Cambodia - International University of Japan...Cambodia This Country Profile is a reference work,...

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Country Profile 2006 Cambodia This Country Profile is a reference work, analysing the countrys history, politics, infrastructure and economy. It is revised and updated annually. The Economist Intelligence Units 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 www.eiu.com/schedule The Economist Intelligence Unit 26 Red Lion Square London WC1R 4HQ United Kingdom

Transcript of Cambodia - International University of Japan...Cambodia This Country Profile is a reference work,...

Page 1: Cambodia - International University of Japan...Cambodia This Country Profile is a reference work, analysing the country s history, politics, infrastructure and economy. It is revised

Country Profile 2006

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 www.eiu.com/schedule The Economist Intelligence Unit 26 Red Lion Square London WC1R 4HQ United Kingdom

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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 the 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.

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Comparative economic indicators, 2005

Gross domestic product(US$ bn)

Sources: Economist Intelligence Unit estimates; national sources.

0 50 100 150 200 250 300

Laos

Cambodia

Myanmar

Vietnam

Singapore

Malaysia

Thailand

Indonesia

0 1 2 3 4 5 6

Myanmar

Cambodia

Laos

Vietnam

Indonesia

Thailand

Malaysia

Singapore

0 5 10 15 20 25

Singapore

Malaysia

Thailand

Cambodia

Laos

Vietnam

Indonesia

Myanmar

0 2 4 6 8 10

Myanmar

Thailand

Malaysia

Indonesia

Cambodia

Singapore

Laos

Vietnam

Gross domestic product(% change, year on year)

Sources: Economist Intelligence Unit estimates; national sources.

Consumer prices(% change, year on year)

Sources: Economist Intelligence Unit estimates; national sources.

Gross domestic product per head(US$ �000)

Sources: Economist Intelligence Unit estimates; national sources.

27.3

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Contents

Cambodia

3 Basic data

4 Politics 4 Political background 5 Recent political developments 9 Constitution, institutions and administration 10 Political forces 13 International relations and defence

17 Resources and infrastructure 17 Population 17 Education 18 Health 18 Natural resources and the environment 19 Transport, communications and the Internet 20 Energy provision

21 The economy 21 Economic structure 22 Economic policy 24 Economic performance 25 Regional trends

25 Economic sectors 25 Agriculture 27 Mining and semi-processing 27 Manufacturing 28 Construction 28 Financial services 29 Other services

30 The external sector 30 Trade in goods 31 Invisibles and the current account 31 Capital flows and foreign debt 32 Foreign reserves and the exchange rate

33 Regional overview 33 Membership of organisations

36 Appendices 36 Sources of information 37 Reference tables 37 Population 37 National energy statistics 37 Government finances 38 Money supply and credit

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38 Gross domestic product 38 Gross domestic product by expenditure 39 Gross domestic product by sector 39 Consumer prices 40 Agriculture, livestock, fishery and forestry production 40 Tourism statistics 40 Principal exports 41 Principal imports 41 Main trading partners 42 Balance of payments, IMF series 42 Net official development assistance 43 External debt 43 Foreign reserves 43 Exchange rates

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Cambodia

Basic data

181,035 sq km

13.8m (IMF estimate for mid-2004)

Population in !000 (1998 census)

Phnom Penh (capital) 999.8 Battambang 793.1

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 rate in 2005: CR4,092:US$1; Exchange rate on April 9th 2006: CR4,091:US$1

January 1st-December 31st

Seven hours ahead of GMT

January 1st (International New Year!s Day), January 9th (Liberation Day), February 13th (Meakkha Bochea), March 8th (International Women!s Day), April 14th-16th (Cambodia New Year), May 1st (Labour Day), May 13th-15th (King Norodom Sihamoni�s birthday), May 13th (Visaka Bochea), May 16th (Royal Ploughing Ceremony), June 1st (International Children!s Day), June 18th (King�s Mother�s birthday), September 21st-23rd (Pchum Ben), September 24th (Constitution Day), October 23rd (Paris Peace Agreement Day), October 29th (King�s Coronation Day), November 1st (King�s Father�s birthday), November 9th (Independence Day), November 4th-6th (Water Festival), December 10th (International Human Rights Day)

Land area

Population

Main towns

Climate

Weather in Phnom Penh (39 ft above sea level)

Language

Measures

Currency

Fiscal year

Time

Public holidays 2006

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Politics

Cambodia!s 1993 constitution ushered in the current era of parliamentary democracy and constitutional monarchy. King Norodom Sihamoni is the head of state, following the abdication of his father, Norodom Sihanouk, in October 2004. 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 vice-chairman of the CPP, Hun Sen, is the prime minister.

Political background

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 Norodom Sihanouk. Concerned about anti-royalist sentiment, Norodom 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, Norodom Sihanouk abdicated to lead his own party, the Sangkum Reastr Niyum (People!s Socialist Community), taking the title of prince, and his father, Norodom Suramarit, became king. Norodom Sihanouk!s party won the election, and he dominated the political scene for the next 15 years.

Norodom Sihanouk quickly found himself embroiled in the war between Vietnam and the US. Although not pro-communist, Sihanouk allowed the Vietnamese communists to set up bases in Cambodia and use the port of Sihanoukville. In late 1967 he 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. Norodom 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.

Norodom 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

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

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monarchy was abolished, a Khmer republic proclaimed and Lon Nol elected president. United only by their mutual opposition to the Lon Nol regime, Norodom 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.

In 1976 the Khmer Rouge, which lost no time in sidelining Norodom Sihanouk, renamed the country Democratic Kampuchea and proclaimed a worker-peasant 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 non-communist 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 Norodom 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

In early 1990 the five permanent members of the UN Security Council began to negotiate a settlement between Vietnam and Cambodia. The Soviet Union, which had scaled down its assistance to the KPRP government in 1987, 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 Cambodia. As constitutional monarch, Norodom 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 Khmer Rouge period results in around 2m deaths

A Vietnamese invasion led to resistance

The 1993 election fails to bring about stability

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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 Norodom 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. In the wake of the 1997 coup d!état, international donors withdrew aid, which prompted 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.

There was intense political turmoil in the post-1998 election period. As the CPP secured only 41% of the vote, 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, and political tensions turned violent as the opposition took to the streets. Eventually, Norodom Sihanouk intervened and in November 1998 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).

Although Cambodia!s third general election under the present constitution was held on schedule in July 2003, indicating perhaps that electoral politics was beginning to put down roots in Cambodia, the election aftermath 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. It was not until July 15th 2004 that the National Assembly officially voted into office a new government"a two-party coalition comprising the CPP and FUNCINPEC. The balance of power had altered little, with the CPP remaining the dominant coalition partner.

Relations between the government and the sole SRP opposition have shifted from deep antagonism over the past few years to a spirit of co-operation by early 2006. The SRP leader, Sam Rainsy, along with two other SRP members, Cheam Channy and Chea Poch, were controversially stripped of their

Lengthy negotiations follow 1998 and 2003 elections

The government�s relations with SRP improve

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parliamentary immunity from prosecution in February 2005. This move paved the way for legal action to be taken against them, most notably defamation suits filed by Hun Sen and Prince Ranariddh against Sam Rainsy

Sam Rainsy and Chea Poch immediately fled the country, but Cheam Channy was arrested and taken to a military court on charges of building an army as part of a coup plot (he was later sentenced in August to seven years in prison). In December 2005 Sam Rainsy was sentenced in absentia to 18 months! imprisonment on defamation charges. Prince Ranariddh had filed a suit relating to allegations made by Sam Rainsy that he had accepted a US$30m payoff from Hun Sen in return for joining the government in 2004, while Hun Sen had filed a US$5m defamation suit against Sam Rainsy following the latter�s accusations in early 2004 that the government had plotted to kill its political rivals. Sam Rainsy had also accused Hun Sen of planning a grenade attack on an opposition rally in 1997 that killed at least 16 people. Hun Sen has strongly refuted the accusations.

Although there was little sign that Hun Sen would move to seek a review of Sam Rainsy�s conviction, in February 2006 he surprisingly requested that the monarch, King Norodom Sihamoni, pardon the SRP leader. (Cheam Channy was also pardoned and released from prison.) This move was reportedly prompted by Hun Sen�s receipt of a letter from Sam Rainsy, in which the opposition leader expressed regret over accusing Hun Sen of being involved in the deadly grenade attack. Hun Sen�s request for a pardon for Sam Rainsy was probably also prompted by the widespread international criticism, particularly from the US, the EU and the UN, over the government�s apparent moves to repress its opposition. (Raising international criticism further, in late 2005 and early 2006, Hun Sen also filed defamation charges against a number of journalists, human-rights advocates, and labour union leaders. These charges related to criticism of the border treaty with Vietnam signed in October 2005.)

Sam Rainsy�s apparent determination to co-operate with Hun Sen, a sentiment he expressed when returning to Cambodia in February after nearly a year in exile, marked a major change in the country�s political scene, raising the prospect of greater political stability and a political culture centring more on constructive dialogue than confrontation. However, there remained a great deal of scepticism over whether this new style of politics would take hold given Hun Sen�s autocratic tendencies.

In November 2005, during a FUNCINPEC party congress, at which Hun Sen was a guest of honour, FUNCINPEC and the CPP pledged to strengthen their ties, and Prince Ranariddh stated that the parties would draw up a �joint political platform� on which to contest future elections. However, developments in early 2006 indicated that FUNCINPEC was losing some influence in the power-sharing agreement with the CPP. In March Hun Sen reshuffled the his cabinet, in which the positions of co-ministers in the Ministry of Defence and Ministry of Interior were eliminated, with FUNCINPEC co-ministers, Nhiek Bun Chhay and Prince Norodom Sirivudh respectively, standing down, leaving the ministries under the sole charge of the CPP. The co-ministership had been a central part of the power-sharing agreement between

FUNCINPEC loses some of its share of power

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the two parties since 1993, and it was aimed at offsetting the CPP dominant control of the military, policy and judiciary.

In March 2006 Prince Ranariddh announced his resignation as National Assembly chairman. He claimed that the decision was made so that he could devote more time to working for his party. Prince Ranariddh�s position as chairman of the assembly had also been a central component in the power-sharing arrangement, creating some balance between him and Hun Sen as prime minister. Prince Ranariddh�s successor is the CPPs honorary chairman, Heng Samrin, who was promoted from his previous post of first deputy president of the assembly. A number of FUNCINPEC provincial governors were also removed from their posts in March.

