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Cambodia: Index of Economic Freedom

Cambodia’s economic freedom score is 57.4, making its economy the 108th freest in the 2014 Index. Its overall score is 1.1 points worse than last year due to declines in monetary freedom, business freedom, labor freedom, and freedom from corruption. Cambodia is ranked 23rd out of 42 countries in the Asia–Pacific region, and its overall score is lower than the regional average.

Since Cambodia’s economic freedom was first assessed in the 1997 Index, its progress in adopting policies that enhance economic freedom has been uneven and modest. The country’s overall economic freedom score has improved by only 4.5 points, with advancements in trade freedom, monetary freedom, and investment freedom largely offset by significant declines in business freedom and freedom from corruption.

Cambodia had advanced into the ranks of the “moderately free” during the early 2000s but has fallen back to the status of economically “mostly unfree” since 2006. Substantial challenges remain, particularly in implementing deeper institutional and systemic reforms that are critical to strengthening the foundations of economic freedom. Government interference continues to undermine dynamic flows of investment and overall economic efficiency.

Background:
Between 1975 and 1979, Pol Pot’s Khmer Rouge regime killed an estimated 3 million Cambodians. A tribunal established under an agreement with the United Nations to prosecute senior officials involved in the atrocities has been slow to deliver justice. Now nominally a democracy, Cambodia has been ruled by former Khmer Rouge member and Vietnamese puppet Prime Minister Hun Sen since independent Cambodia held national elections in 1993. Elections have often fallen short of international standards, with the outcome of the most recent, in 2013, hotly contested by the opposition. In 2012, Cambodia took its turn as chair of the Association of Southeast Asian Nations, drawing increased international attention to and criticism of its undemocratic policies and close ties to China. Cambodia’s economy depends heavily on tourism and apparel assembly.

Rule of Law:
A majority of Cambodians in a 2013 corruption survey said they had paid a bribe in the past year; nearly three-quarters said that personal contacts were needed when dealing with the government. A weak and inconsistent judiciary does not protect private property effectively. Investments in mining, forestry, agriculture, textiles, tourism, hydropower, and real estate frequently involve land grabs by powerful politicians, bureaucrats, and military.

Limited Government:
The top individual income tax rate has fallen to 20 percent. The top corporate tax rate remains at 20 percent for most businesses but 30 percent for the petroleum and gas sectors. Other taxes include a value-added tax (VAT) and an excise tax. The overall tax burden has remained steady at about 10.9 percent of GDP. Expenditures remain around 20 percent of the domestic economy, and public debt has stabilized at about 29 percent of GDP.

Regulatory Efficiency:
The overall freedom to establish and run a private enterprise is constrained significantly by the inefficient regulatory environment. Starting a business remains time-consuming, and completing licensing requirements takes more than 500 days. The formal labor market is not fully developed, and enforcement of many aspects of the labor codes is ineffective. Most prices are determined by the market, but the state has been increasing subsidies for fuel.

Open Market:
Cambodia has an average tariff rate of 9.5 percent. The country’s underdeveloped legal system is a deterrent to foreign investment. The financial system remains segmented and subject to government influence. There is only one company listed in the country’s first stock market, which opened in 2012 after years of delay.

(Source: heritage)

Cambodia: World Bank Country Assistance Strategy

Cambodia received its first credit from the World Bank in 1993. Following decades of conflict in Cambodia, the World Bank’s priority areas were to support the reconstruction of social and economic institutions and the development of physical infrastructure. Since 1999, increasing focus has been placed on governance reforms, macroeconomic stability and sustainable economic growth, private sector development, rural development, sustainable natural resource management, and improving and expanding health and education services.

The World Bank Country Assistance Strategy (2005-2008, extended to 2011) outlined two priority areas: removing governance constraints on growth and poverty reduction and supporting the strategies and investments needed to achieve Cambodia’s development goals. Projects financed by the World Bank under this strategy have been designed to help implement Cambodia’s National Strategic Development Plan for 2006-2011 (extended to 2013) and to help Cambodia achieve the MDGs.

Human development, particularly in the areas of health and education, remains an important development priority for Cambodia. About 40 percent of children under five-years-old are malnourished and are short for their age.

The World Bank remains concerned about conflict over land issues in Cambodia. It is critical to Cambodia’s sustained economic and social development that these are resolved fairly and peacefully.
The World Bank continues to discuss with the government on how to support the country's development in a way that benefits all Cambodians.

