Charting the Course of a Brighter Future - A Survey of Progress, Problems and Prospects
Publication Year: 2012
Published by: ISEAS–Yusof Ishak Institute
Title Page, Copyright
Table of Contents
To assess the economic situation in Cambodia, we need to have a clear understanding of its past. Cambodia has moved in stages, many traumatic, from a position as a war-torn, conflict-ridden, isolated country to one of stability, which is underpinned by a gradual progress to a market economy. ...
The overthrow of Prince Sihanouk by the Lon Nol coup d’état on March 18, 1970, plunged Cambodia into the horrors of war, genocide, and unbrid violence. The two decades that followed dramatically transformed the society and economy of Cambodia. The seizure of power by the Khmer Rouge on April 17, 1975 set Cambodia on course of genocide and self-extermination of its people. ...
After more than three decades of civil war, Cambodia has experienced relative peace since 1998 and has been rebuilding its infrastructure, economy, and social fabric, and thereby enabling the country to redirect its resources and strengths toward sustained, equitable development. ...
Symbols and Abbreviations
Part I: Geography and Population
Cambodia is located in South East Asia. It lies between the 10th and 15th degrees north latitude, and between the 102nd and 108th degrees east longitude. It has a tropical climate and receives monsoon rains. With an area of 181,035 square kilometers, Cambodia is polygonal in shape, with its center located near Kampong Thom Province. ...
2. Population and Demographic Structure
War, social breakdown, and genocide exacted a heavy toll on the people of Cambodia. Before World War II, the population of Cambodia numbered just over 3 million. According to the 1962 census, the total population was 5.7 million. Prud’homme estimated the total population to be 6.9 million people in 1970, and 7.9 million in 1975. ...
Part II: Macroeconomic Framework
3. Macroeconomic Performance – Historical Trends and Key Features of Structural Adjustment
Since 1989 Cambodia has embarked on a series of reforms to replace central planning with the fundamentals of a market economy. These include the introduction of private ownership of property, rapid price and trade liberalization, current account convertibility, the opening of domestic markets to entry by private businesses, privatization of stateowned companies, ...
The degree of development of the financial sector is a sound indicator of long-term economic growth. Jalian and Kirpatrick (2005) showed that even for developing countries, improved financial systems speed up the pace of per capita productivity and production growth as they channel the resources of society toward fruitful activities that translate into productivity gains. ...
5. Insurance Sector
In 2002, the MEF took into account the relatively small size of the insurance industry and the scarcity of capital and accorded it greater flexibility in terms of capital requirement whereby the companies will be given a grace period of up to five years to comply with the capital requirements. ...
6. Capital Market Development
The “Financial Sector Development Strategy 2006-2015” envisages the development of a sound, market-based financial system. Capital market and banks function complementarily to enhance the efficiency of the financial system which is crucial for stimulating economic growth. ...
Part III: The Challenge of Modernizing Agriculture
7. Agricultural Economy
Agriculture is fundamental to raising rural incomes, especially among the poor in rural communities. It accounted for 29.6% of the GDP in 2005. Given that 85% of the population is rural, 60% of the people make their living from agriculture and that 75% of the heads of disadvantaged families are farmers, development of this sector is crucial ...
8. Impediments to Improving the Standard of Living of Farmers
In 2004, half of rural households, or well over a million rural families, owned less than 0.5 ha of arable land. Because of the uneconomic size of the landholding, some farmers might have sold their land in order to take jobs in sectors outside of agriculture. In general, a family that owns between a half to three quarters of a ha of average-fertility cropland can earn an annual income of $300 to $400, ...
9. Agriculture Modernization Policy
The vision of the RGC in the area of agricultural and rural development during the next decade is to be the primary catalyst for launching a sustainable transformation of rural economies, by supporting technological, institutional, and policy changes that will, equip rural communities to improve their productivity ...
Part IV: The Challenge of Industrialization
10. Industrial Sector - An Overview
After achieving independence in 1953, Cambodia pursued a mixed economy model in which both State property and private property were recognized and allowed to coexist. Agriculture, light industry, and commercial services were left to the private sector, while heavy industry and finance were controlled by the public sector. ...
