Cambodia Poverty Assessment Opening Remarks by Maryam Salim, World Bank Country Manager for Cambodia

Excellency Tuon Thavrak, Secretary of State, Ministry of Planning

Excellency Chan Narith, Under Secretary of State, Ministry of Economy and Finance

Excellencies, Ladies and Gentlemen:

Welcome to the launch of our Cambodia Poverty Assessment - Toward A More Inclusive and Resilient Cambodia. My name is Maryam Salim, World Bank Country Manager for Cambodia. I am pleased to physically and virtually meet all of you today.

The Poverty Assessment is a core diagnostic report that the World Bank prepares for all client countries. It is a result of the World Bank's technical assistance to support the Government to revise the poverty measurement methodology including redefining the national poverty line to make it more consistent with international best practice and to fill knowledge gaps on trends and drivers of poverty and inequality in Cambodia using up-to-date household survey data.

First of all, I would like to congratulate Cambodia for reducing the poverty rate by almost half in the last decade. The proportion of Cambodians living below the national poverty line declined from 33.8 percent in 2009 to 17.8 percent in 2019/20. Almost 2 million Cambodians escaped poverty, many of whom lived in rural areas.

As you will see shortly in the presentation, rapid economic growth from 2009 to 2019, combined with structural change and higher labor earnings reduced poverty in Cambodia. Cambodia's gross national product (GDP), among the fast-growing in the world, grew about 7 percent annually over the decade. Cambodia's population also grew at a pace far slower than the economy, helping GDP per capita grow about 5.4 percent annually over the same period.

Structural transformation was crucial to Cambodia's poverty reduction success. The structure of Cambodia's economy changed rapidly as workers moved from agriculture to higher-productivity, better-paying manufacturing and service jobs, boosting workers' earnings. Most garment and footwear jobs paid at least the minimum wage and offered a range of monetary and non-monetary benefits. The minimum wage, applicable to garment and footwear industries, increased from US$ 50 in 2009 to US$ 182 in 2019.

The decline in monetary poverty is reflected in the improvement in household living standards. Housing conditions improved with more durable dwellings, and the proportion of households with access to electricity more than tripled, with rural households seeing a seven-fold increase. Access to improved water almost doubled, access to improved sanitation more than doubled. Maternal and child health improved substantially as comprehensive health services scaled up along with pro-poor social assistance. Child nutrition and vaccination improved, and in 2015 Cambodia achieved most of the health-related Millennium Development Goals. Cambodia increased primary education enrollment to levels comparable with high-income economies and increased secondary school enrollment. Increased ownership of communication devices, transport assets, and household appliances are further evidence of rising living standards.

Despite this remarkable performance, Cambodia's economy and households showed signs of vulnerability, which materialized following the COVID-19 pandemic. Cambodia's economy contracted 3.1 percent in 2020 due to the pandemic, marking the sharpest decline in Cambodia's recent history and among the most pronounced in East Asia. COVID-19 severely negatively affected Cambodia's growth-driving sectors: construction, tourism and merchandise exports. Cambodia's tourism and hospitality sector collapsed due to travel restrictions.

COVID-19 partially reversed Cambodia's poverty reduction progress. In 2020, poverty rose for the first time in a decade. COVID-19 weakened labor markets considerably and household incomes declined due to employment loss and/or reduced hours and wages. Hitting the poorest people hardest, the adverse COVID-19 effects eroded shared prosperity as low-income households suffered most from job losses and declines in welfare. For the bottom 20 percent, per capita consumption dropped three times more than for the top 20 percent, and low-income households were more likely to reduce food consumption and eat less nutritious meals.

To mitigate the negative effects of COVID-19, in June 2020, the Government launched a cash transfer program, the largest component of the government's support package, for poor and vulnerable households. As of October 2022, the program has disbursed $837.05​​​​​​ million and reached about 700,000 households (2.8 million individuals) or about 17 percent of the population. The COVID-19 relief cash transfers prevented an estimated 300,000 people from falling into poverty in 2020. The poverty rate in 2020 is thus projected to have increased by 2.8 percentage points instead of by 4.7 percentage points.

To foster a more inclusive and resilient Cambodian economy and society, it is crucial to (i) leverage cash transfers for immediate and future poverty reduction, (ii) strengthen Cambodia's post-pandemic social protection system, (iii) improve human capital through health and education, (iv) diversify Cambodia's growth model, and (v) strengthen the redistributive effect of fiscal policy and finance poverty reduction strategies sustainably.

Excellencies, Ladies and Gentlemen:

Let me conclude by thanking you for joining the hybrid launch of our Cambodia Poverty Assessment.

Finally, let me also thank the Cambodia Poverty Assessment World Bank team, led by Wendy Karamba and Kimsun Tong, with support from Isabelle Salcher, Saroeun Bou and Socheat Ath, working under the guidance of Rinku Murgai.

Thank you

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