Country Profile 2004 Cambodia This Country Profile is a reference work, analysing the country s history, politics, infrastructure and economy. It is revised and updated annually. The Economist Intelligence Unit s Country Reports analyse current trends and provide a two-year forecast. The full publishing schedule for Country Profiles is now available on our website at http://www.eiu.com/schedule The Economist Intelligence Unit 15 Regent St, London SW1Y 4LR United Kingdom
The Economist Intelligence Unit The Economist Intelligence Unit is a specialist publisher serving companies establishing and managing operations across national borders. For over 50 years it has been a source of information on business developments, economic and political trends, government regulations and corporate practice worldwide. The Economist Intelligence Unit delivers its information in four ways: through its digital portfolio, where its latest analysis is updated daily; through printed subscription products ranging from newsletters to annual reference works; through research reports; and by organising seminars and presentations. The firm is a member of The Economist Group. London The Economist Intelligence Unit 15 Regent St London SW1Y 4LR United Kingdom Tel: (44.20) 7830 1007 Fax: (44.20) 7830 1023 E-mail: london@eiu.com Website: www.eiu.com New York The Economist Intelligence Unit The Economist Building 111 West 57th Street New York NY 10019, US Tel: (1.212) 554 0600 Fax: (1.212) 586 0248 E-mail: dantecantu@eiu.com Hong Kong The Economist Intelligence Unit 60/F, Central Plaza 18 Harbour Road Wanchai Hong Kong Tel: (852) 2585 3888 Fax: (852) 2802 7638 E-mail: hongkong@eiu.com Electronic delivery This publication can be viewed by subscribing online at www.store.eiu.com Reports are also available in various other electronic formats, such as CD-ROM, Lotus Notes, on-line databases and as direct feeds to corporate intranets. For further information, please contact your nearest Economist Intelligence Unit office Copyright 2004 The Economist Intelligence Unit Limited. All rights reserved. Neither this publication nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of The Economist Intelligence Unit Limited. All information in this report is verified to the best of the author's and the publisher's ability. However, the Economist Intelligence Unit does not accept responsibility for any loss arising from reliance on it. ISSN 1740-8326 Symbols for tables n/a means not available; means not applicable Printed and distributed by Patersons Dartford, Questor Trade Park, 151 Avery Way, Dartford, Kent DA1 1JS, UK.
Country Profile 2004 www.eiu.com The Economist Intelligence Unit Limited 2004
Cambodia 1 Contents 3 Regional overview 3 Membership of organisations 5 Basic data 6 Politics 6 Political background 7 Recent political developments 10 Constitution, institutions and administration 11 Political forces 13 International relations and defence 16 Resources and infrastructure 16 Population 17 Education 17 Health 18 Natural resources and the environment 18 Transport, communications and the Internet 21 Energy provision 21 The economy 21 Economic structure 23 Economic policy 25 Economic performance 26 Regional trends 26 Economic sectors 26 Agriculture 28 Mining and semi-processing 29 Manufacturing 29 Construction 29 Financial services 30 Other services 31 The external sector 31 Trade in goods 32 Invisibles and the current account 33 Capital flows and foreign debt 34 Foreign reserves and the exchange rate 35 Appendices 35 Sources of information 37 Reference tables 37 Population 37 National energy statistics 37 Government finances 38 Money supply and credit 38 Gross domestic product 38 Gross domestic product by expenditure 39 Gross domestic product by sector 39 Consumer prices The Economist Intelligence Unit Limited 2004 www.eiu.com Country Profile 2004
2 Cambodia 40 Agriculture, livestock, fishery and forestry production 40 Main industrial production 41 Tourism statistics 41 Principal exports 41 Principal imports 42 Main imports and exports 42 Main trading partners 43 Balance of payments, IMF series 44 Net official development assistance 44 External debt 45 Foreign reserves 45 Exchange rates Country Profile 2004 www.eiu.com The Economist Intelligence Unit Limited 2004
Cambodia 3 Regional overview Membership of organisations Association of South-East Asian Nations (ASEAN) The Association of South-East Asian Nations (ASEAN) was established in 1967. The five original members were Indonesia, Malaysia, the Philippines, Singapore and Thailand. Subsequent joiners were Brunei (1984), Vietnam (1995), Laos and Myanmar (1997) and, most recently, Cambodia (1999). ASEAN summit meetings, which bring together the heads of government of member states, must now be held every three years. The most recent summit was in Brunei in 2001. Informal summits of heads of governments are also held. In addition, members' foreign and economic affairs ministers meet annually. Joint meetings of foreign and economic affairs ministers are held before each ASEAN summit. There is also a standing committee (consisting of the members' accredited ambassadors to the host country), which usually meets every two months. There is a permanent secretariat, based in Jakarta, and a number of committees. The organisation started with some grand objectives, but has generally failed to deliver. Early hopes that ASEAN could engineer a regional economic development strategy with particular countries concentrating on particular industries were soon dashed. In 1977 the Basic Agreement on the Establishment of ASEAN Preferential Tariffs was concluded, but a decade later only about 5% of trade between members was covered by this system. (Members had been permitted to exclude "sensitive" sectors, a let-out clause that a subsequent agreement in 1987 only slightly curtailed.) Plans for a proper ASEAN free-trade area (AFTA) were unveiled in 1992, with the aim of achieving this by 2008. A common effective preferential tariff (CEPT) scheme was applied in 1993, providing for the gradual reduction of tariffs on intra-asean trade in certain goods over a number of years. Again, however, member states could exclude "sensitive" items, limiting progress. A new AFTA programme, with a wider