11. Private Sector Development
The main motivator of industrial development, wealth creation and accumulation is the private sector. While much progress has been made in reviving the private sector after the Khmer Rouge regime it is yet to exhibit the dynamism of private initiative which has been the hallmark of the outstanding economic performance of the Southeast Asian countries in recent years. ...
12. Industrial Policies
The export oriented garments and textiles sector has been mainly responsible for the high industrial growth of Cambodia in the last decade. Cambodia has been seriously affected by the decline in garment exports due to the global economic slowdown in late 2008. Cambodia has also been losing ground in the US its major destination for garment exports. ...
Part V: Services and Infrastructure
Cambodia is a country with a rich diversity of cultural and natural resources. During the last decade the tourism industry has been growing to become one of the main pillars of economic growth. The rapid development of the tourism sector was attributed to the following factors: ...
Information and communications technology (ICT) refers both to the technologies of information and to telecommunications equipment and services. These two technological sectors, which were clearly separate at their inception, have converged considerably in recent years. ...
15. Transport Infrastructure
The RGC has made considerable progress during the last 15 years in rehabilitating Cambodia’s core transport infrastructure which was practically destroyed during the civil strife. The ability to transport merchandise over long distances at a reasonable cost is indispensable for export competitiveness. ...
16. Energy Sector
The provision of energy is a major dimension in development; it is a household necessity in a modern society and is a production factor the cost of which directly affects the competitiveness of a range of goods and services where it is a direct or indirect input. The energy potential of Cambodia is still not fully known. ...
Part VI: Human Resource Development
17. Poverty Situation
At the end of the Khmer Rouge regime the entire population of Cambodia was living below the poverty line. Economic liberalization in the 1990s returned normalcy to the country and development over more than two decades has improved the poverty situation. Poverty receded from 43% in 1993/94 to 30% in 2007. ...
Human resource development is both an outcome and a driver of the economic and social development of a country. Skills acquired by the people, their values and attitudes, are necessary to increase productivity. This by itself may not be enough since “work productivity is subject to the health and nutrition of the work force. ...
The health sector in Cambodia is characterized by under-developed infrastructure and low quality service provision. Health care staffing is in short supply, of increasingly unequal distribution, but disinclined to work in the rural and remote areas of the country. There are limited means of transferring patients out, especially in poor, from remote areas of the country. ...
Part VII: Public Finance
20. Tax System
To start with, the tax authorities receive the tax return from taxable persons. They then audit the tax return that has been submitted of the taxable person’s own accord in order to check whether the income declared complies with the information included in the taxable person’s file and whether the latter complies with the regulatory provisions in force in terms of taxation. ...
21. State Budget
The budget is the instrument through which the government implements its fiscal policy; it addresses four key financial functions of the State, namely: (i) resource mobilization; (ii) allocation of resources; (iii) distributive justice; and (iv) macroeconomic stabilization. ...
Part VIII: International Economic Relations
22. Foreign Trade
The principal goal of Cambodia’s foreign economic policy is to expand and strengthen economic ties and international cooperation through the integration of the Cambodian economy into the regional and world economy. This goal is designed to utilize the advantages of international division of labor to promote economic development ...
23. External Debt
The foreign debt of a country is the total of long-term debts owed by residents of this country to non-residents. This definition and the following ones are provided by the World Bank. They are of high importance for at least two reasons: ...
24. Regional Integration
In April 1999, Cambodia became a member of the Association of Southeast Asian Nations (ASEAN). Economic cooperation within ASEAN led to the establishment of a free trade area. Cambodia is also part of the Greater Mekong Sub-region (GMS). Cambodia’s regional cooperation activities now include a new regional grouping referred to as “ASEAN Plus Three,” ...
Part IX: Conclusion
25. Accelerating Institutional Development - The Key to Progress
During its second mandate, from 1998 to 2003, the RGC implemented the Triangular Strategy to focus on achieving peace and stability, normalizing relations with the rest of the world and marshalling resources to accelerate economic development and fight poverty. ...
About the Author
Dr. Hang Chuon Naron is currently the Secretary General of the Ministry of Economy and Finance and Permanent Deputy Chairman of the Supreme National Economic Council (SNEC), a government think tank. ...
Page Count: 569
Publication Year: 2012
MUSE Marc Record: Download for Cambodian Economy