The apparent transfer of even more power to the CPP raised speculation that the CPP-FUNCINPEC power-sharing coalition, which was also in place during the two previous parliamentary terms, was coming to end. The catalyst for this was probably the passage of a constitutional amendment on March 2nd permitting a new government to be formed with a simple majority (more than 50%) instead of the previous requirement of having to have a two-thirds majority. As a result of this change, the CPP is unlikely to need FUNCINPEC�s support to form a future government. The constitutional amendment had actually been proposed by Sam Rainsy, possibly indicating that the SRP leader expected to be in a position to form a government in the future, either as a single party or though a coalition with FUNCINPEC.

Important recent events

February 2002

Commune (local government) elections are held for the first time. The Cambodian People�s Party (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.

July 2003

The general election produces a hung parliament. The CPP is the largest party with 53% of the vote, followed by the National United Front for an Independent, Neutral, Peaceful and Co-operative Cambodia (FUNCINPEC) with 24% and the opposition Sam Rainsy Party with 23%. Lengthy negotiations ensue in a bid to form a government.

July 2004

The CPP and FUNCINPEC again form a two-party coalition, with Hun Sen retaining his position as prime minister.

October 2004

The country�s long-standing monarch, Norodom Sihanouk, announces his abdication. He is succeeded by his son, Norodom Sihamoni. When announcing his decision, Norodom Sihanouk emphasised the fact that he was old (aged 82) and in

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poor health, and therefore he claimed to be no longer capable of properly carrying out his duties as king. It is also probable that he wanted to oversee the appointment of his successor, and hence ensure the survival of the monarchy, before he died.

February 2005

The National Assembly votes to strip the opposition leader, Sam Rainsy, of his parliamentary immunity from prosecution. Sam Rainsy later flees the country.

October 2005

Cambodia and Vietnam agree on the controversial �Supplementary Treaty to the 1985 Treaty on the Delimitation of the State Border between Cambodia and Vietnam�, and the deal is promulgated in Cambodia in the following month.

December 2005

Sam Rainsy is sentenced in absentia to 18 months! imprisonment on defamation charges, and Hun Sen files defamation suits against vocal critics of the border deal with Vietnam.

January 2006

Inaugural elections are held for the Senate holds, in which the CPP wins the majority of votes and increases its representation in the upper house.

February 2006

The king approves Hun Sen�s request for a pardon for Sam Rainsy and Cheam Channy, and their parliamentary immunity from prosecution is restored. Sam Rainsy returns to Cambodia with the aim of co-operating with Hun Sen.

March 2006

Prince Ranariddh steps down as National Assembly chairman, stating that he needs to spend more time working for his party. He is replaced by the CPP�s Heng Samrin. A constitutional amendment lowers the level of support needed to form a new government from a two-thirds majority to a simple majority.

Constitution, institutions and administration

The 1993 constitution states that Cambodia is a constitutional monarchy. The monarch, as head of state, is responsible for appointing the prime minister. The cabinet is chosen by the prime minister with the king!s approval. The influence of the monarchy has declined in recent years, partly because of the poor health of Norodom Sihanouk during the final few years of his reign. His successor, King Sihamoni has pledged to remain politically neutral, a move that is likely to be an advantage in terms of the king�s chances of being a symbol of unity rather than division. Indeed, the king did not become embroiled in the lengthy dispute in 2005 and early 2006 between Hun Sen and Prince Ranariddh on one side and Sam Rainsy on the other.

There is a lack of real separation of power, with the executive branch commonly dominating the legislature and the judiciary. The legislature comprises the 123-seat National Assembly (the lower house) and the 61-seat Senate (the upper house), both of which are dominated by the CPP. The

The legislature and judiciary are weak

The influence of the monarchy has declined

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parliamentary agenda is therefore largely driven and controlled by the CPP-dominated executive. Judges are also highly vulnerable to political pressure.

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. Constitutional changes require the support of a two-thirds majority.

The Senate�s inaugural election

The Senate was set up in 1999 with a role of scrutinising laws passed by the National Assembly and acting as a co-ordinator between the government and the lower house. It has 61 members and runs concurrently with the lower house. For the Senate�s first term, the king appointed two senators, and the remainder were appointed by the political parties according to their respective shares of seats in the National Assembly. However, elections were introduced for the Senate�s second term, with 57 seats contested and four seats chosen by the king and the lower house. Eligible voters for the January 2006 elections comprised only members of the lower house and of Commune Councils (local administrative authorities), an electoral base of around 13,000. In view of the fact that the CPP recorded a major victory in the commune elections in early 2002 and that voting in the Senate elections was inevitably going to be along party lines, the CPP�s victory was assured. The SRP had been resigned to suffering a major defeat in the Senate election. The party had complained that the decision to give the vote to commune councillors placed it at a great disadvantage, because it performed significantly worse in the 2002 Commune elections compared with the 2003 general election, on which the Senate election would have been based had the old system been left unchanged. The SRP received only 1,165 votes in the Senate election, compared with the CPP�s 7,854 and FUNCINPEC�s 2,320. FUNCINPEC secured ten seats, and the SRP won only two, compared with the CPP�s 45 seats in the Senate election. In the previous Senate the CPP had 31 seats, FUNCINPEC 21 and the SRP seven. The outcome of the 2006 election in essence has made the Senate a more ineffective institution in terms of its role as a check on the power of the executive.

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.

Political forces

Of the 23 political parties competing in the July 2003 National Assembly 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 of the 123 seats), in other state organs and in terms of its

The bureaucracy is politicised

The CPP is disciplined and powerful

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grassroots party network. Further strengthening its hold on power, the CPP increased its representation in the Senate (the upper house) following the body�s inaugural elections on January 22nd 2006, securing 45 seats out of the 57 contested (four members in the 61-seat upper house are to be appointed by the king and the National Assembly), up from 31 in the previous Senate.

The president of the Senate, Chea Sim, is the chairman of the CPP, the prime minister, Hun Sen, is its deputy chairman, and the party�s honorary chairman, Heng Samrin became the National Assembly chairman in March 2006. The CPP maintains strong Leninist roots, evident in its internal discipline, and in terms of economic policy it can be regarded as pragmatic reformist. Never-theless, it tends to support market reform when it accords with its political requirements or it has no choice as a result of international agreements.

FUNCINPEC, which currently holds 26 seats in the National Assembly (down from 43 seats in the previous lower house) and ten seats in the Senate, has recorded a drop in popular support in recent years, and it 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 ministerial 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.

General election results (% of vote)

1993 1998 2003CPP 38 41 53FUNCINPEC 46 32 24SRP - 14 23Others 16 13 -

Source: Press reports.

The SRP has been the only opposition party represented in the National Assembly and Senate, where it has 24 seats and two seats respectively. 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. Although, the party�s ties with the CPP-dominated government appeared to have improved in early 2006, the party effectively remains sidelined. The SRP 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

The Sam Rainsy Party is the main opposition party

FUNCINPEC loses support

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corruption. However, whether this policy orientation would continue if the SRP were to win office is uncertain.

Main political figures

King Norodom Sihamoni

King Sihamoni acceded to throne in October 2004, following his father�s abdication. There has been concern expressed in some quarters about King Sihamoni�s character and suitability, particularly with regards to his ability to stand up to the country�s powerful politicians.

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 leader of the National United Front for an Independent, Neutral, Peaceful and Co-operative Cambodia (FUNCINPEC) and chairman of the National Assembly (the lower house of parliament) until he resigned in March 2006. He served as the first prime minister from 1993 to 1997 before being ousted by Hun Sen.

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.

Heng Samrin

The CPP�s honorary chairman became chairman of the National Assembly in March 2006.

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

Some Khmer Rouge will face trial

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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). In October 2004 the National Assembly approved legislation required for the tribunal to go ahead. Preparations for the long-delayed Khmer Rouge tribunal have been moving forward. In January 2006, in a symbolic development, the military handed over part of its national headquarters complex to the tribunal�s taskforce, thereby providing a base for the tribunal�s �extraordinary chambers�, comprising offices and a 500-seat courtroom. However, there remains the potential for the preparations to stall as a result of insufficient funding, with foreign donations falling short of the total required and the government claiming that it cannot meet its share. Foreign donor commitments have resulted in the pledging of US$43m out of estimated trial costs of US$56.3m. The government has said that it would gather US$1.5m from the state budget, below its expected contribution of US$13.3m. However, in December 2005 Hun Sen said that the funding issue would not be allowed to become an obstacle to the trial.

International relations and defence

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 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.

Diplomatic ties with the US, the EU and the UN were again strained in 2005 and early 2006 after strong criticism of Hun Sen�s apparent efforts to silence his critics. The situation reached another low in March 2006, when Hun Sen denounced a UN envoy, Yash Ghai, who had criticised the Hun Sen administration�s record on human rights. Hun Sen called on the UN secretary-general, Kofi Annan, to sack Mr Ghai, and labelled UN human rights workers in Cambodia as �long-term tourists�.

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. In late 2004 Cambodia was admitted to the Asia-Europe Meeting (ASEM, an informal forum for dialogue between the EU member states and a number of Asian countries) together with Laos and Myanmar (Burma) and the ten new EU member states.

Ties with the EU, the US and the UN have often been tense

Cambodia joins ASEAN, and later ASEM

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Cambodia is one of the four less-developed ASEAN members in a group also comprising Laos, Myanmar and Vietnam (collectively known as �CLMV�). The four-member group held their first leadership summit in Vientiane, Laos, in November 2004, ahead of the full ASEAN leadership summit. The group agreed to strengthen co-ordination, mutual assistance and economic co-operation, and the leaders of each country signed the Vientiane Declaration on Enhancing Economic Co-operation and Integration.

Under Hun Sen, Cambodia has moved closer to China, and in late 2005 Hun Sen stated that ties with China were entering their �best stage� in history. This followed the visit by a delegation headed by Li Jinzhang, the assistant minister of China�s Ministry of Foreign Affairs, to Cambodia in November 2005. Hun Sen has shown himself willing to jeopardise relations with Taiwan"an important investor in Cambodia"in the interests of good relations with China. During Mr Li!s visit Hun Sen pledged his country�s full commitment to adhering to a �One China� policy, under which Cambodia does not recognise Taiwan as a sovereign entity. In return for maintaining close diplomatic ties with China, Cambodia continues to benefit from Chinese aid, investment and tourists. In April 2006 China!s prime minister, Wen Jiabao, pledged US$600m in aid and loans to Cambodia during his trip to the country.