spread of products covered, was launched in 1994. During the mid-1990s the timescale for implementing the programme was steadily tightened, with the aim being to reduce tariffs on most goods to below 5% by 2000. A limited AFTA, between the original six members of ASEAN and involving a reduction on tariffs on intra-asean trade to between 0% and 5%, came into operation on January 1st 2002. (Recent joiners have been allowed more time.) The 1997-98 regional financial crisis exposed ASEAN's failings in a brutal fashion. The organisation was unable to stop the regional currency devaluations, or alleviate the subsequent economic hardship. A Statement on Bold Measures, released at end-1998, was exactly the opposite of what the title implied. Unfolding events in Indonesia then moved the focus on to the organisation's security plans. ASEAN members' commitment to the principle of non-interference in the internal affairs of other members complicated the response to East Timor. (Some members did eventually participate in the multinational force, but not under ASEAN auspices.) The Economist Intelligence Unit Limited 2004 www.eiu.com Country Profile 2004
4 Cambodia On the economic front, ASEAN's slow progress towards AFTA has encouraged some of its members, notably Singapore, to opt instead for bilateral trade pacts. Singapore's bilateral trade agreement with New Zealand in 2000 prompted protests from other ASEAN members, but the island state is pursuing similar agreements with other countries, including the US. (It is unlikely that this approach will prove universally applicable, as the absence of an agricultural sector in Singapore makes it much easier for it to negotiate with trading partners with heavily protected primary sectors.) A decision in 2001 by various ASEAN members to set up bilateral currency-swap arrangements to protect against currency volatility is limited in scope, and does not presage further ASEAN economic collaboration. The organisation's political hopes could be severely tested in the next few years. Changing governments in member countries could undermine any remaining pretence about political consensus in the region. On the security front, the ASEAN Regional Forums (ARFs), which bring together the ASEAN ministers of foreign affairs with those of other countries, notably China) are likely to remain just talking shops, with little impact on changing geopolitical trends. Country Profile 2004 www.eiu.com The Economist Intelligence Unit Limited 2004
Cambodia 5 Basic data Land area Population Main towns 181,035 sq km 13.4m (IMF estimate for mid-2002) Population in '000 Phnom Penh (capital) Battambang 691.0 (mid-1993 official estimate) 573.9 (mid-1993 official estimate) Climate Weather in Phnom Penh (39 ft above sea level) Language Measures Currency Fiscal year Time Public holidays Tropical; rainy season, May-October; dry season, November-April Hottest months, March-April, average daily temperature 27 C (daily maximum 32-40 C); coldest month, January, average daily temperature 25 C; wettest month, October, 256 mm average rainfall; driest month, January, 8 mm average rainfall Khmer Metric system. Local measures include: 1 tao = 15 kg 1 thang = 40 litres (20-22 kg paddy) 1 hap = 60 kg 1 king (or ray) = 0.16 ha 1 chi = 3.75 g 1 damloeng = 37.5 g Riel (CR) introduced in March 1980. Average exchange rates in 2003: CR3,973:US$1; CR6,492: 1. Exchange rates on May 5th 2004: CR4,130:US$1; CR7,316: 1 January 1st-December 31st Seven hours ahead of GMT January 1st (International New Year's Day), January 7th (Liberation Day), February 5th (Meakkha Bochea), March 8th (International Women's Day), April 13th-15th (Cambodia New Year), May 1st (Labour Day), May 3rd (Visaka Bochea), May 7th (Royal Ploughing Ceremony), June 1st (International Children's Day), June 18th (Birthday of Her Majesty the Queen), September 24th (Constitution Day), October 12th-14th (Pchum Ben), October 23rd (Paris Peace Agreement Day), November 1st (Birthday of His Majesty the King), November 9th (Independence Day), November 25th-27th (Water Festival), December 10th (International Human Rights Day) The Economist Intelligence Unit Limited 2004 www.eiu.com Country Profile 2004
6 Cambodia Politics Cambodia's 1993 constitution ushered in the current era of parliamentary democracy and constitutional monarchy. King Norodom Sihanouk is the head of state. Following years of political instability, Cambodia has been run by a coalition government comprising the Cambodian People's Party (CPP), the dominant partner, and the National United Front for an Independent, Neutral, Peaceful and Co-operative Cambodia (FUNCINPEC). The leader of the CPP, Hun Sen, is the prime minister. Political background The Angkor empire declines Independence from France is gained in 1954 Prince Sihanouk is embroiled in the Vietnam war Lon Nol s coup in 1970 is successful In the early ninth century rival Khmer principalities in the Mekong delta gave way to a highly centralised empire based at Angkor. After a period of political decline, Angkor was taken over in 1431 by the Thai kingdom of Sukothai. By the end of the 18th century the territory of the old Angkor empire had been greatly reduced. In the mid-19th century, as the kingdom came under further threat from its Thai and Vietnamese neighbours, the Khmer monarch asked France for protection. In 1887 Cambodia was fully incorporated into the French Indochinese Union. The Japanese ousted the French colonial government in 1941 and a Khmer government was installed under the young King Sihanouk. Concerned about anti-royalist sentiment, King Sihanouk arranged for the French to return to power in 1946, but later requested full independence. Faced with defeat in Vietnam, France acceded and an agreement was ratified in 1954. In the run-up to the election that followed, King Sihanouk abdicated to lead his own party, the Sangkum Reastr Niyum (People's Socialist Community), taking the title of Prince Sihanouk, and his father, Norodom Suramarit, became king. Prince Sihanouk's party won the election, and he dominated the political scene for the next 15 years. Prince Sihanouk quickly found himself embroiled in the war between Vietnam and the US. Although not pro-communist, Prince Sihanouk allowed the Vietnamese