Cambodia: Stability, Security and Economic Growth amidst Geo-Political Uncertainties remains top priority


March 22, 2017

Cambodia: Stability, Security and Economic Growth amidst Geo-Political Uncertainties remains top priority

by Dr. Sorpong Peou

http://www.newmandala.org

Cambodia’s ruling party is seeking to shore up its chances of electoral success with recent changes to the rules governing political parties, Sorpong Peou writes.

Much has been written about the Cambodian culture of impunity as an obstacle to democratic development, but what is still least understood is the fact that the persisting culture driven by the fear of personal retribution (actual or perceived) has been a principal threat to democracy.–Dr. Peou

Is Cambodia heading towards a single party dictatorship? This is a legitimate question after the Cambodian government took a drastic but unsurprising step in February 2017 to amend the law on political parties – a step that its critics consider undermines liberal democracy. In my view, Cambodia has not resembled any form of liberal democracy since 1997, and the existing hegemonic party system is likely to remain.

If and when it comes into effect, the amended party law will allow the Supreme Court to dissolve any political party with leaders who have criminal records and to bar such party leaders from standing for political office for five years. Moreover, the new law requires that any party that loses its President find a replacement within 90 days of the King’s signature.

The amended law will also allow the Ministry of Interior to suspend indefinitely any political party that the government considers to be involved in activities resulting in an “incitement that would lead to national disintegration” and subversion of “liberal multi-party democracy.”

The amendments were designed to ensure that the Cambodian People’s Party (CPP) led by Prime Minister Hun Sen will remain politically dominant, but not to eliminate opposition parties. They were intended to further empower two CPP-dominated state institutions – the Supreme Court and the Ministry of Interior – to prevent opposition parties, especially the Cambodian National Rescue Party (CNRP), from winning enough seats to form a government.

The CPP does not want to see the 1992 or the 2013 national election repeated. It lost the UN-organised election in 1992, but forced the winning party (led by the Royalists) to share power, and then removed the royalist prime minister from power by force in July 1997.

The multi-party system has since weakened, giving rise to a hegemonic party system, with the CPP as the dominant power. However, the party was badly shaken by the 2013 election results: it won only 68 seats (compared to the 55 seats gained by the CNRP), leaving it with fewer seats than the previous elections.

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Attempts by Hun Sen to seek reconciliation with CNRP’s Sam Rainsy has not been successful

After the 2013 election, the CPP leadership did a lot of soul searching and took a number of steps to weaken the CNRP. Opposition politicians have been subject to intimidation and litigation. Sam Rainsy, ex-President of the CNRP and opposition leader (in exile since 2015), has been sentenced to a total of seven years in prison. CNRP Vice-President Kem Sokha had been subject to criminal prosecution and sentenced to five months in prison (for not showing up in court for a dubious lawsuit against him) before he received a pardon from the King at Hun Sen’s request.

All this goes to show that the CPP leadership was well aware of the fact that it would not do well in the upcoming commune election in June 2017 and the National Assembly election in 2018 – if the CNRP could have its way. After the July 2016 killing of Kem Ley, a popular political commentator known for his strong criticism of the government, the CPP has become increasingly unpopular with growing public anger directed toward them.

Government officials have confidentially indicated that the CPP is determined not to lose in the upcoming elections and that it would not transfer power to any winning party if it lost. The amendments to the party law were just another step the CPP has taken as part of its pre-emptive measures designed to avoid the repetition of the 1992 and 2013 elections.

Much has been written about the Cambodian culture of impunity as an obstacle to democratic development, but what is still least understood is the fact that the persisting culture driven by the fear of personal retribution (actual or perceived) has been a principal threat to democracy.

Top members of the CPP elite remain as insecure as ever. What else can explain the fact that the (CPP) Prime Minister has up to 6,000 personal bodyguards? Opposition members have called CPP leaders traitors and threatened to bring them to justice for their past human rights violations (perhaps including some of those committed under the murderous Pol Pot regime) and rampant corruption. CPP leaders, thus, appear to believe that their political fate would be sealed if they lost the elections.

