Cambodia: Hopes, Trials, and Tribulations

For Cambodia, 2010 was yet again a year of measured optimism as the economy began to recover from the global contraction of the previous two years, and the country hosted the 6th General Assembly of the International Conference of Asian Political Parties, that drew a hundred delegates from fifty countries, and high-level state visits from the United Nations Secretary General Ban-Ki Moon and from China, Vietnam, and the United States. Secretary Hilary Clinton’s October visit marked the first such visit by a U.S. Secretary of State since 2002, while the arrival of the destroyer USS Mustin at Sihanoukville with a Cambodian American at the helm brought not only U.S. goodwill but also pride and inspiration to many Cambodians at home and abroad. It was thirty-seven years ago when Commander Michael Vannak Khem Misiewicz, a Cambodian adoptee, last saw his native country. On a more sobering note, the Khmer Rouge Tribunal rendered its first verdict in July as Cambodians looked on with relief, disappointment, and resigned anticipation of the second cluster trial of the four surviving senior Khmer Rouge leaders, scheduled for 2011.

After a protracted lull, the International Monetary Fund (IMF) placed Cambodia’s economic growth in 2010 at 4.8 per cent and expects it to climb to 6–7 per cent by 2011. This recovery was attributed in large part to the revitalization of the country’s key sectors. Cambodian textile exports were able to capitalize on this year’s more robust global market, growing by 21 per cent in the first ten months of 2010 alone. With the rice harvest at a more positive yield than expected given this year’s drought and erratic rainfall, agricultural export also grew by 5 per cent. Likewise, tourism increased by 15 per cent, aided by new infrastructural development, such as the recently completed 127-kilometre-long National Road 76 that facilitated access, especially for ecotourism in the Cambodian northeast. Siemreap remains the country’s most popular tourist destination, with the volume of visitors growing by 24 per cent in the first three quarters.

With the global recovery, bilateral trade was also on the upswing. Trade volume with China in the first half of 2010 totaled $627 million, a 37 per cent increase from 2009,¹ while bilateral trade with Vietnam is expected to reach $2 billion by the year’s end. Government tax revenue also increased by 13.8 per cent in 2010, which speaks of the state’s enhanced efficacy in tax collection and, more importantly, in channeling it to the public coffer despite persisting challenges posed by what has been described as the simultaneous “under-enforcement of official taxes and over-zealous enforcement of unofficial taxes”. The omission of airport taxes from the budget declaration of the Ministry of Economy and Finance is symptomatic of the persisting porosity of the system. At the official rate of $25 per adult foreign passport holder, this constitutes a significant loss of revenue, given the record of 835,000 air travelers in the first eight months of the year alone.

Foreign Investment

Cambodia’s economic recovery was also aided by the infusion of foreign investment, directed largely to infrastructural, energy, telecommunication, agricultural, farming and mining projects. The construction of a new airport in Siemreap, an estimated $1 billion joint venture between Canada’s Caminco and South Korea’s A&A, is slated for completion by 2015. Plans for the improvement of the port facilities in Siemreap and a 220-kilowatt transmission line between Kampot and Sihanoukville, to be financed by Japan, are also being considered.

Though these investment interests are significant, the exponential increase in activities came from China. The visit of China’s Chairman of the Standing Committee of the National People’s Congress, Wu Bangguo, in November concluded with the announcement of an anticipated sixteen agreements, mostly related to the development of water resources and hydro and other power generating projects,² including a charcoal power plant project in Preah Sihanouk. In all, $6.4 billion dollars was pledged by Beijing for energy...