Competitiveness: Cambodia ranks 109 out of 139 - Bravo?!?!

Switzerland ranked top in competitiveness - WEF report

Monday, 13 Sep 2010
The China Post

In South East Asia, Singapore and Malaysia came ahead of Brunei 28, Thailand 38, Indonesia 44, Vietnam 59, the Philippines 85 and Cambodia 109.

The China Post reported that the United States continued its fall in the rankings of a global competitiveness report, dropping from first place to fourth in two years as Switzerland retained the top spot for a second year in a row, followed by Sweden and Singapore.

While the United States is a leader in productivity, innovation and competitiveness, the world's largest economy has shown growing weaknesses in recent years, the World Economic Forum said in releasing its rankings. Those included its burgeoning government budget deficit, financial market development, corporate ethics, and public and corporate trust of its government

As for the world's newly minted second-largest economy, China was ranked 27th, moving up two spots, while the highest rated eurozone country was Germany in fifth, also up two places from last year. Japan with the third largest economy in the world was ranked sixth.

Switzerland was singled out for the top honors because of its sophisticated business culture and innovation, characterized by its high level of scientific research organizations, high spending on research and development and a large number of patents, said the World Economic Forum, known for its annual meeting of economic and world leaders in that Alpine country.

Sweden, which switched places with the United States from last year's rankings, was noted for its transparent and efficient government and corporate ethics.

Germany moved up two places from last year as its macroeconomic position improved in comparison with other large economies. It was praised for its infrastructure and sophisticated and productive businesses but was given low marks for its inflexible labor market.

Europe was the region with the most countries in the top 10 with Scandinavia doing particularly well. Finland was seventh, the Netherlands eighth and Denmark ninth although it fell four spots. East Asia was another region that performed well.

While Singapore retained its third place from 2009, lauded for its efficient goods and labor markets and government as well as the sophistication of its financial markets, infrastructure and education, Japan moved up two notches.

Hong Kong was 11th, Taiwan 13th, South Korea 22nd and Malaysia 22nd, all ahead of China and the region's third largest economy, India, ranked 51st. The remaining two countries in BRIC, which consists of four large developing countries, settled in at 58th place for Brazil and 63rd for Russia.

The top countries in the Middle East were Qatar at 17, Saudi Arabia at 21, Israel at 24, the United Arab Emirates 25, Oman 34, Kuwait 35 and Bahrain 37. In Latin America, Chile was the highest rated country at 30, followed by Panama at 58, Costa Rice 56 and Brazil. In South East Asia, Singapore and Malaysia came ahead of Brunei 28, Thailand 38, Indonesia 44, Vietnam 59, the Philippines 85 and Cambodia 109.

The remaining countries in the top 20 were Canada 10th, Britain 12th, Norway 14th, France 15th, Australia 16th, Austria 18th, Belgium 19th and Luxembourg 20th.

The World Economic Report compiled the rankings using public data and a survey of more than 13,500 business leaders in 139 economies. The survey was released ahead of the forum's summer meeting.

Khmer Intelligence News - 11 March 2009

11 March 2009

Nearly 80 percent of Cambodians live under poverty line (2)

Government and aid officials claim that the percentage of Cambodians living below the poverty line dropped from 47% to 35% between 1996 and 2006. The fact is that, during that period, the “poverty line” used to assess the number of poor people and defined as a threshold of daily income, was surreptitiously lowered from US$1.00 to US$0.75. Had the “poverty line” not been changed, the percentage of Cambodians living with less than US$1.00 a day would be close to 50%. Moreover, had the “poverty line” been set at US$2.00 income a day as it is in the Philippines and some African countries, the percentage of Cambodians considered as poor would be 77.7% according to the UNDP. See “Over 75 percent of Cambodians live under poverty line” (KI News, 13 January 2008).

Poverty to worsen in 2009 (2)

Given the population increase, inequality in revenue distribution and gross misallocation of resources in Cambodia, a minimum 5 percent annual GDP growth is required to prevent poverty from worsening. For 2009, the IMF has predicted that Cambodia’s economy would shrink by 0.5%, meaning a negative growth leading to a marked increase in poverty.

Sharp drop in customs revenue (2)

In the 2008 state budget, the Customs Department accounted for over 60 percent of all tax revenue, which is a relatively high figure in the region. For 2009, it should collect US$585 million, a figure that now looks impossible to achieve given the ongoing economic slowdown.

For the first two months of 2009, customs revenue reached only US$64 million compared to US$86 million for the same period last year, which represents a 25 percent drop [adjusted for the collection of a US$7 million duty pertaining to 2008].

State budget for 2009 in jeopardy (2)

The government will soon be obliged to revise downward the state budget for 2009 that was adopted last December because it is unable to collect the projected revenue. See above news “Sharp drop in customs revenue” while knowing that the fall in revenue also holds for other sources of income. The projected 2009 budget amounts to US$1.75 billion compared to US$1.37 billion for the 2008 budget, representing a 28 percent increase. This 28 percent increase will likely evaporate and be replaced by a decrease instead. Cambodia is facing the world economic crisis with a collapsing budget, let alone a strong budget with an appropriate economic stimulus package.

Cambodia losing competitiveness because of its dollarized economy (2)

A dollarized economy puts Cambodia in a weak position in the face of the global economic crisis. The fact that Cambodia’s currency, the riel, is pegged to the US dollar is putting pressure on its economic competitiveness as its neighbors’ currencies (Thai baht, Vietnamese dong) depreciate vis-à-vis the US dollar. Little can be done about this in the short term since 95 percent of Cambodia’s money supply consists of US dollars. Paradoxically for the poorer country, the cost of living is higher in Cambodia than in Thailand and Vietnam. For instance, a factory worker can live on a monthly salary of US$60 in Vietnam but not in Cambodia. Cambodia’s economy has been dollarized as a result of weak economic foundations (low productivity, lack of diversification, over-reliance on foreign remittances, shady foreign investors/speculators, cash economy) and poor governance.
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13 January 2008

Over 75 percent of Cambodians live under poverty line (1)

According to the latest official statistics, 35 percent of Cambodians live below the "national poverty line", which is defined as $0.75 of income a day. But if the poverty line is raised to $2 a day, which is the level used to measure poverty in most developing countries in Asia and Africa, 77.7 percent of Cambodia's population live under this more realistic poverty line. The 35 percent of Cambodians identified above through our "national poverty line", are actually those who survive under a "starvation line" of $0.75 a day.

Source: 2007/2008 Reports, Human Development Reports, UNDP.