SokSiphana-WTO IF Cambodia Lao...

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Session 1a:Overview: Trade, Growth and Poverty ReductionPresented by Mr. Sok Siphana, Secretary of State for Commerce

Senior Policy Seminar for Cambodia and Lao PDR: The Integrated Framework and WTO Accession: Challenges and Opportunities for Poverty

Reduction

The Trends and the Temperature Checks …

China’s Accession to the WTO

Statu s of Co untrie s in th e WTO Syst emSt atus as of April 1, 2000

GAT T Contrac ting PartyCom pleted Ac cessionSee king Acces sionNot Seeking A ccession

Clic k on the yellow or red ar eas to a ccess thetabl es of co ntents fo r docum ents on accessio n

NAFTANAFTA

MERCOSURMERCOSUR

ECOAWASECOAWAS

SADCSADC

AFTAAFTASAARCSAARC

CARICOMCARICOM

EUEU

SPFSPF

The Various Free Trade Areas

China’s accession to the WTOUS granting MFN status to VietnamUS’s Farms Act ($190 billion in farm subsidies)AGOAEnd of the Multi-Fiber Agreement in 2005Difficulties in WTO accession process (LDC-Plus or worse WTO-Plus)The changing role (power?) of multinational companies and the role of governments must be reviewed in the changing scenario.

Increased regional and international competition

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Prospects for the FutureFuture ASEAN-China FTA, ASEAN-Japan FTA, and ASEAN-India FTA. ASEAN Vision 2020 – ASEAN Economic Community.

Trade …

Trade would help break the vicious cycle of poverty

Rapid population growth

Rapid labor force growth

Insufficient employment

creation

Low-per-capita income level

Low growth in per-capita

income level

More Jobsopportunities

Increased incomes

Mainstreaming Trade Strategy into the Government’s Development Policies Towards

Poverty Reduction in Cambodia

SEDP I (1996-2000) SEDP II (2001-2005)

NPRD (early 1994)

INPRD (early 1995)

PIP (1996-1998) PIP (1999-2001) PIP (2002-2004)

(2001 onwards) Pro Poor Trade Strategy

IPRSP (Oct 2000)

PRSP (Mid 2002)

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JOININGWTO

JOININGASEAN

ACCESS TOTHE U.S.MARKET

ACCESS TO THEEUROPEANMARKET

Cambodia has embraced the globalization process as part of its outward looking economic development strategy….

Cambodia could be the 1st LDC to accede to WTO….

…Growth …

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Real GDP Growth (%)

4.10%

5.70%

7.60%

7.00%

1.00% 1%

6.90%

7.70%

6.30%

4.5%5%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

9.00%

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Est.

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Inflation41.10%

17.80%

3.50%

9.00% 9.10%

12.6%

1.5% 0.7%

4% 4%

-0.8%

-5.00%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

45.00%

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Est.

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Official Exchange Rate(Riels/US$)(average mid-point buying and selling rate)

27472570 2467

2640

2991

3774 3814 3859 3924 3950 3950

0

500

1000

1500

2000

2500

3000

3500

4000

4500

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Source: MOP

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Cambodia GDP by sector (1998 ~ 2001)

45.8

16.1

3436.9

21.9

35.3

05

101520253035404550

Agriculture Industry Services

1998199920002001

Source: Ministry of Planning/National Accounts of Cambodia April 2002

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Cambodia’s Foreign Trade 1996 ~ 2003(million US$)

1354 1323

1922 1887

24732649

3082

482.6

-1000

-500

0

500

1000

1500

2000

2500

3000

3500

1996 1997 1998 1999 2000 2001 2002 Feb-03

TotalExportsImportsBalance

Source: Ministry of Commerce

16.5m

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Cambodia’s Garment exports (million US$)

26.50.5

26

80.11.5

74.8

223.9

106.8112.3

355.2

287.9

62.9

650

512.2

137.8

964.8

729.9

220.9

1119.8

792.6

308.8

1308.8

923.1

358.2

198.4157.3

34.6

0

200

400

600

800

1000

1200

1400

1995 1996 1997 1998 1999 2000 2001 2002 03-Mar-03

TOTALUSAEUOTHERS

Source: MOC/TPD as of 06 January 2003

Number of Garment Factories1995 – 8/2002

20 24

67

129

152

190 185

185

0

20

40

60

80

100

120

140

160

180

200

1995 1996 1997 1998 1999 2000 2001 2002

21

5

9

13

15

16

14

0

2

4

6

8

10

12

14

16

1997 1998 1999 2000 2001 2002

Number of Footwear Factories1997 – 8/2002

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Session 1b:Regional Impact of China’s Integration and the Need for Policy Reform Presented by Mr. Sok Siphana, Secretary of State for Commerce

Senior Policy Seminar for Cambodia and Lao PDR: The Integrated Framework and WTO Accession: Challenges and Opportunities for Poverty

Reduction

Cambodia carried out a country diagnostic trade integration study (DTIS).

