First and foremost, I would like to express my deep appreciation to the distinguished speakers and panelists for their valuable contribution to our CCDR launch today.
The panel discussion provided a very good initiation into the challenges and issues that Cambodia faces if it is to grow its economy along a climate-compatible development path. The discussion also touched on several recommendations highlighted in the CCDR.
Cambodia's economic success has largely been driven by the dynamism of the private sector. Companies here have been aided by a supportive policy environment. However, as outlined by our speakers Cambodia now requires a new economic model to propel it to the next stage of becoming an upper-middle-income economy by 2030 and a high-income economy by 2050.
Climate change will exacerbate these development challenges with potentially significant impacts on growth, trade, debt, and poverty reduction. Cambodia faces one of the world's highest levels of exposure to floods and extreme heat.
Simultaneously, Cambodia will be significantly affected by the accelerated decarbonization and changing consumption and production patterns in the rest of the world. With the right policy choices and a vibrant private sector, this could offer opportunities for export diversification, job creation, and growth.
A new growth paradigm will require a private sector that is responsive to evolving global trends. Several institutional, human capital, and infrastructure constraints continue to hinder the competitiveness of the private sector in Cambodia. Costly trade-related regulatory barriers and inadequate trade-related infrastructure continue to obstruct full global integration, especially in the green space.
It will be crucial to catalyze private investments by removing distortions that deter private sector investments, thereby improving the enabling environment and providing the right incentives.
Reforms in the energy sector can intensify the private sector’s role on renewables. Investments in solar energy have been impressive in recent years, but further progress will require improvements in the regulatory environment. Measures to promote transparent and competitive procurement procedures, such as auctions, are overdue and necessary to encourage private sector participation in the renewable energy sector. Additionally, the contracting architecture under Power Purchase Agreements must reflect risk allocations in line with local conditions and international best practices.
We have also witnessed a construction boom that has been detrimental to the climate. The Cambodian government can do more to promote private sector investment in the development of green buildings by introducing green building standards and key regulations to increase demand for green buildings.
The CCDR identifies substantial financing needs for both adaptation and mitigation investments.
There is large financing gap between Cambodia’s climate ambitions and its current climate expenditures. Meeting Cambodia’s climate challenges will require large scale mobilization of private investment.
The CCDR identifies a range of measures that both the government and private sector can take to mitigate the impacts of climate change. The CCDR identifies several measures as a foundation for increasing private sector participation in adaptation investments through blended finance and de-risking mechanisms.
Green finance, Foreign Direct Investment (FDI) and other external private financing sources can play vital roles to fill this financing gap. It will be crucial to develop a green finance taxonomy to enhance market transparency, along with capacity building in financial institutions to promote a green financial sector.
These new regulations have to be aligned with international standards and supported by verification and validation systems.
The CCDR provides an excellent analysis and roadmap for Cambodia. Our focus should now shift towards the implementation of its recommendations.
As Cambodia continues to grapple with the triple challenge of ensuring rapid, inclusive growth, building resilience to climate change, and reducing emissions of harmful greenhouse gases, the World Bank is committed to providing technical and financial support. At IFC we look forward to working in partnership with the private and public sector participants here today to help Cambodia achieve its goals.
I look forward to the implementation, operationalization, and quick wins of the Cambodia CCDR.