Last week, I traveled to Singapore to promote U.S. investment in Cambodia. Two weeks prior, I was in Bangkok doing the same thing. I plan to go on similar trips in the region next year. Why am I taking these trips? What do I hope to accomplish? Quite simply, I am working on expanding the middle class in Cambodia. A strong middle class is the best engine for developing the economy and reducing poverty. In the United States, the growth of the American middle class gave average working people a stake in the economy and civil society. Instead of living hand-to-mouth, middle class Americans began to think about the future – we saved money for retirement, we made sure our children received a quality education, and we made sure the government was responsive to our needs. America is often called “the land of opportunity” because, no matter how humble your beginnings, you will have the chance for a livable wage and decent schools for your children. It was the growth of the middle class that made this possible.
How do we expand the middle class in Cambodia? In one sense, expanding the middle class is like a jigsaw puzzle – you need all the pieces to fit together in order to have a complete picture. The first piece lies in creating the right conditions for economic growth. The Cambodian government has made significant progress in laying the foundation for growth by creating a relatively pro-business environment. Cambodia, for example, allows 100 percent foreign ownership of businesses, exemptions from export taxes, duty free imports of capital goods, favorable corporate tax policies, and a liberal policy on work permits for expatriate personnel. These policies, although a good start, still need to be taken further. To help develop recommendations on how the Cambodian government could improve the business environment to further open the Cambodian market to foreign investment – particularly through regulatory and legislative changes– I have formed a team comprised of Embassy personnel and members of the American Chamber of Commerce.
The second piece of the puzzle is developing the country’s human capital. While people often point to Cambodia’s substantial timber reserves and petroleum resources, its greatest asset is its youth. With nearly 70 percent of the population under 35 years of age, Cambodia has a large and growing supply of labor. If the labor force expects to reach the middle class, it will need greater skills. The U.S. government has spent millions of dollars on training and education for Cambodian citizens to lay the foundation for middle class development. For example, USAID’s Improved Basic Education in Cambodia project is helping the Cambodian government develop a school curriculum to benefit over 140,000 students,with 5,600 students receiving scholarships to support their lower secondary education. The U.S. government also has about 115 Peace Corps volunteers in Cambodia, who are training primary and secondary teachers as well as working to build the capacity of healthcare professionals in the provinces. By focusing on education and training, we will help Cambodia’s labor force migrate to higher-wage, higher-skilled jobs that will expand the middle class.
The final piece of the puzzle is bringing these higher-skilled jobs to Cambodia. Without good-paying jobs that allow ordinary Cambodians to buy everyday consumer goods like food, housing, and clothes, the Cambodian economy faces a formidable challenge in reaching the next stage of development.
One reader has asked, “Why don’t huge U.S. corporations invest in Cambodia?” My trips to Bangkok and Singapore were meant to find an answer to this question and to encourage regionally-based and sizeable U.S. companies to expand their operations to Cambodia. I gave speeches to U.S. business chambers, met individually with scores of businesses ranging from computer manufacturers to oil companies, and led a business roundtable. At every opportunity, I pointed out that Cambodia has a lot to offer U.S. businesses looking to get in on the ground floor of a surging market. While the growth rates of many countries in Southeast Asia are flattening, Cambodia is far from reaching its peak.
But like putting together any jigsaw puzzle, knowing what the pieces are and actually fitting them together are two very different things. Cambodia needs to appreciate the importance of how human rights, open political discourse, and rule of law fit into the investment and middle class mosaic. A more open political space, greater transparency, and less corruption would benefit the entire country by encouraging foreign investment. If Cambodia can take substantial, concrete steps towards resolving these issues, it will mean more investment from U.S. companies and from businesses the world over. Remember, it is not what you say, but rather what you do that is important.Or as my high school Latin teacher would often tell me acta,non dictum, which means “deeds, not words.”
As we can see, the expansion of the middle class and the number of higher-paying skilled jobs are vital factors to economic growth in Cambodia. Please accept my heartfelt wishes for a happy holiday and thank you all very much for reading my column. As always, you may send your questions to me in English or Khmer at AskAMBToddPP@state.gov,and of course, you can follow my blog at http://blogs.usembassy.gov/todd/.
William E. Todd is U.S. Ambassador to the Kingdom of Cambodia