Prime Minister assesses private sector development and its status as ‘key engine of economic growth’

Cambodia continues to create investment opportunities in a full range of areas for the vital engine of economic growth that is the private sector, refining market economy regulations long before it joined the World Trade Organization. (WTO) in 2004, although the underlying legal provisions and regulatory infrastructure still does not meet international standards, according to Prime Minister Hun Sen.

The prime minister was speaking at a graduation ceremony on October 3 in front of 3,866 students from the Vanda Institute in Phnom Penh, 87.48% of whom were women, according to local media.

Hun Sen referred to the large proportion of graduates from tertiary institutions working in the private sector, which he said could account for almost four-fifths of employment opportunities. He noted that as they grow, private companies generally offer more jobs to former students and pay more taxes.

However, he postulated that the overall position and scale of the ever-expanding private sector requires intensified human resource capacity building and training development, adding that the growth of this economic segment can be harnessed through a careful consideration of its wider relationships with society. to stimulate employment and taxation as well as to solve other macroeconomic problems.

“The more the private sector prospers, the more taxes are paid – money that can then be invested in roads, canals, schools and hospitals, as well as raising the salaries of our civil servants,” he said. he declares.

“The distribution of jobs is to be welcomed which only sees 4.75% of graduates entering the state. That’s enough – we can’t accept every person who completes university.

“What should also be a source of pride is the penetration of graduates into private sector employment. Up to 78.79 percent of them go on to work for large companies and corporations, a clear sign that the private sector is getting stronger. We see the private sector as the engine of economic growth,” Hun Sen said.

The Prime Minister acknowledged that Cambodia still lacks the associated legal standards and official regulations in line with WTO rules, but stressed that the Kingdom is striving to perfect its market economy regulations over the course of the year. of the last 30 years. Hun Sen also mentioned that Cambodia joined the WTO before Vietnam and Russia – in 2007 and 2012, respectively.

He argued that empowering the local private sector is a prerequisite for significant improvements in economic growth.

“We still need to think about some areas where we need to improve when it comes to managing our economy…the private sector is very important to us – if it’s not thriving it means we’re in a hopeless situation.”

The Prime Minister shared some encouraging figures from the General Tax Department (GDT) to offer good prospects for tax collection after Covid-19. The department has raised “at least $250 million” each of the past nine months, hitting 95% of the nearly $3 billion annual goal, he said.

Cambodian Chamber of Commerce Director General Nguon Meng Tech said the remarks would be a great motivator for the companies, which he described as one of the pillars supporting the government.

He said the government has helped the private sector by regulating investments and establishing good business practices. In turn, the taxes paid by businesses allowed the government to develop the Kingdom.

Prime Minister Hun Sen presides over the graduation ceremony for students of the Vanda Institute on October 3. MPS

“Because the government has prepared excellent laws and regulations, we can do business easily. It gives us the momentum to succeed, which means we can meet our tax obligations,” he said, warning governments around the world of the costs associated with private sector neglect.

“That’s why Prime Minister Hun Sen is preparing effective laws and regulations. This allows companies to be more successful and contribute to the strengthening of the national economy. We ensure that the government is strong enough to lead the nation,” Meng Tech added.

He recalled that the private sector had always been slow to ask for regulation from the State, but that it had improved. He also commended Hun Sen for never failing to seek foreign investment whenever he led an overseas delegation.

Meng Tech called on the government to strengthen its partnership with the private sector by renewing an annual forum, when circumstances permit.

“We have mechanisms in place between government and the private sector for the Prime Minister to lead a forum once a year. Due to Covid-19 concerns, we have not held the most recent events, but I believe Hun Sen will announce that next year’s event will take place. The forums are an effective way to bring the two parties together, which is crucial for the growth of the national economy,” he added.

Speaking to The Post on October 3, Hong Vanak, director of international economics at the Royal Academy of Cambodia, highlighted the private sector’s close ties to the Kingdom’s production chains. Generally, a strong supply stimulates economic growth and development and leads to increased tax revenue, he said.

“When the productive capacity of the domestic private sector is strong, it helps to reduce imports and increase exports. The more prosperous the private sector becomes, the more tax revenue the state collects,” Vanak said, arguing that a more influential private sector engenders more foreign direct investment (FDI).

Cambodia has consolidated its position in the market through strong diplomatic and commercial relations with many countries and international organizations, as well as bilateral and multilateral trade pacts with key partners – in particular Free Trade Agreements (FTAs). ) with China and South Korea, and the Comprehensive Regional Economic Plan. Partnership agreement (RCEP).

Cambodia’s international trade reached $37.406 billion in the first eight months of 2022, up 21.48% year on year, with exports totaling $15.642 billion, up 26.26%, and imports of $21.764 billion, up 18.26%, according to the General Department. of Cambodia Customs and Excise.

In contrast, the Kingdom’s trade deficit for the January-August period increased by 1.78% to $6.122 billion.

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