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Regional co-operation is vital
The world is getting more interconnected each day. As a result, global and regional cooperation has increased dramatically. This is particularly true here in Asia.
Cambodia, of course, is closely linked to regional bodies, having just finished chairing the Association of Southeast Asian Nations (ASEAN) and having been an active member of the Greater Mekong Subregion (GMS) grouping for more than 20 years.
Cambodia also has much to gain through the wider ASEAN+3 and East Asia Summit processes. And as Myanmar becomes a more deeply engaged with the GMS, closer cooperation can bring further benefits both for Cambodia and its neighbours.
Regional cooperation benefits Cambodia and its neighbors in a number of ways.
The GMS Economic Cooperation Program is promoting physical connectivity, whether through power grids or building economic corridors.
An open economy also brings greater access to new markets, resources and investments.
Supply chains and production networks link neighbors and accelerate growth, productivity and employment generation.
Financial cooperation, including through sound banking systems and capital markets in equities, bonds and insurance can effectively mobilize public and private savings.
The promotion of regional public goods can also address common issues, ranging from disaster relief to cross-border human trafficking and health epidemics.
As a small and open economy, strategically located within GMS and ASEAN, regional considerations must be a core element of Cambodia’s future development planning.
The Asian Development Bank’s (ADB) three year Cambodia country partnership strategy explicitly calls for efforts to harness the benefits of regional cooperation and integration through closer alignment of GMS activities with Cambodia’s national development strategy.
In particular, leveraging and deepening the assets of the GMS Southern Economic Corridor and linking the two major urban hubs of Bangkok and Ho Chi Minh City through Phnom Penh, can generate incomes, improve competitiveness of business, and promote inclusive economic growth.
Strengthening connectivity, as convincingly laid out in the ambitious Master Plan on ASEAN Connectivity which includes GMS priority projects, is a critical regional cooperation agenda item for Cambodia as the GMS forges ahead towards middle-income status.
Indeed, the ADB estimates that complete connectivity in ASEAN carries a price tag of almost $600 billion.
In order to frame an agenda for promoting connectivity, four key elements can be enumerated: finance – foundations – facilitating – framework:
- Financing connectivity through: fine-tuning the allocation of existing national infrastructure programs to incorporate regional connectivity elements more effectively leveraging private sector finance through public-private partnerships, and improving the intermediation of financing to meet infrastructure needs such as the ASEAN Infrastructure Fund (AIF).
- Building the hardware Foundations for connectivity by using subregional groupings as connectivity building blocks or foundations for ASEAN, and complementary provision of regional public goods to improve the physical connectivity in the ASEAN region as a whole.
- Facilitating connectivity and recognizing the growing importance of the “soft” side through intensified efforts at improving logistics and trade facilitation; improving transport services, through initiatives such as the recently-formed GMS Freight Transport Association and related reforms; and implementing at the sub-regional level non-discriminatory, World Trade Organisation-consistent trade and investment facilitation measures that will strengthen the ASEAN Free Trade Area framework at the regional level.
- Meeting the challenges and harnessing the immense potential of the (somewhat) new and evolving business sector Framework of global value chains through efforts at linking GMS enterprises to international markets.
Global enterprises are re-organizing and the relocating the production of goods and services through increasingly fragmented global value chains that demand increasingly stringent global standards with respect to quality, price, timely delivery and flexibility.
This creates significant challenges but offers appealing benefits.
In Cambodia, the GMS Southern Economic Corridor has already attracted a number of global players that demonstrate clearly the benefits of enhanced connectivity.
Minebea, the global leader in micro-motors, and Sumitomo Electric, a leading producer of wiring harnesses, have set up state-of-the-art production facilities in Phnom Penh to serve global markets.
Cambodia can maximize the benefits of this through programs to support the spillover benefits to local enterprises, to strengthen training programs that reflect labor market needs, and to build better transport and logistics infrastructure.
The ADB is determined to support government efforts at balanced, inclusive growth, creating income opportunities, bridging rural–urban gaps and more closely integrating Cambodia within a region that has grown to become one of the most dynamic in the world.