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Cambodia in Race To Catch Up, as Asean Moves To Integrate

A member of government security holds his weapon at the VIP section of Phnom Penh airport as delegations arrive for the 21st ASEAN (Association of Southeast Asian Nations) and East Asia summits in Phnom Penh, file photo.
A member of government security holds his weapon at the VIP section of Phnom Penh airport as delegations arrive for the 21st ASEAN (Association of Southeast Asian Nations) and East Asia summits in Phnom Penh, file photo.

Cambodia and other less-developed Southeast Asian nations will have a few years of preferential status before fully integrating into Asean. But the regional bloc is moving forward with economic integration, and economists warn that Cambodia has a long way to go before reaping the benefits.

The Asean Economic Community will launch at the end of the year, in an effort to bring the free flow of goods, services, investment, capital and labor to the region. That means low tariffs, between 0 to 5 percent, and a potential loss of revenue to nations.

Nop Sophorndara, director of the Asia-Pacific department of the Ministry of Commerce, said the tariff reduction will ultimately not hurt Cambodia.

“We will get other benefits,” he said. “We may lose our tax, but there will be more investments coming to Cambodia. It doesn’t mean all import taxes are removed. We have our policies. We can impose a local tax. And not all goods are taxed at zero; some needed goods, such as oil, we still can place in the list of exceptions.”

Cambodia, Laos, Myanmar and Vietnam, meanwhile, will have until 2018 to enjoy preferred statuses, as they race to catch up to the rest of the region. This will allow some flexibility and some needed revenue, Nop Sophorndara said.

Motivated young people need not worry either, he said. They will have opportunities under an integrated Asean.

“Joining the AEC doesn’t mean everything changes,” he said. “Business runs as usual, things are going as normal. But we also have to run, otherwise, we cannot catch up with others. A skilled workforce is important. When we have skill, that means that we are able to fulfill the position in a factory or company for investors who come to invest in our country.”

But not everyone shares such optimism, especially among Cambodian youth.

“I think it can effect our businesses, especially the small ones,” said Sao Somina, a 26-year-old student of international relations at Pannasastra University. “Our family businesses will have to compete with branch businesses after the arrival of the AEC, and that’s quite hard for us.”

Phou Sinuon, 19, a student at the University of Health Sciences, said she believes young people must be ready. “To me, that’s what I’m worried about, is that when it comes to AEC, 10 Asean countries become one,” she said. “Yet I’m not sure whether we can compete with others.”

She’s glad that the borders will be open, “so that we can go anywhere,” and learn more about other countries, she said. “Though we may not be ready, we still have to face it and be prepared for it.”

Sok Virakyuth, 19, a second year student at the Cambodia International Cooperation Institute, said the technical skills of Cambodian youths remain limited, compared to neighboring countries. But he said he feels ready.

“I’m glad there will be job opportunities, but I’m also concerned because our human resources are still low,” he said. “I’m afraid it will be hard for us to get jobs, especially when it comes to technical skills. For me, I have to prepare myself for hard skills and soft skills.”

Seang Sopanha, director of the CAM-ASEAN institution and a former of youth leader, said some Cambodian youth still see the region as far away, and as a result they lack readiness. But integration is coming, he said, which will put demands on the youth, ready or not.

“First, young people need to understand the regional and international environment,” he said. “Second, they must strive to master certain skills and be focused on those. Third, they must be well prepared with foreign-language skills; young people should ask themselves whether or not their language capacity is enough to work internationally. Fourth, they have to have the ability to use technology. Fifth, they need the ability for cross-cultural communication with other youths, as well as leadership skills.”

Asean economic integration will widen the market, though. The Cambodian market, proponents say, will grow from 14 million to 600 million people, the total population of all 10 Southeast Asian nations.