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ADB approves $50m loan for Cambodia to boost competitiveness
The Asian Development Bank (ADB) has approved a $50m policy-based loan aimed at supporting the government of Cambodia to diversify the country’s economy and boost its global competitiveness.
The loan will support Cambodia’s post-COVID-19 economic recovery by supporting government reforms to enhance the investment and business environment; foster the growth of micro, small, and medium-sized enterprises (MSMEs); and improve trade policy and trade facilitation.
The apparel sector is a significant contributor to Cambodia’s economy. During the first ten months of the year Cambodia recorded an 18.5% increase in apparel exports.
Data from the General Department of Customs and Excise for Cambodia under the Ministry of Economy and Finance show apparel exports amounted to $7.75bn in the period from January to October, representing an increase on $6.54bn a year earlier.
The export figure represents around 41.3% of Cambodia’s total foreign income of $18.75bn for the period.
For the month of October, however, exports were down due to slow demand from global markets.
“The COVID-19 pandemic severely impacted key sectors of the Cambodian economy like garment, footwear, and textile manufacturing, as well as tourism and construction,” said ADB Senior Economist Sion L. Morton.
“The reforms under the program will help Cambodia’s post-pandemic recovery prospects by paving the way for businesses to grow and migrate to higher value-added segments and adapt to the changing trade landscape.”
The loan, part of the Trade and Competitiveness Program, will help improve the overall business climate for both domestic and foreign firms operating in Cambodia.
Under the first subprogram, the government has enacted a new investment law to codify legal protections for investors, including those investing in special economic zones, and upgraded an online business portal to enable the timely issuance of specialized digital business licenses.
The program supports the development and diversification of MSMEs, improving their access to finance, and creating new markets for them.
This includes simplifying the legal definition of MSMEs and rolling out a government-funded assistance package to provide grants and technical support to MSMEs in priority industries with high female participation.
The program will also help Cambodia improve the implementation of regional trade agreements and strengthen coordination on trade facilitation to provide more opportunities for Cambodian businesses to export their goods. As part of these reforms under subprogram 1, the government has set up the National Committee on Trade Facilitation and approved the National Road Map on Trade Facilitation. Just Style.com