(Source: World Bank)

Cambodia Economic Growth Overview

Cambodia’s economy grew rapidly, at more than 8 percent per year, between 2004 and 2012. GDP growth slowed during the global economic downturn in 2008-09 and then picked up again to reach a four-year high of 7.3 percent in 2012.  The economy is expected to grow at around 7 percent in 2013, driven by strong exports, private investment and agriculture, and underpinned by a solid macroeconomic position. Economic growth broadened over the past few years, thanks to sustained growth in the agricultural sector, driven by increases in rice prices in global markets.

Poverty in Cambodia has fallen sharply. World Bank estimates suggest that Cambodia achieved the Millennium Development Goal (MDG) of halving poverty in 2009. However, a vast majority of families who were lifted out of poverty were only able to do so by a small margin. Today, the poverty rate is 20.5 percent. Still about 2.8 million people are poor, and about 90 percent of them live in the countryside.

Cambodia has made good strides in improving maternal health, early child care, and primary education programs in rural areas. The number of deaths per 100,000 live births decreased from 472 in 2005 to 206 in 2010, the under-five child mortality rate decreased from 124 per 1,000 live births in 1998 to 54 in 2010, and the net primary school admission rate increased from 81 in 2001 to 94.3 in 2012.

Cambodia has also been successful in HIV/AIDS prevention and treatment. As of 2011, 95 percent of people infected with HIV/AIDS in Cambodia have access to antiretroviral treatment. This coverage rate is among the highest in the developing world.

Cambodia still faces a number of development challenges, including effective management of land and natural resources, environmental sustainability, and good governance. Corruption and poor public service delivery impede inclusive development.

(Source: World Bank)

International Trade

This category contains articles pertaining to international trade from a Microeconomics perspective.
Absolute and Comparative Advantage
Imports and Exports

China: Building the dream

By 2030 Chinese cities will be home to about 1 billion people. Getting urban China to work properly is vital to the country’s economic and political future, says James Miles

SOME HISTORIANS BELIEVE that Marco Polo never went to China. But even if the 13th-century Venetian merchant did not lay eyes on the coastal city of Hangzhou himself, he certainly reflected the awe it inspired in other foreign traders when he described it as “beyond dispute the finest and the noblest in the world”. And, “incredible as it may seem”, he wrote, Hangzhou (which he called Kinsay) was but one of more than 1,200 “great and wealthy cities” in southern China. “Everything appertaining to this city is on so vast a scale…that it is not easy even to put it in writing.”

In Marco Polo’s day it was the ornate palaces, paved roads and meticulously planned layouts of Chinese cities that impressed visitors; in today’s megacities it is some of the world’s tallest skyscrapers and largest shopping malls, interlinked by the world’s longest bullet-train network. And if all goes according to the Communist Party’s plan, the coming two decades will evoke a few more gasps.

By 2020 the high-speed rail network will expand by nearly two-thirds, with the addition of another 7,000km (4,300 miles). By then almost every city with a population of half a million or more will be connected to it. Tens of millions more migrants will have poured in from the countryside. Between now and 2030, says the World Bank, the average rise in the number of city-dwellers each year is likely to be around 13m, roughly the population of Tokyo. In 2030 China’s cities will be home to close to 1 billion people, or about 70% of the population, compared with 54% today. By some estimates the urban population will peak around 2040, still just shy of the 1 billion mark but close enough. As James McGregor, an American businessman, put it in his book, “One Billion Customers”, published in 2005, the notion of a billion Chinese spenders has come to symbolise “the dream of staggering profits for those who get here first, the hype and hope that has mesmerised foreign merchants and traders for centuries”.

After taking over as party chief in 2012, Xi Jinping (now also president) launched his expected decade in power with a catchphrase: “The Chinese dream”. It was a striking break from the party’s tradition of ideology-laden slogans. Now endlessly invoked in official speeches and the subject of numerous books and songs, the phrase is clearly intended to appeal to upwardly mobile urban residents striving for the comforts of their rich-world counterparts.

Only 15 years ago such a middle class barely existed in China. In 2011, when the country reached 50% urbanisation, it had become obvious that the party’s fate rested with the stability of cities and the contentedness of their middle-class residents. The largely rural country that Deng Xiaoping (himself of peasant stock) set out to “reform and open up” in the late 1970s had become overwhelmingly urban in its economic and political focus. Thanks mainly to a tide of migration, China’s urban population had grown by more than 500m since Deng launched his reforms: the equivalent of all the people in the United States plus three Britains.

