Thursday, February 17, 2011
CAMBODIA MUST MAKE SERIOUS AND PAINFUL REFORMS
CAMBODIA MUST MAKE SERIOUS AND PAINFUL REFORMS
By Ronnie Yimsut
A land rich in history, abundance natural beauty, a well known “land of warm-smiling people,” the Kingdom of Cambodia has always attracted pilgrimage from all over the world for millenniums. The latest had been the Travel Channel (many popular programs) and a CBS reality game show, such as the “Amazing Race.” Other travel magazines also had effectively put Cambodia on the map as the “Emerging Hot Destination in the World.”
This rapidly changing physical landscape reflects the developments and maturity, across this gentle Buddhist Kingdom, a far cry from the infamous “Khmer Rouge’s Killing Fields” to one of the most rapid economic transformation nations in SE Asia. Cambodia’s economic growth rate— ranked sixth fastest in the world in the last few years— has been nothing short of a miracle--considering Cambodia’s terrible and recent self-implosion past. Cambodia is now considered as amongst “Economic Tigers,” in the SE Asia region.
More than 2.4 million tourists now visit this tiny Kingdom as of mid 2010, a number that is staggering and is expected to double (or even triple again) in the next 10 years or so. This has brought in a flood of hard currencies into the local and regional economy. The “Supply and Demand” economic (remember economic 101?) have led to an explosion of quality service industries within the “Development Triangle” of Siem Reap, Phnom Penh, and Sihanoukville. The proof of this amazing growth is represented by the mushrooming of hotels and restaurants, ranging from the most basic “Backpacker’s Paradise” guesthouses to “Five Star” accommodations that rival the region, if not the world’s finest.
Foreign investments are still pouring in, despite the global economic crisis of 2008-2010, thanks in part to the Royal Government’s liberal policy to attract key investors to the country, especially within the garment, agriculture, and tourism sectors. China and South Korea led the way in foreign capital investments in the Kingdom.
Today, the Cambodian (Khmer) people are much, much better off than ever before, specifically for the nation’s urban areas where economic growth traditionally sprung its seed and started its root. The people now have a much better food security with better nutrition, and a more open access to a much higher quality education, as well as health care services that catching up fast with regional standards that rival western nations in cost and quality care provided.
Cambodia is still growing with a young population (a ratio of approximately 68 percents under the age of 25) that had known nothing but a good time that is considered to be much, much better than their parents or grandparents have ever had previously. And since the cessation of internal conflicts, life expectancy has risen sharply from a mere 52 years of age to 58, slightly longer for female. With the advance of better family planning and even better prenatal care system in place, the infant mortality rate has also fallen notably, especially in urban area. These are all good news for Cambodia as a whole.
The local economy is now much more stable with more and more traditional micro-enterprises (small businesses) leading the way. The inflation rate is skillfully held in check and under control by the Royal Government to at between 8 and 10 percents annually. The dollarization over local currency, the Riel, may soon end and thus could only help to stabilize the local economy even further.
Micro-lending and Micro-finance Institutions (MFI) are at an all time high, especially in the rural areas, which has led to an explosion of micro-economic growth. Personal debt is relatively low as people, a cultural norm, often paid back their loans sooner rather than later. The pay back rate, on borrowed money, often rated at 98-100 percents, which is truly exceptional-compare to the rest in the SE Asia region.
The nation’s economy today is highly liberal. The investment climate is perhaps the best in the region, with less than tight rules and regulations, generous tax incentives, and low tariffs. And these incentives seem to work quite well as more and more foreign investments are pouring into the Kingdom’s rapidly growing and expanding economy.
Additionally, a total of $1.1 billion US worth of foreign aids have been pledged for Cambodia, representing approximately 10 percents of the Nation’s GDP, for fiscal year 2011 alone. This aid injection is on top of an average of $600 million in annual foreign aid already given to prop and boost Cambodia’s treasury since 1994 (on top of what UNTAC had provided in 1992-94).
