Cambodia’s industrial sector remains dominated by labor-intensive, low-value added production of garments and this could be an impediment in the AEC.
The Commerce Ministry in collaboration with the Cambodian Federation of Employers and Business Associations (Camfeba) and the ILO’s Bureau for Employers’ Activities yesterday launched a book to help Cambodian business better understand the Asean Economic Community (AEC) which brings together more than 622 million people in a huge common market of $2.6 trillion.
The guidebook “Asean Economic Community (AEC): Guide for Business in Cambodia” presents its readers with details on the changing economic realities in a dynamic landscape and outlines opportunities for businesses to better prepare themselves in the fast-moving AEC landscape.
The book also has economic data, research findings and analysis, coupled with a comprehensive study on various sectors based on interviews with 23 key business players in Cambodia. The interviews were based on their key challenges, risk mitigation and market strategies, and operational needs in the massive common market with 10 Asean countries.
The research indicates that the AEC will enhance the attractiveness of Cambodia as a regional production base and investment destination. One business model that will evolve, according to the research, is franchising that will bring in more opportunities through partnerships, mergers and acquisitions.
The AEC, according to the book, will provide tremendous opportunities for Cambodian exporters, leading to economic gains for all. Also the AEC will provide a boost for the Kingdom’s tourism industry.
But the publication cautioned that the AEC will also have an impact on the country’s human resources, as skilled Cambodians leave for more lucrative paying jobs in the rich neighboring Asean countries, in the common market with a free movement of labour.
The published research urged Cambodian businesses to be more competitive and move away from the old mindset of doing business, or risk being left behind in the AEC. The AEC also comes at the brink of a technological revolution that will fundamentally alter the way Asean citizens work, live and relate to one another. The book urges Cambodian businesses to embrace this digital revolution and adopt ICT in their business operations and business communication strategies.
The deputy secretary general of Camfeba, Matthew Rendall, said that with the AEC, businesses in the region were concerned about how regional integration will impact their day-to-day business activities.
“The big problem is that people and businesses do not understand what the AEC is all about, so they don’t know how to benefit from the common regional market. There has been a lack of preparation, on the part of Cambodian businesses,” said Mr. Rendall.
“Therefore, this guidebook will lay the groundwork for businesses and help them navigate the AEC with all its challenges and also its opportunities,” he added.
Lee Eunmee, a consultant with the ILO’s Bureau for Employers’ Activities, said the AEC aimed to provide a platform to improve mobility within the regional market.
This mobility, she said, applied to products, services, labor, capital, and investment. She added that in long term, these changes happening in ASEAN will have an impact on the way business is done at all levels – from national, regional, and global.
“But this is not to be seen as a potential threat to the way business is done in Cambodia,” stressed Ms. Lee.
“It makes a lot of sense then for business to be more aware of what exactly the changes will be and how their business will be affected,” she added. “The important question then is how businesses could profit from it [the AEC]. It’s not just reacting to external changes but more of making proactive moves to incorporate those changes.”
According to the book, Cambodia is small in terms of economic size and population among the 10 Asean countries. Despite the Kingdom’s high level of sustained GDP growth, economic structure remains narrowly-based and the industrial sector is dominated by labor-intensive, low-value added production of garments and footwear. Cambodia’s Human Development Index is one of the lowest in the Asean region while its labor market is still dominated by the low educated and low skilled. By Sok Chan, 07 June 2016
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