Li Keqiang, who took over as prime minister in 2013, sees further urbanisation as critical to China’s economic success. He has called it a “gigantic engine” for growth. Mr Li and other officials are fond of quoting Joseph Stiglitz, a Nobel prize-winning American economist, who said that technological innovation in America and urbanisation in China would be “two keys” to mankind’s development in the 21st century.

(Source: The Economist)

10 things great talent always does

Finding amazing talent is a tricky process. Making talent recruitment a top priority can multiply the success of
an organization. To recognize great talent, hiring managers can look for the following signs instead of paying attention only to resumes and cover letters. Here are 10 things people possessing great talent always do:


1. They talk about their long-term goals. 
Talented candidates aren’t afraid of their future. In fact, they’re excited about their career and what’s in store. Ask candidates about their long-term goals during a job interview. Those with great talent will talk about their prospective future with the company and what they plan to accomplish if hired.


2. They’re resourceful and prepared for anything.
Great talent is prepared for any situation. The ability to think and act on the spot is a quality few people have.
People with top-notch talent know their resume inside and out, have their portfolio ready and can answer interview questions without stumbling over their thoughts.


3. They display confidence in any situation.
There’s a fine line between confidence and arrogance when identifying top talent. Confident individuals, however, can handle any situation and accept the reality that it’s OK to be wrong. During the interview, ask candidates about their weaknesses. Look for a candidate who can confidently speak about weaknesses and explain the lessons they have learned.

4. They market their versatility.
Individuals who are truly talented possess a wide range of skills and can transfer them to different roles and succeed. Ask candidates about a time when they had to try something new or apply their skills in an unusual situation. A good candidate will be able to share an experience or two.


5. They prioritize results.
Talented people care about results. They have a burning passion to accomplish their goals, both in their personal life or career. Those who possess top talent will talk about what they want to accomplish once hired without the interviewer having to ask.

6. They ask smart questions.
Bright individuals are curious people. Because of this, they’ll ask questions to learn more about an organization and how it functions. During the interview, a talented candidate will ask questions about what he or she is expected to accomplish if hired. They will inquire about the attributes of the top performers at the company and about what it takes to drive results.


7. They’re extremely flexible.
Many organizations continuously update their goals and implement new strategies. Top talent can adjust to such changes without becoming derailed from success. Ask candidates about a time when they had to quickly adapt to a new situation and what happened.

8. They’re comfortable with taking risks.
Risk taking is involved at any business. Talented people aren’t afraid of pushing the envelope to discover new ideas. Ask candidates about a time where they had to take a risk. Their response should provide enough insight about whether they can take big enough risks.

9. They bring passion to the position and organization.
This might seem like a cliché, but passion is a quality that sets apart those with great talent from lackluster candidates. When a talented person is passionate about what he or she does, that individual is not afraid to tell a prospective employer. In fact, when someone is truly passionate, a hiring manager can see it in the individual's personality and previous experience.

10. They communicate effectively with a variety of stakeholders.
Strong communicators have the ability to take organizations to the next level.
When speaking to candidates over the phone or in person or exchanging emails, pay close attention to how they communicate. This gives employers a better indication of their communication skills.
What are some other ways to recognize great talent?

(Source: entrepreneur)

Malaysia Halfway to 2020 Plan

Halfway through its first century of independence and halfway to 2020 plan which is expected towards becoming a developed country by 2020 due to its booming economic growth. The average growth rate is about 6.1 per cents and its GDP per capita was double to USD 15,385 by 2008. Notably, Malaysia has an impressive current account surplus of 99.3 billion Ringgit equivalents to USD 31 billion (Richard, 2006).

The growth in manufacturing, agriculture, and services are significantly bringing Malaysia forwards. The Malaysian electronic export is equivalent to nearly 47 per cents and agricultural commodities such palm oil and rubber contributing 8.6 per cents which leads to a surplus of USD 310 million. Given to its rapid economic growth during the past five years, Malaysian Prime Minister Badawi was satisfied with the achievements and the progress of its halfway in its vision 2020.

Despite a rapid economic growth, it is concerned that this plan might face the risks of getting stuck in the middle in term of great challenges and even more perilous and demanding in the global environments. The main issue in Malaysia Halfway to 2020 plan is a low investment rate. Therefore, this case paper intends to analyze this key issue and provide some new alternative options for the government to achieve the objectives of its vision 2020 plan.

