Reform needed for sustainable development
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 for socio-economic development. According to Transparency International, Cambodia ranked 160th out of 177 countries surveyed in 2013.
How can Cambodia achieve high economic growth with poor governance?
The answer is that wealth is not evenly distributed and the economy depends much on foreign development assistance, cheap labour, natural resources, and tourism. It is not sustainable, and very much vulnerable to external shocks. Manufacturing and the service industry lag far behind those of its neighbours. Poverty remains severe, especially in the rural areas, although it has dropped from 54 percent in 2004 to 20 percent in 2013.
Income disparity has widened rapidly in the last decade. The Gini Coefficient index for Cambodia in 2009 was slightly above 0.36. Moreover, with reference to the 2013 report of the United Nations Economic and Social Commission for Asia Pacific (UNESCAP), only 24 per cent of Cambodians have access to electricity, 64 per cent to clean water and 31 per cent to proper sanitation.
Land conflicts, depletion and mismanagement of natural resources, rampant corruption, and uneven development are some of the inherent issues that must be addressed.
Pressures for reform
The propelling forces of reforms have gained momentum since the aftermath of the 2013 general election. After a serious setback in the poll, 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 cabinet 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. “We must change our attitude, way of thinking and action in delivering on our election promises.”
In his speech at the official launch of Cambodia’s trade integration strategy 2014-2018 on February 18, Hun Sen reasserted that the government would continue to strengthen good governance and create a favourable environment for the private sector to enhance its competiveness.
But political disunity continues to be a threat to national peace, stability, economic development and poverty reduction. The CPP and the opposition CNRP have been at loggerheads for the past eight months. If the problem is not solved, it will lead to political polarization and social fragmentation, adversely affecting economic development and foreign direct investment.
Labour conflicts and workers’ demand for a minimum wage increase from US$80 to US$160 have shaken investors’ confidence. There were several violent incidents involving protesting workers and security forces early this year, resulting in at least 5 deaths and dozens injured. The government and private sector later agreed on a new wage rate of US$100, starting in February, but a number of workers are still not happy with the increase.
Both the CPP and the CNRP agree that public institutions must be reformed to better serve the interests of the people and increase economic development and competitiveness. But political accommodation and agreement 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.
Both the Cambodian people and the international community are calling on the two 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 for the good of the country.
For its part, the government must do more to improve public institutions by implementing good governance and reducing entrenched 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. Development needs to reflect and respond to the needs of the people. Attaining these objectives requires full participation from all the political parties, the private sector, civil society, and the grassroots people.
Vannarith Chheang is a researcher at the Cambodian Institute for Cooperation and Peace.