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Address at the 2010 AsiaLink Conversations - Cambodia
Raffles Hotel
Le Royal, Phnom Penh, 4th September 2010
|2010
Asialink Conversations-Cambodia| Cambodia: Two decades of
nation building |The
Global Financial Crisis: Changing regional and global architecture | Security Cooperation in East Asia | ASEAN-Australia in
a wider East Asian Regionalism | Regional
Cooperation in the Protection of Cultural Heritage |
Excellencies, Ladies and Gentlemen,
It is
my great pleasure and honor to address the opening of this “2010
Asialink Conversations-Cambodia”. Taking this opportunity, I would like
to warmly thank Asialink at the University of Melbourne, especially Mr.
Sid Myer, its Chairman, for organizing this event in Cambodia, in partnership
with CDRI, Cambodia’s leading independent development policy institute.
Since its
establishment in 2002, The Asialink Conversations has made a significant
contribution to ‘second track’ regional policy dialogue, linking Asia with
Australia, and prompting better understanding among people and countries in our
region. I believe this communication connectivity helps to improve
state-to-state and people-to people relations between Australia and Asia,
enabling us to promote mutual understanding and information sharing and expand
our political, security, economic, social and cultural cooperation.
Taking this opportunity, on
behalf of Cambodian people and myself, I would like to express our deep
gratitude for the role that Australia played in Cambodia’s economic development
and in the Cambodian peace process which led to the successful conclusion of the
Agreement on a Comprehensive Political Settlement of the Cambodian Conflict on
October 23, 1991. This enabled Cambodia to organize a free and fair election in
1993, form the Royal Government of Cambodia, achieve national unity and
reconciliation; paving the ways for peace and stability, democratization,
economic development and institutional reform.
In the context I would like to
extend a particularly heartfelt welcome back to Cambodia to The Honourable
Professor Gareth Evans, Chancellor of the Australian National University &
Former Australian Minister for Foreign Affairs, for his personal role and great
contribution to Cambodia’s national reconciliation and reconstruction. I would
also like to warmly congratulate him on his recent award of the prestigious
Franklin Delano Roosevelt Freedom Medal in recognition of his tireless efforts
over many years in the cause of peace, social justice and international
governance, and in his acceptance speech his generous acknowledgement of the
role that contact with Cambodia and young Cambodians played in his commitment to
that cause.
Cambodia:
Two decades of nation building
Even
after the general elections of 1993 following the peace agreement, unrest
continued. The prerequisites for any serious development had yet to be
established. However, the rudiments of a market economy were established during
this period. Cambodia was firmly put on the path of rehabilitation. The
Cambodian economy was growing 6.3% per annum during 1994-1998. Only the
“win-win” policy of national reconciliation that I initiated and implemented in
1997 finally ended the Khmer Rouge regime and the remaining Khmer Rouge
political and military forces were integrated into the mainstream of the
Cambodian society.
Since
1998, with the return of full peace, a sense of confidence and pride pervades
the country, a feeling that bodes well for bright prospects for economic growth
and job creation and a concrete vision of a promising future. We have
successfully implemented the triangular strategy, focusing on strengthening
peace and security, integrating Cambodia into the region and the world, and
promoting reforms and development. Cambodia joined ASEAN in April 1999. The
Royal Government of Cambodia has embarked on wide-ranging reforms focusing on
macroeconomic management, public financial management and financial sector
reforms, and rehabilitation and reconstruction of physical infrastructures,
especially the national road network. Since then, the Cambodian economy has
undergone a dramatic and rapid transformation. Economic growth during 1999-2003
averaged 8.8%. Although ODA continued to finance growth, FDI particularly
investments in garment and tourism, was key to promoting growth.
The economic take-off phase
started from 2004. Considerable efforts have been made by the RGC to implement
the second generation reforms in all sectors as envisaged in the Rectangular
Strategy, in particular the implementation of the Public Financial Management (PFM)
reform program and continued investment in provincial and rural roads. Economic
growth during 2004-2008 averaged 10.3%. For the first time Cambodia achieved
sustained double-digit growth, financed mainly by the rapidly growing banking
sector, FDI inflows and the ODA. Cambodia was the first Least Developed Country
to join the World Trade Organization in October 2004.
