AMRO Launches the SPIRIT Pilot Project to Strengthen Cambodia’s Economic Capacities

The ASEAN+3 Macroeconomic Research Office (AMRO) and the Ministry of Economy and Finance of Cambodia (MEF) are launching an unprecedented technical assistance project in 2026 to boost the mobilization of Cambodia’s domestic revenue. This initiative is the first pilot of the SPIRIT framework (Structural Policy Improvement and Review Instrument with Technical Assistance) and marks a major milestone in ASEAN+3 regional cooperation.

A Strategic Three-Year Partnership

Initially financed by the China Technical Assistance Trust Fund managed by AMRO, this program will support the MEF in assessing and optimizing its revenue streams, with a focus on tax incentives, carbon taxes, and non-tax revenue. Unlike traditional short-term technical assistance (usually lasting 6–12 months and focused on a single topic), SPIRIT provides multi-year support—up to three years—leveraging both internal resources and external expertise to deliver long-term, sustainable recommendations. 

A Letter of Intent was signed on November 26, 2025, in Hong Kong by Joong Beom Shin (Deputy Director of AMRO) and Ung Luyna (Director-General of the MEF Policy Department), formalizing this partnership. The signing took place on the sidelines of the ASEAN+3 meeting of Vice-Ministers of Finance and Central Bank Governors, and was attended by officials including Liao Min (Chinese Vice-Minister of Finance) and Tep Phiyorin (Cambodian Under-Secretary of State), along with other Chinese and Cambodian representatives.

SPIRIT: A Lever for Structural Reforms

Formally endorsed in May 2025 by the Ministers of Finance and Central Bank Governors of ASEAN+3 member economies, SPIRIT is an optional instrument that combines macroeconomic surveillance with targeted technical assistance. It is designed to identify long-term structural challenges, strengthen regional financial safety nets, and help participating economies pursue prioritized reforms.

AMRO’s technical assistance under SPIRIT is tailored to the development stage and national priorities of each of the 14 members (ASEAN countries plus China, Hong Kong, Japan, and Korea), promoting knowledge sharing and cross-institutional collaboration.

Impact on Cambodian Taxation and Competitiveness

Cambodia faces a major challenge: its domestic revenue mobilization remains low (around 19% of GDP in 2020), constrained by excessive tax exemptions, low tax productivity, and declining customs revenue following ASEAN Free Trade Area liberalization. The SPIRIT project is launched at a critical time, as subsidy levels fall and infrastructure needs grow rapidly.

By reforming tax incentives (which have often been criticized for high cost with limited benefit) and optimizing non-tax revenues, the initiative could increase the government’s revenue by up to 0.5% of GDP per year, which is a key goal for Phnom Penh.

Introducing a carbon tax, aligned with the Article 6 operational framework of the Paris Agreement (whose manual was approved in 2025), would open potential “green” revenue streams through carbon credits such as JCM and Gold Standard mechanisms—while supporting Cambodia’s environmental transition without undermining competitiveness.

According to AMRO projections, Cambodia is expected to see a budget deficit of around 2.8% of GDP in 2025; the fiscal reforms supported by SPIRIT, combined with gradual consolidation, would help stabilize public finances and enhance resilience even amid slower growth.

The overall result: a more resilient Cambodia that is attractive to investors and equipped with modern, environmentally aligned fiscal policies.