Background

The economy of Cambodia has grown at more than 7 percent per year since 2011, driven by the garment industry (which represents 80 percent of Cambodia’s exports and 1/3 of GDP), construction, the service sector, in particular tourism, and agriculture. The poverty rate fell from 50.2 percent in 2004 to 17.7 percent in 2012 and unpublished figures indicate that the poverty level may have fallen below 14 percent in 2014 so Cambodia has met and achieved MDG1. However, a very high proportion of the population lives only marginally above the poverty line of USD 1.25/day. It has been estimated by the World Food Programme (WFP) that 11 million of the total population of 15 million are poor or near-poor leading to a very high level of vulnerability. The Royal Government of Cambodia (RGC) expects to graduate from Low Income to Lower-Middle Income status in 2016 and has set as target to reach Higher-Middle Income status in 2030 and High Income status in 2050. Threats to this ambition include gradually rising minimum salaries in the garments sector which may erode the competitiveness of the sector. The rising salaries in the public sector which divert RGC resources while not adding to productivity or performance, the low growth rate in the agriculture sector and the generally low level of skills of the population and the mismatch of the existing skills with the requirements of employers, especially those wishing to move up the value chain. Cambodia will remain a Least-Developed Country for several more years as the social indicators required for graduation lag behind the increase in the calculated per capita income. In fact, the benefits of the high level of economic growth have not been sufficiently well shared socially or geographically as illustrated by the high levels of vulnerability and the underperformance of the health care and education systems. From growth rates of between 5 and 6 percent from 2005 to 2009, the growth rate of the agriculture reached 1.7 percent in 2013 and 2.9 percent in 2014 indicating that agriculture is no longer a driver of economic growth. However, as 80 percent of the population depend fully or in part on agriculture for their livelihoods and as 90 percent of the poor live in rural areas, the sector will remain essential for poverty alleviation and vulnerability reduction for many years to come. The Country Programming Framework (CPF) 2016-2018 of the Food and Agriculture Organization of the United Nations (FAO) in Cambodia defines the development objectives for collaboration between FAO and the Royal Government of Cambodia for the period 2016-18 in support of the achievement of the priorities of the Royal Government. The overarching goal of FAO’s programme in Cambodia is to contribute to the eradication of poverty, food insecurity and malnutrition and to the sustainable management and use of the country’s natural resources.