It is reasonable to assume that the CPP is not interested in turning the country into a single-party dictatorship, as some commentators think. The ruling party would be happy if it could just maintain a party system that would allow it to remain dominant and secure.

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 Cambodia has enjoyed peace, stability and sustained economic growth since 1998

The CPP’s behaviour may s also help explain weak reactions from members of the international community, especially donors, some of whom seem to prefer political stability under a CPP leadership to chaotic democratic politics. Others may simply have come to the realisation that there is not much they can do to weaken the CPP’s grip on power.

Over the past several years, CPP leaders have worked harder to deepen their relations with two powerful authoritarian states – Russia and China. China has emerged as Cambodia’s largest donor. Sino-Cambodian relations have grown much tighter in recent years. The harsh reality is that the CPP leadership remains suspicious of Western democracies’ regime-change agendas and wary of any criticisms directed at the human rights situation in Cambodia.

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The current global political environment also does not allow democracy in Cambodia to thrive. The looming return of fraught geopolitics (the rise of China, the escalating tension in the South China Sea, the ongoing confrontation between Russia and the West over Crimea and Ukraine), the rise of right-wing forces in Europe and the United States, and the persistence of authoritarianism in Southeast Asia – have all produced negative effects on Cambodian politics.

Dr. Sorpong Peou is Full Professor in the Department of Politics and Public Administration at Ryerson University, Canada, and a member of the Yeates School of Graduate Studies.

This article is a collaboration with Policy Forum — Asia and the Pacific’s leading platform for policy analysis and debate.

Hoping for the Best Against Trump


January 30, 2017

Hoping for the Best Against Trump

By Ian Buruma

https://www.project-syndicate.org/commentary/hoping-against-trump-by-ian-buruma-2017-01

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Is there any reason for liberals to feel optimistic after a year of political disasters? Is there even a shred of silver lining to be found in the tatters of Brexit, Donald Trump’s election, and European disunity? Christians believe that despair is a mortal sin, so one might as well try to find a glimmer of hope.

In the United States, many liberals console themselves with the belief that the obvious dangers of being governed by an ignorant, narcissistic, authoritarian loudmouth backed by billionaires, ex-generals, peddlers of malicious fake news, and neophytes with extreme views will help to galvanize a strong political opposition. Trump, it is hoped, will concentrate the minds of all who still believe in liberal democracy, be they left or even right of center.

In this scenario, civil-rights groups, NGOs, students, human-rights activists, Democratic members of Congress, and even some Republicans, will do everything in their power to push back against Trump’s worst impulses. Long-dormant political activism will erupt into mass protest, with resurgent liberal idealism breaking the wave of right-wing populism. Well, perhaps.

Others seek comfort in the expectation that Trump’s wildly contradictory plans – lower taxes, while raising infrastructure spending; helping the neglected working class, while slashing welfare and repealing the Affordable Care Act – will suck his administration into a swamp of infighting, incoherence, and incompetence.

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All these things might happen. But protest alone won’t be of much help. Anti-Trump demonstrations in big cities will no doubt annoy the self-loving new president, and the moral glow of joining the resistance will warm the protesters. But without real political organization, mere protest will go the way of Occupy Wall Street in 2011; it will peter out into ineffectual gestures.

One of the most dangerous ideas of contemporary populism is that political parties are obsolete, and should be replaced by movements led by charismatic leaders who act as the voice of “the people.” By implication, all dissenters are enemies of the people. That way lies dictatorship.

Liberal democracy can be saved only if mainstream parties can regain voters’ trust. The Democratic Party must get its act together. “Feeling the Bern” (the mantra of Bernie Sanders’ leftist campaign) will not suffice to stop Trump from inflicting great harm to institutions that were carefully constructed more than two centuries ago to protect American democracy from demagogues like him.