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. In December 2005 Hun Sen and Thailand!s prime minister, Thaksin Shinawatra, pledged to strengthen links as both countries celebrated the 55th anniversary of diplomatic relations. In a sign of practical co-operation, the Thai government has moved ahead with a registration programme for Cambodians working illegally in the country, a scheme that aims to give Cambodian workers protection under Thai labour laws. 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. However, in February 2006 both sides agreed to finish demarcation of the land border by the end of 2006 and the maritime border by end-2007.

Relations with Vietnam, soured by the Vietnamese occupation, have proved vulnerable to border disputes. However, in general, relations have become easier since Hun Sen, who is pro-Vietnamese, assumed power and ties have been boosted in the past year or so by high-level state visits, most notably King Norodom Sihamoni�s trip to Vietnam in March 2006.

Ties with China are close

Relations with Thailand are stable

Relations with Vietnam improve

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Cambodia and Vietnam are moving ahead with plans to demarcate the joint border after the controversial Supplementary Treaty to the 1985 Treaty on the Delimitation of the State Border between Cambodia and Vietnam was promulgated in Cambodia in November 2005. (The two sides signed the treaty in October 2005, and it was ratified by both countries! parliaments in November.) In December the two sides agreed to establish a joint committee for border demarcation in the first quarter of 2006, with demarcation and the placing of border markers set to commence in September 2006. This task, which is scheduled to be completed by December 2008, is unlikely to go smoothly, as in some areas Cambodians are living in what will be Vietnamese territory, and vice versa. The location of the border between the two countries has proved to be a highly sensitive issue in Cambodia, with local opposition concentrating on claims that Cambodia is set to lose territorial sovereignty to Vietnam.

There have also been problems between the two countries over Vietnamese ethnic minority refugees living in Cambodia. Although the Cambodian government has often adopted a tough stance towards these refugees, it has helped to facilitate their resettlement to third countries, usually the US. In a positive step towards future co-operation between the two governments and the UN Refugees Agency (UNHCR), a memorandum of understanding was signed in January 2005 relating to the resettlement of ethnic minority people from Vietnam�s central highlands who cross illegally 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 had got into difficulties. However, in early 2005 the World Bank announced that the government had made �significant progress� in meeting the conditions for lifting the proposed suspension of disbursements for the demobilisation project, which has been largely inactive since February 2003. If ultimately successful, streamlining the security forces should make it easier to realise planned cuts in defence expenditure.

Security risk in Cambodia

Armed conflict

The risk of armed conflict threatening business is moderate. The risk has declined in recent years, as a result of 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

Army demobilisation proves difficult

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from dissident groups like the Cambodian Freedom Fighters (CFF), 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. The CFF has been considerably weakened in Cambodia following successive arrests and trials of alleged CFF members in Phnom Penh, and in some provincial locations, since the failed coup d�etat in 2000. However, it has not abandoned its goal of overthrowing the government, and it may not be an entirely spent force.

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 with the local population. Moreover, thieves frequently carry guns. 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.

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. In an incident that attracted widespread international media coverage, masked gunmen held a class of children hostage in Siem Reap International School in Siem Reap in June 2005. The incident, which resulted in the death of a Canadian boy, was a botched attempt at kidnapping the children of a South Korean businessman, who had previously employed one of the gunmen.

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.

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Resources and infrastructure

Population Age structure of population (% of total)

2003

0-14 years 38.3

15-64 years 58.9

65+ years 2.8

Source: UNDP, Human Development Report.

According to the IMF, in recent years the population has been growing by an annual average of around 2%; it reached 13.8m in mid-2004, up from just over 13m in 2001. In 2003 around 38% of the population was under the age of 15, 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.

According to the UN Development Programme (UNDP), nearly 19% of the population live in urban areas. The largest city is Phnom Penh, the capital, which has a population estimated at more than 1m. National population density is low, averaging 64 people per sq km, according to the 1998 Population Census. However, the more densely populated central provinces have an average of 161 people per sq km.

Population indicators, 2003 Urban population (% of total population) 18.6Infant mortality rate (per 1,000 live births) 97.0Fertility rate (births per woman) 4.1

Life expectancy (years) 56.2

Source: UNDP, Human Development Report.

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

By the end of the Pol Pot era formal education had ceased, and many educated Cambodians had been killed or had fled abroad. There have been improvements over the past decade or so, but there are still problems. According to data from the UNDP, the adult literacy rate stood at 73.6% in 2003, up from 62% in 1990. However, the literacy rate for women was only 64.1% in 2003 compared with 84.7% for men. The primary enrolment rate has picked up, rising to 93% in 2002/03 from only 67% in 1990/91, but the secondary rate stood at only 24%. Educational opportunities at tertiary level are inadequate, resulting

The population is poor and growing fast

Skills levels are poor

There is a sizeable Vietnamese and Chinese population

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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

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 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 2.1% of GDP in 2002, according to the UNDP, among the lowest percentage of countries reporting data. The private sector has sought to fill the gap"private health expenditure was estimated at nearly 10% of GDP in 2002"but personnel offering medical treatment are often poorly qualified.

Various indicators reveal the dismal condition of healthcare in Cambodia. The UNDP estimated infant mortality at 97 per 1,000 live births in 2003 and maternal mortality at around 4.4 per 1,000 births; the true figures may be much higher as only about one-third of births are attended by qualified medical staff. The UNDP classifies around one half of all children under the age of five as stunted and 33% malnourished. In 2002 only 34% of the population had access to safe drinking water (the figure is lower in rural areas) and only 16% had 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 was only around 56 years in 2003, compared with 70 years in Thailand, according to UNDP data.

Natural resources and the environment

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.

Public health provision is poor

Cambodia is a resource- rich country

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Transport, communications and the Internet

Cambodia!s transport infrastructure is in a serious state of disrepair. According to the World Bank, in 2003 Cambodia had around 4,800 km of national roads, 5,700 km of regional roads and 27,800 km of rural roads. The majority of roads are not paved, including national roads (despite repair work over the past few years, only 28% of national roads were paved in 2003). Many bridges and ferries are in a poor state of repair. Foreign donors are financing a wide range of road and bridge projects, including ones in provincial areas. Motorcycle and vehicle traffic is increasing in urban areas, but overall road traffic remains light.

Inland waterways provide important transport routes, particularly during the rainy season when many roads are impassable. The major routes are the Mekong and Tonle Sap rivers. Silting of the Mekong has rendered some stretches impassable for large boats, leading to a need for regular dredging, which is taking place.

The railway system comprises a 385-km line running from Phnom Penh to Poipet on the Thai border, which is in urgent need of repair, and a 263-km route from Phnom Penh to Sihanoukville, which was upgraded in 1996. The government is receiving technical and financial assistance from bilateral aid donors to upgrade the network further. In December 2005 China agreed to provide a grant of US$8m to fund a technical survey for a 255-km railway line from Kampong Speu province to the border with Vietnam. The minister of public works and transport, Sun Chan Thol, said that the project was an important part of efforts to build transport links between Cambodia and China. The government will seek further funds to finance the construction of the railway once the survey has been completed.

There are eight domestic airports, but the country�s main airports are in Phnom Penh (Pochentong airport), which has been upgraded, Sihanoukville and Siem Reap. There are regular flights between Phnom Penh and destinations within Asia. Regional airlines are now permitted to fly directly to Siem Reap, which has been upgraded to handle increased tourism traffic. Cambodia�s airline market has proven to be volatile, with many start-up airlines going out of business. The national airline, Royal Air Cambodge (RAC), suspended operations in October 2001 after the withdrawal of its foreign partner and in August 2004 First Cambodia Airline, a joint venture between Cambodian and Chinese investors, suspended operations claiming that it could not sustain the losses it was making. The airline had only commenced flights from Phnom Penh to Guangzhou, Kuala Lumpur and Singapore in February 2004.

Cambodia!s two main ports are Phnom Penh on the Mekong river and Sihanoukville, the only deepwater seaport (although Phnom Penh can receive small ocean-going vessels). Both suffer from silting and have antiquated cargo-handling equipment. Anecdotal evidence suggests that shipping companies prefer to dock at Sihanoukville rather than Phnom Penh, despite the subsequent land journey that this involves, because of the lengthy Vietnamese paperwork required for ships sailing up the Mekong, although port charges at Sihanoukville are some of the highest in the region. Japan has been supporting

Transport infrastructure is poorly developed

Sihanoukville is the only deepwater port

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upgrading and expansion work on Sihanoukville port, with the most recent expansion project agreed in September 2004.

According to data from the World Bank, fixed-line telephone density is low. In 2003 there were only 0.3 fixed lines per 100 people, up slightly from 0.2 in 1998, but much lower than Vietnam (5.4) and Thailand (10.5). The US$50m telecommunications network installed for the UN Transitional Authority in Cambodia (UNTAC) by an Australian telecoms company, OTC/Telstra, links all 21 provinces. However, many small towns are without telephone connections. Telecoms links also exist via the Intelsat system, which provides international communications services through a network of satellites. The government has said that it would be willing to sell off as much as 70% of the state-run telecoms network, Cambodia Telecoms, to foreign and domestic investors, but nothing has yet come of it. Mobile-phone systems are widely used in urban areas to bypass deficiencies in the fixed-line telecoms network, and the number of mobile-phone subscribers has grown fairly quickly, rising to 3.5 subscribers per 100 people in 2003, from only 0.5 in 1998. Internet use is concentrated in Phnom Penh, but is low compared with most other Asian capital cities, with only 0.2 users per 100 people in 2003. E-business is largely undeveloped.

Energy provision

Cambodia�s installed capacity stood at 187 mw in 2003, around 85% of which comes from diesel-fuelled generators, with the remainder from hydroelectric sources or imported batteries. Many companies and hotels have also installed their own generators. The majority of the population have no access to electricity; according to the World Bank, in 2003 only 17% of households had electricity connections. Phnom Penh, which has around 10% of the population, uses around 85% of total electricity consumed. The distribution system is old and badly in need of repair and power cuts are commonplace. Because of the inefficient generation and distribution systems, the unit cost of electricity is high at around US$0.25-0.50 per kwh. All of the diesel used to generate electricity has to be imported. A newly empowered regulator, the Electricity Authority of Cambodia, was established in 2000, but concerns remain about its independence from the government.