Despite a positive economic growth, Malaysia has a negative investment rate due to its restrictions on openness to trade and investment in terms of government regulations. Comparing to the Asian countries such as China, India, Singapore, and Hong Kong, Malaysia has a lower rate of economic growth. For instance, China receives a huge amount of foreign direct investment which leads to an increase in growth rate in excess of 9 per cents in the past two decades. India became the fastest growing centre of information technology and outsourcing contributing to a growth of 8 per cents annually for the past six years. Exhibit 3 and 4 indicate a huge negative investment of Malaysia which is USD 14.5 billion leading to a decrease in the account surplus (pp. 12-13). According to Figure 1 and 2, Malaysia is similar to the Asian countries in terms of starting a business but considerably worse in terms of excessive regulation which leads to a decrease in investment (p. 9). Therefore, Malaysia might face economic slowdown if this problem is ignored.

To overcome the above issue, two alternative options are recommended to boost the economic growth: ongoing increase in savings and investment rates, and ongoing technological change and human capital accumulation to ensure the stability and enhancement of its economic growth. These options will strengthen the Malaysian economic growth fundamentals.

First, the Malaysian government should continue to increase a level of investment and reduce restrictions on openness to trade to boost an inflow of foreign direct investment. It is significant to keep ongoing increase in savings and investment which lead to an increase in capital stock and income per capita. The high level of inward foreign direct investment leads to an increase in the capital stock and formation which contributes more to the Malaysian economic growth. Additionally, the transparency and consistency of the government policies should be treated for the openness to trade and competitiveness. Thus, it will boost the industrialized sector and enhance an increase in manufacturing, construction and services. For instance, the government’s surplus savings and capital should be used to channel into investments.

Second, ongoing technological change and human capital accumulation significantly boost the productivity and total productivity leading to an economic growth (Helpman 1994, p. 55). Although, the growth of output increases to 6.3 per cents in 2007, it is expected that the growth will decrease at 5.5 per cents in 2008 due to a global turndown. Notably, the Malaysian total factor productivity of more than 2 per cents annually is significant for boosting its economy apart from the growth of labor and capital inputs. For this reason, by continuing the technological change and human capital accumulation will enhance the total factor productivity and could sustain the economic growth.

Although, both two alternative options above are significant to take into accounts, it is preferably suggested that the most significant option to deal with the above issue is option one: Malaysia should increase the level of investment and reduce restrictions on openness to trade to boost an inflow of foreign direct investment. Exhibit 3 and 4 indicate the Malaysian investment was hugely negative USD 14.5 billion which leads to a decrease in their account surplus. Therefore, the government should take into account to further step their investment rates. However, increasing the level of investment alone does not exert an independent positive effect on growth, the openness to trade and human capital development in particular is needed to be tied to investment (Ventura 1997, p. 58). For this reason, the government needs to challenge more with the Asian Countries such as China and India. If they do not improve the weakness of its investment, it would clearly decline as China and India will take more foreign direct investment. At the same time, education and training should be enhanced and government regulation on trade and investment should be simplified to provide for both domestic and foreign investors an opportunity for further investment. As a result, Malaysia would be able to sustain and enhance its economic growth, and even actively compete with the global markets.

Finally, Malaysia has a remarkable economic growth. They could continue to forge ahead with their economic policy towards the achievement of vision 2020 plan. Given to its current account surplus and strong economic growth, Malaysia has clearly stayed on the course of growth. Although, it is concerned that the plan might get stuck in the middle, their economic trend indicates positive growth. However, they need to challenge more on investment, which is suggested in option one above, in order to sustain and boost the economic growth, and seize the opportunities in the next decade.

(Author: Bong Angkeara)

How fortune 500 leaders spend every minute of the day

How do top business leaders spend their time?

Being fascinated by this topic, I collaborated with Chris Stowell, vice president of the International Center for Management and Organization Effectiveness in Sandy, Utah, to survey 267 C-level executives (all at the vice president level or higher) at Fortune 500 companies.

The respondents to the email survey, completed over the past two months, came from 163 companies including Adobe, American Express, AT&T, Bank of America, Boeing, BP, Delta, DHL, Federal Express, GE, Google, HP, John Deere, Johnson & Johnson, Kelloggs, Motorola, Rio Tinto and Twitter.

The survey research showed that the typical corporate leader wakes up at about 6:15 a.m., exercises for 45 minutes and commutes 25 minutes each way. Every workday, he or she spends two hours and 25 minutes on email and texting, 25 minutes on strategy and planning, and 30 minutes on personal development. The infographic below, created by Stowell, my friend and a leadership-training consultant, summarizes the findings.

(Source: entrepreneur)