The Asian Development Bank (ADB) has approved a $50 million policy-based loan to support the Cambodian government to diversify the economy and boost global competitiveness.

The loan is under the Trade and Competitiveness Program and will support Cambodia’s post-Covid-19 economic recovery by aiding government reforms to enhance the investment and business environment; foster the growth of micro, small, and medium-sized enterprises (MSMEs); and improve trade policy and trade facilitation.

ADB Senior Economist Sion L. Morton said in a press release on Tuesday that the Covid-19 pandemic has severely impacted key sectors of the Cambodian economy, such as garment, footwear, and textile manufacturing, as well as tourism and construction.

“The reforms under the program will help Cambodia’s post-pandemic recovery prospects by paving the way for businesses to grow and migrate to higher value-added segments and adapt to the changing trade landscape,” Morton said.

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The Trade and Competitiveness Program will help improve the overall business climate for both domestic and foreign firms, ADB said.

Under the first subprogram, the government has enacted a new investment law to codify legal protections for investors, including those investing in special economic zones, and upgraded an online business portal to enable the timely issuance of specialized digital business licenses, the bank added.

The ADB said the program supports the development and diversification of MSMEs, improving their access to finance, and creating new markets for them. This includes simplifying the legal definition of MSMEs and rolling out a government-funded assistance package to provide grants and technical support to MSMEs in priority industries with high female participation.

“The program will also help Cambodia improve the implementation of regional trade agreements and strengthen coordination on trade facilitation to provide more opportunities for Cambodian businesses to export their goods.”

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As part of these reforms under subprogram 1, the government has set up the National Committee on Trade Facilitation and approved the National Road Map on Trade Facilitation.