The government wishes to attract private-sector investment in power generation, but the lack of a developed regulatory framework for private-sector participation has hampered efforts to attract investment. The state-run Electricité du Cambodge (EdC) accounted for 44% of installed capacity in 2003. The remainder comprised eight independent power producers (48%) and 69 consolidated licensees (18%). Cambodia also imports energy; in 2003 it imported 58m kwh from Vietnam and Thailand, equivalent to nearly 10% of power generated domestically.

Cambodia will be in a position to meet more of its electricity needs domestically in the future, with the help of foreign funding. During a visit by Hun Sen to China in July 2005 the Chinese government pledged US$300m in aid to build and operate a 180-mw hydroelectric power station in Kampot

Telecommunications infrastructure is weak

Power cuts are frequent

Private-sector investment in energy is lacking

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province. A Chinese company, Sino Hydro Corporation, has been awarded the contract to build the power station. When complete, the power station is expected to have the capacity to generate 180 mw of electricity during the wet season for distribution to users in Kampot, Takeo and Phnom Penh.

The economy

Economic structure Main economic indicators, 2005 Real GDP growth (%) 7.7a

Consumer price inflation (av; %) 5.7

Current-account balance (US$ m) -240.4a

Foreign debt (US$ m; year-end) 3,139b

Exchange rate (K:US$; av) 4,092.5

a 2004. b 2003.

Sources: IMF, International Financial Statistics; World Bank, Global Development Finance.

Agriculture�s share of GDP (at current prices) has steadily declined in recent years, falling to 31% in 2004 from 36% in 2000. Although the sector has been fairly weak, it is the rapid expansion in industry that has been the major factor in the decline in agriculture�s contribution to overall GDP. In 2004 industry (comprising mining, manufacturing, construction and utilities) accounted for 28% of GDP at current prices, up from only 22% in 2000 and 18% in 1999. The manufacturing sector!s contribution to GDP has been on a rising trend, standing at 20% of GDP in 2004, compared with 16% in 2000. Services accounted for 36% of GDP in 2004; the sector has remained around this level over the past five years. The largest component of services is wholesale and retail trade, which contributes around 10% to GDP.

In expenditure terms GDP is dominated by private consumption, which contributed nearly 79% of total GDP at current prices in 2004. However, private consumption has generally followed a gradual downward trend in terms of its contribution to GDP, being displaced by investment. Consumption is dominated by rural consumption and thus fluctuates according to the harvest outturn. In cities such as Phnom Penh and Sihanoukville, private consumption is more influenced by domestic and foreign business confidence than in the countryside, and in Siem Reap province the performance of tourism is the key factor. Government consumption contributed just around 5% to GDP by expenditure in 2004, reflecting the government!s weak fiscal position. The contribution of gross fixed investment was 23.6% in 2004, representing a large increase over the past decade, and even over the past few years, with investment accounting for only 17.3% of GDP in 2001. This primarily reflects growth in private investment, spurred mainly by improved political stability and better government relations with international donors. Private investment accounts for around 70% of total investment. The importance of exports of goods and services has also increased in recent years, accounting for nearly 65% of GDP in 2004. However, exports remain lower than imports, which accounted for nearly 76% of GDP in 2004.

Agriculture�s share of GDP is falling

Rural demand dominates private consumption

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Comparative economic indicators, 2005a Cambodia Laos Vietnam Indonesia Philippines Thailand

GDP (US$ bn) 5.4 3.2 52.8 281.3 95.4 183.5b

GDP per head (US$) 382 536 630 1,162 1,086 2,802

Consumer price inflation (av; %)b 5.7 7.2 8.2 10.5 7.7 4.5

Current-account balance (US$ m) -166 -524 -176 2,241 3,392 -3,735

Exports of goods, fob (US$ bn) 2.8 0.7 32.2 84.7 40.1 109.2

Imports of goods, fob (US$ bn) 3.6 1.3 33.5 63.1 46.5 106.1

Foreign trade (% of GDP)c 118.5 62.5 124.4 52.5 90.8 117.3

Foreign debt (% of GDP) 77.3d n/a 38.2 49.0 69.0 28.2

a Estimates. b Actual. c Merchandise exports plus imports.

Sources: Economist Intelligence Unit estimates; IMF, International Financial Statistics; World Bank, Global Development Finance; national sources.

Economic policy

Any government in Cambodia is faced with an unenviable legacy: a long history of warfare, the destruction of the country!s economic and social fabric under Khmer Rouge rule (from 1975 to 1979), and the consequences of central planning. The result is widespread poverty and underdevelopment coupled with run-down (or in some regions non-existent) infrastructure and weak institutions. However, government policy continues to move in a market-oriented direction, with the government not being weighed down by the ideological baggage that plagues policymaking in Vietnam and Laos. Since the late 1990s, greater political stability has enabled the government to focus more on economic development. However, weak administrative capacity, including rivalry between institutions and corruption, remains a drag on policy implementation.

Main economic policy developments

2000

A three-year US$1.1bn public investment programme receives government approval, concentrating on health, education, transport and agriculture.

2002

International donors make new aid commitments but criticise the slow pace of reform.

2003

The government joins the World Trade Organisation (WTO).

2004

Delay in forming a government holds up the passage of important legislation and results in a loss of focus on reform. The National Assembly eventually ratifies the WTO accession agreement in October and passes the 2005 budget in December.

2005

In giving his support for the 2006 budget, the minister of economy and finance, Keat Chhon, explains that the government aims to encourage diversification to maintain stable economic growth. As a part of this effort, the government plans to increase spending on irrigation so as to help �develop and modernise field agriculture�.

Policy challenges are substantial

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As part of its economic reform, the government has attempted to improve the public finances and make monetary policy more effective, but progress has been slow. Central control over revenue is weak and the government depends heavily on foreign assistance. The government recognises that foreign aid and investment will remain crucial to economic development for the foreseeable future and it is in this context that it has pledged to introduce reforms in a range of areas, including streamlining the civil service, reducing the size of the armed forces and introducing a more sustainable forestry policy.

However, many of the planned reforms are running behind schedule or have faced problems in implementation. As a result, Cambodia�s international donors have been increasingly critical of the government�s failure to improve its performance in a number of areas. During the December 2004 Consultative Group (CG) meeting of multilateral and bilateral aid donors, donors called for greater accountability in the way in which aid money was spent. The problem of corruption was also mentioned frequently. Multilateral and bilateral donors also said that they wanted to see greater progress in the area of legal and judicial reform, public administration and fiscal management. In the March 2006 CG meeting concerns were again raised about corruption and Hun Sen made further pledged to combat administrative corruption and to accelerate judicial reform.

The ability of the National Bank of Cambodia (the central bank) to fine-tune the economy by using monetary instruments is weak. This reflects "dollarisation""more than 90% of deposits are in foreign currencies, predominantly US dollars"and the fact that Cambodia is still largely a cash economy. Despite the merits of a move to �de-dollarise� the economy, no major effort has been made yet to commence such a process, partly because of the risks attached to such a complex task. Nevertheless, gradual progress has been made in other areas. Domestic interest rates have been completely liberalised and reserve requirements are in operation in the banking system. The IMF has offered support for a policy of intervention in the foreign-exchange market to prevent excessive exchange-rate fluctuation.

Current legislation encourages investment, whether domestic or foreign, in a range of sectors including export-oriented projects, tourism, agro-industry, infrastructure, energy and mining. Restrictions on foreign investment apply in law, accountancy, and certain areas of transport, construction and foreign trade. The investment law offers a number of guarantees to foreign investors, including a uniform 20% corporate income tax rate, and allows them to remit foreign currencies abroad. Fiscal incentives are also available, such as tax holidays and exemptions on import duty on select products.

In terms of external trade, most quantitative restrictions on imports have been removed, but tariff barriers remain high. In 1999 Cambodia joined the Association of South-East Asian Nations (ASEAN). Since becoming a member, the government has lowered tariff barriers annually in line with obligations stemming from membership of the ASEAN free-trade area (AFTA). This requires the reduction of tariffs to below 5% on a wide range of goods by 2010.

Cambodia joins the World Trade Organisation

Dollarisation remains a problem

The government welcomes foreign investment

Public finances depend heavily on foreign assistance

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Cambodia joined the World Trade Organisation (WTO) in September 2003, but it did not officially become a member until October 2004 because of the delays in ratifying the agreement. Membership requires additional liberalisation of Cambodia!s trade and investment regime, where progress has been fast.

The government has a full policy reform agenda to work through as it proceeds to implement legislation required by the WTO. The WTO�s key stipulation is that Cambodia should be �WTO compliant� by 2008. There is a concern that the country made too many concessions in its WTO negotiations. In April 2004 the UN special envoy on human rights in Cambodia, Peter Leuprecht, said that he believed the country had not got a good deal when it agreed to join the WTO.

Economic performance

Real GDP growth has accelerated in recent years. GDP growth was 7.7% in 2004, up from 7% in 2003 and 5.2% in 2002, according to the National Institute of Statistics. This expansion has reflected strong growth in industry, primarily garment manufacturing, which has been supported by reasonably robust foreign investment. Construction activity has also been an important component of the overall expansion in industry. The services sector has continued to thrive, with services growth increasing to 9.2% in 2004, driven by the rebounding tourism sector and continued steady growth in wholesale and retail trade. Prior to 2005 agriculture had been a drag on overall GDP growth, contracting by 2% year on year in 2004, when it was hampered by unfavourable weather conditions. The strength of GDP growth in recent years has been impressive when taking into account the uncertain international and domestic political climate, which has constrained private investment growth.

Gross domestic product (% real change)

Annual average 2004 2000-04GDP 7.7 6.8 Agriculture -2.0 1.6 Industry 16.1 17.4 Services 9.2 5.2

Sources: National Institute of Statistics.

Inflation has accelerated during the past few years, reaching an annual average of 5.7% in 2005 (up from 3.9% in 2004) and an average of 2.7% in 2000-04. This trend has primarily been the result of increases in food and fuel prices, the latter rising in line with higher global oil prices. Low inflation in 2003, of only 1.2%, was the result of low rice prices (food prices are an important component of the consumer price index) and generally slower economic growth in the context of the general election and in the wake of the SARS (severe acute respiratory syndrome) crisis. However, supply-side factors have helped to constrain upward pressure on prices, most notably continued excess capacity in the labour market (as a result of the large number of entrants), which has constrained growth in urban wages, with knock-on effects for consumer prices.

