The economic tariffs on rice exports to the EU were mainly at the behest of Italian rice producers who could not compete with imported rice. As seen in trade wars, we are likely to see more of this sort of action – certainly among the major trading blocks.
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The potential tariff impositions on Everything-but-Arms exports to the EU needs deeper consideration.
As the world economy slows, and people in their own countries get nervous about their jobs, a stronger move to more protectionism could happen. This is perfectly illustrated by the current trade and tariff war by the US, primarily against China and the EU. A worrying aspect is that tariffs were a feature of the Great Depression (1929-1939) which was only really brought to an end by the need for countries like the US to rearm to face the threat from Germany and Japan.
Cambodia is caught in a vice by being so export reliant on a narrow range of products exported mainly to the EU and US.
The other future problem for the clothing and footwear industry is how this sector will be affected by artificial intelligence (AI) such as computer -controlled machines doing sewing jobs that were once done by low-skilled employees. In some overseas factories, AI has already arrived and you can be certain that it will quickly spread to replace a lot of low-skilled work, and not just in the garment and footwear sectors.
In fact, AI will affect just about every business sector in every country in the world, none more so than businesses in Southeast Asia. It will be on a scale equivalent to the broad introduction of computers into businesses from around the 1970s or how the Internet has affected our lives. We could see a loss of employment in Cambodia in the clothing and footwear sectors.
It is time for Cambodia to start repositioning itself for future changes and new challenges that all countries will be facing. Such a change should not be taken as a threat but as an opportunity to remove the burden of boring repetitive work. Workplace change needs to be matched by more challenging and rewarding activities in the field of employment. This is the challenge. The need is to look forward, not backward.
As any economy grows and becomes more mature, there needs to be a move to more service-oriented industries and high value production. It is not even reasonable to expect the high GDP growth rates of the past to continue. One also has to be careful that in the blind charge for apparent progress, there should not only be a focus on the standard of living. Rather, there should be a greater focus on the quality of life.
The difference between standard of living and quality of life can be illustrated as follows. If everyone in Phnom Penh gets a new car and no longer rides a motorcycle, that would mean a huge increase in the standard of living. However, the roads would become crammed with cars that no one would be able to go anywhere. This translates to the loss of quality of life. So, the trick is to find a balance between an adequate standard of living and high quality of life.
Any person concerned with the environment and/or sustainability will tell you that the current path of world economic development is not sustainable. This cannot be placed at the feet of Cambodia as when compared to first world countries, consumption is only a fraction of those in countries like the US, Canada, Australia, New Zealand, some Middle East countries, Denmark, Sweden and the list goes on. Of note is that these resource consuming countries are often considered the most desirable countries to live in – but even they cannot continue on the path they are and have some painful readjustments in store for them. Some of these more advanced countries are on a somewhat desperate path to making their economies more sustainable. By 2025, electric cars in Europe will be cheaper to own and operate than petrol-driven cars. So why would anyone buy a petrol-driven car? Cambodia needs to be equally swift on its feet to adapt to a rapidly changing world.
As a rough figure, the world’s consumption is 50 percent more every year than what the earth can replace. This is a figure that is hard to imagine but try putting some perspective into it. Consider the loss of forests in Cambodia, and the loss of abundant wildlife and thus the sustainability of Tonle Sap. Then, multiply this 1,000 or more times, year after year. Is this the direction a rational person would choose? What sort of world would you want to leave to your children and grandchildren?
The reality is that in our world, everything is connected, none more so than economic activity.
What sort of future can we hope for ?
Cambodia does have the advantage of being a small country that has proved to be economically-dynamic over the last few decades. It has a young population. No one article can possibly suggest what could or what needs to be done. But perhaps we could try and put some of the problems, challenges and opportunities facing Cambodia (and the rest of the world) on the table and call for an informed debate. Repeating the past model of economic progress the world has followed since the industrial revolution is clearly unsustainable and to persevere on this course will mean meeting a brick wall at some stage. And it will be too late to ask for help when that happens.
The changes needed in all the economies are so great that these changes cannot be managed in a few years. It will take decades to bring about real change but a change of direction can be made overnight, if there is a will. It needs leadership and vision to take a country into a new and better future.
