The Kingdom’s non-garment industry is predicted to remain healthy next year, supported by the agriculture and services sector, according to the government’s national strategic budget plan 2021-2023.
Amid the outbreak of the pandemic, the government plans to trim the 2021 state budget to around $4 billion, a 50 percent drop from this year.
According to the budget plan, the government predicts the country’s economy to decrease 1.9 percent in 2020 but to rebound by 3.5 percent in 2021, buoyed by a 1.6 percent growth in the agriculture sector and a 3.6 percent increase in services while the industrial sector is expected to rise 4.1 percent.
Lim Heng, vice-president of Cambodia Chamber of Commerce (CCC), welcomed the government’s austerity measures to trim the budget’s spending.
He said it is the right decision during the COVID-19 period because the government needs more budget to support businesses and public health.
Heng said while the garment sector, the country’s main exported product, faces hardship from the pandemic, the non-garment industry would see growth – especially agriculture.
“We are developing the industry sector, especially non-garment, and we are moving towards industry 4.0, which is more digitally based,” he said, adding that growth will come from entering the free-trade agreements (FTAs) with many countries such as China.
“We are preparing for FTA negotiations with South Korea and Japan as well, so I believe that the non-garment industry will increase, especially agricultural-product processing, construction materials, spare part assembling and electronics,” he said.
The value of garment exports accounted for more than 74 per cent of the Kingdom’s total exports last year. The sector employs about 800,000 workers. The Cambodian garment sector benefits from the EU’s Everything But Arms (EBA) trade preferential treatment, which will be cut by 20 percent this August.
Heng said Cambodia needs to diversify its production base to reduce its dependence on garment exports.
“We cannot rely on the garment sector as a whole and we need to diversify our production lines. We should not be threatened by matters such as EBA, but we need to find more markets and more products,” he said.
Currently, Cambodia is seen attracting more investor interest from China, Korea and Japan for its agriculture so the sector needs to improve its infrastructure development such as roads, electricity, human resources and technology.
“Countries in the region are modernising the sector with machines for farming and technology, so we cannot use traditional ways in our agriculture any more. We now can see investors from China, South Korea and Japan are interested in our agriculture sector,” Heng said.
- Tags: agriculture