The same thing is true of international arrangements and institutions, whose survival depends on the willingness to defend them. Trump has expressed his indifference to NATO, and US security commitments in East Asia. His election will further erode Pax Americana, already battered by a succession of foolish wars. Without the US guarantee to protect its democratic allies, institutions built after World War II to provide that protection would not survive for very long.

Perhaps there is a tiny ray of hope in this gloomy prospect. Europe and Japan, not to mention South Korea, have become too dependent on US military protection. The Japanese have fairly large armed forces, but are hampered by a pacifist constitution written by Americans in 1946. Europeans are completely unprepared to defend themselves, owing to inertia, complacency, and lassitude.

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It is just possible that Trump’s blustering “America first” rhetoric will galvanize Europeans and East Asians into changing the status quo and doing more for their own security. Ideally, European countries should build an integrated defense force that would be less dependent on the US. And the countries of Southeast and East Asia could construct a Japanese-led variant of NATO to balance the domineering might of China.

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But even if these arrangements came to pass (a huge if), it would not happen soon. Europeans are unwilling to pay higher taxes for their own defense. Germany has neither the wherewithal, nor the will to lead a military alliance. And most Asians, including many Japanese, would not trust Japan to lead such a coalition in Asia. The current Japanese government, under Prime Minister Shinzo Abe, would like to revise the pacifist constitution, as a necessary first step toward weaning the country off its total dependence on the US. But Abe’s revisionism is rooted in a nationalist ideology, which is prone to justifying historical atrocities instead of drawing lessons from them. This alone disqualifies Japan from leading others in a military pact.

So, while it might be time to rethink the world order built by the US on the ruins of WWII, the Trump presidency is unlikely to bring this about in a careful and orderly manner. His election is more like an earthquake, unleashing forces no one can control. Instead of encouraging the Japanese to think about collective security in a responsible way, Trump’s indifference is more likely to play to the worst instincts of panicky Japanese nationalists.

Europe is in no shape to rise to the challenge of Pax Americana’s erosion, either. Without a greater sense of pan-national European solidarity, European institutions will soon become hollow, and perhaps even cease to exist. But this sense is precisely what the demagogues are now undermining with such conspicuous success.

If there is reason for confidence, it is not in the liberal democratic world, but in the capitals of its most powerful adversaries: Moscow and Beijing. Trump, at least in the short term, seems to be good news for Russian President Vladimir Putin and his Chinese counterpart Xi Jinping. Without credible American leadership, or a strong alliance of democracies, there won’t be much left to restrain Russian or Chinese ambitions.

This might not lead to catastrophe in the next few years. Russia and China are more likely to test the limits of their power slowly, bit by bit: Ukraine today, perhaps the Baltics tomorrow; the South China Sea islands now, Taiwan later. They will push, and push, until they push too far. Then anything may happen. Great powers often blunder into great wars. This is no reason for despair, as we begin the New Year, but no reason to be optimistic, either.

ASEAN to-do List in 2017


January 30, 2017

ASEAN to-do List in 2017

by Dr. Munir Majid@www.thestar.com.my

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IT is not business as usual. As ASEAN’s array of official and private sector meetings roll out for the year, urgent thought must be given to dramatically new challenges beyond the stubborn issues that continue to arrest the region’s meaningful integration.

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The Alternative to Donald Trump’s Rejection of TPP–China’s Gain, America’s Loss

The advent of Donald Trump as President of the United States has overturned many regional assumptions and threatens to cause economic as well as political turmoil. These developments should make ASEAN think crisis management – even if, in the end, the worst does not happen.

There are a number of “what ifs” which should be addressed. What if Trump causes a trade war to break out between America and China by imposing the punitive import duties on Chinese goods that he has threatened?

It will then not be a simple outcome of relocation of manufacturing centres from China to low-cost Vietnam, for instance, as some have rather sanguinely suggested. The supply chains to which many ASEAN exports are linked for the finished Chinese product would be broken. There will be export disruption – not just for China.

