LOCATION Phnom Penh

SPEAKER Bill Rammell

DATE 27/05/2009

Foreign Office Minister, Bill Rammell, delivered a speech at the Cambodia Development Resource Institute (CDRI) during a regional visit to Cambodia and Vietnam. The speech focused on the global economic crisis and the role all governments must play to restore long-term, sustainable growth.

Read the speech

Your Excellency Dr Hang Chuon Naron, President of the Board of the Cambodia Development Resource Institute (CDRI), Excellencies, Ladies and Gentlemen. It is truly an honour and a pleasure to be here today. 

Can I begin by thanking the Cambodia Development Resource Institute for making this possible.  The sort of open and knowledgeable debate on key policy issues you generate is vital to democratic development. 

Today, I would like to add my thoughts to that debate.  And to give you the UK’s perspective on the global economic crisis and on the role all governments must play to restore long-term, sustainable growth.

I’m here in Phnom Penh - along with my EU and ASEAN colleagues - because it will take the efforts of all countries to bring about recovery.
Our countries need to work together on the common problems we face – and accept that we share the responsibility for finding solutions to those problems.  

Asian countries have the experience of their financial crisis in the late 1990s.  The lessons you learned then – and the policies adopted by many Asian countries since – should help us to weather the new crisis.

With its regional partners, Cambodia has the ability and the opportunity to make a difference: locally; regionally; and globally.  I’m here to have a substantial policy debate on how our two countries and two regions can deliver more together, than we can when working alone.

If there is one message that we in the UK have taken from the global economic crisis - it’s that all our economies are interlinked and interdependent.

Whether you are in London or Phnom Penh – what happens in the economy of one country, affects others – rich and poor, developed and developing.

Cambodia is an excellent example of just how interlinked our economies really are. 

Yours is a country which bears no responsibility for the financial crisis.  In the past decade you have built double digit growth on the back of hard work, entrepreneurship, and trade sector development. 

Much of this growth has come from increased exports to the EU, the US and other countries.  Exports that are now affected by lower consumer demand in those countries.

So a recession that was not of your making, is having a tangible effect here in Cambodia. 

For the last two years the UK has been Cambodia’s third largest export market.  Lower clothes sales in our high street stores affect jobs here.  I know that your first quarter figures show 33 fewer garment factories operating, and nearly 25,000 fewer workers employed in the sector during that period.

The 95,000 British visitors who came to Cambodia in 2008 also made a significant contribution to your economy.  The fall in international visitor numbers this year has a direct impact on those people working in hotels in Siem Reap that have shut for business for the remainder of the low season. 

The economic crisis also affects those who are unemployed or under-employed.  They will find it harder than ever to find jobs that earn a decent wage to support their families. 

All this will put an increasing financial burden on the state – as lower exports reduce revenues and impact the government’s ability to pay for and deliver key services to the poor.

Ordinary people in this country and in ours know that the global economic crisis is not some abstract concept that only politicians and international bankers need to worry about.  It’s a problem that affects the daily lives of ordinary people.

Although a relatively small economy, Cambodia still has a voice which needs and deserves to be heard.  So it is absolutely vital and right that Cambodia speaks up and plays its part in helping bring the world economic crisis to an end. 

By working to create the right economic environment here in Cambodia - and by cooperating with other countries on global measures.
The UK is working both nationally and internationally to deal with the economic downturn.

Last month in London, we hosted a meeting of G20 leaders and others.  We came together to fight back against the global recession; to agree a plan to restore confidence, growth and jobs; and to ensure a fair and sustainable recovery for all.

That was a tough challenge – but one that those leaders met.  The communiqué agreed in London committed G20 countries to serious action.  To targeted government spending aimed at stimulating growth.  To better systems of regulation for the financial sector.  And to reject the protectionist policies that would do long term damage to global trade. 

The leaders at the London Summit also recognised that you can’t separate global finance from development.  That’s why they reaffirmed their commitment to meeting the Millennium Development goals and why they agreed to a new fund of 50 billion US dollars available to low income countries. 

Leaders also made available an extra 850 billion US dollars to International Finance Institutions, and committed to reform the way they are run to reflect changes in the world economy, particularly through giving emerging market and developing countries a greater voice.

All these steps were agreed to make sure that the poorest and most vulnerable will not be the ones to suffer the most during this recession. 
These outcomes closely mirrored the objectives that the Cambodian Government set out to us ahead of the G20 summit.

The ASEAN representative at the meeting, Thai Prime Minister Abhisit, said the reforms agreed at the London Summit reflected the needs of emerging and developing economies  - and the medium and long term development goals of those countries.

He was right.  The creation of such a large fund clearly demonstrates that the G20 leaders were not just looking after their own interests – but were there to deliver a global recovery package for the benefit of all nations. 

Within this region too, bold and decisive steps have been taken.  The Asian Development Bank has expanded its lending capabilities three fold in order to combat poverty in the region.  And within ASEAN, the Chiang Mai initiative promises to play an important role in providing countries with the resources they need from within the region.

The success of the London Summit showed that bold and inclusive leadership can help to rebuild confidence and trust in our international financial system.  It also pointed the way to a new and progressive era of international cooperation – not just on finance – but on development and on climate change too. 

But as successful as the Summit was – it was only a start.  It is now up to countries to deliver on the promises made. 

And all countries need to act domestically to help rebuild the global economic network to which we are all linked. 

