Cambodian Economy

Charting the Course of a Brighter Future - A Survey of Progress, Problems and Prospects

Hang Chuon Naron

Publication Year: 2012

Hang Chuon Naron's Cambodian Economy: Charting the Course of a Brighter Future is a tour de force of modern Cambodia's development challenges. The book is without peer in terms of providing a comprehensive and thorough review of Cambodia's economy, from key economic sectors to social development to governance. On a country that still seems 'exotic' and sometimes difficult to penetrate, Dr Naron's survey provides valuable empirical analysis, insightful explanations, and practical recommendati... Hang Chuon Naron's Cambodian Economy: Charting the Course of a Brighter Future is a tour de force of modern Cambodia's development challenges. The book is without peer in terms of providing a comprehensive and thorough review of Cambodia's economy, from key economic sectors to social development to governance. On a country that still seems 'exotic' and sometimes difficult to penetrate, Dr Naron's survey provides valuable empirical analysis, insightful explanations, and practical recommendations for the way forward. The book ought to be required reading for every student, academic, or practitioner working on Cambodia.” - Robert Taliercio, Lead Economist, World Bank"The international community has observed with relief and admiration as Cambodia has made a remarkable recovery from one of the modern world's most awful tragedies. Much has been written about the country, but very little has been from an authentic Cambodian perspective. In this encyclopaedic and original study, Dr Hang Chuon Naron, one of the country's key economic policy architects, fills the gap. The author combines analytical rigour and careful attention to empirics with an accessible expositional style. A must-read for anybody interested in Cambodia, Southeast Asia, and post-conflict development challenges more generally." - Hal Hill, H.W. Arndt Professor of Southeast Asian Economies, The Australian National University"This mammoth volume on the Cambodian economy fills a major gap in the literature on Cambodia’s economic transition - one from a war-torn post-conflict state to a modernizing market economy. It traverses a very vast terrain, ranging from macroeconomics and finance - both private and public, to challenges facing agriculture, infrastructure and energy, to institution building and regional integration. As one of Cambodia's leading intellectuals, and policy-makers, Dr Hang Chuon Naron is uniquely placed to sketch this dramatic transformation, and tell the Cambodian story in a way that is insightful and revealing, yet accessible to a broad audience. This is a book that should appeal to more than just those interested in Cambodia's economy, or economists interested in issues of transition to market, but to anyone interested in Cambodia in general, or in post-conflict societies and the challenges that they face.” - Jayant Menon, Principal Economist, Asian Development Bank, and former Board Director, Cambodian Development Research Institute and sometimes difficult to penetrate, Dr Naron's survey provides valuable empirical analysis, insightful explanations, and practical recommendations for the way forward. The book ought to be required reading for every student, academic, or practitioner working on Cambodia.” - Robert Taliercio, Lead Economist, World Bank"The international community has observed with relief and admiration as Cambodia has made a remarkable recovery from one of the modern world's most awful tragedies. Much has been written about the country, but very little has been from an authentic Cambodian perspective. In this encyclopaedic and original study, Dr Hang Chuon Naron, one of the country's key economic policy architects, fills the gap. The author combines analytical rigour and careful attention to empirics with an accessible expositional style. A must-read for anybody interested in Cambodia, Southeast Asia, and post-conflict development challenges more generally." - Hal Hill, H.W. Arndt Professor of Southeast Asian Economies, The Australian National University"This mammoth volume on the Cambodian economy fills a major gap in the literature on Cambodia’s economic transition - one from a war-torn post-conflict state to a modernizing market economy. It traverses a very vast terrain, ranging from macroeconomics and finance - both private and public, to challenges facing agriculture, infrastructure and energy, to institution building and regional integration. As one of Cambodia's leading intellectuals, and policy-makers, Dr Hang Chuon Naron is uniquely placed to sketch this dramatic transformation, and tell the Cambodian story in a way that is insightful and revealing, yet accessible to a broad audience. This is a book that should appeal to more than just those interested in Cambodia's economy, or economists interested in issues of transition to market, but to anyone interested in Cambodia in general, or in post-conflict societies and the challenges that they face.” - Jayant Menon, Principal Economist, Asian Development Bank, and former Board Director, Cambodian Development Research Institute and sometimes difficult to penetrate, Dr Naron's survey provides valuable empirical analysis, insightful explanations, and practical recommendations for the way forward. The book ought to be required reading for every student, academic, or practitioner working on Cambodia.” - Robert Taliercio, Lead Economist, World Bank"The international community has observed with relief and admiration as Cambodia has made a remarkable recovery from one of the modern world's most awful tragedies. Much has been written about the country, but very little has been from an authentic Cambodian perspective. In this encyclopaedic and original study, Dr Hang Chuon Naron, one of the country's key economic policy architects, fills the gap. The author combines analytical rigour and careful attention to empirics with an accessible expositional style. A must-read for anybody interested in Cambodia, Southeast Asia, and post-conflict development challenges more generally." - Hal Hill, H.W. Arndt Professor of Southeast Asian Economies, The Australian National University"This mammoth volume on the Cambodian economy fills a major gap in the literature on Cambodia’s economic transition - one from a war-torn post-conflict state to a modernizing market economy. It traverses a very vast terrain, ranging from macroeconomics and finance - both private and public, to challenges facing agriculture, infrastructure and energy, to institution building and regional integration. As one of Cambodia's leading intellectuals, and policy-makers, Dr Hang Chuon Naron is uniquely placed to sketch this dramatic transformation, and tell the Cambodian story in a way that is insightful and revealing, yet accessible to a broad audience. This is a book that should appeal to more than just those interested in Cambodia's economy, or economists interested in issues of transition to market, but to anyone interested in Cambodia in general, or in post-conflict societies and the challenges that they face.” - Jayant Menon, Principal Economist, Asian Development Bank, and former Board Director, Cambodian Development Research Institute