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There are countries in ASEAN, apart from Vietnam (90%), like Singapore (176%), Thailand (69%) and Malaysia (71%) whose exports amount to a substantial proportion of their GDP.

On top of exports through China, their own direct exports to the US will also be affected, as will any relocated exports from Vietnam.

There will be no winners in a trade war, no benefits to be derived from China’s apparently singular predicament. The knock-on effect will be widespread. In time, as excess capacity looks for export sales, dumping will become a problem, as will protection against it.

Motor cars that cannot get into America will have to go somewhere. Steel turned away from the US as Trump seeks to protect mills and jobs in the mid-west will have to be shipped somewhere else. Even the textile industry will be spinning in different directions as Trump has promised to revive it in America.

The whole global free trade ecosystem will go topsy-turvy. How will free trade within the ASEAN Economic Community, such as it is, be maintained? Can ASEAN+6 move on to the Regional Comprehensive Economic Partnership (RCEP) as the fallout from Trump’s America First trade policy hits the world?

Asia – and ASEAN – will have to stick together and carry on with the open, albeit reduced, global free trade and investment system. Will that happen? Some ASEAN states with larger domestic economies are less dependent on international trade than others. Already, now, they take a different position on opening up their market. Will it get worse in the situation of stress, should it come about?

ASEAN must talk about these possibilities now, before they happen. Someone must take the lead. Too often this does not happen in ASEAN. Can the officials, or the secretariat, or the private sector do this scenario-setting for the ministers, for the leaders? Or is Asean going to carry on as if everything is not changing around it?

I am reminded of what George Orwell has been said to have remarked: In a time of universal deceit, telling the truth is a revolutionary act. The tendency to take to the Asean level what routinely happens in many ASEAN domestic systems should be snapped. Some functionary in ASEAN must warn the regional grouping of the dire threat facing it.

The other challenge facing Asia and ASEAN is the risk Trump poses to regional peace and stability.

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This comes from the challenge again thrown at China, this time in respect of its claim to the South China Sea. As China’s predominance in the disputed expanse of territory is by no means ideal, its exposure to a more counter-assertive and belligerent American stance under Trump – no Chinese access to islands artificial or militarised that do not belong to China “under international law” – may encourage claimant ASEAN states to be less compliant with the China-set path of dispute management.

Since the law of the sea tribunal decision last July, there has been a lowering of temperature in the South China Sea dispute, even if at the cost of not highlighting the baselessness of China’s claims under international law. The return has been a commitment by China in the diplomatic channeling with ASEAN to having a code of conduct (COC) finally in place this year – although only in framework form.

It has been a long-term ASEAN objective to have this COC for peaceful conduct in the South China Sea. China has hitherto been dragging its feet on this. With a more assertive American policy against China, would there be among ASEAN states a disposition to push with the US to get a better deal on the South China Sea?

This kind of geopolitical arbitrage may be attractive, but it would come at a longer-term cost to regional cooperation, which has become critical because of Trump’s foreign economic and trade policies. This is a dilemma ASEAN states would do well to address together.

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India flirting with Trump’s USA?

Already, beyond ASEAN, India appears attracted to taking advantage of the predicament China might be in with Trump. India, of course, has long-standing border disputes with China, which Beijing has been happy to keep unresolved. At the same time, there is strategic competition between the two over their regional place in Asia.

Another could be Japan which, again, has many unresolved disputes and issues with China. As usual, India, in particular, appears to want to flirt with Trump even at the cost of frustrating conclusion of the RCEP. The cost to India, however, could be isolation from the Asia-Pacific region for an uncertain alliance with Trump’s America.

You cannot do strategy with a counter-party whose leitmotif is transactional. With Trump it is not going to be win-win. It is going to be win-win-win for America, given his America First posturing.