The UK is doing just that.  Along with our substantial contribution to the international framework – the UK Government is taking national steps to help people and businesses in Britain deal with the effects of the downturn.

We’ve reduced tax for the less well off and for small business owners.  We’re giving more help to people who’ve lost their jobs – so that they can find new ones quickly and so that they don’t lose their homes while they look for work. 

We’ve also brought forward plans to build new houses, schools and hospitals as well as investing in energy saving measures and efficient transport.

In addition the UK is strongly committed to building a recovery that will deliver our environmental objectives.  We’re supporting low-carbon industries; advanced green manufacturing; and renewable, clean energy. 

We believe such investment will not only create new jobs, but will create a UK economy fit for the future – when oil, gas and coal are no longer the dominant sources of energy – and as countries increasingly recognise the need to create a low carbon economy. 

By investing now the UK will benefit from being a world leader in the technologies we will all rely on tomorrow.

Like everyone else, we didn’t want to have to deal with an economic downturn of this magnitude.  But we’ve got no choice – so we may as well use the opportunity to build an economy fit for the 21st century.  There is little point in simply rebuilding the same sort of economy that led to the collapse in the first place.

We know that climate change poses a threat much larger than any credit crunch.  We know too that if the world’s big economies don’t dramatically cut greenhouse gas emissions – global warming will make us all permanently poorer.

That’s why the UK has committed itself to legal targets for carbon emissions – so that the growth we generate today will not be wiped out in the future, or be at the expense of others. 

But we can’t deliver reductions in global warming on our own.  The UK is determined to see all countries come together at the UN Climate Change conference in Copenhagen later this year.  And for those countries to agree sweeping reforms that will really make a difference. 

I hope Cambodia will be there in Copenhagen pushing for such reforms.  As with the economic crisis - climate change is not something you caused – but it will profoundly affect all Cambodians.

And Cambodia is able to make a difference in the debate.  Your government can be one of the champions for all vulnerable developing countries by advocating an ambitious, forward thinking outcome at Copenhagen in December.

I know that the Government of Cambodia has, like Britain, taken steps to limit the impact of the global economic crisis for its people.  You rightly want to hold onto the economic gains made in the past decade – and to ensure that the many people brought out of poverty in recent years don’t slip backwards. 

I warmly welcome the attention that the government is now giving, alongside donors, to developing social safety nets to protect the most vulnerable.  We need to make these a reality quickly.

You are absolutely right to look to diversify your export markets and to invest more in infrastructure.  But, like us in the UK, you too will want to check that the steps you are taking will build an economy fit for the 21st century.  One able to withstand future shocks. 

I think it’s fair to say that the world has changed since the global downturn hit last year.  Where before, there were many investors looking for places to invest – today countries are fighting for a much smaller pot of investment money. 

Competition to attract investment – and the jobs that go with it – is more fierce than it has ever been.

Today’s businessmen and women with money to invest will be much harder to please.  They will look for the best business environments – with the greatest chance of a guaranteed return on their investment. 

We are all well aware that the global nature of the financial system means that investors’ money can go almost anywhere in the world. 

South East Asia is certainly seen as a highly attractive prospect by investors.   British investment in Thailand and Vietnam, for example, stands at well over $1 billion in each country.  Cambodia’s potential for growth should make it a good target market for investors too.

But if Cambodia is to join its neighbours in successfully attracting more investment from the UK and elsewhere, it will have to show that it has the right human capital and national infrastructure - and an enforceable legal framework.  Its business environment will need to be open and transparent.

Cambodia has good experience of how governance reform can create growth.  Reforms of your trade rules allowed you to pioneer the way for Least Developed Countries to join the World Trade Organisation.  The adoption of high labour standards in the garments sector opened the doors to both US and European markets.

I think it’s worth remembering also that this global recession is the first to take place in the era of 24 hour international news coverage. 
Today, the media has a much bigger influence than they once had.  They no longer just report events - they affect them – particularly when it comes to the economy.   What they write – whether good or bad, true or otherwise - can be seen by anyone and will affect the choices investors make.

Cambodia knows that very well from the recent report by the Economist Intelligence Unit.  We may all agree that the report’s conclusions about Cambodia’s prospects were misleading.  But it cannot be dealt with by simply issuing a rebuttal.  Investor confidence needs to be rebuilt through positive government action.

Similarly, the commitments that Cambodia has made to combat corruption are ones we can all welcome.  The message that the Royal Government is to pass anti-corruption legislation during this parliamentary term is one that reaches potential investors wherever they are. 
But the media will not just report the statement – but assess it for credibility.  They will then follow up – with reports to assess how well the Government have met their goals.

Today’s global media means that a failure to deliver will be seen around the world in a flash.  Investors’ money can move almost as fast.
So it is in the interests of all Governments to ensure they make sound economic decisions, and take steps to create an open, level playing field for investors. 

Quality investment won’t flow into countries with corruption problems.  There are too many good opportunities available in other countries without corruption.

So from the UK perspective – the future is clear. 

Success in the next few years will come to those countries which make the right long term moves. 

Those who build their economies on solid foundations – rather than on the quicksand of corruption or protectionism. 

And those who forge international partnerships by cooperating on the global issues we face today.

I hope and believe the UK can count on Cambodia to take all these steps – so that we can continue to work together to bring prosperity to people in both our countries. 

I hope too that we all are able to enjoy the four Buddhist wishes that I’ve heard here in Cambodia – long life, beauty, health and strength.

Thank you. 

Notes for Editors

UKinCambodia.fco.gov.uk

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