ASSESSMENT OF CAMBODIAN ECONOMY

In April 1999, Cambodian Government, under the consequent struggle and effort, Has become the full member of Association of Southeast Asian Nation (ASEAN),

And acquired the Most Favored Nation (MFN) Status from U.S. and

The Generalized System of Preference (GSP) from other

 28 developed countries and membership in

WIPO and MIGA.

The Royal Government as taken steps to prepare for accession to the World Trade Organization (WTO). Cambodia does her best to accelerate the space for

 Its integration with the regional and world economy.

The Kingdom of Cambodia, located at Southwestern part of Indochina peninsula, has a land area of 181,035 Square Kilometers. The population is 13,094,442  (female: 6,784,686 and male: 6,309,756), of which 1,144,629 live in the capital, Phnom Penh city. The official language is Khmer spoken by 95% of the population. Other languages include Vietnamese and Chinese spoken by the minorities (5%). The main religion is Buddhism.

Since the signing of the Paris Peace Accord in 1991, the reform process has been widened significantly. Until 1992, Cambodia carried out its reform largely itself. With the establishment of a democratic coalition government in 1993 under the auspices of United Nations, the stabilization and structural reform continued to have high priority and consolidate the economic growth.

Cambodia’s economy experienced quite strong growth between 1990 and 1996. GDP growth has increased from 2.8% in 1990 to 6.7% in 1996. Per capita income of Cambodians has significantly increased from US$130 in 1990, to US$285 in 1999, and US$299 in 2000. Due to the serious flood, GDP in 2000 just reached 4.5% (target 5%). With a 7-8% annual growth rate, per capita income is expected to double by the year 2004. But the benefits of growth have not been spread throughout the society.

Much of the growth has been driven by services (40% 0f GDP) and construction in urban area, especially in Phnom Penh City. 85% population of Cambodia lives in the rural area. The Cambodian economy is reliant upon agriculture, which accounts for about 44% of GDP (Gross Domestic Product) and the sector employs 80% of the labor force.

There are several bright spots in terms of economic progress which are noteworthy;

First, while external assistance is not something that is permanent or can be taken for granted, it looks as if the chances are good for Cambodia to secure on-going aid in the medium term.

Second, there are some very competent people who work behind the scene to craft the institutional framework to run a modern economy. Cambodia, for example, has a more aggressive package of incentives to attract investors compared to the other Indochinese economies. Another example is the careful way in which the mechanics of exchange rate management is drawn up, where the official rate is set in-line with the parallel market rate.

Third, currently, Samdech HUN SEN, who is the prominent leader of the Cambodian People’s Party (CPP), has been elected as the Prime Minister and has total control of power. From all signs, he can remain in power for many years. Under his leadership, the security and economy in Cambodia have been rapidly improved. The political situation in Cambodia becomes more and more stable because all fractional Khmer Rough troops have merged into the National Armed-Force of Royal Government for the peace.

At the closing ceremony of Ministry of Commerce (MOC) held on Feb. 22^nd, 2001, Prime Minister Samdech HUN SEN declared three (03) points for the trade policy such as below:

            1-    Strengthening supply capacity at micro and mesco –level by improving the production capacity of the domestic firms and improving the live standard of farmers in the rural areas. To increase exports, Cambodia is required to strengthen and diversify its current export base by increasing the value-added contact of the existing exports and developing new exports with higher value-added.

            2-    Focusing strongly on the delivery of capacity building support at the export enterprise level and private sector development for trade. Developing new export products and diversifying destination of exports require the available of support services to domestic enterprises and producer, including stabling producer association, trade information, promotion services, export financing and setting the technical standards to meet the requirements of export market.

            3-    Adopting the regionalization, decentralization and setting export priorities including the establishment of special economic zones or export processing zones (Koh Kong, Poi Pet and Stoeung Hao District, Sihanoukville) to attract new industries. In this sense, the Royal Government of Cambodia has given high priorities to tourism development – Cambodia’s huge exports potential – agriculture, agro-processing and fish-farming for exports.