ASEAN states should want to address these profound issues. Even dissuade member and partner countries from wanting to sup with the devil, as it were.

China, of course, has not been the ideal big country partner beyond platitudinous statements and suffocation of ASEAN with money. Its actions in the South China Sea are not indicative of a great power that will not grind your face in the dirt if you did not do its bidding.

Will China become the good big brother it claims it wants to be, even as America becomes the bad and ugly one? It looks like ASEAN might be caught between a rock and a hard place. Individual member states no doubt will be doing their calculation with the hope to position themselves in a better than survival mode.

However they will all be better off if they also worked together among themselves and partnered Asia-Pacific countries to achieve better economic integration, whose benefit will discourage them from playing dangerous geopolitical games.

So, as ASEAN under Philippines leadership looks at themes such as inclusive growth, an excellent focus, and addresses the many stubborn issues that are barriers to better integration, it must prepare also for the very difficult economic and political environment which will be fashioned by the Trump administration.

Tan Sri  Dr. Munir Majid, chairman of Bank Muamalat and visiting senior fellow at LSE Ideas (Centre for International Affairs, Diplomacy and Strategy), is also chairman of CIMB Asean Research Institute.

 

Cambodia: Sustaining high economic growth


January 1, 2017

Cambodia: Sustaining  high economic growth 

by  Heng Pheakdey, Enrich Institute

http://www.eastasiaforum.org/2017/01/01/keeping-cambodia-competitive-beyond-2016/

Here Comes Cambodia: Asia’s New Tiger Economy

After decades of conflict and poverty that captured the world’s attention, Cambodia has enjoyed five years of high economic growth that is moving it toward becoming one of the new tiger economies of Asia, according to forecasts in the Asian Development Bank’s Asian Development Outlook 2016.

For the last two decades Cambodia has been one of the fastest growing countries in Asia with an average annual GDP growth rate of 8.1 per cent.

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Cambodia has been highly successful in embracing the ‘factory Asia’ model of growth, supplying its low-cost labour to export-oriented industries. Economic progress in recent years has allowed Cambodia to invest in physical and social infrastructure, attract foreign direct investment, create jobs and lift millions of its people out of poverty. The Asian Development Bank called Cambodia Asia’s new ‘tiger economy’.

Cambodia’s economic performance in 2016 remained robust, with growth continuing at 7 per cent. Strong garment sector exports and foreign investment in construction drove this economic performance. Exports in the garment and footwear industries rose by 9.4 per cent in the first half of the year, almost double the pace in the same period of 2015 thanks to improved production processes and high demand from the European market. As of September 2016, the value of approved commercial projects in the construction sector more than doubled to US$7.2 billion. Imports of construction equipment and materials also increased to support the construction boom.

But solid growth in the industrial sector has been offset by a slowdown in agriculture and tourism. Unfavourable weather conditions and falling commodity prices have resulted in agriculture’s sluggish performance, which grew at a rate of only 0.2 per cent in 2014–2016. Tourism also underperformed in early 2016 due to a decline in tourist arrivals from Vietnam, Laos and South Korea. 1.3 million tourists visited Cambodia in the first quarter of the year, a mere 2.6 per cent increase compared to the same period in 2015.

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The World Bank reclassified Cambodia in July 2016 as a lower middle-income country after its gross national income per capita reached US$1070 in 2015, surpassing the minimum threshold of a lower middle-income nation of US$1026. While this sign of progress should be welcomed, it comes with its own set of challenges. Analysts fear that this new classification will reduce Cambodia’s benefits from international foreign aid and preferential trade agreements that the country enjoyed while still a ‘least developed country’.

To prepare for the anticipated reduction in international assistance and trade privileges, Cambodia needs to strengthen its competitiveness, diversify its economy and upgrade its industries.

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Although garment exports have held up well so far, the sector remains narrowly based and concentrated on a few markets, making it vulnerable to external shocks. To preserve Cambodia’s attractiveness relative to its regional competitors such as Vietnam and Bangladesh, it must diversify into higher value products and services and strengthen labour productivity to reflect the rise of the minimum wage.

