The structural economic issues facing the Kingdom will need greater institutional collaboration, according to Vongsey Vissoth, Permanent Secretary of State at the Ministry of Economy and Finance, who sees a lack of economic diversification and competitiveness as key issues to overcome.
“Fiscal policy has played a critical role to respond to structural changes of Cambodia’s economy. In this regard, the ministry has implemented a number of measures,” says Mr Vongsey, citing the successful implementation of Revenue Mobilisation Strategy 2014-2018, which has, on average, increased by more 1 percent a year and, at the end of 2018, left government revenue standing at 21.6 percent of gross domestic product.
“This has allowed the government to channel more budget allocations to promote structural change. For instance, during the last five years, the government has increased budget spending three-fold on the development of human resources in ministries such as education, Technical Vocational Education and Training (TVET), agriculture and health. In particular, the government has increased domestically financed public investment, including for rural infrastructure.”
Despite this multi-pronged approach, the results remain unconvincing.
“Productivity remains an economic challenge for Cambodia to stay competitive in the region. Now this lower level of education in the workforce will lose its productivity in the long term because workers are less able to acquire new skills,” said Nick Beresford of the UN Development Programme while addressing a National Career and Productivity Fair this month.
“The Skills Development Fund, a demand-driven technical and vocational training skill development programme, has been established to correct the skills mismatch, as well as to increase the number of Cambodian skilled workers,” noted Mr Vongsey, who argues that this is a key element to address.
The 2015 Cambodia Socio-Economic Survey found that nearly half of the labour force have either not completed primary education or never attended school and that less than 7 percent of workers completed high school.
A recent study from the International Labour Organisation claimed that as many as 57 percent of jobs in Cambodia will be at risk as the Kingdom – and the world – heads towards Industry 4.0. This risk, the study found, could be mitigated by further developments of TVET programmes.