Cambodia gets positive LDC graduation tick in UN evaluation

Cambodia gets positive LDC graduation tick in UN evaluation

The UN’s preliminary evaluation for the 2024 triennial review has given Cambodia a positive tick for its 2027 graduation from the status of Least Developed Country (LDC) with a Gross National Income (GNI) per capita score of $1,546 which is above the threshold of $1,306 or above.

Cambodia also achieved a good score of 77.7 on the Human Assets Index (HAI), which is above the graduation threshold of 66 or more. The country progressed well in the Economic and Environmental Index (EVI) as well with a score of 23.3 (the threshold for this category is 32 or below), as per data recently revealed by Chandarany Ouch, Economist at the United Nations Resident Coordinator Office, at a roundtable discussion.

In 2021, during the previous triennial evaluation, Cambodia had a GNI per capita of $1,377 (threshold $1,222 or above), HAI of 74.3 (threshold 66 or above) and EVI of 30.6 (threshold 32 or below).

The 2024 evaluation data are, however, preliminary and subject to update and review. The evaluation was conducted by the Committee for Development Policy (CDP) of the UN. The CDP is a subsidiary body of the United Nations Economic and Social Council (ECOSOC).

Graduation from the LDC category is a multi-year process which formally starts when a country meets the criteria for the first time at one of the CDP’s triennial reviews. The CDP is mandated to review every three years the list of LDCs and to make recommendations on which countries are to be graduated from the category.

The UN General Assembly will consider the CDP recommendation (endorsed by ECOSOC) for Cambodia to graduate in November this year following which the preparatory period will officially commence.

Expectations are that Cambodia will achieve the Upper Middle Income Country status by 2030 or even earlier and a High-Income Country status by 2050.

It may be noted that Cambodia met the graduation criteria for the first time in 2021. While the graduation is considered a development milestone for the country, it also means loss of trade benefits enjoyed by LDCs, including duty-free status under the Generalized System of Preferences (GSP) by various countries including the European Union (EU).

Cambodia should pursue new free trade agreements (FTAs) and act promptly to accelerate trade reforms to deal with challenges that may arise when it graduates from the LDC status in 2027, a blog on the Asian Development Bank (ADB) website suggested.

Cambodia is one of the few LDCs that has dramatically increased its exports to the EU through preferential treatment and lenient rules of origin, allowing its products to enter Europe duty-free.

If not carefully managed, the loss of these preferences may hurt Cambodia’s export performance, the blog by economic consultant Gerald Pascua, Pramila Crivelli, economist with ADB’s economic research and regional cooperation department and Stefano Inama, chief of technical assistance at the UN Conference on Trade and Development (UNCTAD), noted.

It is learnt that Cambodia will no longer be eligible for the standard GSP and the Everything But Arms (EBA) tariff scheme of the EU after it gives up the LDC status. The country is now in the process of checking out favourable trade tariff schemes such as the EU’s GSP Plus.

GSP Plus is a special incentive arrangement of the EU for sustainable development and good governance in vulnerable developing countries that ratified 27 international conventions on human rights, labour rights, environmental protection and climate change, and good governance. khmertimeskh

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