GDP growth picks up pace

Inflation accelerates

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Greater stability of the currency, the riel, has also contributed to modest imported inflation.

Consumer prices (% change, year on year)

Annual average 2005 2001�05Consumer prices 5.7 2.7

Source: IMF, International Financial Statistics.

Regional trends

Although regionalism exists in Cambodia!s economy, it is not such an entrenched problem as in China or Vietnam. This reflects a range of factors, including history, the smaller size of Cambodia and relatively tight central control by the Cambodian People!s Party (CPP). Nevertheless, provincial and local governments do have power in their own localities and are able to flout central government directives on certain issues, such as logging. Moreover, not all of the revenue that is collected locally for central government finances actually arrives in the central coffers. Regional tendencies are strongest in former Khmer Rouge areas in the north and north-west of the country, where former Khmer Rouge officials hold senior positions in the provincial admini-stration. The government has stated that it intends to devolve more power to the commune level of government. It is unclear what form this will take, but it may well involve greater responsibility in fiscal matters. The economic gap between Phnom Penh and the rest of the country, including even provincial-level towns, is large. However, there is little evidence that this is leading to regional tensions.

Economic sectors

Agriculture

The majority of farming households are engaged in rice production and the best rice-growing land is in Siem Reap, Banteay Meanchay and Battambang provinces. Around 85% of rice cultivation is reliant on the annual rains and generally only one rice crop is produced a year. Yields are low by regional standards because production is small scale (at the level of rural household units), there is a lack of irrigation, and capital is limited. Limited domestic milling capacity, resulting from a historically risky investment environment, creates inefficiencies downstream, as does the weak transport infrastructure.

Preliminary estimates show that rice output soared in 2005 to reach 6m tonnes, up from 4.2m tonnes in 2004. There has been a small, but growing, rice surplus since 1996. Despite the surplus, there have been food shortages in some areas because of weaknesses in infrastructure and the trading system, and low incomes. The government is hoping to develop rice exports, but to be successful it will have to reform the entire production system, which is currently oriented towards providing food security through subsistence farming, not cash crop

Regionalism is not a major problem

Rice farming is small scale and relatively inefficient

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cultivation. Major improvements to processing facilities are needed if Cambodia is to compete with Thai and Vietnamese rice exporters.

Rice production calendar Planting period Harvest periodRainfed upland rice Apr-Jun DecFloating rice May-Jul Dec-Jan

Rainfed lowland rice Jun-Oct Oct-DecIrrigated lowland rice Nov-Mar Feb

Floodwater rice Nov-Mar Feb-May

Source: Ministry of Commerce, Cambodia Business and Investment Handbook.

Rubber output expanded sharply in 2003, increasing to 107,000 tonnes, up from 53,000 tonnes in 2002 and only 39,000 tonnes in 2001 However, output dipped in 2004 to 105,000 tonnes, according to the latest available data from the Asian Development Bank (ADB). Rubber is an important export commodity, but the sector!s performance is constrained by smuggling, a stock dominated by old trees and low international rubber prices. The government has been pushing to privatise the state-owned rubber plantations, but progress has been slow over the past few years. Although the state-owned Kampuchea Export Import Company (Kampexim) holds exclusive rights to export rubber, it is estimated that up to one-third of rubber produced is smuggled out of the country.

Fishing has contributed to around 10% of GDP (at current prices) in recent years, but the size of the annual catch has declined. In 2004 around 327,000 tonnes of fish were caught, marking the third consecutive year of decline from a high of 385,000 tonnes in 2001. Part of the problem reflects environmental changes and overfishing. Around 60% of the catch is from lake and river fishing, although sea-fishing and aquaculture have growth potential.

Bird flu in Cambodia

Cambodia�s small poultry industry has suffered outbreaks of avian influenza (bird flu) since early 2004, with the most recent outbreaks occurring in March-April 2006. The number of officially reported human deaths in Cambodia from the bird flu virus stood at four as of March 2006, all of which occurred between January and April 2005 in Kampot province, which borders Vietnam. In an initial effort, around 30,000 chickens, ducks and other fowl were culled in January-April 2004. The UN Food and Agriculture Organisation (FAO) has been assisting the government in monitoring the outbreaks, and France and Japan pledged financial assistance totalling around US$1.7m in early 2004. The government announced a ban on all chicken and duck imports, including eggs, in late 2004, but there have been reports of the embargo being flouted periodically as public perceptions of the risk posed by bird flu fluctuate. The World Health Organisation is assisting the government in its efforts to control the possible spread of the virus.

The contribution of forestry to GDP has stood at around 2% in recent years, down from a high of more than 6% in 1997. However, official figures are underestimates because of widespread illegal logging. The lack of central control over revenue raised from the felling and export of timber has frequently

Rubber output rises, but the sector needs overhauling

Fish catch declines

Illegal logging is common

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strained relations with the IMF and the World Bank. The government asserts that it has taken steps to clamp down on illegal logging and to improve the management of forest resources. However, there are concerns among international donors and non-governmental organisations about the government!s commitment on this issue. Documented logging output dropped sharply in 2004, falling to 442,000 cu metres, compared with 664,000 cu metres in 2003 and 644,000 cu metres in 2002.

Mining and semi-processing

Cambodia is endowed with a variety of minerals, but exploitation is still on a small scale. The mining sector contributed only 0.3% to GDP in 2004 (at current prices). A number of companies, including foreign companies, have been exploring for oil and gas offshore over the past decade, but few discoveries have been made. The government said in 2003 that it expected to start receiving revenue from the oil and gas sector from 2006-07, but this may be premature. Full exploitation of the offshore fields in the Gulf of Thailand is prevented by an unresolved territorial dispute with Thailand. However, exploration is taking place in areas unaffected by the dispute.

Companies from Australia, Canada and Malaysia have signed agreements to prospect for gold in Kompong Thom, Preah Vihear and Mondulkiri provinces, but nothing is being mined commercially at present. There is an established gem-mining industry around Pailin dominated by former members of the Khmer Rouge and largely beyond central government control.

Manufacturing

The main growth areas in manufacturing in recent years have been textiles and garments, and food processing. Other important manufacturing sectors are cigarettes, beer and soft drinks, and rice-milling. There has also been a proliferation of companies producing construction materials. Textiles and garments are particularly important, both in terms of manufacturing growth and employment. The sector has grown strongly in recent years, with annual growth reaching 17.4% in 2004, up from 12.1% in 2003. In 2004 textiles and garments (and footwear) accounted for 72% of total manufacturing GDP (at current prices) and 15% of total GDP; according to the commerce minister, Sok Siphana, a total of 250,000 people were employed in the sector in 2004, up 10,000 from the total at end-2003.

The textiles and garments industry is export-oriented, and exports have recorded robust growth in recent years. However, growth in the years up to 2004 partly reflected an increase in the size of its US export quota. Cambodia!s entry into the World Trade Organisation (WTO) in 2003 removed one uncertainty facing the garment sector insofar as Cambodia is not to be subjected to restrictive quotas following the winding up of the WTO�s global system of quotas at end-2004 under the WTO�s Agreement on Textiles and Clothing. However, in the quota-free trading environment, Cambodia�s garments exporters have to compete with their more efficient counterparts in China

Oil and gas have yielded little revenue

Garments and food processing are growth areas

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In 2005 Cambodia�s garment exporters, however, benefited from moves by the US and the EU to contain imports of garments from China. Cambodia�s impressive performance in improving labour standards and working conditions has also helped exporters to maintain export contracts. The International Labour Organisation (ILO) is operating a multi-donor-funded �Better Factories Cambodia� project, under which it monitors and reports on working conditions in Cambodia�s garment factories, in addition to helping factories to improve productivity. According to the ILO, the project has helped Cambodia�s garment manufacturers to survive the ending of WTO�s quotas, with factories maintaining the loyalty of major global buyers seeking low-cost production, but also international standard working conditions.

Construction

The construction sector has contributed around 6% to GDP (at current prices) in recent years. It has been recovering since 1997-98, when business confidence plummeted following Hun Sen!s military take-over and the onset of the Asian crisis. Since then, the sector has recovered to above 1996 levels, as the situation settled and as investor anticipation of higher tourism levels spurred a new wave of hotel, office, and residential construction. The sector has grown fairly strongly in recent years, up by an average of around 12% annually in 2003-04. There has been a surge in construction projects in the past year or so, with the value of construction projects receiving approval by the authorities in the capital, Phnom Penh, reaching US$263.5m in 2004 and US$287min January-September 2005, up from less than US$200m in 2003. As an indicator of supply-side weaknesses, however, official imports of construction materials are high, averaging around US$92m annually in 2002-04. However, smuggling is prevalent, particularly of cement.

Financial services

Cambodia has 15 licensed commercial banks, which are all private except for the state-owned Foreign Trade Bank of Cambodia and the Rural Development Bank. In late 2003 a Cambodian microfinance institution, Acleda, was granted a licence to operate as a commercial bank, and thereby became the fourth-largest bank ranked by loan portfolio. There are also a number of specialised banks. Over the past few years, some international banks, including the UK�s Standard Chartered Bank and France�s Credit Agricole Indosuez, have withdrawn from the Cambodian market because of insufficient business. However, the finance industry has been boosted by the formation of ANZ Royal Bank, a joint venture between Australia�s ANZ bank and Cambodia�s Royal Group. The joint-venture bank, which was formed in November 2004, has opened four branches in the capital, Phnom Penh, and two in Siem Reap. ANZ Royal Bank offers a range of financial services, including services that were previously unavailable in Cambodia, such as Internet banking, offsite automated teller machines (ATMs), and mobile phone top-ups through its ATMs.

Construction activity picks up, particularly in Phnom Penh

Foreign interest in banking has been mixed

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There is a widespread distrust of the banking system among Cambodians, partly based on past experience. However, the banking system has been fairly stable in recent years, but the high proportion of foreign-currency deposits in the money supply reflects a continued preference for US dollars. Another weakness in the sector is the lack of a well-developed rural banking network. However, microfinance (the provision of financial services to poor and low-income households) in Cambodia is expanding rapidly, with outstanding loans reaching CR231bn (US$56.3m) in 2005, up by 40% year on year, for a total of 384,000 clients. There is a well-developed informal credit market, which provides an important, if expensive, source of funding for small businesses and farmers.