Cambodia can
be considered as a successful post-conflict country. With the support of our
development partners and the private sector, Cambodia has made giant
strides in development in the last decade. Since 1993
Cambodia’s Gross Domestic Product (GDP) increased fourfold from US$2.4 billion
in 1993 to US$10.3 billion in 2008. During this period per capita income has
more than tripled from US$229 to US$739. Poverty rate was reduced from
around 50% in 1993 to 30% in 2007, then to 27.4% in 2009. The
structural reforms were undertaken to allow the Cambodian people to live in a
modern civilized society. These reforms are necessary so that Cambodian society
can face the future confidently.
However, with each stage of
development accomplished, new challenges arise. Cambodia’s economic performance
has been affected in 2009 by the global financial crisis. The RGC has
successfully guided the economy, like other Asian economies, through the most
difficult period of the global crisis. The RGC has acted swiftly to counter the
social impact of falling incomes and employment from declining garment exports,
tourism and construction pursuant to the crisis. Cambodia has managed to
maintain the stability of the financial sector as well as macro-economic and
social stability, especially the normalcy of the people’s livelihoods.
With the implementation during
the last 5 years of the Public Financial Management (PFM) Reform Program,
government revenue more than doubled from 2,220 billion riels (US$ 553 million)
in 2004 to 4,928 billion riels (US$1,2 billion) in 2009. The expenditure tripled
from 3043 billion riels (US$758 million) to 8,539 billion riels (US$2 billion).
At the same time, we have accumulated more than US$700 million in cash reserves
in government deposits. During the crisis, we used this money to implement our
stimulus package, without resorting to borrowing, in order to maintain
macro-economic stability. The Gross Domestic Product experienced a positive
growth in 2009, though very small, as agriculture and services sector maintained
robust growth. Economic growth in 2010 is estimated to be 5%. Next year the
economy is expected to grow 6.5%.
The Global Financial Crisis: Changing regional and global architecture
Even
though Asia’s financial institutions have limited direct exposure to the US
sub-prime mortgages and East Asian countries have strong external positions,
Asia was hit by the Global Financial Crisis because of the collapse of
international trade and capital flows. On top of this, domestic demand in the
region also deteriorated. But Asian policy makers have been proactive in
managing the global crisis. Australia has also engaged with a strong degree with
the region on the global financial crisis.
Although
the global recovery remains fragile, we expect growth in Asia excluding Japan in
2010 to be around 7 percent. Strong economic performance in Asia is
predominantly led by the high positive economic growth of China and India, and
the robust recovery in South Korea. Asia’s remarkable recovery reflected a
decoupling from the United States and Europe. The main factors contributed to
Asia’s rebound include global trade normalization, especially in the global IT
recovery, monetary easing, currency flexibility, sound balance sheets of its
private sector and large fiscal stimulus.
The
Global Financial Crisis has had far-reaching impact on the region and the world,
with the rise of economic powerhouse of China, which has become the world second
largest economy, and the changing global architecture, which will have
geo-political implications for our region. However, Japan continues to play an
important role in the global economy, especially in the hi-tech sector. In this
regard, I would like to welcome “the New Growth Strategy Blue Print for
Revitalizing Japan” adopted by the Government of Japan under Prime
Minister, Mr. Kan, on 18th June 2010.
Consequently, the global financial crisis has had the effect on the traditional
global economic architecture G8 with the rise of the G20 as the key global forum
to tackle the global recession and rebalance global growth in the post-crisis
environment. The Global Financial Crisis has spawned G20 Leaders process, also
thanks to the efforts of Australia. The G20 has coordinated stimulus measures
combined with commitments to reform the global financial architecture, address
longer term economic challenges and the future growth and rebalancing challenge
facing the global economy, including the response to climate change.
