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Industrial Development Policy 2015-2025 (IDP) in Cambodia

Sok Chea (Mr.)Deputy Director, Department of Techniques, Science and TechnologyGeneral Department of IndustryMinistry of Industry and Handicraft (MIH), CambodiaTel: (855) 15 764 910Email: [email protected]

Cambodia's economic structure and sector contribution to growth

0

5

10

15

20

25

30

35

40

45% of GDP

(a) Economic structure: value added (% of GDP)

Agriculture Construction, Mining & Utilities

Services Manufacturing

-2

0

2

4

6

8

10

12

14

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

(b) Sector contribution to growth (% points)

Agriculture Mining & utilities

Garments¹ Other manuf.

Construction Tourism¹

Real Estate¹

Other services

Real Value Added

% points

Source: Estimates based on World Development Indicators and National Institute of Statistics of Cambodia Note: (¹) Garments includes textiles and footwear; Real Estate includes business activities and Tourism refers to hotels & restaurants

Source: Annual Report, 2016 Ministry of Industry and Handicraft

Components of growth in Cambodia and selected peers

6.2 6.9 9.8 5.6 7.9 4.9 3.8 5.4 6.2 3.3 6.1

-20

-15

-10

-5

0

5

10

15

20

25

30

B. Cambodia and peers: components of growth, 2005-2015

% points

Real GDP Growth

-30

-20

-10

0

10

20

30

A. Cambodia: components of growth, 2001-2015

% points

Household consumption Government consumption Gross capital formation

Exports Imports Real GDP

Source: Estimates based on World Bank Development Indicators

Cambodia's performance in the ASEAN SME Policy Index

Source: ASEAN SME Policy Index 2014

Challenges & opportunities to enhance competitiveness(private sector perspective)

o Skills development/productivity

o Environment-cleaner production

o Electricity cost & supply reliability

o Quality, safety & cost of products

o Producers-SME linkage

o Private sector-academia linkage

o Access to finance & technology for SMEs

o SMEs clustering

o Public-private partnerships

o Logistics…

Industrial Development Policy

Drive for change and modernize the country's industrial make-up from a

labor-intensive industry to a skills driven industry by 2025 by:• Way of linkages with global value

chain integration into regional production net works

• Developing clusters of interconnected manufacturing production

• Strengthening the competitiveness and productivity of domestic industries

• Moving toward modernizing technology and knowledge based industries.

Vision“ASEAN with free movement of goods, services, investment, skilled labor & freer flow of capital”

ASEAN 2016:

628.9 Million

USD 2.4 Trillion

USD 2,269.9 Billion

USD 119,974.8 Million

Industrial Development Policy

The IDP is designed to provide :

• A vision along with a policy framework

• An implementation coordinating framework

• An institutional arrangement to promote industrial

sector development in Cambodia so as to

achieve the aforesaid vision.

Goal

The IDP is aimed at:

• Defining various interconnected measures at

the macro and sectorial level and at specific

interventions in response to actual needs.

• Spans the period from 2015 to 2025 and must

be updated every 5 years.

The main objective of this policy is:

• Address structural challenges and investment

in key industrial infrastructure, both hard and

soft

• To be in line with the potentials, competitive

advantage and development of the

Cambodian industry.

Objective

Three targets include:

• Transforming and

strengthening the industrial

structure in the national

economy

• Increasing and diversifying

export products

• Strengthening and

promoting of SMEs.

2013

Industrial Development Policy

Key Indicators

1) Transforming & strengthening the industrial structure in the economy

2) Increasing & diversifying export

products by increasing the export of manufacturing products as well as new products

3) Strengthening management mechanism & development of SMEs by promoting their official registration including large enterprises & promoting good governance with proper accounts & balance sheets.