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CompetitivenessASEAN

Study

Cambodia Working Group Meeting, June 24, 2002Updated June 26, 2002

McKinsey & Company

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The “Cause and Effect”(Fishbone) Diagram

CoveringThe Multitude ofIssues having anImpact onMarket Access

Market Access Facilitation

Prohibitions

Services

Transport

Registry procedures

Harbour Services

Taxes

Investment related matters

Foreign Exchange measures

Banking

DFI regulations

Tools and mechanisms for trade

Negotiations

Dumping practices

Trade disputes

Elaboration of trade agreements

Registration & documentation

ImportLicenses

Custom clearance

Warehousing

VAT Taxes

Intellectual Property

Sanitary and Phytosanitarymeasures (SPS)

International Plant Protection Convention (IPPC)

Intl. Office of Epizootics (IOE)

Domestic requirements

Health (HACCP)

Codex AlimentariusCommission (CAC)

Genetic Modified Organisms (GMO)

International Standards

Standards, Testing, Labelling and Certification

ProductProcess

Packaging

LabellingQuality System Standard

Testing Accreditation Certification

RulesOf Origin

PreShipmentInspection

CustomValuation

EnvironmentalStandards

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Cambodia’s New Competitiveness Paradigm

Cambodia is a small economy relying primarily on an export led growth strategy.

Our success as a leading LDC to have surpassed the 1 billion dollar mark 2 years ago lies to a great extent on our ability to be and remain competitive.

Competitiveness for an outward looking country like Cambodia will depend on our ability to constantly attract new source of foreign direct investment.

National Development Strategy and the Trade Policy Process

Support from Multilateral and Bilateral Donors

National Development Strategy

Trade Strategy

Government ministries and

agencies

Trade Policy Process

AnalysisFormulation of trade

policyNegotiation

Implementation

Civil SocietyAcademia

and Research Institutions

Private Sector and Business Associations

Effective Participation in MTS

Negotiating and implementing agenda and capacities

Increased Trade and Investment

National and regional competitiveness agenda and

capacitiesTrade Policy

mainstreamed in development

policy

Trade and Investment Linkages and othercompanion and mutually supportive policies...Formulating a long-term financial sector development plan…”RGC’sFinancial Sector Blueprint (the Blueprint) for 2001-2010”Capitalizing on the FDI Opportunities through Reforms of the Investment RegimeInitiating Regional Development Master Plan of the Phnom Penh –Sihanoukville Growth CorridorBringing in Private Participation in Infrastructure: Complete the Country Framework Report on Private Participation in Infrastructure (CFR) with World Bank and the Public-Private Infrastructure Advisory Facility (PPIAF)Telecom Comprehensive Sector Study with World Bank


Good Governance…Enforcement of the Rule of Law …

Reinforcement of Intellectual Property Rights as Tool for Development …

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Ambitious national legislative agendato implement the WTO requirements.

More than 40 draft laws or regulations are planned to be adopted in order to complete the legal framework of Cambodia, among those are various intellectual property laws like

the draft Law on Geographical Indications Including Appellation of Origin, the draft Law on Plant Variety Protection, the draft Law on Layout Designs of Integrated Circuit, and the draft Law on Protection of Undisclosed Information.


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Implementing the IPR policiesMembership in International Conventions and Bilateral and Regional Arrangements

WIPO in 1995, the Paris Convention in 1998, the ASEAN Framework Agreement on Intellectual Property Cooperation in 1999, Bilateral agreement on Trade Relations and Intellectual Property Rights Protection Agreement with the United States of America in 1996.

In the near horizon is Cambodia’s intent to join the Bern Convention and the Patent Cooperation Treaty


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IPR LegislationThe three keys IPRs laws were adopted:

Law on Marks, Trade Names and Acts of Unfair Competition in February 17, 2002.

Law on Patents, Utility Model Certificates and Industrial Design in December, 2002.

Law on Copyright and Neighboring Rights in January 2003.


… Product Diversification

Product value chain

Assembling Processing PackagingSuppliers

TransportingInspecting ConsumerFinishing

Distribution $$$$$

Sector Value Chain

Recapture the Domestic Market

Building In-Country Alliances

in the Services Sector

“Cluster” sectors with similar clients1. For projects: engineering, construction, design,

planning , surveying and mapping, architecture

2. For investors: corporate real estate, legal, accounting, insurance, banking

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E-competence

… Destination Diversification

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North-South Economic Corridor

East-West Economic Corridor

Southern Economic Corridor

GMS GMS Flagship Flagship ProjectsProjects

40

.