Other services

The fortunes of the tourism industry have fluctuated, depending on the domestic political situation as well as regional and international developments. The outbreak of SARS in early 2003, combined with fears about regional terrorism and uncertainty associated with the July 2003 general election, led to a drop in tourism during that year, with arrivals falling to around 701,000, according to the Ministry of Tourism. However, there was a sharp rebound in visitor arrivals in 2004, with the total number reaching more than 1m, and this expansionary trend continued in 2005, with arrivals reaching 1.4m, of which 60% arrived by air. In terms of country of origin, South Korea, Japan and the US account for the largest shares, 15.2%, 10% and 7.7% respectively in 2005.

Arrivals from nearby countries, particularly Thailand and Malaysia, are set to increase further, as Cambodia is now a destination for a leading budget airline in the region, Malaysia�s Air Asia. Air Asia commenced flights from the Malaysian capital, Kuala Lumpur, to Phnom Penh in November 2005, and also operates flights between Thailand!s capital, Bangkok, and Phnom Penh. Air Asia�s fares are lower than those of its competitors on these routes, and as a result the minister of tourism, Lay Prohas, has stated that he believes the new flights will help to increase the number of visitors travelling to Cambodia for short trips.

The government is seeking to boost foreign investment in the tourism sector. Tourism infrastructure remains weak and investment is urgently needed for the sector to be able to handle targeted visitor increases. Plans for the industry focus on three areas: the temple complex at Angkor Wat in Siem Reap; the beaches around Sihanoukville; and eco-tourism in various parts of the country. Angkor Wat remains by far the biggest attraction. The government!s policy of allowing foreign airlines to fly directly to the town of Siem Reap, which serves the Angkor Wat temple complex, has been a major boost to the sector. The number of visitors flying into Siem Reap airport rose from zero in 1997 to 440,000 in 2005.

Tourism booms, with Angkor Wat a major attraction

Microfinance expands

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The external sector

Trade in goods Foreign trade, 2004 (US$ m)

Merchandise exports fob 2,475.5

Merchandise imports fob -3,193.3Trade balance -717.7

Source: IMF, International Financial Statistics.

Cambodia�s export revenue has recorded fairly strong growth in recent years, more than doubling from just over US$1bn in 2000 to US$2.1bn in 2004, according to official local data. (However, data on exports in balance of payments terms, according to the IMF, dropped sharply in 2002 before rebounding strongly in the following two years, reaching US$2.5bn in 2004.) Garment exports account for nearly all of Cambodia�s exports (excluding re-exports). In 2004 garments exports accounted for 96% of total exports (excluding re-exports), thereby raising concerns that export revenue would drop sharply in 2005, following the expiration at-end 2004 of the World Trade Organisation�s global system of quotas on trade in textiles and garments. However, exports remained strong in 2005, reaching US$1.7bn in the first three quarters of the year, up from less than US$1.6bn in the year-earlier period. Other exports include logs and sawn timber, rubber and fishery products. Re-exports comprised around 6% of total exports in 2003, down from 32% in 1997.

Cambodia!s trade has shifted away from the former Soviet Union and other members of the now defunct Council for Mutual Economic Assistance (known as Comecon), with the US and the EU now accounting for the largest shares of Cambodia�s exports. Exports to the US and the EU (mainly garments) have grown sharply over the past few years. In 2004 Cambodia�s garments exports to the US reached nearly US$1.3bn and to the EU around US$590m.

Cambodia remains dependent on imports for a wide range of products. Imports of consumer goods have increased in importance in recent years, in part because of the re-export trade. However, the main imports include petroleum products and construction materials. Imports (in fob terms) totalled US$3.2bn in 2004, up by nearly 25% year on year, according to the IMF, while local customs data indicate that imports reached US$2.1bn in 2004, compared with US$1.4bn in 2000. According to data from Thailand!s central bank, the Bank of Thailand, Cambodia!s imports from Thailand reached a record high of US$922m in 2005, nearly double the amount imported in 2001 (this data differs slightly compared with that in the IMF!s Direction of Trade Statistics). Cambodia!s imports from Thailand mainly comprise refined oil and cement, in addition to foodstuffs, chemicals, motorbikes and electrical components. Singapore and China (including Hong Kong) are other important sources of imports.

Export growth is sustained

The country is heavily import dependent

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Invisibles and the current account

According to the most recent IMF data, the current-account deficit (including official transfers) widened in 2004 to US$240.4m (around 54% of nominal GDP), up from around US$129m in 2002, but below the recent high of US$557.8m in 2001. Underscoring Cambodia!s dependence on foreign assistance, if official transfers are excluded, the current-account deficit was equivalent to around 14% of nominal GDP in 2004, up from around 8-9% in 1997-99. In balance-of-payments terms, the trade deficit reached US$717.7m in 2004, after averaging around US$550m in 2002-03. Services credit in the form of tourism has been on an upward trend (although dipping in 2003), offsetting services debits, which have risen in line with the expansion in merchandise trade. The deficit on the income account has widened, with foreign investors repatriating profits.

Current account, 2004 (US$ m)

Trade balance -717.7

Services balance 297.8Income balance -239.2Transfers balance 418.8

Current-account balance -240.4

Source: IMF, International Financial Statistics.

Capital flows and foreign debt

Cambodia�s capital inflows mainly comprise foreign loans. The Consultative Group (CG), which brings together multilateral and bilateral donors, has often made annual aid pledges in the US$500m-650m range, although disbursed aid is always lower than this. At the most recent CG meeting, in March 2006, donors pledged US$601m in loans for the year ahead, up from US$504m pledged in the December 2004 meeting. Out of 15 countries and two multilateral lending agencies"the Asian Development Bank (ADB) and the World Bank"in addition to a host of UN agencies attending the CG meeting in March 2006, Japan was the leading donor, pledging US$115m, followed by the ADB (US$88m), the US (US$62m) and the World Bank (US$53m). Despite continuing to extend aid to Cambodia, the CG is closely monitoring the government!s implementation of reforms with a programme of quarterly reviews.

Cambodia has also benefited from IMF debt relief, under the Fund�s Multilateral Debt Relief Initiative. The relief announced in December 2005 equates to a cancellation of all debt incurred by Cambodia to the IMF before January 1st 2005, amounting to around US$82m. Cambodia completed a Poverty Reduction and Growth Facility (PRGF) arrangement with the IMF in February 2003, following the disbursement of all loans.

Outside of the CG, China has been a major source of foreign funding in recent years, and in April 2006 China pledged US$600m in grants and loans to Cambodia, much of it directed at the construction of dams and bridges.

The current account has remained in deficit

Foreign lending continues amid concerns

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Cambodia�s outstanding external debt has increased steadily in recent years. According to the World Bank, Cambodia!s total stock of external debt increased from around US$2.5bn at end-1999 to US$3.1bn at end-2003 (the latest data available). Nearly all of the debt stock is medium- and long-term, of which around 72% is owed to bilateral creditors. Despite the 25% increase in debt levels in 2003 compared with 1999, the debt stock stood at the equivalent to 77.3% as a percentage of GNP in 2003, up only slightly from 75.1% in 1999. Cambodia�s outstanding external debt includes rouble debt of Rb815m, converted using an unrealistic official exchange rate of Rb0.554:US$1, which gives a US dollar value for the rouble debt of nearly US$1.5bn. If, for instance, the 2005 rouble:US dollar exchange rate, Rb28.3:US$1, were to be used, the value of this debt would be only US$28.8m. In the absence of an agreement with Russia on what exchange rate to use, Cambodia has not been servicing its debt. After Vietnam reached an agreement with Russia on its rouble debt a few years ago, it was thought that a similar agreement involving Cambodia would be increasingly likely. However, although talks have been held, an agreement has eluded the two parties.

Foreign direct investment (FDI) inflows have played a relatively small role in external finance, although this is changing slowly. Despite improved political stability and better economic conditions in Asia since the financial crisis in 1997-98, foreign investment has failed to recover. According to the IMF, actual FDI inflows fell from an annual average of nearly US$150m in 2000-02, to only US$84m in 2003, before picking up to US$131m in 2004. The largest proportion of foreign investment has been channelled into the textiles and garment sector, although food and wood processing, shoe manufacturing, and hotel and tourism projects are also attracting overseas capital. China (including Hong Kong) is Cambodia�s largest investor, followed by Thailand and the US. However, investors in general are still concerned about political stability, and have also been put off by red tape, high utility costs and corruption, all of which detract from the advantages of low labour costs.

Foreign reserves and the exchange rate

Cambodia!s foreign-exchange reserves have grown strongly over the past decade and have remained at relatively high levels despite the instability of the riel in 1997-98 following the Asian financial crisis. After rising continuously in recent years, reserves (excluding gold) reached a historic high of US$953m at the end of 2005, according to the IMF. The reserves are equivalent to around four months of import cover, in line with minimum safety levels, but still below what are considered to be prudential levels (around ten months) in many countries.

After weakening sharply in 1997-98 as a result of political instability and the onset of the regional financial crisis, the riel recorded steady depreciation against the US dollar in 1999-2001, before appreciating slightly in 2002 to an average of CR3,912:US$1. Since 2002 the riel has continued to weaken, dropping to an annual average of CR4,092.5:US$1 in 2005. Despite government efforts to build confidence in the domestic currency, US dollars and gold continue to be widely used as a hedge against possible falls in the domestic currency.

Foreign-exchange reserves grow strongly

The riel weakens steadily

Foreign investment inflows remain weak

An agreement on rouble debt proves elusive

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Regional overview

Membership of organisations

The Association of South-East Asian Nations (ASEAN) was established in 1967. The five original members were Indonesia, Malaysia, the Philippines, Singapore and Thailand. Brunei joined in 1984, as did Vietnam in 1995, Laos and Myanmar in 1997 and, most recently, Cambodia in 1999.

ASEAN summit meetings, which bring together the heads of government of member states, must now be held every three years. The most recent took place in Malaysia in December 2005. Informal summits of heads of governments are also held. In addition, the foreign and economic affairs ministers of member countries 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 the Indonesian capital, Jakarta, and a number of committees.

The organisation started with some grand objectives, but has failed to deliver in most areas, with the exception of tariff reform. 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 the association!s members was covered by this system. (Members had been permitted to exclude "sensitive" sectors, a let-out clause that a subsequent agreement in 1987 curtailed only slightly.)

