• H.E. Dr. Chea Serey, Assistant Governor and Director General of Central Banking of the National Bank of Cambodia
• Excellencies, distinguished speakers, colleagues
• Ladies and gentlemen

Good morning!

I am very glad to be back and to have the opportunity to participate again in the National Bank of Cambodia (NBC)’s Annual Macroeconomic Conference - a platform for motivating research and policy dialogue on Cambodia’s development and the relevant role of the financial sector.

The ongoing COVID-19 pan­demic, the war in Ukraine and elsewhere, and record-breaking temperatures, fires, storms, and floods have spun off complex uncertainties in almost every country. They are fuelling a cost-of-living crisis felt around the world, causing uncertain times and unsettled lives.

While Cambodia embarked on a forward-looking recovery pathway, it is with no exception, facing the impacts of global crisis. Yesterday, we launched with the Ministry of Economy and Finance a policy brief on the combined Economic and Social Impacts of COVID-19 and the War in Ukraine and an update on the socio-economic outlook of Cambodia. The analysis indicates that although Cambodia’s recovery is slowed down by uncertainties driven largely by external shocks. For 2022, the country’s GDP was revised to 4.9% from earlier projections of 5.4% before the Ukraine crisis. This decrease is because of the combined price hikes and demand shocks, which reduced the growth of Cambodian exports, tourism, and construction sector. The monetary poverty rate and unemployment rate are, accordingly, estimated at 15.2% and 1.25%, respectively.

It is worth noting that the government’s social protection and economic stimulus packages slowed down further losses. According to UNDP Human Development Report 2022 – a measure of a nation’s achievements in three basic aspects of human development, namely, health, education, and standard of living, Cambodia has regressed to the 2018 human development level.

It is important to strengthen the country’s socio-economic resilience and preparedness to absorb future shocks, manage the uncertainty complex and harness the potential embedded in uncertain times. This would require concrete transformations that focus on investment, insurance, and innovation. Investment — on renewable energy, preparedness for future pandemics and extreme natural hazards, nature-based solutions to ease planetary pressures, and inclusive and whole-of-society digital transformation. Insurance — including social protection — to prepare our societies for the contingencies of an uncertain world. Innovation in its many forms — technological, economic, cultural — to respond to the unknown challenges that humanity will face.

To support these transformation, the country would need to diversify not only its economic growth and sources of revenue, but also the sources of financing for development. As per the 2021 Development Finance Assessment, Cambodia has moved during the last decades from an Overseas Development Assistance (ODA) dependent country to one where domestic revenue is the most important source of development financing[1].

To secure resources for development, the Ministry of Economy and Finance and UNDP developed an Integrated National Financing Framework (INFF) for exploring innovative financing options, including debt and non-debt financing, leveraging more resources from domestic and international private sector to bridge the financial gap for the achievement of the Sustainable Development Goals (SDGs) by 2030 and the smooth and durable country graduation from the Least Developed Countries category.

The private sector is a key player in development; accordingly, “Cambodia SDG Investor Map” was launched in August 2022. It is a market intelligence tool that provides investors with insights into local markets and opportunities to identify investments that both advance the SDGs and generate financial returns for investors. It identified 15 Investment Opportunity Areas (IOAs) that are spread across key sectors such as agriculture and allied industries, financial services, infrastructure, renewable energy, education, and healthcare. As far as financial models are concerned, 47% of the IOAs are expected to be funded through commercial capital, while the remaining are either through concessionary capital or blended financing instruments. 

We hope that the SDG Investor Map will inform and support private investors – including funds, financial institutions, corporations, and foundations – to invest in opportunities and businesses that accelerate sustainable development in Cambodia. We look forward to continuing work with the National Bank of Cambodia and the banking sector to increase private sector participation in responsible and sustainable investments.

During COVID-19, the private sector, and namely, Micro, Small, and Medium Enterprises (MSMEs) were hardly hit, including by rapid technological disruption. UNDP supported adaptation through business digitalization and supporting e-commerce for business continuity and resilience; Virtual job matching with the National Employment Agency (NEA); de-risking investments through facilitating access to Credit Guarantee Schemes, with particular attention to women-owned Small and Medium Enterprises (SMEs); and innovation (new business models, technological solutions, etc.). The progress done on business digitalization is an asset for future preparedness, resilience, and competitiveness to be harnessed and expanded.

Excellencies, ladies and gentlemen,

In closing, I would like to take this opportunity to celebrate UNDP and NBC’s partnership on alternative financing and acknowledge the critical role of national banks in scaling up finance for inclusion and sustainability and building resilience in the financial system to risks while harnessing opportunities. Uncertainty is not new, but its dimensions are taking worrying new forms today. One thing is sure, business as usual is not functioning, we are in a time where we must rethink the basic ground rules and assumptions, navigate uncertainties, and unleash people’s potential to be agents of change.  

Wishing you all productive deliberations and a successful event.

Orkun Chroeun!