The forgone Valued Added (VA) for most industries in Cambodia

Last time during my visit to Vietnam, I met a Malaysian investor who currently investing in Cambodia. She told me she is running a company supplying beavearge and softdrinks for Cambodia Market. Then, I asked her why did you come to Vietname? she replied she came here to order some inputs for the production in Cambodia. I continued why dont you order in Cambodia? She said there is no supply source that can consistantly ensure a smooth production for her firm and aslo the cost of input is quite expensive in Cambodia.

This a very obvious point for Cambodia, case most input is imported from neighbouring coutries or from other countries. If input is supply from Cambodian then such a linkage would added more value added to final products. Furthure, it will help in job creation for Cambodian people.  

Then, what  is VA? VA is the value added in the production chain so that the value will be included in the final goods produced.

Another simple example is the garment industry, the cloth production where the factories in Cambodia perfromed only Cut and Trim whereas input such as cotton is imported from China. This reflect a fogone value added in garment industry. Imagine what will be if the local supply is subsituted for the imported input from China. The transportation cost is reduced, local farmer find his business grow and job creation for local farmer.

Another case of Cashew nuts and Rubber plantation. Cashew nuts market in world market is predominant by Vietnam and India (FAO Statistics 2004). The problem is the demand for cashew nuts without shell is high. Cambodia is abundant with area of Cashew nut plantation 16,000 ha but the problem is we lack the company who process and package cashew nuts into final products. This lack offer Vietanamese dealer to buy from Cambodia through informal channel and make the price quite low. This reflect a lost of value added for cashew nuts industries. 

 The problem is the same for rubber industry. The world demand for plastic and material transformed from rubber is high but since we do not have any local process firm that process the natural rubber into semin-final or final product, the value added is lost. Although recently we have seven stated-owned company and there privated owned company as well as small holder of rubber plantation for natural rubber (EIC, 2007 June), we do not have company that process natural rubber this cause Cambodia to export natural rubber without any process.

Building supply linkage is necessary to avoid the lost of value added for most Cambodia industry. Also, it will offer job creation and ruaral development.  

Economic Leakage of Tourism Industry in Cambodia

Tourism is one among few potential industry contribution to Cambodia GDP. This sector offer both direct and indirect employment. Direct employment and indirect employment amounted to about 32500 and 67500 respectively (MoC 2003). The direct employment mainly refer to those who engage directly with tourism activities which included travel agents and aviation as well as transportation company. The indirect investment refere to the spillover of tourism industry, for instance the silk production, hotel, restaurants, bankings and others.

Returning to economic leakage. The leakage occur due to the industry import both consumption and resource from other country to support the growth of its own industry. A simple example is the hotel o r resaturants import foods, beaverage, construction material and others from Thailand and Vietnam to support its activity and serve customers. Well, this kind of leakage is one of phenomenan in every country, importantly, the leakage is measure in term of leakage multiplier. Regarding the leakage multiplier, according to MoC, Cambodia is higher (0.400) in comparasion with Thailand and Vietnam.