communists to set up bases in Cambodia and use the port of Sihanoukville. In late 1967 the prince became concerned that victory for Vietnam might have negative repercussions for Cambodia, so he switched his allegiance to the US. He allowed the US to undertake "secret" air raids on Vietnamese communist troops in Cambodia, but these lasted for far longer than expected, and only served to drive the troops further into Cambodian territory. Prince Sihanouk's change of allegiance provoked the Vietnamese communists to provide arms to Cambodia's emerging underground organisation, the Communist Party of Kampuchea, known as the Khmer Rouge. Prince Sihanouk's indecisiveness caused his own generals to accuse him of destroying the national army. In 1970 the then prime minister, Lieutenant- General Lon Nol, led the disaffected army in a successful coup. In 1972 the monarchy was abolished, a Khmer republic proclaimed and Lon Nol elected Country Profile 2004 www.eiu.com The Economist Intelligence Unit Limited 2004
Cambodia 7 president. United only by their mutual opposition to the Lon Nol regime, Prince Sihanouk and the now powerful Khmer Rouge, led by Pol Pot, joined forces, plunging Cambodia into civil war. At the same time the US, which was providing considerable financial support to the new government, commenced ground attacks on communist bases in Cambodia. The rural population was forced to abandon its crops and flee to the cities, resulting in severe food shortages. Eventually, the Lon Nol government crumbled and the capital fell to the Khmer Rouge on April 17th 1975. The Khmer Rouge period results in around 2m deaths A Vietnamese invasion led to resistance In 1976 the Khmer Rouge, which lost no time in sidelining Prince Sihanouk, renamed the country Democratic Kampuchea and proclaimed a workerpeasant revolutionary state. The urban population was marched from the towns into large-scale rural co-operatives or industrial work camps. The punishment for disobedience was often execution. Money was abolished, the postal service halted, and Cambodia was isolated from the rest of the world except China, which still provided it with assistance. The strategy was a catastrophic failure, resulting in economic chaos and widespread starvation, and the regime carried out brutal purges of suspected counter-revolutionaries. It is estimated that Khmer Rouge rule caused the deaths of around 2m people. The Khmer Rouge then turned against its supporters in Vietnam and pursued a strategy of confrontation. Diplomatic relations were severed in 1977 and Vietnam invaded Cambodia in December 1978. Pol Pot's forces were quickly pushed to the far west and Vietnam installed a communist government under the newly created Kampuchean People's Revolutionary Party (KPRP), led by Khmer Rouge defectors. The new government renamed the country the People's Republic of Kampuchea. This led to the emergence of two noncommunist resistance movements, the Khmer People's National Liberation Front (KPNLF, later to become the Buddhist Liberal Democratic Party) and the National United Front for an Independent, Neutral, Peaceful and Co-operative Cambodia (known by its French acronym, FUNCINPEC), led by Prince Sihanouk. In 1982 the two joined forces to fight with the Khmer Rouge against the KPRP government. Throughout most of the 1980s neither side managed to gain the upper hand. Recent political developments The Paris peace agreement provided a role for the UN In 1987 the Soviet Union scaled down its assistance to the KPRP government, and in early 1990 the five permanent members of the UN Security Council began to negotiate a settlement between Vietnam and Cambodia. The Soviet Union persuaded Vietnam and Cambodia to accept a limited UN role in supervising an election, designed to settle the matter democratically. This paved the way for the Paris peace agreement of October 1991. The KPRP was renamed the Cambodian People's Party (CPP) and the country was renamed the State of Cambodia. As constitutional monarch, Prince Sihanouk reverted to his title of King. In February 1992 the UN Security Council approved a massive peacekeeping operation, to be implemented by the UN Transitional Authority in Cambodia (UNTAC). The Economist Intelligence Unit Limited 2004 www.eiu.com Country Profile 2004
8 Cambodia An uneasy coalition was formed A power-sharing arrangement proved to be unstable The 1998 election delivers a fragile peace The Khmer Rouge refused to disarm or to participate in the proposed general election, and the intimidation and murder of members of rival political parties marred the election campaign. The election went ahead nevertheless in May 1993 and 20 parties took part. FUNCINPEC, now led by King Sihanouk's son, Prince Norodom Ranariddh, won by a small margin, securing 45.5% of the vote. The CPP, led by Hun Sen, came second with 38.2%. Lacking a majority, FUNCINPEC was forced to form a coalition with its erstwhile battlefield enemy, and Prince Ranariddh and Hun Sen were appointed as co-prime ministers. The two leaders were, however, unable to put their differences behind them, and the power-sharing arrangement became a source of instability. Events came to a head in July 1997 when Hun Sen's forces overpowered those of Prince Ranariddh in a coup d'état. Some FUNCINPEC members agreed to work with Hun Sen and the CPP thereby consolidated its power. Some key international donors withdrew aid, which lead Hun Sen to pledge that the election scheduled for May 1998 would go ahead. After Japanese diplomats brokered a peace plan, which repaired relations between the CPP and FUNCINPEC, and allowed opposition politicians who had fled Cambodia to return, the election took place, although it was delayed until July 1998. The results of the July 1998 election gave the CPP only 41% of the vote, which meant that it had to form a coalition government, either with FUNCINPEC, which won 32% of the vote, or the Sam Rainsy Party (SRP), which won 14%. Lengthy negotiations ensued during which FUNCINPEC and the SRP accused the CPP of election-related fraud. By September, with still no coalition in place, political tensions turned violent as the opposition took to the streets. Eventually King Sihanouk intervened and in November the CPP and FUNCINPEC agreed