The modernisation of agriculture would also help to sustain productivity in the long run. Employing more than half of Cambodia’s labour force, agriculture has contributed significantly to poverty reduction. But high reliance on rain-dependent rice production, slow adoption of quality seeds and inadequate agricultural extension services and irrigation facilities remain key constraints in the sector. Diversifying to less water intensive crops, developing the agribusiness and agro-processing industry, promoting a modernised value chain and cost effective logistics are crucial to put agriculture back on a higher growth path.

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Efforts have been made so far to support economic diversification. The Cambodia Industrial Development Policy was launched in March 2015 to transform and modernise Cambodia’s industrial structure from a labour-intensive industry to a skill-driven industry by 2025. This implies increasing the GDP share of the industrial sector, diversifying goods exports including non-textiles and processed agricultural products and modernising the registration of enterprises. The policy also supports stronger regulations and enforcement and helps create a more favourable business environment.

Domestic investors also have an important role to play in the diversification process. Experts believe that the success of Cambodia’s economy will be driven by local entrepreneurs and the private sector, not by international donor assistance. Providing support to domestic investors in trade facilitation, logistics, infrastructure and human capital is just as important.

Cambodia faces many challenges to stay competitive. To realise its vision of becoming an upper middle-income country by 2030 requires strong commitments to address infrastructure bottlenecks, build a high-quality human capital base, strengthen natural resource management, enhance governance and improve financial services and the business environment.

Heng Pheakdey is the founder and chairman of Enrich Institute.

 

Back in Time –Pol Pot’s Cambodia


December 12, 2016

Back in Time –Pol Pot’s Cambodia

HE RAN the country for less than four years, yet between April 1975 and January 1979 Pol Pot killed up to a fifth—some think a quarter—of the Cambodian people to whom he said he was bringing a new and better life. In its way, it was the worst of the 20th century’s totalitarian horrors, unless the eventual unlocking of North Korea’s doors reveals something even grimmer. Hitler murdered about 6 million Jews and others in his concentration camps; Stalin’s “anti-party” toll was close to 20 million; Chairman Mao’s Great Leap Forward starved over 20 million to death, before moving on to the Cultural Revolution. But Pol Pot’s victims were a much bigger proportion of little Cambodia’s 7 million people, and few of them could even vaguely be called “enemies of the regime”. His killing fields were the most mind-boggling of them all.

Philip Short, who wrote a good book about Mao’s China, has now done a spectacularly efficient job of describing what happened, and how. He has spent four years in Cambodia, talking to survivors of the killing-fields, and perpetrators. He has dug up piles of revealing documents. Some of the brightest illumination comes from the handful of westerners who watched what was going on, not least the diaries of Laurence Picq, an honest young Frenchwoman who went to Cambodia thinking she could help a good cause.

The result is a chillingly clear portrait of Saloth Sar, the man who became Pol Pot (and also Grand Uncle, First Brother and sundry other pseudonyms). From a comfortable background—his sister was one of the king’s concubines—he went to a smart lycée in still French-run Phnom Penh, and then won a scholarship to study in Paris. There he fell in love with Marxism-Leninism in its especially intellectual French form, and from France he went back to the emerging guerrilla war in Cambodia, to bring communism to his countrymen. Calmly and firmly, he worked his way to the top of the party; and in April 1975 his men marched into Phnom Penh.

It then became pure Orwell. Pol Pot at once ordered the total evacuation of all towns and cities—not just the middle class, but labourers, mechanics, street-cleaners, war refugees, everybody. All Cambodians were to become workers on the land. There were to be no wages. Meals were to be provided by collective kitchens (“unity of feeding”). Each Cambodian had to refer to himself or herself as “we”, forbidden to use the first person singular. When one region found it did not have enough food, supplies were not sent from better-off places; rather, the hungry were marched off to look for them.