Plans for a proper ASEAN Free-Trade Area (AFTA) were unveiled in 1992, with the aim of achieving it 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, covering a wider range of products, was launched in 1994. During the mid-1990s the timescale for implementing the programme was steadily tightened, with the aim of reducing tariffs on most goods to below 5% by 2000. A limited AFTA, between the original six members of ASEAN and involving a reduction of tariffs on intra-ASEAN trade to between zero and 5%, came into operation on January 1st 2002. (Countries joining recently have been allowed more time.) The momentum for change has been maintained in recent years. An ASEAN finance ministers! meeting in September 2004 agreed to abolish tariffs in 11 industrial sectors by 2012.

Before the recent acceleration in tariff reform, ASEAN!s slow progress towards AFTA had encouraged some of its members, notably Singapore, to opt instead for bilateral trade pacts. But ASEAN!s hopes of further multilateral deals have not been extinguished. In December 2004 ASEAN and China signed a major trade deal, which aims to eliminate most tariffs on trade between ASEAN and China by 2010 (2015 for the less developed members of ASEAN). Tariffs will not go completely: countries will be able to designate a number of sectors as

Association of South-East Asian Nations (ASEAN)

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sensitive, and the greatest liberalisation is therefore likely to occur in areas where Chinese and ASEAN trade is complementary.

The 1997-98 regional financial crisis exposed ASEAN!s failings in other areas 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, issued 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 member countries complicated the response to the crisis in East Timor in 1999. (Some members did eventually participate in the multinational force that intervened in East Timor, but not under ASEAN auspices.)

The non-interference principle has also enabled the ruling military junta in Myanmar to escape strong criticism from the governments of other ASEAN countries. However, in July 2005 Myanmar gave in to international and regional pressure and agreed to forgo its turn to chair the association, thus sparing ASEAN embarrassment in its relations with the US and the EU. In another sign that the policy of non-interference in domestic issues is becoming more flexible, in August 2005 the Indonesian government asked ASEAN countries to provide representatives to help monitor progress on the restoration of peace in the province of Aceh, in northern Sumatra. Further, in December 2005 it was announced that ASEAN was to send an envoy to meet not only Myanmar!s ruling generals but also the opposition leader, Aung San Suu Kyi, whose National League for Democracy won elections in 1990 but was denied power by the junta. In the event the envoy, Syed Hamid of Malaysia, was not allowed to see Aung San Suu Kyi, and it appears that ASEAN!s patience with Myanmar!s glacial progress on political reform is running out. Myanmar is increasingly being seen as a serious impediment to ASEAN!s attempts to raise its profile and increase its credibility.

The East Asia Community (EAC), which consists of the ten members of the Association of South-East Asian Nations (ASEAN) plus China, Japan, South Korea, India, Australia and New Zealand, was inaugurated at the East Asian Summit in mid-December 2005 in the Malaysian capital, Kuala Lumpur. The EAC has been a controversial idea from the time when it was first proposed, in 1991, by the Malaysian prime minister, Mahathir Mohamad. Initial opposition came from the US, which resented the fact that it was to be excluded from membership. However, the concept was revisited at a meeting in 2004 between ASEAN and China, Japan and South Korea (the so-called ASEAN + 3 grouping), when it received the enthusiastic backing of the Chinese premier, Wen Jiabao. Perhaps wary of Chinese ambitions, the other members of ASEAN + 3 supported a wider membership, and the group now also includes India, Australia and New Zealand. The December 2005 meeting marked a shaky start to the EAC, as it was dominated by the ongoing Sino-Japanese feud, Sino-Indian rivalry and a general wariness regarding China�s growing power. Chinese and Korean leaders refused to hold bilateral talks with their Japanese counterparts (owing to continuing animosity over what they see as Japan!s failure to atone sufficiently for atrocities committed in

East Asia Community (EAC)

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those countries before and during the second world war). China also suggested that EAS members be divided into "core" (ASEAN + 3) and "secondary" (India, New Zealand and Australia) categories.

The EAC did reach agreement that ASEAN + 3 would be the core of the new grouping, but it was also decided that EAC meetings would always be hosted by an ASEAN country (China having previously made a bid to hold the second EAC meeting in 2006). India and Australia objected to their secondary status, and were supported in this by Japan. Given the prevailing discord at the December summit, it appears unlikely that the EAC will prove to be the precursor to an Asian version of the EU, and it is thus unlikely to facilitate mutually beneficial economic co-operation. From a political standpoint, the EAC is also unlikely to cause the US concern about a possible loss of its influence in the Asia region, at least for the foreseeable future.

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Appendices

Sources of information

The availability of regular statistical publications is improving, although there are still problems with consistency.

Cambodia Development Resource Institute, Cambodia�s Annual Economic Review

Cambodia Development Resource Institute, Cambodia Development Review (quarterly)

Cambodia Development Resource Institute, Flash Reports (monthly)

National Institute of Statistics, www.nis.gov.kh

Asian Development Bank, Asian Development Outlook (annual)

Asian Development Bank, Key Economic Indicators of Asian and Pacific Countries (annual)

IMF, Cambodia: Statistical Appendix, October 2004

IMF, International Financial Statistics (monthly)

OECD, Geographical Distribution of Financial Flows to Aid Recipients

UN Development Programme, Human Development Report (annual)

World Bank, Global Development Finance (annual)

World Bank, World Development Indicators (annual)

Council of Ministers Press and Communication Department: www.camnet.com.kh/ocm

National Assembly: www.cambodian-parliament.org

The Senate: www.khmersenate.org

National Archives: www.camnet.com.kh/archives.cambodia

The CPP: www.cambodianpeopleparty.org

FUNCINPEC: www.funcinpec.org

The SRP: www.samrainsyparty.org

Cambodia Development Resource Institute: www.cdri.org.kh

Asian Development Bank Cambodia homepage: www.adb.org/Cambodia

The IMF Cambodia homepage: www.imf.org/external/country/KHM/index.htm

The UN Development Programme: www.un.org.kh/undp

National statistical sources

International statistical sources

Internet homepages

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David Chandler, A History of Cambodia, Colorado, 2000

David Chandler, Brother Number One: A Political Biography of Pol Pot, Boulder, 1999

Justin Corfield, The Royal Family of Cambodia, Melbourne, 1993

Ben Kiernan, The Pol Pot Regime: Race, Power and Genocide under the Khmer Rouge, London, 2002

David W Roberts, Political Transition in Cambodia, 1991-99, London, 2001

Mario De Aamaroczy and Sopanha Sa, Economic Policy in a Highly Dollarised Economy: The Case of Cambodia, Washington DC, 2003

Reference tables

These reference tables provide the most up-to-date statistics available at the time of publication.

Population (mid-year estimates)

2000 2001 2002 2003 2004Total (m) 12.74 13.01 13.27 13.53 13.80 % change, year on year 2.1 2.1 2.0 2.0 2.0

Source: IMF, International Financial Statistics.

National energy statistics (m kwh)

1998 1999 2000 2001 2002Electricity output 336 350 380 433 478

Source: Asian Development Bank, Key Indicators of Asian and Pacific Countries, 2005.

Government finances (CR bn unless otherwise indicated)

2000 2001 2002 2003 2004Total revenue and grants 1,792 2,029 2,385 2,154 2,499 Current revenue 1,379 1,520 1,728 1,741 2,107 Tax revenue 1,026 1,097 1,227 1,228 1,578 Non-tax revenue 353 424 501 513 530 Capital revenue 29 9 16 31 20 Grants 383 499 640 382 372Total expenditure 2,085 2,517 2,963 2,946 2,937 Current expenditure 1,189 1,416 1,575 1,758 1,745 Capital expenditure 896 1,101 1,388 1,188 1,192Balance -293 -488 -579 -792 -429Financing 293 488 579 792 429 Domestic borrowing -20 11 -160 100 -59 Foreign borrowing 324 390 609 589 522 Use of cash balances -11 87 130 103 -24

Source: Asian Development Bank, Key Indicators of Asian and Pacific Countries, 2005.

Select bibliography

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Money supply and credit (CR bn unless otherwise indicated; end-period)

2001 2002 2003 2004 2005Money (M1) 609.7 813.3 935.9 1,152.9 1,322.8 % change, year on year 13.0 33.4 15.1 23.2 14.7

Quasi-money 1,594.2 2,075.1 2,383.0 3,176.4 3,702.1Money (M2) 2,203.9 2,888.4 3,318.9 4,329.3 5,024.9 % change, year on year 20.4 31.1 14.9 30.4 16.1Net foreign assets 3,077.6 3,737.6 4,009.9 4,796.6 5,475.1Domestic credit 867.6 941.8 1,208.7 1,607.8 1,783.1

Source: IMF, International Financial Statistics.

Gross domestic product 2000 2001 2002 2003 2004Total (CR bn) At current prices 14,089 14,860 15,994 17,311 19,630At constant (2000) prices 14,089 14,863 15,643 16,745 18,032 % change, year on year 8.4 5.5 5.2 7.0 7.7Per head (CR �000) At current prices 1,106 1,142 1,205 1,279 1,422At constant (2000) prices 1,106 1,142 1,179 1,238 1,307 % change, year on year 6.2 3.3 3.2 5.0 5.6

Sources: IMF, International Financial Statistics.

Gross domestic product by expenditure (CR bn; current prices; % of total in brackets)

2000 2001 2002 2003 2004

Private consumption 12,507 12,651 13,184 13,652 15,420

(88.8) (85.1) (82.4) (78.9) (78.6)

Government consumption 737 828 913 975 961

(5.2) (5.6) (5.7) (5.6) (4.9)

Gross fixed capital formation 2,579 2,577 3,274 3,702 4,639

(18.3) (17.3) (20.5) (21.4) (23.6)

Exports of goods & services 7,020 8,214 9,239 10,149 12,704

(49.8) (55.3) (57.8) (58.6) (64.7)

Imports of goods & services -8,698 -9,390 -10,548 -11,738 -14,879

(-61.7) (-63.2) (-65.9) (-67.8) (-75.8)

GDPa 14,089 14,860 15,994 17,311 19,630

a Including statistical discrepancy.

Source: IMF, International Financial Statistics.