to form a coalition in which Hun Sen would be prime minister and Prince Ranariddh the chairman of the National Assembly (the lower house of parliament). Following the 1998 election the coalition experienced its longest period of broad political stability since the downfall of the Khmer Rouge. Important recent events July 1997 Forces loyal to the co-prime minister and leader of the Cambodian People's Party (CPP), Hun Sen, take over Phnom Penh. The other co-prime minister, Prince Ranariddh, and many others flee the country. The Association of South-East Asian Nations (ASEAN) responds by delaying Cambodia's admission to the grouping and some Western countries freeze aid to Cambodia. April 1998 The hardline Khmer Rouge leader, Pol Pot, dies. July 1998 The general election takes place after some delay. The CPP wins, but without enough seats to form a government on its own. Country Profile 2004 www.eiu.com The Economist Intelligence Unit Limited 2004
Cambodia 9 Domestic politics remains poorly institutionalised November 1998 In a climate of mounting violence, King Norodom Sihanouk intervenes and a coalition government is formed, helped by an agreement to establish a new upper house of parliament (the Senate). April 1999 Cambodia becomes a member of ASEAN. February 2002 Commune (local government) elections are held for the first time. The CPP wins the most votes after a campaign marred by violence and intimidation. March 2003 The government and the UN reach an agreement on holding a Khmer Rouge tribunal, perhaps in the second half of 2004 or 2005. July 2003 The general election produces a hung parliament. The CPP is the largest party with 53% of the vote, followed by FUNCINPEC with 24% and the opposition Sam Rainsy Party with 23%. Lengthy negotiations ensue in a bid to form a government. March 2004 Attempts to form a three-party coalition are abandoned in favour of the old twoparty formula, grouping the CPP and FUNCINPEC, but agreement continues to elude the parties through April. Cambodia's third general election under the present constitution was held on schedule in July 2003. This was seen by some as indicating that electoral politics was beginning to put down roots in Cambodia. Some election observers also argued that the 2003 poll was less violent than the previous one. However, as with the 1998 poll, the aftermath of the election underlined the fact that democratic politics, in particular the art of compromise, remains poorly institutionalised in Cambodia. The election result saw the CPP increase its share of the vote to 53% from 41% previously. FUNCINPEC saw its share of the vote drop from 32% to 24%, whereas the SRP enjoyed an improvement from 14% to 23%. Together, FUNCINPEC and the SRP sought to force the CPP to share power with both of them. This proved unworkable and the CPP and FUNCINPEC eventually reverted to trying to form a two-party coalition the same formula that had underpinned the previous two parliaments. However, even this was not straightforward, and by May 2004 a government had still to be formed. In the meantime, Cambodia was run by a caretaker administration, which was practically the same as the CPP-dominated government that ran the country from 1998-2003. The aftermath of the 2003 election: Tortuous negotiations Negotiations to form a government after the 2003 general election got off on the wrong foot, with FUNCINPEC and the SRP trying to pressure the CPP to share power with both of them. They could do this because the CPP, although politically dominant, had failed to gain the two-thirds majority necessary to form a government on its own. However, talk of a three-party coalition represented a break The Economist Intelligence Unit Limited 2004 www.eiu.com Country Profile 2004
10 Cambodia with tradition since the last two coalition government have contained just two parties, the CPP and FUNCINPEC. Moreover, although relations between the CPP and FUNCINPEC have never been easy, the CPP and the SRP are bitterly opposed to each other, so much so that few believed they could really work together. For a period, however, the CPP seemed to go along with the possibility of a three-party coalition. The party may simply have been playing for time. It also may have felt duty-bound to at least pay lip-service to the three-party formula because King Norodom Sihanouk, who despite his frailty wields some influence, appeared to favour it. However, negotiations went nowhere. They were disrupted in October 2003 by the shooting of two prominent figures linked to FUNCINPEC, one of whom died and the other left in a coma from which she is unlikely to recover; and again in January 2004, by the killing of a prominent labour leader with links to the opposition SRP. Precisely who carried out the attacks is unknown, although some pointed the finger at "dark forces" within the CPP seeking to prevent the formation of three-party coalition. The CPP vehemently rebutted the accusations. With eight months having elapsed since the election and still no government in sight, the pretence that the three parties were working to form a government could be maintained no longer. In March 2004 the CPP and FUNCINPEC formed a tenmember working group comprising senior figures from their two parties to hammer out the basis on which a new government would be formed. Although negotiations continued to be tortuous, progress was gradually made and few doubted that the CPP and FUNCINPEC had returned, by the most circuitous of routes, to an old formula on which the next government would be formed. Constitution, institutions and administration A constitutional monarchy is in place The legislature and judiciary are weak A Senate is established The 1993 constitution states that Cambodia is a constitutional monarchy. King Norodom Sihanouk, as head of state, is responsible for appointing the prime minister. The cabinet is chosen by the prime minister with the king's approval. King Sihanouk's influence has declined in recent years, owing to his poor health, but he has still been able to step in at decisive moments, including maintaining pressure on the rival parties to keep negotiating following the 2003 general election. The increasing frailty of the king has spurred speculation as to who might succeed him. The