Cambodia is far from helpless to achieve this
Rail links with Thailand have just been reestablished, and in terms of energy efficiency of transportation, rail is hard to beat. We will not be seeing electric commercial airplanes anytime soon. Part of the future direction of the country could be the electrification and expansion of services of the Cambodian rail network, perhaps with more links to the surrounding countries – at the same time as a massive investment in solar power to power the system. As a person who has travelled Asia, it is clear that tourists take great delight in travelling by train. There are a lot of quality tourists who could easily be encouraged to spend more of their money in Cambodia compared to other Southeast Asian destinations.
In terms of rail infrastructure, Cambodia should be able to benefit from relatively low labour rates, and skilled hands to refurbish second hand rail stock from other countries, perhaps moving to manufacturing new rolling stock in the future.
A lot of the engineering is required to work towards the electrification of the railways. This could be undertaken in Cambodia.It can be no accident that countries who are progressive such as Japan, China and France all have advanced rail systems. While Cambodia does not need bullet trains, there is an irresistible case for a good rail network which would provide efficiencies within Cambodia and a lot of skilled jobs.
Another area that can be easily tackled is reforestation. Commercial forestry is very big business and in the countries where it is undertaken on a large scale, it is a large employer. Some fast growing varieties of trees can be mature in less than 30 years. One possibility for large-scale forest plantations in Cambodia could be African Mahogany. This would have a high value when harvested, and can then be further processed into higher value exports. And much like farming, the land is replanted.
The largest percentage, at around 60 percent of Cambodia’s population, is still involved in agriculture. This will change, and it needs to change. Contrast this with the US and its huge landmass, where the percentage of its population employed in agriculture is one percent.
Cambodia cannot compete against farms of thousands of acres and big machinery but a lesson could be taken from a region in Spain, Almeria in Southern Spain. Here, there is the largest number of greenhouses in the world. It covers an area of 26,000 hectares. It is so large that they can be seen from space. These greenhouses reflect so much sun that they are attributed to lowering the temperature in the region. Yet only 35 years ago, this region in Spain was dry and arid. The climate in this region of Spain is very similar to that of Cambodia – hot and dry, maybe more harsh than the climate in Cambodia.
Reforestation and remodeling Cambodia’s agriculture sector would provide quality and well paid employment in the more rural areas. Additionally, there needs to be a move to make sure all unproductive land is put into use, even if it is just reforested. Perhaps, there should be a move to place a tax on unused land, the proceeds of which are reinvested into the agriculture of that region.
Cambodia is well-placed to enter the new world, and change from being a follower to being leader. The old economic model of the western world is broken.
There is no one person or initiative that can transform Cambodia into its next stage of development. The nation cannot sit back and wait for someone else to do everything for them. The most obvious place to start for those that do not have a very good school education is to look at the vocational training establishments provided by the government’s TVET system. The person just needs the courage and confidence to walk into a TVET training establishment, and asked to be taught a trade or skill to be able to secure better employment.
Parents need to do their best to try and make sure their children finish schooling. There needs to be a change of attitude and to embrace change. People who are struggling to make a better life sometimes need a little help. The right word of encouragement at can help someone to a better life. This is more about Khmer attitude than it is about abilities.
Cambodians need skills
Cambodia needs mechanical engineers, electrical engineers, water distribution engineers, project managers, computer specialists, accountants and industry leaders. For those with lesser training, there is a need for skilled welders and mechanics, electricians, skilled agricultural people and much more.
Cambodia needs to fully embrace gender equality. Failing to do this means the country loses a huge amount of valuable potential. Skills are not gained overnight, they need effort and commitment to acquire them.
The government needs to provide the framework to allow Khmers to make a better Cambodia and this is likely to be most efficiently achieved by government and private enterprise partnerships. Of course, economic reforms need to continue, along with government’s war on corruption and dedollarisation of the economy.
Change should not be feared. If it is managed properly and all the partners in the change mechanism including the people of Cambodia are informed, then there can be a concerted move to a brighter future.
Miles Dugmore, 65, is based in Northland, New Zealand. He sees his involvement in Cambodia as the last big chapter in his life