GDP Share of

Industrial

Sector

GDP Share of

Manufacturing

Sector

2025 2013 2025

15.5% 20%24.1% 30%

Non-textile

products of all

export

products

By 2025

15%

Processed agricultural

products of all export

products

By 2025

12%

80% to 95% 50% to 70%

Officially

registered SMEs

targeted by

2025

Out of which have

accurate accounts &

balance sheets

Industrial Development Policy

Key Strategic

Frameworks

First, attracting FDI and mobilizing domestic private investment for industrial development, export market development and expansion, and promotion of technology development and transfer;

Second, developing and modernizing SMEs by way of expanding and strengthening the manufacturing base, modernizing and officially registering enterprises, promoting technology development and transfer and strengthening industrial linkages between domestic and foreign enterprises specifically in the agro-industrial sector

Third, improving the legal environment to enhance competitiveness by way of improving the investment climate and promoting trade facilitation, providing market information and reducing business transactional fees; and

Fourth, coordinating supporting policies such as human resource development, skills training and industrial relations improvement, implementation of land management, urbanization and land use plan in line with the Land Policy and the National Policy on Land Management together with infrastructure development

1

2

3

4

Industrial Development Policy

Priorities

1) First, new industries or manufacturing ventures with the capability of breaking into new markets, with high value-added products, creative and highly competitive that focuses not only on consumer products but also production equipment such as machinery assembly, mechanic/electronic/electric equipment assembly, means of transport assembly and natural resource processing;

2) Second, SMEs involved in drugs and medical equipment production, industrial or handicraft construction materials, packaging equipment for export, furniture manufacturing and industrial equipment, etc.;

3) Third, agro-industrial production for export and domestic markets;

4) Fourth, various types of supporting industries for the agriculture, tourism and textile sectors as well as for industries serving regional production chains linked with either global markets or global value chains in the form of forward linkages and for industries linked with the provision of raw materials supply network in the form of backward linkages, especially for the garment sector, for production of spare parts and assembling of other semi-finished products;

5) Fifth, industries serving regional production lines and those of future strategic importance such as in information technology and telecommunication (ICT), energy, heavy industries, cultural/historical/traditional handicraft, and green technology.

Industrial Development Policy

Policy Measures/ Action

Plan

1) To ensure the success of the IDP

implementation, there are 116 key

action plans have been set in

which many institutions/ministries

are involved in the

implementation. Part of that there

are 24 action plans have to be

implemented by MIH and other 25

action plans have to be

implemented by participating with

other ministries.

2) There are 99 project action

plans have been set by MIH to

implement the related policy

measures.

3) To ensure the efficiency of

policy implementation MIH has

established work team for policy

implementation, secretariat for

facilitating of policy

implementation team and task

force group for implementation

and monitoring of each action

plans by appointing the sectorial

department to implement the

project action plans.

Monitoring &

Evaluation Mechanism

• A tri-annual and annual

reporting system, and in

particular a quarterly report to

the meeting of the Council of

Ministers on the progress and

challenges

• Objective and national

strategies for implement the

IDP

• A Trouble Shooting

Mechanism

• An evaluation of the progress

and achievements on the

implementation of the four

IDP key action plans to be

achieved compare to the

indicated indicators

• GDP Growth as the result of

IDP implementation and

• Other indicators as necessary

indicated

Main Supporting Activities

“The Concept” of enhancing theindustral development:

z

Supporting Activities៖• One-Stop-Services of MIH • Enhance Productivity• Industrial Property• Technical and Technology

Support• Industrial Standard & Laboratory• Metrology• Acreditation• Potable Water Supply

Priority Supporting Activities

Main Supporting Activities

Open for SMEs registration and

other services

.mih.gov.kh

National Productivity Center of

Cambodia (NPCC)

• Business Diagnose services

• Consultancy services for

business excellence

• Training services

• Business recognition and

awards

One-Stop-Services of MIH

-APO & UNIDO

Enhance Productivity

Industrial PropertyTechnical and Technology

Support Services

• New invention is valid for 20

years

• Utility model is valid for 7 years

• Industrial design is valid for 15

years

• Layout design of integrated

circuit is valid for 10 years

• Breeder is valid for 20 years to

25 years

• Inspect on factory’s master

plan and machine layout

• Inspect and evaluate

environmental safety,

occupational safety, raw

materials, machinery and

equipment management

• Provide technical consultation

to SMEs

• Training on industrial safety

management

• Promote R&D on STI

IP is protected :

Main Supporting Activities

-WIPO, Paris convention for IP, Hague Agreement & PCT, UPOV- IPOS, JPO,EPO, EUIPO & SIPO

Industrial Standard &

Laboratory

Institute of Standard of Cambodia

(ISC):

• Bio & chemical testing

• Research & consultancy on Product

quality

• improvement and standards testing

40 parameters

ILCC Internationally Recognition:

ISO/IEC 17025

National Metrology Center (NMC)

Accurate measurement improves

productivity and quality; it underpins

consumer confidence and trade.