For a small and developing country, these are all great news. Still, there are many daunting problems to overcome and it would take a collective effort by all Cambodians (and supporters) to effectively solve these problems. This task will not happen overnight and strategic reforms are a must for a long lasting growth and stability—socially, politically, and economically speaking.
Despite the rapid growth in Gross Domestic Product (GDP), public (Government) debts are still growing, which is a serious concern, especially for future generations who will have to pay all the debts back. China has lead the way in the so called, “soft loans” often dished out to Cambodia--without any string attached. China had already forgiven all the Kingdom’s overdue debts (almost $5 billion US) incurred during the Khmer Rouge’s Democratic Kampuchea regime; a regime China had sponsored and supported (more on China and Cambodia later).
The country is currently ranked 166th out of 181 countries surveyed by the Transparency International for its corruption perception index. Corruption is rift and an accepted norm from the bottom all the way to the top levels. Corruption can be found in just about every sector, large and small. The recent passage of an anti-corruption law, after 10 years of casual debates, and the recent establishment of an oversight committee may not be adequate to counter and turn around the entrenched and endemic crafts.
The recent discovery of large oil and gas deposit off Cambodia’s coast, in the Gulf of Thailand, could very well complicate things even more. Overlapping claims with neighboring countries, such as Thailand and Vietnam, could only lead to envy, resentment, and may even fuel additional conflicts. The “Nigerian Curse,” where oil rich Nigeria has seen its share of serious social, political, and economic challenges, has been predicted or suggested to afflict Cambodia as well—which also has similarly weak infra-structures.
Sometime, there is too much of a good thing, particularly when a small and developing nation is not yet ready or mature enough with sound capability of managing its new found wealth, which oil boom surely shall bring about in 2012. The competing Chinese and American oil firms, such as China’s National Oil and America’s Chevron, will surely added more fuels that could lead to more problems as Cambodia’s best interest is not necessary a top priority for neither China or the US. When two giants fought (an economic and political cold war), tiny Cambodia could very well be expected to be trampled, if not completely trashed, yet again as history had shown us.
Since the nationalization of land and real property (ownership rights was completely abolished) by the Democratic Kampuchea regime in 1975, the deforestation and land grabbing by private and public entities have been rampant, blatant, and a steep worrisome climb. The lack of land title made it much more complicated by a weak land law, which is rarely respected. This has lead to serious up heval among the populace as land (through speculation) price shot up sky high.
With foreign investors looking to drop serious cash on what they perceived as “great investment values or opportunities” in real estate, prices have escalated beyond reality. Practically overnight, land (real properties) were bought and sold at will. There seems to be nothing that can’t be negotiated, bought and/or sold, including countless state owned properties. Multi-millionaires, along with pricy luxuries items (Jewelry, vehicle, and villa etc.), sprout like mushroom all over the country, seemingly overnight. Even poor farmers, those who were once could hardly afford one meal a day, became “filthy rich” by selling off land they managed to hold on to from 1979 on. Many government officials with meager state salary also became openly wealthy (See a 2008 case study by Global Witness entitled “Country for Sale” for much more disturbing details and statistics).
Land concessions for various “development” schemes by the government often made some of the most vulnerable worse off than ever before--all across Cambodia. Many marginalized people have been summarily evicted off their land holding (do remember that land, including all resources found below ground, still belong to the Government, technically and legally speaking), often time in the middle of the night when bull-dozers moved in to push them out. Protest after protest went unheard or unresolved, which has led to dire desperation by the affected and marginalized people, including minority tribes. Internally speaking, this one shall be the greatest of all challenges for Cambodia now and in the foreseeable future.
Externally speaking, land/sea (border) encroachment by both Thailand and Vietnam (even tiny Laos) has led to serious clashes. Take Preah Vihear Temple (and other flash points) along the Thai/Cambodian’s border; for instance, have seen thousands of heavily armed troops amassed and both sides faced off just meters apart. Since 2008, serious firefights have broken out that have killed and wounded many. Cross border trades, the livelihood of nearby local villagers, effectively ended as tension rises and war of words escalated and heated to a boiling point.
