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World Bank: Education is the key to reducing poverty

May Kunmakara / Khmer Times Share:
Ulrich Zachau, country director at the World Bank. KT/Mai Vireak

KT: You are ending your tenure as World Bank’s country director at the end of this month. In your term as country director do you think Cambodia has made strides in poverty reduction?
Mr Zachau: What impressed me most over the past four to five years is how much Cambodia has continued to change. GDP has been growing impressively at an average of 7.6 percent and the poverty rate fell from 47.8 percent in 2007 to 13.5 percent in 2014. Cambodia has come a long way and is a leader in East Asia in reducing poverty.
This progress is visible both in Phnom Penh and elsewhere in the country where people are better off than they used to be. 
KT: The agricultural sector is one of the main pillars of Cambodia’s economic growth and about 80 percent of the population are farmers. What has the World Bank been doing to help this sector?
Mr Zachau: Countries across East Asia are looking for ways to improve farming, increase productivity in agriculture, and raise farmers’ incomes so they can make a better living for their families.
Many farmers in Cambodia and across Southeast Asia depend on rice. Now, rice prices are determined internationally. When rice prices are high and increase, then rice farmers do well. That was what happened for many years in Cambodia, as good, open policies helped farmers take advantage of rising prices. We have been supporting these good policies, and the International Financial Corporation, our private sector arm, has financed private sector investments in agriculture as well.  
Today, agriculture in general and rice farming in particular face challenges in Cambodia and across the region. Prices have fallen and are likely to stay below past high levels over the near to medium term.
How can farmers’ incomes remain strong or even continue rising when prices are at lower levels? Increased productivity is the key – producing more and higher quality products with the same or fewer land and inputs. Cambodia can move in three directions that will help raise productivity and farmers’ incomes – investing in improved irrigation and water management; strengthening extension services and support farmers in learning modern, higher-earning, lower-cost farming practices, including organic and environmentally clean farming and product branding; and diversifying more to higher value added crops.
Yesterday I learnt, for example, about regions in Cambodia where farmers now grow avocado, passion fruit, and other products beyond rice – although opportunities for such crops naturally depends on soil and climate. We fully support Cambodia’s efforts to modernise and invest in agriculture and agri-business.
KT: If you are asked to give three main recommendations to boost Cambodia’s economic growth and to reduce poverty, what would they be?
Mr Zachau: The first is education, and I stress that this is very important. Education will be the key to propel Cambodia forward, create opportunities for its people and reduce poverty and inequality.  I remember traveling in Cambodia and visiting schools across the country.  The joy and smile of young children coming to class and learning eagerly are what will be Cambodia’s future. It is absolutely essential, I believe, that Cambodia will continue on its path of providing high-quality education to everybody, especially poor and disadvantaged families.
The second is inclusion. It is important for society to come together. This will mean equal opportunities for all groups in the society – the rich and poor, old and young, rural and urban, men and women, and straight and gay, lesbian and transgender people.
In Cambodian society today, people in rural areas have fewer opportunities than in urban areas; women still have fewer opportunities than men; and gay, lesbian, and transgender people, and people who live with HIV/AIDs, are among the most discriminated and disadvantaged in the country.  In the World Bank Group, we support and advocate for the inclusion of these disadvantaged, often discriminated groups.     
The third is transparency.  Open data, more publicly available information and open and free media reporting about economic and social developments will continue to be important. They help empower people across the country and they can help improve economic policies and also the quality of public and private investment.   
KT: What are the main challenges to Cambodia’s economy as it maintains an open trade policy with global players like the US and the EU? 
Mr Zachau: Cambodia has benefited from its open trade policy, which has helped raise people’s incomes, in the past. In the World Bank’s view, trade openness remains an important policy for a relatively small or medium-sized country like Cambodia to advance. It is true that the trade regime in the United States and Europe’s growth prospects are uncertain.  However, Asia will remain the region where growth is booming, and Cambodia can capitalise on this by drawing on its strong ties with the Greater Mekong Sub-Region, Asean and China, and also the US and Europe.  The World Bank strongly supports continued open trade and further regional economic integration throughout Asia.      
KT: China seems to have better growth and is a leader in the region. Does China have a crucial role to play in driving economic policy in Asean and the Greater Mekong Sub-Region? 
Mr Zachau: China has demonstrated how a country can grow rapidly and reduce poverty dramatically over a very long period of time.  China’s determined strong economic management and the systematic development and implementation of its long-term economic and social strategy have contributed much to this achievement.  China’s readiness to adapt and adjust its policies pragmatically – for example in the drive for capital investment, in balancing public and private ownership and in opening up for trade and foreign investment – has been important to secure sustainable growth over decades.
China therefore has an important role as a driver of economic policy in the region.  It also plays an important role simply because of its size.
For example, a very large and rapidly growing number of Chinese tourists travel abroad, in particular to countries in Southeast Asia, so tourism from China is a major source of income for many countries in the region.  China is also a source of investment of capital, both public and private capital.  Moreover, China is a key trading partner.
I would like to highlight, finally, that today China is looking to promote green, environmentally and climate responsible growth. In the past, China put growth ahead of environmental considerations, as did many other countries. However, China experienced negative effects of environmentally harmful growth, so China has been changing course. China is now promoting and advocating green growth.  I believe this is an important development for countries to consider carefully and to pursue climate and environmentally responsible economic growth policies across the region.
KT: Revenue from tax collection has improved. However, many complain that more revenue could have been collected if it wasn’t for corruption. What are your thoughts about this and how can the World Bank help Cambodia fight this scourge?
Mr Zachau: Corruption is a challenge in Cambodia and also in all countries I have ever worked in around the world. Corruption, by the way, is also a challenge in my own country – Germany.  Naturally, there is a question of the degree and extent of corruption in any country.  There is a challenge in Cambodia, no question, and I think it is important to address it. 
Transparency is critical. If people know and understand well what money and resources are available and what they are spent on, it will help reduce corruption.

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