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Of course, it did not work. Up to 1 million people died of starvation. Protests began, including among party members. The leadership of the party denounced such “microbes”. The protesters were put into camps, including Camp S-21 at Tuol Sleng, the sole task of which was to extract confessions. Many “confessions” turned out to be pure invention, yet all confessors were executed. At least another 100,000 people, maybe 250,000, died at this stage of the proceedings. As Pol Pot’s central committee put it, it was necessary “to avoid a solution of peaceful evolution”, which could “corrode” the revolution.

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Why was Pol Pot’s Cambodia even worse than Mao’s China, Stalin’s Russia and Hitler’s Germany? Here Mr Short, so good at finding out what happened, is less good at explaining why it did.

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Samdech Techo Hun Sen–Making a  huge Difference for Cambodians

He suggests that Pol Pot, like many other Cambodians, was driven by resentment over his country’s loss of glory since the great days of the Angkor empire. But that was 600 years earlier. Lots of other countries have had far more recent puncturings of national pride without being pushed into anything quite as horrible.

Mr Short then wonders whether Buddhism, Cambodia’s main religion, lay near the root cause, because it believes in “the demolition of the individual”. This is nonsense. Buddhism, a gentle faith, believes that individual human beings eventually dissolve into nirvana when in successive lives they have earned it. This is not the explanation of Pol Pot’s slaughters.

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No, it was the bug he picked up in Paris that poisoned Pol Pot. An ideology which believes, as communism did, that a small group of self-selected possessors of the truth will get everything right is bound to produce disaster. Perhaps things were made worse by Pol Pot’s desire to outshine the communists in Vietnam; and maybe also by some still unexamined twist in his psyche. All the same, it was the pseudoscientific certainty of Marxism-Leninism, that malformed child of the Enlightenment, which was chiefly to blame.

Free market alternatives


November 27, 2016

Here is something I wrote in The Phnom Penh Post in 1996, which may still be of interest. Of course, Cambodia has come a long way, having achieved average GDP of over 7 per cent p.a. over the last 20 years. It is enjoying peace and security, thanks to the strong leadership of Prime Minister Samdech Techo Hun Sen.–Din Merican

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Free market alternatives

The Editor,

I read Mr Matthew Grainger’s balanced and interesting report on the recent CDRI International Roundtable on Structural Adjustment Programme in Cambodia (January 26, 1996). I also read Dr Walden Bello’s paper titled “Economic Liberalization in Southeast Asia: Lessons for Cambodia”, and Dr K.P. Kannan’s paper, “Economic Reform, Structural Adjustment and Development: Issues and Implications”.

Dr Bello of Chulalongkorn University’s Social Research Institute in Thailand and Dr Kannan, CDRIs research director, are reminding policy makers in Cambodia that there is an alternative paradigm for Cambodian economic development to the standard IMF/IBRD prescription of market economics.

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The trickle-down theory is attractive in concept, but it has limited relevance in the real world due to market imperfections. Government intervention, as a result, is necessary to ensure equity and development without degradation of the environment.

Growth and equity are two sides of the same coin. For that reason, real GDP growth, in my view, is alone not a good indicator, if we ignore the distributional or equity and environmental aspects of development. One has to look at Thailand and Malaysia to realize that this obsession with GDP growth rates among policy makers results in serious socio-economic imbalances with long-term political consequences.

Malaysia’s realization of this problem is now incorporated in its Second Outline Perspective Plan 1991-2000. Even as of yesterday (Feb 13), Malaysia’s Deputy Prime Minister Dato Seri Anwar Ibrahim was reported to have said that in the next Malaysia Plan, our seventh, the social and related aspects of development will receive greater attention. After nearly 40 years of economic management, Malaysia’s decision to evaluate its strategies and adopt new approaches to achieve more balanced development supports Dr. Bello’s call “to articulate an alternative future” and “to ponder carefully the consequences of fast track capitalism…”

We must remind ourselves what development is all about. Here I would quote Dr Kannan:

“In terms of development, the ultimate objective is that of human development and reducing inequities as between people and regions.”

