CDC CDC CDC CDC CDC