Then Cambodia is also facing with the Chinese, the Japanese, and the American’s factors (competing interests) in the region. China, with one of the world’s fastest growing economies just to the north, had steadily increased its “Sphere of Economic and Security Influence” throughout SE Asia, paying particular special attention in Cambodia as one of its core strategic value areas. Billions of dollars worth of Chinese’s investments, in form of direct financial aids, including free cash and “soft loans,” as well as military aids, have poured into Cambodia. This is, yet again, an attempt by China to gain even more influences in the region, with a special focus on Cambodia. Ever wonder why? We should ask the Chinese.
To counter China’s growing influences, both the US and Japan (a strong US’ allies), two of the world’s largest economies, have also decided to pour billions of dollars more—in various forms—into Cambodia. This has led to the “Three Ring Circus” effect as Cambodia is all but a tiny ant beneath the three competing interests that may not necessary Cambodia’s. The last of such “Cold War” fought had led Cambodia into untold national tragedies and sufferings, first under the Lon Nol’s Republic Regime and later on under the Pol Pot’s Democratic Kampuchea. A past lesson that has never learned by Cambodia is bound to repeat again, unfortunately.
Yet Cambodia alone must make serious and painful reforms, on its own accord and way, in order to achieve growth that is socially equitable, environmentally sustainable, and politically stable. Cambodia’s infrastructure, all aspects, is required and an absolutely necessary transformation.
Where should such reform begin? Here are a few pressing ones as a starter:
1. Political reform:
Cambodia can start with the biggest reform of them all, its hardcore politic. The one party (one man or women) rule is not healthy for long-term Cambodia’s politic. A free and fair election for a true liberal democracy to take hold is absolutely essential. Competing political parties must have equitable access to state and private media without threat or intimidation, with a “level playing field” so to speak. Fair competition could very well driven better quality products.
2. Judicial (Courts) reform:
A competent and independence judiciary is not only essential, but critically important for Cambodia’s development. Cambodia’s courts are routinely seen as “for sale to the highest bidder,” by both local and international community. The courts are rarely shown their own “backbones.” Better trained and professional judges and lawyers are a good first step to a quality, equitable, and independence judiciary.
3. Executive branch (Prime Minister) reform:
Bottom line, the Executive power must rest with the people, by the people, and for the people. The Executors (Prime Minister and his cabinet), thus, obligated to work for the people—not a political party or clanship. The Executive branch must be “checked and balanced” by the Judicial (Courts) and Legislative (Parliament) branch. In short, answer only to the people!
4. Legislative (Parliament) reform:
Law makers are elected to the Parliament by the people and must openly debate an introduced law before its passing. The Parliament cannot and must not be seen as simply the “rubber stamp” for the Executive branch or a political party (the ruling party). They must work for the betterment of the Khmer people—NOT a political party!
5. Military or security reform:
In a perfect world, a small, developing nation such as Cambodia doesn’t really need a military or powerful security apparatus, which often are the biggest human rights abusers and violators. The military and security matters are also cost prohibitive, representing quite a "high percentage" of the national budget—compare to other meager and yet key expenditures, such as rural development, health care, and education. Costa Rica, for instance, seemed to survive quiet well without a military force as it had abolished the military since 1946 and save tons of national treasure in the process. Since Cambodia is not in a perfect world, granted, then an all volunteered “professional” Arm Forces (with professional soldiers) is needed. In addition, by killing all the “Ghost Soldiers” within the rank and file, the extra savings (often goes to officer’s pocket) can be used for professional training, procured new and much needed equipments.
