Europe - Cambodia - EBA:

This is an English version of an article published in Cambodge Mag, a French Magazine published in Cambodia.

Arnaud Darc, “we must strengthen European partnerships”

While the world is riveted by the round ball, the kingdom continues to live to the rhythm of electoral campaigning and the French community to its preparations for the 14th of July, while a particularly important debate for the economic future of Cambodia has been taking place since last Monday. 

As we have discussed in earlier columns, Cambodia’s privileged access to preferential measures for its exports is under discussion between a delegation of the European Union, consular representatives and ministers. Among them, Arnaud Darc, President of EuroCham, wished to express his point of view concerning a possible suspension of the privileged regime granted to Cambodia under the “Everything But Arms” scheme, and his wish that these measures be maintained. Interview:

Arnaud Darc, President of EuroCham, during the first EuroFair exhibition

CM: Are you participating in the discussions under the framework of this European mission? 

Yes, but my concerns are not recent within the framework of the discussions likely to affect the preferential regime that facilitates Cambodia’s exports to the European Union. In March this year, I explained to the European Commission that EuroCham was closely following this case and I did not conceal my concerns. In my view, if these discussions conclude with a suspension of the arrangements granted to Cambodia in its commercial exchanges with Europe, this will directly affect European investment and, more generally, the well-being of the whole population. 

CM: For what reasons? 

Such a decision would first of all contradict the European desire to reconstruct Cambodia and participate in its development, a desire that has been demonstrated for more than 20 years. More specifically, in the economic domain, the kingdom has made spectacular progress which, since 1998, has greatly facilitated and encouraged the flow of European investment to Cambodia. Within 20 years, the country has emerged from a state of conflict, without any real economic activity and a catastrophic social and humanitarian context, to become one of the most dynamic economies in the world, with regular annual growth of 7%. Moreover, the state has largely reduced poverty, with a rate falling from 53% at the opening of millennium to under 14% today. This is not insignificant social change. Finally, within the context of the United Nations Millennium Development Goals, Cambodia achieved the majority of its objectives, while the average income per capita tripled between 1994 and 2015. 

CM: Why does the kingdom still need “privileges” if the economy is doing so well? 

The preferential tariff for finished products exported from the kingdom to Europe has a powerful social impact. It is one of the keys that enable the country to improve the situation of those on low incomes and to support poverty reduction. Sectors employing low-skilled labour need support measures in the face of competition from countries in the region. Securing a minimum wage of $170 would not have been possible without this measure. Only five years ago, the minimum wage peaked at $61, scarcely enough to meet basic needs. 

We must appreciate the situation globally, in all its complexity. The kingdom has not only benefited from incentives and support from the international community, it has also played the game by opening up its economy to foreign investment while making efforts to favour business creation and implementing provisions for more job creation, as well as social security coverage and a better public sector. As a result, jobs have been created, infrastructure developed and foreign investment has flowed, and the local economy keeps getting better and better. All this creates a favourable context for local, foreign and European investment. 

CM: The impacts of this rapid development are sometimes subject to doubt as to their direct benefits

The numbers speak for themselves. In addition to the significant reduction in poverty, and the wage increase I mentioned earlier, there is also the 75% reduction in infant mortality, an increase in school enrolment and a vibrant labour market that allows young graduates to find work quickly. In relation to health, the decline of AIDS is a significant result, among many others. It should also be mentioned that these social advances are possible thanks to a much better level of cooperation between the public sector, industry and the unions. The recent provisions concerning the minimum wage, social security, public transport, etc., have only been possible with the support of a permanent dialogue. In the economic sector, there is a real desire for a consensus that produces results, and thus to direct benefits. 

CM: Back to Europe, how do you see its role for Cambodia more generally? 

Europe has played an essential role that goes beyond simple measures of support. It is a sponsor of reconstruction and of peace, a donor through its assistance to different programmes, and a commercial partner. It takes more than 40% of Cambodia’s exports, accounting for 25% of GDP, and this looks set to grow over the coming years. Through European companies present in Cambodia, the country also enjoys an added benefit that cannot only be measured in terms of fiscal revenue and employment, but also in terms of training, openness and reach. 

CM: So, you are pro the status quo concerning the preferential regime? 

I don’t like the phrase status quo. To be clear, although Cambodia’s progress is tangible and rather spectacular, this dynamic growth needs to strengthen and consolidate 

CM: So you are for the status quo concerning the preferential regime?

I don’t like the phrase status quo. To be clear, although Cambodia’s progress is tangible, and rather spectacular, this dynamic economic growth needs to be reenforced and consolidated at the base. Human and social development remains closely connected to it. Yes, I believe that Europe must continue to support the kingdom’s development and economic growth. And I call on the European community and our partners, the France-Cambodia Chamber of Commerce and Industry and the German Business Group, for their support in this endeavour.