ADB Provides US$100 Million in Loan to Boost Labour Force Competitiveness in Cambodia

date_range 04-Aug-2023
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Phnom Penh, August 01, 2023 --

The Asian Development Bank (ADB) has approved a US$100 million loan to help boost the caliber of Cambodia’s labour force by addressing skills gaps and shortages, said the bank in a news release this morning.

This will be done through reforms and investments in technical and vocational education and training (TVET) combined with private sector participation, it pointed out.

The first subprogramme of the Skills for Future Economy Sector Development Programme will help transform Cambodia into a technology-driven, knowledge-based industrial economy by strengthening its human capital resources, with a focus on enhancing the country’s skills development environment, providing industry-led inclusive training, and mobilising additional funds for demand-driven skills development, the source added.

“Reshaping Cambodia’s labour force and modernising its economy requires the continual reform of the TVET system through comprehensive strategies and well-timed, successive investments,” said ADB Country Director for Cambodia Jyotsana Varma. “These structural and institutional reforms in TVET are crucial in designing training programmes that meet market demand, upgrade training facilities and equipment, and expand the Skills Development Fund (SDF).”

According to the news release, the SDF was piloted by the government under the ADB-financed Skills for Competitiveness Project, which was approved in 2019 to boost the skills and competitiveness of Cambodia’s growing labour force. The SDF pilot has been responding to industry skills development training needs through cofinancing partnerships with government institutions, industries, training providers, and development partners.

Three key challenges contribute to the broader constraints facing Cambodia’s TVET system: the lack of a focused and comprehensive skills development programme for the fourth industrial revolution, limited private sector roles in skills development and the transformational vision of industries, and inadequate financing and partnerships in skills development. Combined, these challenges limit the employability and productivity of current and future labour forces and may prevent post-pandemic Cambodia from diversifying and transforming into a knowledge-based economy. The Skills for Future Economy Program will help address these challenges.

An estimated 9 million workers make up Cambodia’s labour market, with women accounting for 49 percent of the workforce. As of 2021, 54 percent of Cambodia’s population was under 30 years old, presenting a unique opportunity for the country to increase investment in human capital development and enhance the skills of new entrants to the labor market, while also upgrading the skills of existing workers to match industry demand.

The programme is a key component of ADB’s support for the government to strengthen human resources and develop the private sector and jobs market. It is also aligned with the government’s overall development plan and strategy as well as ADB’s country partnership strategy for Cambodia, 2019-2023.