I am, of course, reminded of great development economists of the sixties like Sir Arthur Lewis, Gunnar Myrdal, Jan Tinbergen and Ragnar Nurkse and my mentors in economics, Clifton Wharton Jr., and Ungku Abdul Aziz (Malaysia), who studied the processes of development and underdevelopment with a socio-cultural perspective.

Development is about bringing about systematic change, and providing meaning to the lives of people so that they have opportunities to progress as far as their abilities can take them. It is about ensuring that scarce resources are used responsibly so that succeeding generations can build on the efforts and achievements of their forebears.

It is about institutions, culture and people. It does not exist in a vacuum, certainly not in econometric models, computer simulations, scenario planning systems or in the air-conditioned offices of the World Bank, IMF and the ADB. Most of all, development is about responsibility and accountability for all stakeholders, not a power game.

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Because it is a grassroots process and culture bound, development must be driven by nationals, in the case of Cambodia by Cambodians, with a shared vision, not by experts who have no stake and who do not have to live with the consequences of their prescriptions. This is not to discount the contributions made by the international community, donor countries and multilateral agencies. But it does emphasize that the granting of technical and financial assistance does not confer on the provider the right to impose their own values, preferences and way of life, or to dictate what is best for the beneficiary.

Cambodian leaders know what they want for their country. They have a clear vision of their country’s future as reflected in their National Programme (NPRD) and this is more than what can be said about some countries in the Third World. They have a strategic purpose which is to create a fair, just and peaceful society and, through strong sustainable economic growth, to raise the living standards for all Cambodians.

Cambodia is committed to a democratic system of government with a Constitutional Monarchy, and free market economic system with the private sector as the engine of growth and government in the role of strategist and manager-mentor.

Cambodia is adopting a state-directed economic growth strategy. This approach accepts the price mechanism, and the market in general, as an efficient allocator of resources. It also taps the dynamism of the private sector, but recognizes that government activism is essential in the area of national strategy in a competitive and interdependent world and to tame the excesses of the profit motive and ensure that economic growth is sustainable, balanced and equitable in the long term.

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Their development will be on the back of agriculture which is today the step child of most economies in East Asia. It may not be the “sexy thing” to do, but Cambodia is making its first wise move. Modern agriculture backed by advances in bio-technology, efficient water resource management systems, and strong marketing and distribution networks is a profitable undertaking.

Since the private sector is going to be given a prominent role in the development of the Kingdom, the World Bank and other multilateral agencies should finance a master plan study on small and medium scale industries and businesses and recommend policies and strategies for developing this sector. In many countries in East Asia, this sector is the driver of economic activity with the greatest potential for growth.

It is more refreshing to talk about development than other issues, usually negative ones, about Cambodia. The country has done well since the formation of the Royal Government. The tasks and challenges ahead are daunting. Cambodia needs the understanding and the patient support and cooperation of friends. Credit when it is due should be given. Criticisms, on the other hand, should be constructive.

For democracy to survive in Cambodia, economic development is essential. I have not known of any situation in the world where democracy exists side by side with abject poverty, unemployment, illiteracy and social inequities.

I stand, therefore, to be educated by anyone who has had the privilege of seeing democracy in a symbiotic relationship with the aforementioned phenomena.

I hope your readers – especially those in the IMF, World Bank, ADB and UNDP here in Phnom Penh – will respond with their comments on my letter. If that happens, my purpose in writing this letter as a sort of rejoinder to the Cambodian development debate is well served.

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Din Merican 2016

– Din Merican, Phnom Penh. (Din Merican is an economist with an MBA degree from the United States, who worked for more than 30 years in the Central Bank in Malaysia and in the private banking industry. This letter represents his personal views.)