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Gross domestic product by sector (CR bn at constant 2000 prices unless otherwise indicated)

2000 2001 2002 2003 2004Agriculture 5,065 5,204 5,058 5,677 5,566 % change -1.2 2.7 -2.8 12.2 -2.0Industry 3,078 3,424 4,015 4,495 5,219 % change 31.2 11.2 17.3 12.0 16.1 Mining & quarrying 34 34 42 45 49 % change 25.9 0.0 23.5 7.1 8.9 Manufacturing 2,255 2,611 2,990 3,353 3,935 % change 30.3 15.8 14.5 12.1 17.4 Electricity, gas & water 58 61 71 83 86 % change 7.4 5.2 16.4 16.9 3.6 Construction 732 718 913 1,014 1,148 % change 36.8 -1.9 27.2 11.1 13.2Services 5,231 5,429 5,668 5,676 6,201 % change 8.9 3.8 4.4 0.1 9.2 Wholesale & retail trade 1,512 1,535 1,545 1,579 1,678 % change 4.5 1.5 0.7 2.2 6.3 Hotels and restaurants 521 639 759 680 841 % change 18.9 22.6 18.8 -10.4 23.7 Transport & communications 930 1,020 1,097 1,122 1,192 % change 6.0 9.7 7.5 2.3 6.2 Financial services 175 138 145 147 156 % change 36.7 -21.1 5.1 1.4 6.1 Public administration 377 359 357 342 319 % change -0.8 -4.8 -0.6 -4.2 -6.7 Real estate 855 851 832 828 855 % change 7.3 -0.5 -2.2 -0.5 3.3 Other services 861 887 934 979 1,160 % change 16.7 3.0 5.3 4.8 18.5Taxes on products less subsidies 870 934 1,034 1,044 1,208

Less: imputed bank charges 155 128 132 147 161GDP 14,089 14,863 15,643 16,745 18,032 % change 8.4 5.5 5.2 7.0 7.7

Source: National Institute of Statistics.

Consumer prices 2001 2002 2003 2004 2005Consumer prices (2000=100) 99.4 102.6 103.8 107.9 114.0 % change, year on year -0.6 3.2 1.2 3.9 5.7

Source: IMF, International Financial Statistics.

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Agriculture, livestock, fishery and forestry production (calendar years and '000 tonnes unless otherwise indicated)

2000 2001 2002 2003 2004Cropsa Rice 4,026 4,099 3,823 4,710 4,170Maize 183 186 149 314 257Cassava 145 142 122 n/a n/aSweet potato 35 26 32 n/a n/aVegetables 166 185 143 n/a n/aSugarcane 213 169 209 n/a n/aRubber 36 39 53 107 105Livestock ('000 head) Cows 3,490 3,495 3,550 n/a n/aBuffaloes 694 626 626 n/a n/aPigs 1,838 2,114 2,105 n/a n/aPoultry 15,250 15,248 16,678 n/a n/aFishing Fish 136 385 360 345 327Crocodiles ('000 head) 26 36 51 n/a n/aLogging ('000 cu metres) Logs 179 123 644 664 442

a Crop years.

Sources: IMF, Cambodia: Statistical Appendix, October 2004; Asian Development Bank, Key Indicators of Asian and Pacific Countries,

2005.

Tourism statistics ('000 unless otherwise indicated)

2001 2002 2003 2004 2005Total visitor arrivals 605 787 701 1,055 1,422Visitor arrivals by air 408 523 456 626 857 % change, year on year 15.9 28.2 -12.8 37.3 36.9

Tourism receipts (US$ m) 380 454 n/a n/a n/a % change, year on year 25.0 19.0 n/a n/a n/a % of GDP 10.3 11.4 n/a n/a n/a

Sources: IMF, Cambodia: Statistical Appendix, October 2004; Ministry of Tourism.

Principal exports (US$ m; fob)

2000 2001 2002 2003 2004Garments 962 1,202 1,356 1,628 2,027Rubber 30 26 30 35 38

Wood 33 22 16 10 11Fisheries 5 6 4 3 11

Total (incl others)a 1,056 1,268 1,453 1,708 2,108

a Excludes re-exports.

Source: Cambodia Development Resource institute, Cambodia Development Review.

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Principal imports (US$ m)

2000 2001 2002 2003 2004Diesel n/a n/a 102 110 109Construction materials n/a n/a 97 81 95

Gasoline n/a n/a 26 33 30Total imports (incl others) 1,418 1,501 1,674 1,825 2,143

Sources: Cambodia Development Resource institute, Cambodia Development Review.

Main trading partners (US$ m; incl re-exports)

2000 2001 2002 2003 2004Exports to: US 739.7 832.2 1,041.7 1,214.3 1,446.9Germany 66.0 98.7 159.8 213.8 302.8UK 81.6 126.3 122.1 150.3 179.1Canada 4.9 10.4 13.2 60.7 107.7Japan 10.7 13.3 68.1 81.0 90.5Singapore 18.0 28.0 77.8 67.8 43.9France 27.7 35.0 39.4 40.5 40.2Netherlands 20.5 25.7 29.2 28.7 34.9Spain 6.4 6.7 15.9 18.0 31.7China 23.8 16.7 22.3 23.6 27.2Imports from: Thailand 221.8 503.9 567.0 756.5 795.6Hong Kong 254.3 116.9 372.8 411.2 497.2China 112.9 86.9 276.8 324.1 480.7Vietnam 91.5 109.5 196.3 294.0 386.1Singapore 106.0 399.5 387.7 338.2 383.3South Korea 76.8 49.6 126.8 116.1 139.0Malaysia 64.2 19.3 60.4 71.3 91.9Japan 58.4 19.7 76.8 59.8 88.4Indonesia 68.4 9.9 75.7 87.9 79.0US 32.8 16.6 32.1 63.6 64.6

Source: IMF, Direction of Trade Statistics.

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Balance of payments, IMF series (US$ m)

2000 2001 2002 2003 2004Exports: goods fob 1,961.2 2,490.1 1,753.8 2,027.2 2,475.5Imports: goods fob -2,792.0 -3,430.8 -2,318.0 -2,559.9 -3,193.3

Trade balance -830.8 -940.7 -564.2 -532.7 -717.7Services: credit 428.4 524.6 604.2 526.1 767.1Services: debit -327.5 -347.3 -374.3 -390.4 -469.3

Services balance 100.9 177.3 229.9 135.7 297.8Income: credit 67.1 57.5 50.6 43.7 48.6

Income: debit -190.2 -195.4 -227.6 -250.3 -287.8Income balance -123.1 -137.9 -177.0 -206.6 -239.2Current transfers: credit 361.0 351.8 391.7 455.4 431.1

Current transfers: debit -7.3 -8.3 -9.3 -10.3 -12.3Current transfers balance 424.7 395.5 447.2 445.1 418.8Current-account balance -499.3 -557.8 -128.9 -158.5 -240.4Capital-account balance 35.6 44.9 13.3 -0.1 3.9Direct investment in Cambodia 148.5 149.4 145.1 84.0 131.4Direct investment abroad -6.6 -7.3 -6.0 -9.7 -10.2Portfolio investment assets -7.2 -7.7 -7.5 -7.7 -8.0

Other investment assets -176.3 -118.8 -116.3 -160.5 24.3Other investment liabilities 219.7 122.3 221.2 260.7 194.6

Financial-account balance 178.1 138.01 236.4 166.8 332.2Net errors & omissions 306.5 391.1 -20.0 -8.2 6.3Overall balance 20.9 16.1 100.9 0.0 102.0Financed by: Reserve assets -108.7 -90.2 -187.7 -41.2 -127.8Use of IMF credit & loans 4.0 9.3 9.3 -1.7 -10.3Exceptional financing 83.8 64.8 77.6 42.9 36.0

Source: IMF, International Financial Statistics.

Net official development assistancea (US$ m)

1999 2000 2001 2002 2003Bilateral 167.1 248.0 264.8 272.8 319.2 Japan 50.9 99.2 120.2 98.6 125.9 France 22.1 21.5 21.4 24.6 25.8 Australia 16.7 25.7 15.8 21.6 19.9 US 14.1 21.5 22.4 44.4 51.2Multilateral 109.8 149.7 153.9 191.3 178.1 International Development Association 26.8 36.6 39.6 47.3 62.6 Asian Development Bank 26.2 50.8 48.4 79.1 74.1 IMF 9.5 5.5 13.5 10.8 -0.1 UN Development Programme 7.9 3.1 3.9 3.1 4.3Total 277.2 398.4 419.9 486.9 508.0

a Official development is defined as grants and loans with at least a 25% grant element, provided by OECD and OPEC member countries andmultilateral agencies, and administered with the aim of promoting development and welfare in the recipient country.

Source: OECD, Geographical Distribution of Financial Flows to Aid Recipients.

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External debt (US$ m unless otherwise indicated; year-end)

1999 2000 2001 2002 2003Total external debt 2,517 2,628 2,697 2,900 3,139 Medium- & long-term debt 2,293 2,328 2,393 2,587 2,814 Short-term debt 152 227 224 217 221 Interest arrears on long-term debt 109 131 145 192 207 Use of IMF credit 73 73 80 96 104Memorandum item Principal arrears on long-term debt 1,157 1,275 1,318 1,359 1,401Public & publicly guaranteed medium- & long-term debt 2,293 2,328 2,393 2,587 2,814 Official creditors 2,293 2,328 2,393 2,587 2,814 Multilateral 325 381 442 609 801 Bilateral 1,968 1,947 1,951 1,978 2,013 Private creditors 0 0 0 0 0Total debt service 32 32 22 22 25 Principal 18 14 13 14 16 Interest 14 18 9 8 9 Short-term debt 2 5 4 1 0Ratios (%) External debt/GNP 75.1 75.9 75.5 75.7 77.3Debt service, paid/exports of goods & services 2.1 1.6 1.0 0.9 0.9Short-term debt/total debt 6.0 8.6 8.3 7.5 7.1Concessional loans/total debt 90.2 88.2 88.4 88.9 89.3

Note. Long-term debt is defined as having an original maturity of more than one year.

Source: World Bank, Global Development Finance.

Foreign reserves (US$ m; year-end)

2001 2002 2003 2004 2005Total reserves excl gold 586.9 776.2 815.5 943.1 953.0

Source: IMF, International Financial Statistics.

Exchange rates (CR:US$)

2001 2002 2003 2004 2005Annual average 3,916.3 3,912.1 3,973.3 4,016.3 4,092.5

Year-end 3,895.0 3,930.0 3,984.0 4,027.0 4,112.0

Source: IMF, International Financial Statistics.

Editors: Danny Richards (editor); Gerard Walsh (consulting editor) Editorial closing date: April 14th 2006 All queries: Tel: (44.20) 7576 8000 E-mail: [email protected]