Published by: Institute of Southeast Asian Studies

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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. ...

Preface

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pp. xiii-xviii

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. ...

Introduction

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pp. xix-xxiv

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

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pp. xxv-xxvi

Part I: Geography and Population

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pp. 1-2

1. Geography

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pp. 3-32

Cambodia is located in South East Asia. It lies between the 10th and 15th degrees north latitude, and between the 102^nd and 108^th 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

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pp. 33-48

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

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pp. 49-50

3. Macroeconomic Performance – Historical Trends and Key Features of Structural Adjustment

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pp. 51-120

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, ...

4. Banking

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pp. 121-152

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

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pp. 153-160

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

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pp. 161-168

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

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pp. 169-170

7. Agricultural Economy

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pp. 171-196

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

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pp. 197-206

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

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pp. 207-230

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

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pp. 231-232

10. Industrial Sector - An Overview

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pp. 233-244

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

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pp. 245-262

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

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pp. 263-278

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

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pp. 279-280

13. Tourism

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pp. 281-292

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: ...

14. Telecommunications

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pp. 293-312

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

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pp. 313-338

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

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pp. 339-350

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

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pp. 351-352

17. Poverty Situation

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pp. 353-378

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. ...

18. Education

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pp. 379-392

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. ...

19. Health

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pp. 393-404

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

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pp. 405-406

20. Tax System

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pp. 407-420

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

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pp. 421-458

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

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pp. 459-460

22. Foreign Trade

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pp. 461-484

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

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pp. 485-508

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

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pp. 509-548

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

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pp. 549-550

25. Accelerating Institutional Development - The Key to Progress

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pp. 551-562

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. ...

Bibliography

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pp. 563-568

About the Author

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pp. 569-

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. ...

E-ISBN-13: 9789814380201
Print-ISBN-13: 9789814311601

Page Count: 569
Publication Year: 2012

Edition: 1