Cambodia Context

Cambodia is one of the poorer nations in the world. The 2008 listing places Cambodia at 131 out of 177 nations on the United Nations Development Programs Human Development Index based on figures for 2005. Poverty in Cambodia has largely resulted from high population growth, inadequate opportunities, low capabilities, insecurity, exclusion and vulnerability (NPRS 2003, CSD/RGC, 20 Dec 2002).  

Cambodia is also a post-conflict country, where many of the foundations for growth and development physical, social, human and economic – have been shattered and need to be restored.  Only recently have some parts of the country become accessible as the security situation has increased.  The government lacks sufficient resources – both human and capital – to provide adequate services in health, education and infrastructure.   Private sector growth is limited by weak regulations and land and property rights, poor infrastructure and little access to credit.  In addition to this, allegations of corruption are widespread Cambodia ranks 162 in the world (out of 179) and 26 in the Asia Pacific region on Transparency International’s 2007 Corruption Perception Index.

36.8 per cent of the population lives below the poverty line (2005) and while poverty has moderately declined in the last decade (in 1994 the poverty rate was 39%), the majority of growth is occurring in Phnom Penh and other larger provincial towns.  90 per cent of the poor lives in rural areas and the highest rates of poverty are found in households where agriculture is the primary source of income.  In 2004, Cambodia ranked 24 out of 108 countries on the UNDP Human Poverty Index (HPI), with a score of 38.6.  Chad topped the list with a HPI of 56.9.

Social
Cambodia's social indicators are amongst the lowest in Asia. Life expectancy at birth is 58 years. In 2005 the infant mortality rate (per 1 000 live births) was 143 and the prevalence of HIV in the adult population was 1.6% (estimated 0.9 – 2.3%).  The adult literacy rate (aged 15 and older) is 73.6%. The population of Cambodia is estimated at 14 million in 2005, the next census being conducted in 2008. The population is estimated to be growing at a rate of 1.8% at 2005, the second highest growth rate in ASEAN (Association of Southeast Asian Nations) countries.  Cambodia also has a young population – in 2005 37.1% of the population was under the age of 15.  (The above figures are quoted from UNDP Human Development Report 2007/2008).

Prolonged civil war, internal displacement and other social and economic factors have resulted in almost 20% of households headed by women. Women are generally in a disadvantaged position in both family and society. The poverty rate for female-headed households is 48%.
                                                      
Cambodia's most vulnerable groups include internally displaced persons, returned refugees, war widows, orphans, street children, squatters, ethnic minorities and people with disabilities. Poor health is a major cause of impoverishment and other forms of social deprivation.

Political
Cambodia is at peace today after decades of warfare and civil strife. The third national assembly elections, since the 1991 Paris Peace Accords, were held in July 2003 and the country will go to the polls again on July 27 2008.  Notably peaceful and calm Commune Council elections were held April 1 2007 in 1 621 communes across the country.  The Cambodian Peoples' Party (CPP) won 98% of seats, while the Sam Rainsy Party recieved 28 seats and Funcinpec 2. No other parties, including the Norodom Ranariddh Party, were successful in securng any seats. The Commune Council elections represent the Royal Government of Cambodia's (RGC) efforts at encouraging new political developments towards improved local governance and increased grassroots participation in the nation's development processes through a program of decentralization and deconcentration.

The lack of significant progress in the area of legal and judicial reform however, continues to constrain further advancements in democratic processes and undermines the progress achieved in key social sector reform areas. In addition, lack of access to information and decision making of government policies has prevented the poor from participating in community activities.

Economic
The annual per capita income is US$290, while the 2005 per capita GDP ($US PPP) was measured at 2 727 (124 out of 174 countries for which UNDP data is available).  Economic growth has been strong over the last few years and in 2008 GDP is predicted to grow by 5.5%.  Recent growth has mainly been fueled by increase exports in the garment sector and a growing tourism industry.  However this may be hampered by increasing inflation, which measured at 10.75% in December 2007 (National Institute of Statistics, 2008) due in part to the global increases in the price of rice and other basic foods and fuel.

Agriculture accounts for 31% of GDP, employs 71% of the labor force and accounts for 3% of exports (2006). The average growth in agriculture employment has been less than 2% and is not keeping pace with the increase in the population. Low agricultural productivity and limited employment opportunities in rural areas are spurring migration from rural to urban areas.  Exports are limited due to inconsistent and low yields, stringent requirements of foreign markets and a lack of institutional support domestically.

In contract, the garment industry accounts for around 12% of GDP, 6% of total employment and 70% of exports.  In 2007 the industry achieved a growth rate of more than 9%.  11% of employment is in Industry (including garment production) while the remaining 19% is in Services. (UNDP Human Development Report 2007/2008, Better Factories Cambodia 2005)

The Royal Government is a founding member of ASEAN, AFTA (the ASEAN Free Trade Agreement) and acceded to the WTO (World Trade Organization) in 2004. Numerous legal reforms are underway to support Cambodia's WTO membership, yet some concerns remain that poor Cambodians may in fact be adversely affected by the implementation of the various trade policies. In 2008, Insights for Action (IFA), an initiative of UNDP, in conjunction with the Supreme National Economic Council conducted a SWOT (strengths, weaknesses, opportunities and threats) analysis of the Cambodian economy.  This report concluded that the oil and gas sector was emerging as the biggest opportunity in Cambodia’s future, but also the biggest potential threat. (IFA, A SWOT Analysis of the Cambodian Economy, 2008)  

National Development Priorities of RGC   

The development vision of the Royal Government of Cambodia is to have a socially cohesive, educationally advanced and culturally vibrant Cambodia without poverty, illiteracy and disease. Realizing the vision will require continued adherence to the principles of the market economy, the values of democracy and social justice, human rights and welfare, and the formulation and implementation of policies to reduce poverty by promoting sustainable economic growth and social development (improved governance.)

The development strategies of the Royal Government of Cambodia are: (1) to foster broad based sustainable economic growth with equity, with the private sector leading the role; (2) to promote social and cultural development by improving access of the poor to education, health, water and sanitation, power, credit markets and information and appropriate technology; (3) to promote sustainable management and use of natural resources and the environment; and (4) to improve the governance environment through effective implementation of the Governance Action Plan.

Key priorities for implementation of the Governance Action Plan (GAP) include: civil service reform, decentralization, military demobilization, legal and judicial reform, gender equity, public financial management, anti-corruption and natural resource management. The Government's key strategic message is that economic growth is a prerequisite for poverty reduction and that the key to economic growth is private sector development.

The Royal Government of Cambodia, through a highly consultative process with government agencies, donors, NGOs, civil society organizations and key institutions produced and approved a National Poverty Reduction Strategy (NPRS) in late 2002. The NPRS outlines pro-poor actions to improve rural livelihoods, promote job opportunities, and ensure better health, nutrition and education outcomes and to reduce vulnerability.

More info: http://www.ccc-cambodia.org/About/CambodiaReview/CambodiaReview.htm