At the
regional level, after the Asian Financial Crisis in 1998, ASEAN+3 countries
embarked on bank restructuring and structural reforms, which contribute to
strong economic growth and financial stability. We have embarked on building
regional financial safety nets by establishing the bilateral SWAP arrangement to
the amount of US$77 billion under the Chiang Mai Initiative (CMI). Furthermore,
the regional surveillance mechanism in the form of Economic Review and Policy
Dialogue (ERPD) has played an important role in maintaining the financial
stability in the region. In response to the Global Financial Crisis, ASEAN+3
decided to launch the Chiang Mai Initiative Multilateralization (CMIM) and
increase the size of the SWAP arrangements to US$120 billion. The Chiang Mai
Initiative would be further strengthened if Australia were to also be part of
these regional financial safety nets.
Security
Cooperation in East Asia
At the security level, the
region is wrestling with fighting terrorism and here too Australia is a major
player along with the United States. Cambodia has greatly benefitted from
capacity training in counter-terrorism that Australia, the United States and
some regional countries that have provided us during the past years. Moreover,
Cambodia has embarked on the training of peace-keeping forces, making humble
contribution to regional and world peace.
The ASEAN Regional Forum
has now evolved into the region's premier security forum. We looking forward to
the first Defence Minister Meeting scheduled in October 2010 in Hanoi. As a
founding member of the ARF, Australia can play a positive role to ensure healthy
political, economic and strategic balance between China and the US in our
region. The ARF mechanism also ensures that ASEAN plays a central role in
maintaining peace and security in the region, and therefore will be the
cornerstone of the ASEAN Security Community. The ARF is making progress on three
fronts, namely confidence-building, preventive diplomacy and conflict
resolution. However, in light of the Cambodia-Thailand border conflict, more
needs to be done to strengthen ASEAN conflict resolution mechanism based on
international law, as envisaged by the ASEAN Charter. The Cambodian-Thai crisis
is the litmus test for ASEAN’s credibility and centrality, as we aspire to build
the ASEAN Community in 2015.
Cambodia
is committed to the regime of nuclear non-proliferation and welcomes efforts
exerted to re-launch the six party talks. Peace and stability on the Korean
peninsula are critical for the prosperity of East Asia. In this regard, the RCG
strongly condemns the sinking of the South Korean ship Cheonan which led to the
loss of 46 lives.
ASEAN-Australia in a wider East Asian Regionalism
For decades, we have seen that Australia’s foreign
policy has placed a high priority on the Asia-Pacific and the forging of strong
economic, strategic and political ties with Asian countries and cooperation
frameworks, namely ASEAN Dialogue Partner, ARF, Asia Pacific Economic
Cooperation (APEC) and the East-Asian Summit (EAS). Cambodia has also welcomed
the constructive recent debate on our future regional architecture stimulated by
the concepts of an Asia-Pacific Community (APC) proposed by Australia, and
Japan’s initiative of establishing the Free Trade Area of the Asia-Pacific (FTAAP)
by 2020 under the APEC framework, while still recognizing the need for ASEAN’s
traditional central role and contribution to the many structures of cooperation
existing today in East Asia.
We have
witnessed that East Asia is loaded with increasing responsibility for leading
the sustainable and balanced growth of the world economy. In this regard, the
strengthening and deepening of integration in East Asia is indispensible.
Presently, the EAS is the newest of the regional architecture but a very
important framework, given that its 16 members, including Australia, present
almost half of the world’s population and account for almost 30 percent of
global GDP. Thus, in addition to the regional processes namely APEC, ASEAN
Regional Forum, ASEAN+1 and ASEAN+3, the expansion of East Asia Summit should be
a gateway for ASEAN to engage ASEAN’s dialogue partners whose have substantive
relations with ASEAN.
There are many reasons why
ASEAN and Australia must work closely together and advance together. During the
past years, ASEAN’s trade, investment, education and tourism connections to Australia continue to grow substantially. Moreover, ASEAN stands to benefit from relationship with Australia under the EAS
framework. Among the five priority areas under EAS namely, finance, energy,
education, combating avian influenza and natural disaster mitigation, Australia
has given a key priority to enhance regional financial cooperation in the EAS.
