Cambodia Rethinks

  • Pressures for Reforms
    Cambodia has enjoyed a relatively high economic performance with an annual GDP growth rate of about 8 per cent over the last decade. Market liberalisation, economic openness, regional integration, as well as domestic macroeconomic and political stability are the key drivers for success. The country scored 58.5 on the Economic Freedom Index in 2013. It got 70.2 for trade freedom and 82.3 for monetary freedom. However, corruption remains the key constraint of socio-economic development. According to Transparency International, Cambodia ranked 160th out of 177 surveyed countries in the world.

    How can Cambodia achieve high economic growth with high corruption rate? The answer would base on the fact that the benefits from growth are not well distributed and Cambodian economy depends much on the foreign development assistance, reliance on the exploitation of cheap labor and natural resources, and tourism. It is narrowly based, not sustainable, and very much vulnerable to external shocks. Manufacturing and the service industry lag far behind those of its neighbors. Poverty remains severe, especially in rural areas, although it has dropped from 54 per cent in 2004 to 20 per cent in 2013. Income disparity has widened rapidly in the last decade. Gini Coefficient index for Cambodia in 2009 was slightly above 36. Moreover, with reference to the 2013 report of the United Nations Economic and Social Commission for Asia Pacific (UNESCAP), only 24 percent of Cambodians have access to electricity, 64 percent to clean water and 31 percent to proper sanitation. Land conflicts, depletion and mismanagement of natural resources as well as weak public institutions are some of the inherent issues need to be addressed.

    The propelling forces of reforms have gained momentum since the aftermath of the 2013 general election. After a serious setback in the last election, the ruling Cambodian People’s Party (CPP) has been forced to continue implementing deep and comprehensive reforms to strengthen its legitimacy and ensure its success in the next polls. At the first cabinet meeting on September 25, Prime Minister Hun Sen bluntly told the new ministers to practice self-criticism and be more responsible. “Look at yourself in the mirror, take a bath, and rub off dirt from your body, if there is any,” he said.

    He also told both old and new cabinet members to change their leadership style and attitude by listening to the voice of the people and not running their ministries as if they were their own family business. “We must change or we will fail,” he said. “We must change our attitude, way of thinking and action in delivering on our election promises.”

    The government’s national development plan for 2013-2018 aims to achieve four goals, namely average annual growth of 7%, more jobs for the people, especially the youth, annual poverty reduction rate at more than 1 per cent, and strengthening institutional reform and good governance. In order to realize these goals, the plan will focus on human resources development, continued investment in infrastructure, increasing the prices of agricultural products, and strengthening governance and capacity of the public institutions in order to improve the efficiency of public service and investment climate.

    In his recent speech at the official launching of Cambodia’s trade integration strategy 2014-2018 on 18 February, he reasserted that: “We continue to strengthen good governance, move up the value chains and participate in regional production networks, and create a favorable environment for the private sector and investment to enhance its competiveness.” Such political statement and commitment generally aim at restoring public trust and confidence and the investors alike.

    Despite the continued boycott and protests from the opposition Cambodia National Rescue Party (CNRP), the government has gone ahead with implementing its reform strategy with commitment to deliver concrete results. At the cabinet meeting on October 25, it approved the draft budget law for 2014 worth of 14,166,195 million riels (about US$3.5 billion). To meet the target, the government needs to increase tax revenue and secure continuous financial assistance from the international donor community.

    Imminent challenges

    Political disunity continues to be a threat to national peace, stability, economic development and poverty reduction. If this problem is not solved, it will lead further to political polarization and social fragmentation, adversely affecting economic development and foreign direct investment.

    The government must do more to promote good governance and reduce rampant corruption and abuse of power. Some may argue that corruption has become part and parcel of the Cambodian political system and society. But this is no excuse for the government to do nothing about it. Sustainable and inclusive growth needs to be pursued. Quantity of growth measured through GDP is important, but the quality of growth is even more important. Development needs reflect and response to the needs of the people.

    Ways Forward

    Both the CPP and the CNRP agree that the public institutions must be reformed to better serve the interests of the people and increase economic competitiveness and development. However, in the context of a post-election political crisis as a result of a disputed election, political accommodation and arrangement between the two parties need to be accomplished first. It is also necessary to carry out a comprehensive electoral reform including the structural reform of the National Election Committee (NEC) to avoid future post-election crisis and ensure a peaceful power transition through a free and fair election. All this will contribute to further democratic progress in Cambodia. Attaining these reforms requires full participation from all the political parties, the private sector, civil society, and people from all walks of life. It has been seven months that the CPP and CNRP have not reached any concrete steps to solve the political impasse. Both the Cambodian people and the international community are calling on the political parties to continue their negotiations, bearing in mind the best interests of the country.

    Without a political settlement Cambodia cannot move forward and realise its aim of becoming a healthy, prosperous, and engaged society. Cambodia has suffered enough. It is time for the politicians to get united and work together towards a brighter future Cambodia. Nothing is too late; everything is possible, as long as there is a political will.

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