focus of attention has mostly been on his son, who is also the chairman of the National Assembly, Prince Norodom Ranariddh. According to the constitution, the nine-member Throne Council is to choose King Sihanouk's successor within seven days of his death. There is a lack of real separation in government, with the executive branch commonly dominating the legislature and the judiciary. The National Assembly's agenda, for example, is largely driven and controlled by the executive, which is dominated by the CPP. Judges are highly vulnerable to political pressure. King Sihanouk used to exert some control over the executive, but his powers have diminished and it is doubtful that that his successor will have the same authority. The coalition agreement of November 1998 stipulated that an upper house of parliament, or Senate, was to be established, with the old National Assembly becoming the lower house. The Senate was set up after the National Assembly Country Profile 2004 www.eiu.com The Economist Intelligence Unit Limited 2004
Cambodia 11 passed a 40-article amendment to the constitution in March 1999. It has 61 members and runs concurrently with the lower house. King Sihanouk appoints two senators, and the remainder are appointed by the political parties according to their respective shares of seats in the National Assembly. The role of the Senate is to scrutinise laws passed by the National Assembly and act as a co-ordinator between the government and the lower house. The Senate president, Chea Sim, acts as head of state when the king is absent. The National Assembly is the lower house The bureaucracy is politicised The CPP dominates the security forces The National Assembly has 123 members. Parliament cannot be dissolved before the expiry of its five-year term unless the government has been dismissed twice within 12 months. The five-year term can be extended by one year at a time if it is deemed that there is a threat to national security, on the recommendation of the king and with the approval of two-thirds of the National Assembly. Legislation can be passed only by an absolute majority of all members of parliament. Constitutional changes require the support of a two-thirds majority. In reality, the legislative agenda is driven by the CPP. Policymaking is highly centralised around the executive branch of government. The bureaucracy is rarely a source of novel or alternative policy thinking. Its role is thus best understood in terms of carrying out ministerial wishes. However, its effectiveness in the implementation of policy is limited because it is technically weak, open to corruption and prone to factionalism along party or personal lines. The CPP has long dominated the military, the police and the judiciary. To redress the balance, two co-ministers, one from the CCP and one from FUNCINPEC, have run the defence and interior ministries since 1993. The current prime minister, Hun Sen, has pledged to make the military and the police more independent, but for the moment the security forces remain politically partisan, with generally a strong bias towards the CPP. Political forces The CPP is disciplined and powerful Support for FUNCINPEC has declined Of the 23 political parties competing in the July 2003 election, only three, the CPP, FUNCINPEC and the SRP, won seats. The CPP is politically dominant, in terms of representation in the National Assembly (where it has 73 seats), in other state organs and in terms of its grassroots party network. Although it is in a coalition with FUNCINPEC, there is a history of hostility between the two parties. The president of the Senate, Chea Sim, is the chairman of the CPP and the prime minister, Hun Sen, is its deputy chairman. The CPP maintains strong Leninist roots, evident in its internal discipline, and in terms of economic policy it can be regarded as pragmatic reformist. Nevertheless, it tends to support market reform when it accords with its political requirements or it has no choice owing to international agreements. FUNCINPEC, which currently holds 26 seats in the National Assembly, has been marred by factionalism since the 1993 election. Hun Sen's ousting from the government of the FUNCINPEC president, Prince Ranariddh, in July 1997 imposed great strains on the party. Some FUNCINPEC members took mini- The Economist Intelligence Unit Limited 2004 www.eiu.com Country Profile 2004
12 Cambodia sterial positions in the post-coup administration and others fled abroad or took military positions in the north-west. Despite efforts by FUNCINPEC to mend the divisions in its ranks, if anything, factionalism has got worse and the party's support has declined in rural areas as reflected in its poor showing in the 2003 election. Factions are divided in part by disagreement over whether to remain in coalition and enjoy the fruits of office, such as access to public funds, or openly to challenge the CPP. Personality conflicts also play a role. FUNCINPEC's strongest card is its association with the monarchy. It lacks any solid core of beliefs, although it is instinctively more reformist than the CPP. The Sam Rainsy Party is the main opposition party The SRP has been the only opposition party represented in the National Assembly, where it has 24 seats. It was founded in November 1995 by a former finance and economy minister, Sam Rainsy, who is also a former FUNCINPEC member. The SRP made strong gains in the 2003 election, notably by gaining the support of discontented FUNCINPEC voters. The SRP is highly critical of the government, especially the CPP. Because of its outspokenness, party members have suffered severe intimidation. It has strong support in urban areas, particularly from workers and independent unions. Its rural support base is nascent. Its policy orientation is ostensibly more radical than the other main parties, in both political and economic spheres, favouring greater transparency and a tougher line on corruption. However, whether this policy orientation would continue if the SRP were to win office is uncertain. General election results (% of vote) 1993 1998 2003 CPP 38 41 53 FUNCINPEC 46 32 24 Others 16 13 n/a SRP n/a 14 23 Source: Press reports. Main political figures King Norodom Sihanouk After abdicating in 1955 to lead his own political party, Prince Sihanouk was returned to the throne as a constitutional monarch in 1993. He is revered among ordinary Khmer but his political influence has declined owing to poor health. Hun Sen Hun Sen defected from the Khmer Rouge in the late 1970s and established the Cambodian People's Party (CPP). He was instrumental in the July 1997 coup. He is the prime minister and vice-chairman of the CPP. Prince Norodom Ranariddh The king's son, the leader of the National United Front for an Independent, Neutral, Peaceful and Co-operative Cambodia (FUNCINPEC) and the chairman of the National Assembly (the lower house of parliament). He served as the first prime minister from 1993 to 1997 before being ousted by Hun Sen. Regarded as a possible successor to his father as king. Country Profile 2004 www.eiu.com The Economist Intelligence Unit Limited 2004