NMC undertakes research to

improve its measurement capability

and shares this expertise with public

organizations, private sectors and

society to enhance economic

performance, and the quality of life.

NMC have provided 8 services in

the fields of dimensional metrology,

mechanical metrology,

thermometry, electrical metrology :

1.Calibration Service

2. Verification Service

3. Pattern Approval Services

4. License Issued Services

5. Certificate Issued Services

6. Trainings, Workshops & Seminars

7. Consulting Services

8. Information Services

Main Supporting Activities

• 881 standards were adopted

• 369 standards on food

• Product quality certification

and

Management system : ISO 9001,

ISO14001

ISO 22000, GMP &GHP

ILCC Services:

-UNIDO, GIZ & MOST China

Metrology

-UNIDO, GIZ & NIM-China

Accreditation

MIH is the Govt. Institution

responsible for setting up Policy

and National Strategic Plan for

Potable Water Supply of Urban

area in the country.

Cambodian Accreditation National

Council (CANC)

Main Supporting Activities

Department of Accreditation

NAFP -CANC (DA)

Accreditation Cervices on Conformity Assessment Body

of Product Standards (Certifation Body)

Accreditation Services on Conformity Assessment Body

of Management System Standards ( Laboratory &

Inspection Body)

Accreditation Services on Conformity Assessment Body

of National & International

Standards

Technical

Committee

General Department of Industry

Ministry of Industry &

Handicraft

Cambodian Accreditation

National Council (CANC)

National &

Internationl

Assesor

pool.

Ad hoc Committee

Permanent Committee

-JICA, AFD, ADB,WB,WSP, UN-HABITAT

& WHO

-PTB (ASEAN-GIZ) & GIZ

Portable Water Supply

Statistic of Registered

Manufacturing Industry

Main Supporting Activities

Statistic of registered SME

Main Supporting Activities

Food and beverages

Textile, Garment and Shoes

Paper and Printing

Basic metal

Mineral and Non-metal Industry

Chemical, Rubber and Plastic

Processed Metal

Furniture

Other industries

Current Main Challenges

Main Supporting Activities

• Failed to

achieve some

action plans

under IDP

• Some existing

laws and

regulations need

to be amended

and it takes time

• Lack of

technical skill

workers for

supporting the

diversification of

new merging

sophisticated

industry

• SME Clustering

• SME linkage

• SME registration

under one roof

services is not

feasible for

practical

implementation

• Lack of financial

supports for

capacity

building and

SME promotion

• Lack of testing

equipment for

supporting

laboratory both

for NMC and

ISC

• Public-Private

Partnership

Proposed

Supporting Activities

1) Agro-Industry

• Fisheries value chain food safety

• Enhancing value addition and

addressing quality and post-harvest

issues in the rice sector

• Agro-Mechanization in the rural

agricultural sector

• Bamboo sector value addition and skills

development

2) Export-Oriented Industry

• Strengthening the National Quality

Infrastructure for Trade

• Strengthening the Standards and

Conformity Regime for Regional Trade

and Consumer Protection

• Strengthening the Testing Capability of

Rubber Research Institute of Cambodia

• Pilot Certification Supports to SMEs (ISO

9001, ISO 14001; HACCP)

• Improve the innovativeness and

competitiveness of the Cambodian

Garment Industry

3) Pro-Poor and Inclusive SME Development

• Supporting SME cluster and Value

Chain development in Mango and Silk

• Creative Industries support for

Handicraft sector

• Industrial Statistics Capacity Building

• Entrepreneurship Training

4) Ensuring Sustainable Industrial Development

• Promotion of Waste to Energy

Technologies in the Rice Milling Sector

• Promotion of Investments in

Renewable Energy Technologies in

Augment Rural Electrification

• Supporting Efficient Rice Processing

and Resilience for Climate Change

• Promotion of Waste to Energy

Technologies in the Rice milling Sector

in Cambodia for Access to Energy for

Productive Activities

• Resource Efficient Cleaner Production

(RECP)

• Sustainable Chemicals Management Source: General Department of Industry, Ministry of Industry & Handicraft

Priorities

o Skills development

o SMEs competitiveness

o Value Chains development

o Investment promotion/FDI for SEZs/industrial diversification

o Food quality & safety

o Environmental sustainability

o Tourism, agro-value chains, non-traditional exports

Thank You