We have witnessed that ASEAN’s
total merchandise trade on goods with Australia-New Zealand rose by 23.6 percent
from US$47.8 billion in 2007 to US$ 59.0 billion in 2008. ASEAN exports and
imports to and from Australia-New Zealand both registered significant growth.
ASEAN exports grew by 22.1% from US$ 31 billion in 2007 to US$ 37 billion in
2008; while ASEAN import rose by 26.2 % increasing from US$ 16.8 billion in 2007
to US$ 21.2 billion in 2008.
Medium-term challenge for ASEAN
is, however, to promote domestic sources of growth and diversify regional
cooperation to maintain sustained high-growth rate in a post-crisis environment.
This requires stronger push and sooner completion of cooperation and regional
economic integration process in accordance with initiatives and action plans
that we have adopted, such as the ASEAN-Australia-New Zealand FTA (AANZFTA), the
ASEAN-China FTA, as well as the East Asian Free Trade Area (EAFTA) and the
Comprehensive Economic Partnership in East Asia (CEPEA) in the long run.
Thus, we should speed up the
implementation of the AANZFTA since it entered into force since 1 January 2010
as the first comprehensive FTA between ASEAN and a Dialogue Partners that was
concluded in a single undertaking, covering key sectors such as trade in goods,
services, investment, electronic commerce and intellectual property. I believe
the AANZFTA will not just promote trade and growth but also create a building
block for the establishment of the EAFTA and CEPEA, leading to East Asian
integration in the long run.
Nevertheless, we should avoid
overlapping efforts and resources in EAFTA and CEPEA. East Asia’s economic
architecture should progress gradually and in phases, starting from trade in
goods, reflecting ASEAN’s centrality. Discussion will commence on the Rules of
Origin, tariff nomenclature, customs related issues and economic cooperation as
building-blocks in the process of realising East Asia integration. Four working
groups will be established to study the recommendations for both free trade
arrangements. During the consolidation of the recommendations for EAFTA and
CEPEA, the Plus One, Plus Tree and Plus Six countries will be invited to join
the discussion on how to move forward together to the East Asian Free Trade
Area. Cambodia appreciates Australia’s initiative to facilitate effective and
full participation of LDCs in the discussion and to develop capacity and
increase resources of the ASEAN Secretariat.
Therefore, ASEAN integration
should be a priority and key to East Asian integration in the long run. In this
regard, Cambodia is committed to have the agreement ratified within this year in
order to promote trade and investment in our region to the next level. Cambodia
has much to gain from CEPEA, as it will help us solve the problem of monitoring
the rules of origin and narrowing development gaps. CEPEA will help less
developed ASEAN countries to use imported raw materials from China to process
and export to more developed countries, such as Japan, Australia, New Zealand
and Korea.
Yet, narrowing development gap
among the regional members is necessary to materialize regional competitiveness
and resilience. This requires us to reinvigorate domestic demand, and boosting
intra-regional trade through structural reforms aimed at return for investments
in domestically oriented sectors and removing impediments and bottlenecks
domestic spending.
Closing these gaps will require
a lot of resources. The ADB estimates that Asia Pacific countries need to invest
about USD 8 trillion dollars over the next decade. Such investment would not
only boost productive potential but would also help in the fight against
poverty, by improving access to basic services such as electricity and clean
water. It is important therefore that implementation of Greater Mekong
Sub-region Program and the Initiatives for ASEAN Integration (IAI) be strongly
supported by development partners and members of the regional community alike.
To this end, the Greater Mekong
Sub-region (GMS) program is crucial to resolving the imbalances among the
regional economies. The ADB Strategic Thrust of the GMS has enabled linkages and
connectivity of the GMS countries among themselves. Lao DPR is no longer ‘land
locked’ but ‘land linked’, owning to GMS Transport Corridors. Tremendous
progress has been achieved in connecting the GMS countries with each other.