Cambodia 13 Sam Rainsy As leader of and dominant figure within the opposition Sam Rainsy Party, the former FUNCINPEC finance and economy minister has many enemies in the CPP. Chea Sim The chairman of the CPP plays the role of an elder statesman. He was formerly chairman of the National Assembly and is now president of the Senate. Sar Kheng The deputy prime minister and co-interior minister is influential within the CPP. Some Khmer Rouge will face trial The Khmer Rouge disintegrated in the second half of the 1990s, primarily as a result of the government's policy of enticing Khmer Rouge members to defect, and is thus no longer a political force. In June 1997 senior Khmer Rouge leaders turned on Pol Pot after he ordered the killing of a senior Khmer Rouge figure, Son Sen, for negotiating with the government. In July 1997 the Khmer Rouge tried Pol Pot and sentenced him to life imprisonment. He died shortly afterwards. During 1998-99 the last remaining Khmer Rouge leaders either surrendered or were captured, and the government is in the process of organising a trial. The UN-Cambodian war crimes tribunal Relations with the UN have been dominated of late by lengthy negotiations over plans to hold a Khmer Rouge tribunal. The process has been fraught with difficulties and breakdowns in talks. The UN originally wanted an international tribunal to be held, arguing that the Cambodian judiciary was too vulnerable to political pressure to oversee a legitimate trial. However, the prime minister, Hun Sen, made it clear that the tribunal would be held on home ground. In March 2003 the two sides finally reached a draft agreement on how to proceed with such trials under Cambodian law. On May 13th 2003 the UN General Assembly approved a plan to create a special court for the trials. The plan is to create "extraordinary chambers" that will consist of a trial court and a Supreme Court (within the existing legal structure in Cambodia). The plan stresses the impartiality and independence of the judges, a mix of international and Cambodian judges, and decisions in the two chambers will be taken by a majority of four judges (trial court) and five judges (Supreme Court). The plan will have to be approved by Cambodia's parliament, after a new government is formed. The UN has decided not to fund the trials, which are expected to cost around US$60m, and has called for voluntary donations from member states. If and when the trials commence, they are expected to take around three years to complete. Human rights groups remain concerned that corruption and political influence in the Cambodian court system will prevail and that the trials will fail to meet international standards. International relations and defence Relations with Western countries are ambivalent Relations with the US, the EU and multilateral institutions, such as the IMF and the World Bank, were often difficult in the 1990s. They reached a low point in July 1997 when Hun Sen used military force to oust Prince Ranariddh from the government. Other sources of tension have included the government's failure to implement reform pledges and its poor human rights record. Following the The Economist Intelligence Unit Limited 2004 www.eiu.com Country Profile 2004
14 Cambodia installation of the coalition government in November 1998 the situation improved relations with the IMF and the World Bank were normalised, and aid flows resumed. Nevertheless, differences remain over the speed of reform and the quality of governance in Cambodia. Cambodia joins ASEAN Ties with China are close Relations with Thailand are stable Relations with Vietnam are vulnerable to border disputes Army demobilisation proves difficult Cambodia was given observer status in the Association of South-East Asian Nations (ASEAN) in 1995, but as a result of the coup organised by Hun Sen in 1997, Cambodia failed to gain full membership in 1997 as originally planned. At the ASEAN summit in Hanoi in December 1998 it was agreed that Cambodia should be admitted, and this was formalised in April 1999. Under Hun Sen, Cambodia has moved closer to China. China is an important source of aid, trade and investment. Hun Sen has shown himself willing to jeopardise relations with Taiwan an important investor in Cambodia in the interests of good relations with China. Cambodia frequently reiterates its commitment to the "One China" principle that denies recognition of Taiwan as an independent state. During the 1990s Cambodia's relations with Thailand improved notably as Cambodia accepted that Thailand's leaders had severed ties with the Khmer Rouge. In January 2003 relations suffered a major setback when Cambodian protestors attacked the Thai embassy and Thai-owned businesses in the capital, Phnom Penh, following alleged comments by a Thai actress that Cambodia had stolen the Angkor Wat temple complex, Cambodia's national symbol, from Thailand. Both sides sought to patch up relations soon after the incident. Relations were normalised and ambassadorial relations re-established later in the year, after Cambodia paid US$5.9m in compensation for the damage to the Thai embassy. Although relations are much better, Cambodia has yet to reach a border agreement with Thailand. This includes the maritime border, where there is a dispute over an oil-rich area in the South China Sea. Relations with Vietnam, soured by the Vietnamese occupation, have also proved vulnerable