Phnom PenhThe Philippines

Singapore

Indonesia

MyanmarSouthern China

ManilaBangkok

Kunming

Yangon

Brunei

Jakarta

Begawan

Hanoi

Laoso Vientiane

CAMBODIA

Malaysia

Kuala Lumpur

ThailandVietnam

cdc

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.

Phnom PenhThe Philippines

Singapore

Indonesia

MyanmarSouthern China

ManilaBangkok

Kunming

Yangon

Brunei

Jakarta

Begawan

Hanoi

Laoso Vientiane

CAMBODIA

Malaysia

Kuala Lumpur

ThailandVietnam

cdc

5 Provinces of Cambodia4 Provinces of Lao PDR4 Provinces of Thailand

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Greater Mekong

Subregion (GMS)

Economic Cooperation

Program

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Forging Stronger Partnership with Thailand through Joint Economic Development Cooperation

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Comparative Advantage and Investment and Trade Strategies

Comparative AdvantagesCambodia

A potentially large and currently under-developed natural resource base (agriculture, fisheries, forest)

Comparative Advantages

ThailandSome natural resources over exploited or depleted providing market opportunities for

trading partners

StrategiesIntegration of production baseStrategic partnership in marketing

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CambodiaA largely untapped store of natural attractions and resources


ThailandTourism experience and the springboard for destination linkage

StrategiesTwo Kingdoms one destinationTwo countries one coastline

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CambodiaAn infant manufacturing sector with low labourcosts but poorly developed skill levels


ThailandA rapidly developing manufacturing sector with rising labour and production costs

StrategiesImport substitution for Cambodia

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Comparative AdvantagesCambodia

Low levels of investment but high incentives (GSP status) to compete in the international market place


ThailandHigher investment levels in an increasingly competitive world market

StrategiesReallocation of Thai industries to Cambodia

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CambodiaPoor transport links to the rest of the country and international outlets


ThailandGood transport infrastructure offering good linkages to international air and sea ports

StrategiesStrengthening competitiveness

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CambodiaA big demand for immediate infrastructure supply systems


ThailandA capacity for cross-border system expansion to meet short-term needs

StrategiesUtilization of existing infrastructure in the Thai side of the TCJDS area

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TOURISM

‘Two Kingdoms – One Destination’- Advocacy on integration of tourism resources, tourism cluster and network.Strategy 1: Increase the number of tourists

Buri Ram and Surin clusterSakaeo cluster Tonle Sap cluster Chanthaburi cluster Trat and Koh Kong Cluster

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TOURISM

‘Two Kingdoms – One Destination’- Advocacy on integration of tourism resources, tourism cluster and network.

Strategy 2: Diversifying source of tourism revenueStrategy 3: Improvement of existing tourism facilities Strategy 4: Development of new routes and

destinations

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AGRICULTURE

Strategy 1: Integration of Production Base

Target cropsRice - 16,000 ha in Battambang and Banteay Meanchey Maize - 10,000 ha in Battambang Castor Bean - 1,000 ha Sugarcane - 5,000 ha in Banteay Meanchey Soybean - 10,000 ha in Battambang Eucalyptus - 15,000 ha in Preah Vihear and Oddar Meanchey Para Rubber - 40,000 ha in Siem Reap, Pursat,Banteay Meanchey and Battambang Inland Fisheries - 4,000 ponds in Siem Reap,Pursat and Battambang

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AGRICULTURE

Strategy 2: Joint Marketing Strategy 3: Promotion of Agro-Processing Industry Strategy 4: Development of Agro-based Joint Ventures

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INDUSTRY Target Industries for Cambodia

Type of Industry

Food processing

Products

Rice floursVegetable oilProcessed fruits/vegetablesTapiocaAnimal feedSugar Confectionary

Market

Cambodia/

Thailand

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Type of Industry

Construction materials

Plastic products

Products

Concrete blockPVC pipe

PVC pipeKitchenwareHousehold plastic utensils

Market

Cambodia

Cambodia

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Type of IndustryMetal working

Wood processing

Electronics and household appliances

ProductsMetal-fabricationBuilding materialsAgricultural MachineryFurnitureDecorative wood (made from soft wood)Parts and component for semi conductors and other electrical appliances

MarketCambodia

Cambodia and export

Export

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INDUSTRY

Strategy 1: Promotion of Co-Production Venture Strategy 2: Promotion of Clustered and Networking System

Potential Export Processing Zones (EPZ)Potential Export Processing Zones (EPZ)

Poipet

Koh KongKoh Kong

Stung Hav/SihanoukvilleBavetKaam Samnor

Pailin

Kompong Cham

Kep

Eastern Seabordof Thailand

Ho Chi Minh-City

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ARAN-POIPET

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KOH KONG

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PAILIN-BAN PAKKARD

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Phnom Penh-Sihanoukville Growth Corridor

