The Cambodian government has released its strategic plan to develop the country’s financial sector over the next 10 years, which includes creating a national pension fund.
Speaking at the launching ceremony of its ambitious 109-page report, “Financial Sector Development Strategy 2016-2025” last week, Cambodian Economy and Finance Minister Aun Pornmoniroth said the plan is the third update since the country adopted its first financial development strategy in 2001, according to Vietnam’s state-run news agency The Vietnam News Agency.
Pornmoniroth said that developing the financial sector is one of the main economic and financial goals of the Cambodian government, adding that it has an important role in maintaining macroeconomic stability, and contributing to the country’s long-term economic growth.
Despite its length, the plan doesn’t go into great detail, as the executive summary said it was intended to be “flexible to respond to changing conditions,” according to Cambodia Daily.
But the report does reveal that, in addition to the proposed pension fund, the government is interested in a wide range of initiatives, including creating a social security fund, selling government securities, developing an early-warning system for external market shocks, updating a national strategy for microfinance institutions, and promoting financial literacy.
One of the report’s more lofty goals is to create a “Social Protection Law” and “Pension Law” to be drafted by 2019 and implemented by 2022, according to Cambodia Daily. A mandatory pension fund for the private sector is expected within the next 2 ½ years, according to the report. This could include passing laws that require employers to putting a percentage of their employees’ salaries into pension funds, which would be managed by banks or other financial institutions.
The report also proposed streamlining the issuance of land titles for security and debt collateral, creating a commodities market, developing a consumer protection agency and a commercial court chamber, and seeking the listing of financial institutions and small and medium-sized enterprises on the country’s nascent stock exchange.
In recent years, Cambodia has moved closer to lower-middle-income status through strong economic growth, according to the Asian Development Bank (ADB). The poverty rate plunged from approximately 50% in 2007 to below 20% in 2012, reports the ADB. However, more than 70% of Cambodians still live on less than $3 a day, which means that many of them remain vulnerable to falling back into poverty.
The Cambodian economy grew by an estimated 7% in 2016, matching its growth from the previous year, and is forecast to grow by 7.1% in both 2017 and 2018.