Trade and Transport Facilitation (TTF) measures have been implemented, and the
GMS is poised to transform the transport corridors into Economic Corridors. As a
result, the GMS countries are ready to enter a second generation reform which
essentially increasing investment on soft aspect of development such as greater
financing on human resource development, increasing institutional competency and
training; and cross border market management.
Development partners
(Australia, EU and Japan) all expressed continuing commitment in assisting the
GMS Cross Border Trade Agreement (CBTA). Financial and technical supports are
available for the Trade and Transport Facilitation action Plan. Australia’s
AusAID made available USD 230 million dollars for hardware and software
assistance. USD 170 million is made available for road and energy sector
development. The EU will provide expertise and TA through the ASEAN-GMS
framework; and Japan will made available USD 3 million dollars for human
resource development of three projects.
In this regard, I would like to
welcome the recent plan made by the GMS Ministers in Vietnam to connect regional
rail lines under the GMS cooperation. This will allow the Singapore-Kunming rail
link to be materialized by 2020. I also would like to welcome the US-Mekong
meeting that was initiated by the Obama administration. At the same time,
Japan’s support for the CLV cooperation is very much appreciated.
Australia assistance and
participation in second-generation reform in the CLMV countries is also much
sought to create a healthy, stable and prosperous region that in turn provides
Australia with the opportunities to invest in ASEAN and working together for a
dynamic business environment for trade and investment for the long term. The
ASEAN-Australia Cooperation Framework has enabled Australia to benefits from
ASEAN liberalized economic, political, security, cultural; and social-health
policies cooperation, sharing information on intelligence, and cooperating in
anti-terrorism measures, as well as combating non-traditional security threats
help to stabilize regional security.
Cambodia must not only overcome
impediments to growth through the reform process, but must also create the
conditions for sustainable growth through equitable distribution of costs and
benefits of development. For a start business costs, costs that weigh upon
employment will be further reduced. We must map out a clear strategy and
implement it in order to enhance its attractiveness as an investment
destination.
Regional
Cooperation in the Protection of Cultural Heritage
I am particularly please that
The 2010 Asialink Conversations - Cambodia will include discussion of cultural
heritage and its protection in our region. For Cambodia, regional cooperation in
the protection of cultural heritage is not new. Given our rich history, for us
cultural heritage is fundamental to our national identity, our cultural
identity, and an emerging regional identity. It defines who we are and the value
we bring to each other. Since the 1990s, Australia has provided valuable
assistance to the National Museum in Phnom Penh in the area of cultural heritage
preservation. The Museum houses a large collection of ancient Khmer
archaeological and religious artifacts, including art and sculpture, from the
4th to the 13th centuries.
The Greater Angkor Project
(GAP), an international, multidisciplinary research program of the Sydney
University interested in the study of urbanism history at Angkor. Specifically,
the project is investigating the relationship between the vast extent of Angkor
in the 12th to 16th centuries AD, land clearance for rice production and
regional ecological damage both then and now. The project will identify (i) the
ancestry of Angkor’s social and spatial organisation in the first millennium
BCE, (ii) the way the urban complex operated to diagnose (iii) why, when and how
it was abandoned and reveal the transformations from the 16th to 19th centuries
that created the modern landscape out of 3000 years of cultural continuity.
At the regional level, I urge
Australia to deepen its cooperation for cultural and heritage protection through
the ASEAN-Committee on Culture and Information (COCI) Framework. AusHeritage has
been very supportive in ASEAN Cultural and Heritage protection program; and I
trust AusHeritage will continue to support the Working Plan for the ASEAN-COCI,
specifically its Strategic Framework for Cultural Heritage Management:
Preserving the Past for The Future.
In conclusion, much has been
said and more needs to be done. I hope The Asialink Conversations Cambodia will
enlighten our understanding on the future directions of the relations between
Australia and Asia, and the future shape of our region, and ways we can work
even more effectively together for the peace, security and prosperity of our
region and the wellbeing of our peoples. I trust the discussions that are taking
place here today will be fruitful, and although informal, will generate useful
policy recommendations for our consideration. I wish you all successful a Forum.
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