to border disputes. There are also problems with ethnic Vietnamese living in Cambodia. In general, relations have become easier since Hun Sen, who is pro-vietnamese, assumed power. However, a decision allowing Vietnamese protesters who fled to Cambodia following rural unrest in Vietnam to go to the US strained relations in 2001. The problem has not gone away as Vietnamese are continuing to cross into Cambodia. The Royal Cambodian Armed Forces (RCAF) are officially estimated at around 110,000. The government is in the process of implementing a demobilisation programme. It discharged 1,500 soldiers in 2000 and 15,000 more in 2001. However, the programme fell behind schedule in the last phase of the timetable, which required a further 15,000 personnel to be demobilised by the end of 2002. In July 2003 the World Bank declared "misprocurement" on a contract relating to the demobilisation project, underlining the fact that the project has got into difficulties. If ultimately successful, streamlining the security forces should make it easier to realise planned cuts in defence expenditure. Country Profile 2004 www.eiu.com The Economist Intelligence Unit Limited 2004
Cambodia 15 Security risk in Cambodia Armed conflict The risk of armed conflict threatening business is moderate. The risk has declined in recent years, owing to the firm grip on power of the Cambodian People's Party's (CPP). Opposition to the CPP is much weaker, reducing the likelihood of an armed struggle for power led by the opposition parties. A serious armed struggle last took place in July 1997, when the CPP launched a successful coup d'état against forces loyal to the National United Front for an Independent, Neutral, Peaceful and Co-operative Cambodia (FUNCINPEC). This resulted in widespread if short-lived disruption to business activity. However, deep political differences remain between the main parties. The emergence of a split in the CPP, which is currently unlikely, might presage more serious armed conflict. Moreover, there are also risks stemming from dissident groups like the Cambodian Freedom Fighters, which attempted to overthrow the government in November 2000, and disaffected individuals such as those who blew up two hotels in Phnom Penh in July 2001. Such acts are unlikely to be of sufficient scale to have a major impact on business activity. Unrest/demonstration There is a high risk of labour unrest causing disruption to business, especially in the garment sector, where labour unions backed by the opposition Sam Rainsy Party (SRP) are active and militant. There is also a moderate risk of civil unrest linked to divisions between the main political parties. Unrest is most likely to happen in the period surrounding general elections, especially after the election. The next general election is due in 2008. Violent crime Street crime and burglary are serious problems in Cambodia. Foreigners are at particular risk because of their relative wealth compared to the local population. Moreover, thieves frequently carry guns. The US embassy in 2002 reported a rise in armed robberies of foreigners, which have mostly taken place after dark and have targeted foreigners travelling by motorcycle or bicycle taxis. Many rural parts are effectively lawless and are subject to banditry. Robbers have attacked boats and trains in rural areas. Air travel may be the safest option for some destinations. Extreme caution is advised for foreigners travelling outside provincial towns, especially at night. Ill-disciplined security personnel may also pose a risk to foreigners. Local business disputes are sometimes settled through violence and bombings. Organised crime Given its reputation for lawlessness and lax border controls, Cambodia has attracted the attention of organised crime groups involved in gun-running, human trafficking and drug smuggling. However, the risk from such activity to foreign companies involved in legitimate business activities is small. The Economist Intelligence Unit Limited 2004 www.eiu.com Country Profile 2004
16 Cambodia Kidnapping/extortion There have been incidents of kidnapping and extortion in Cambodia. In the past the Khmer Rouge was active in this area, including the kidnapping of foreign tourists. Even with the demise of the Khmer Rouge, people visiting remote areas need to remain vigilant. Wealthy Chinese families have also been targeted. Armed personnel have charged tourists fees to pass illegal checkpoints in Siem Riep province, the location of the Angkor Wat temple complex, a major tourist attraction. Landmines There are landmines in rural areas, especially in Battambang, Banteay Meanchey, Pursat, Siem Reap, and Kampong Thom provinces. There are clearly marked pathways around main tourist areas. Otherwise, local guides are essential for travel through forested areas and even rice paddies. Areas around small bridges on secondary roads are particularly dangerous. Resources and infrastructure Population Age structure of population (% of total unless otherwise indicated) 2001 0-14 years 43.0 15-64 years 54.2 65+ years 2.8 Total population (m) 12.3a a World Bank estimates differ from those of the IMF. Source: World Bank, World Development Indicators. The population is poor and growing fast Between 1962 and 1998, the dates of the last two nationwide censuses, the population grew at an average rate of 2.7% a year to reach 12.9m, according to the IMF. (Population data from the World Bank are lower.) In 2001, 43% of the population was under the age of 14, and there remains a severe imbalance between the sexes. Women outnumber men, particularly in the over-40s age group, a legacy of years of conflict. The Asian Development Bank (ADB) estimated in 2004 that 35-40% of the population was living below the poverty line. Annual income per head was just US$260 according to the World Bank in 2001. Future population growth rates are likely to be high given the number of people currently under the age of 30; the ADB has identified a post-war baby boom. Population indicators 2002 Urban population (% of total population) 18 Infant mortality rate (per 1,000 live births) 96 Fertility rate (births per woman) 4 Life expectancy (years) 54 Source: World Bank, World Development Indicators. Country Profile 2004 www.eiu.com The Economist Intelligence Unit Limited 2004