6. Civil service and administrative reform.
Average salaries for civil servants are quite meager and ridiculously low. A teacher, for instance, is paid only about $40 US per month, which also represented an average salary for many other civil servants. Often time, their meager salaries are either docked for a myriad of expenses or they got paid only every so often. This has led to serious decline in moral, ethical conduct, and had increased or encouraged low level corruption. On the other hand, lawmakers, who can vote to give themselves (and others) a pay raise, make on average about $2,000 US per month, quite reasonable and generous sum for Cambodia. However, key ministers generally receive only about $500 per month, and yet some seem to live quite lavishly and well beyond their official salary. An equitable and living wage for all civil servants is the only way to help cut back corruption and help make any anti-corruption legislation more effective—not to mention improve the overall moral and better ethical conduct.
7. Treasury reform:
This is also a very critical and important reform area. The country’s tax collection effort is… mediocre (to put it mildly) at best where only at about 11 percent of the 2010 GDP actually found its way into the national treasury’s coffer. The rest simply and magically disappeared, despite of various Value-Added Taxes (VAT), designed to increase the nation’s revenue. Cambodia’s infrastructure and its ability to collect more revenue remain inadequate. The political will is not there to make sure that more revenue actually flow into the nation’s coffer and thus can be equitably used to raise all civil servants’ base salary, to help increase moral, ethical, and professional conduct amongst the civil servants. The increase salaries of civil servants from average $40 and month to $250 per a month, a good living wage, is very much possible-should the much needed reform can be achieved.
8. Financial sectors reform:
The newly proposed stock market and banking system must be better regulated to build stronger business bases and gain public trust within these emerging and growing sectors. The number of banks has increased rapidly due to less than strict rules and regulations now in place. The lax approach in these two sectors could lead to the possibility of a future financial meltdown that could very well cripple an emerging market economy in Cambodia.
9. Corruption reform:
This is a “social norm” (a cancer really that must be cured) that need serious adjustment and curtail. Unofficial “facilitation” fees, usually done quietly under the table, must be eliminated from any and all transactions with the government. Those found dirty must be “publically shamed” and payment made to fit the crime under the new anti-corruption law. If not, the great big gap between the rich and the poor shall continue with serious and dire consequences.
10. Land reform:
Any liberal and open economy in the world—not just in Cambodia-- cannot function properly and effectively without the utmost respect for property rights. The widespread land grabs across Cambodia by the rich and powerful, as a key indicator, could lead to another “Land Revolution” as Prime Minister Hun Sen had correctly recognized. Still, it would take much more than PM Hun Sen and a weak land title law alone to resolve this pressing social, economic, and political problem. It would take a strong political will and a collective effort by all, through better education and enforcement of the established law, in order to effectively reform this sector.
11. Foreign aid and natural resource revenues reform:
Cambodia should and must wean itself from the current “Beggar State” syndrome. Foreign aid must be viewed only as a short-term fix, a band-aid, and not as a long-term solution to Cambodia’s budgetary problem. More importantly, all foreign aid as well as internal revenues must be invested wisely and shared equitably in all areas-not just in urban area where only 20% of the population is located. A diversified investment and broad-based development strategy is also critically needed to counter global economic crisis.
12. Donors reform:
Foreign donors must better coordinate their effort and help Cambodia with even MORE capacity building. They must establish a much stronger mechanism in order to monitor and make sure that their aid actually and effectively went into designated and planned areas as stipulated. Foreign aid, including that from China, must follow the same basic rule of governance.
Lastly, unless these 12 points reform and associated conditions are met, the danger is that what Cambodia have miraculously achieved over the past decade could be easily destroyed by world’s economic crises, civil unrest brought on by repeated oppression, frustration, and outrage at the political and bureaucratic nightmares facing the Kingdom of Cambodia today.
Ronnie Yimsut is an author and an activist. He is a native son of Siem Reap, Cambodia and a lone survivor of a Khmer Rouge’s massacre in December 1977. He has been an active observer of Cambodia since 1992 and he had lived, worked, and traveled extensively throughout Cambodia in the past 3 decades.