The head of the International Monetary Fund has advised Cambodia to strengthen infrastructure that could buffer it from future economic turbulence.
“Cambodia is in a very critical situation,” Dominique Strauss-Kahn told reporters last week, following a two-day Asian economic summit in Daejoen, South Korea.
Strauss-Kahn had warned that many Asian countries need to strengthen their economic policies to protect them from future economic shocks, as economic officials met for the Asia 21 meeting. But Cambodia remains in a difficult situation, he said.
“To make progress, clearly the problem of infrastructure is the highest importance,” he said, “and it has to be stressed because trade and communication are strongly linked with infrastructure.”
Strauss-Kahn also advised increasing trade within Asian countries, so as not to rely on the West for consumers.
Cambodia is one of the smallest countries in Asia and is reliant on exports for economic growth. That made it vulnerable to the 2008 economic crisis, when orders from Western countries, especially the US, fell.
Analysts say Cambodia’s weak infrastructure limits its competitiveness. And the World Economic Forum 2010 report listed Cambodia as one of the worst countries in ease of trade.
“The government has been working on it, since infrastructure is the development priority of Cambodia,” said Sun Sanisith, secretary general of the National Bank of Cambodia, who attended the conference in Daejoen.
Meanwhile, Asian financial experts also warned of financial systems that will require more cooperation among Asian nations. Experts from South Korea, China and Japan all said the banking sectors of Asian countries can be better bolstered through increased capital reserves and better cooperation among local banks.