STUNG HAV EXPORT PROCESSING ZONE

SihanoukvillePort

Oil Terminal

National Road # 4

5/29/2003Sources: Ministry of Commerce

and CDRI 66

Apparel exports, Value added and Employment

0

200

400

600

800

1,000

1,200

1994 1995 1996 1997 1998 1999 2000

($ Million)

020406080100120140160180

(Jobs)(000')

Value added (million dollars) Exports (million dollars)Employment (000')

5/29/2003Sources: Ministry of Interior, Ministry of Tourism and CDRI 67

Foreign Tourist Arrivals to Cambodia by Air (1995-2000)

050,000

100,000150,000200,000250,000300,000350,000400,000450,000500,000

1995

1996

1997

1998

1999

20002001*

Tourists

010203040506070

(Jobs,000')

Tourist arrivals Via Siem Reap Employment

…Poverty …

Background:The Millennium Development Goals (MDGs)

The Millennium Development Goals (September, 2000) aspired to the goal of developing a true Global Partnership for Development which pointed to the establishment of an inclusive and equitable globalization.

The Millennium Declaration called for an open, rule-based, predictable, non-discriminatory trading system, and a commitment to good governance, development, and poverty reduction —both nationally and internationally.

UN LDC-III Conference in BrusselsWTO 4th Ministerial Meeting in Doha

The Quad countries statement at the UN LDC-III Conference in Brussels (May 2001) and the Doha Ministerial Declaration (November 2001) are full of promise for trade-related assistance to help LDCs better address their capacity needs in relation to trade and poverty reduction and to better participate in, negotiate and implement WTO agreements.

The Financing for Development Conference’s Monterrey Consensus (March 2002) moved the commitment further toward a new resource framework, which goes beyond ODA and included mobilization of domestic resources, revenue generated by trade, and FDI.

Cambodia and the MDGs

At the International Conference on Financing for Development (FfD) Cambodia affirmed its commitment to reduce poverty by half by 2015.

Mainstreaming Trade Strategy into the Development Policies Towards

Poverty Reduction in Cambodia

SEDP I (1996-2000) SEDP II (2001-2005)

NPRD (early 1994)

INPRD (early 1995)

PIP (1996-1998) PIP (1999-2001) PIP (2002-2004)

(2001 onwards) Pro Poor Trade Strategy

IPRSP (Oct 2000)

PRSP (LATE 2002)

“…It is interesting to note also that the Royal Government's goals are in line with the MDGs as reflected in various national development strategy documents (Socio-Economic Development Plan II, IPRSP)…”

MDG: Halve the proportion of people living in extreme poverty between 1990 and 2015Poverty rate (% below US$1.08)Global poverty rates down 20% since 1990, but progress uneven

0

10

20

30

40

50

60

1990 1999 2015

East Asia and Pacific

Europe and CentralAsia

Latin American andthe CaribbeanMiddle East andNorth AfricaSouth Asia

Sub-Saharan Africa

Developing Countries

Cambodia

MDG: Halve the proportion of people who suffer from hunger between 1990 and 2015Proportion of children under 5 who are underweight (%)Malnutrition-another dimension of poverty

0

10

20

30

40

50

60

1990 1999 2015

Africa

Asia

Latin America

Cambodia

MDG: Achieve universal access to primary education by 2015Net enrolment rate in primary schools (%)Rising enrollments-but too many children out of school

0

20

40

60

80

100

120

1990 1999 2015


Europe and CentralAsiaLatin American andthe CaribbeanMiddle East andNorth AfricaSouth Asia

Sub-Saharan Africa

High-IncomeCountriesCambodia

MDG: Halve the proportion of people unable to reach or afford safe drinking water by 2015% of population with access to an improved water sourceWater systems are reaching more people

0

20

40

60

80

100

120

1990 1999 2015



Sub-Saharan Africa


MDG: Empower women and minimize gender disparities in the policy and decision making process at all levelsGender equalityRatio of girls to boys in primary and secondary schools (%)

0

20

40

60

80

100

120

1990 1999 2005



Sub-Saharan Africa


MDG: Halt and begin to reverse by 2015 the spread of HIV/AIDS and reduce child mortality by two-thirds by 2015Under-five mortality rates (U5MR)deaths per 1,000 live births

0

20

40

60

80

100

120

140

160

180

1990 1999 2015


Europe and Central Asia

Latin American and theCaribbean

Middle East and NorthAfrica

South Asia

Sub-Saharan Africa

High-Income Countries

Cambodia

MDG: Reduce maternal mortality rate by three-quarters by 2015Births attend by still health personnel (%)Skilled care at birth is still not available in many places

0102030405060708090

100

1990 1999 2015

Latin American and theCaribbean

Middle East and NorthAfrica

Asia, excluding China andIndia

Sub-Saharan Africa

Cambodia

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