Cambodia 17 There is a sizeable Vietnamese and Chinese population According to the World Bank, 18% of the population live in urban areas. The largest city is Phnom Penh, the capital, which has a population estimated at around 1m, although the last official estimate was in 1993 (at 691,000). National population density is low, averaging 64 people per sq km (compared with 117 people per sq km in Thailand and 225 per sq km in Vietnam). However, the more densely populated central provinces have an average of 161 people per sq km. According to ADB data for 2000, 74% of the labour force was concentrated in rural areas, mainly working in farming. Around 90% of the population are of Khmer ethnic origin. The other main ethnic groups are the Vietnamese and the Chinese, who number around 500,000 and 600,000 respectively. There is also a small Cham population, who are generally Muslim, and a number of non-khmer highland groups (Khmer Loeu). Racism directed against the Vietnamese is widespread. The ethnic Chinese were persecuted during the rule of the Khmer Rouge, but managed to establish themselves as a significant economic force from the early 1990s. Education Skills levels are poor By the end of the Pol Pot era formal education had ceased, and many educated Cambodians had been killed or had fled abroad. According to the national census conducted in 1998, only 48% of those over 25 years of age had completed primary education. In 1997 the government estimated that 69% of the population was literate (82% of men and 58% of women). This compares with World Bank estimates of male literacy at 58.6% and female literacy at 21.1% in 1999. Literacy levels fell in the 1990s, partly reflecting the state's increased demand for parents to contribute to the cost of their children's education. According to the UN Development Programme (UNDP), 100% of children of the relevant age were enrolled in primary-level education in 1998, but only 20% in secondary level. Educational opportunities at tertiary level are inadequate, resulting in shortages of skilled labour, which is a problem both for investors and for government efforts to improve public administration. Budgetary constraints limit the scope for developing education. Health Public health provision is poor Mortality figures reflect the poor state of public health provision in Cambodia. About half of the population has no access to the public healthcare system, which is seriously run down. There has been a sharp decline in the number of doctors and nurses per head of population since the mid-1960s. Public health expenditure was estimated at 0.6% of GDP in 1998, according to the UNDP, the lowest percentage among countries reporting data except for Myanmar and Antigua and Barbados. The private sector has sought to fill the gap private health expenditure is estimated at 6.3% of GDP but personnel offering medical treatment are often poorly qualified. Various indicators reveal the dismal condition of healthcare in Cambodia. International development agencies estimated infant mortality at 96 per 1,000 live births in 2002, and maternal mortality at around 5 per 1,000 births; the The Economist Intelligence Unit Limited 2004 www.eiu.com Country Profile 2004
18 Cambodia true figures may be much higher as only about one-third of births are attended by qualified medical staff. The UN classifies half of all children under the age of five as stunted and 20% suffer from severe malnutrition. Only 29% of the population has access to safe drinking water (the figure is lower in rural areas) and only 18% has access to adequate sanitation facilities. HIV/AIDS is also a serious problem, although infection rates have fallen recently, possibly reflecting the impact of prevention strategies. Life expectancy at birth is only 54 years, compared with 69 years in Thailand, according to World Bank data for 2002. Natural resources and the environment Cambodia is a resource-rich country Forest cover has declined Cambodia is the smallest of the three former Indochinese countries. It is bordered by Laos to the north, Vietnam to the east and Thailand to the west. Apart from the Cardamom mountains in the south, which divide Cambodia's interior from its short southern coastline, most of the country consists of a shallow basin centred on Tonle Sap (the Great Lake). The Mekong river bisects Cambodia, running from north to south. During the rainy season flooding is commonplace. Forests are Cambodia's most valuable resource. A UK-based environmental group, Global Witness, estimates that over the last 30 years forest cover has declined from 70% to around 30% of total land area. However, no full forestry survey has been undertaken since 1969 and other estimates differ. The government has attempted to regulate forest exploitation, but with limited success. Fish stocks are abundant, although overfishing is causing a decline in stocks. Cambodia is believed to have modest but commercially viable deposits of phosphate, granite, limestone, sand, gravel, clay and bauxite, and there are also gold, gem and oil and gas reserves. The precise extent of these has not been assessed, although some oil exploration is taking place. Transport, communications and the Internet Poor infrastructure hampers development Cambodia's transport and communications infrastructure is in a serious state of disrepair. In a report to the UN Conference on Least Developed Countries in Brussels in 2001, the government emphasised the need to develop the road and rail networks in order to boost trade with neighbouring countries. However, the government also stressed the importance of air transport as a way of bypassing problems on the ground. Progress has been made in recent years, but bureaucracy, shortages of qualified staff, inadequate financial resources and, until recently, the poor security situation have hampered implementation. A halt in international lending between 1997 and 1999 because of political instability caused delays in infrastructure projects. Private-sector capital has traditionally been scarce, reflecting an inadequate regulatory environment and concerns about the political situation. Country Profile 2004 www.eiu.com The Economist Intelligence Unit Limited 2004