Cambodia Profile


ADVANTAGE CAMBODIA
Nearly a decade of economic liberalization, stable government coupled with robust domestic demand, a growing middle class, a young population and a high return on investment, make Cambodia a credible investment destination.

INVESTMENT OPPORTUNITIES
A growing Cambodia offers great avenues for investments in various sectors — notably Infrastructure, Agriculture, Food Processing, Healthcare, Aviation, Construction, Tourism, ICT, Media & Entertainment, Mining, Oil & Gas, Pharmaceuticals, Ports, Power, Garments & Textiles, Tourism & Hospitality, Automobiles, Retailing Education and many more — in an investor-friendly environment.

COUNTRY FACTS
Area: 181,035 sq km (69,898 sq miles)
Population: 14,453,680 (2010)
Capital City: Phnom Penh
People: Khmer (90 to 95%), with the remainder being Chinese, Vietnamese, Cham or about one dozen other smaller ethnic groups.
Languages: Khmer
Religion(s): The population is largely Buddhist, with a small Muslim minority (around 2.5%). There is a small Christian community.
Currency: Riel (the economy remains highly dollarized and the US dollar is accepted for most transactions in Cambodia)
Major political parties: Cambodian People’s Party (CPP), National United Front for an Independent, Neutral, Peaceful and Cooperative Cambodia (FUNCINPEC) (acronym from French initials), Sam Rainsy Party (SRP), Norodom Ranariddh Party (NRP), Human Rights Party (HRP)
Government: Constitutional Monarchy
Head of State: King Norodom Sihamoni
Prime Minister: Hun Sen
Foreign Minister: Hor Namhong

Membership of international groupings/organisations: United Nations (UN), Association of Southeast Asian Nations (ASEAN), Group of 77 at the United Nations (G77), Non Aligned Movement (NAM), Asia-Europe Meeting (ASEM), ASEF (Asia-Europe Foundation).

ECONOMY
GDP: US$ 9.9bn (2009)
GDP per capita: US$2,000 (2010)
Inflation: 4.1% (2010)

Major Industries: Agriculture, fishing and forestry, mining, construction, garment manufacture, tourism.

Major trading partners: United States, Germany, United Kingdom, Singapore, Japan, Thailand, China, Hong Kong, Vietnam, Canada and Taiwan

Exchange Rate: 1 GBP = 6,453.42 KHR (Cambodian Riel) (April 2010)

Cambodia’s per capita income is increasing but is still low compared with other countries in the region. The economy is stable and the government has made significant progress in reducing poverty levels. In 2005 the government developed a comprehensive reform agenda set out in the National Strategic Development Plan, which has solid support from foreign donors. The NSDP II (2009-2013) was approved in May 2010 and at the Cambodia Development Cooperation Forum in June 2010 donors confirmed their intention to spend some $1.1 billion in development assistance during 2010.

Cambodia sustained a decade of high economic growth until the global economic downturn in 2008/09. Drops in exports, tourist arrivals from beyond the region, and in foreign direct investment, affected the economy severely during the economic crisis. Growth recovered in 2010, and is forecast to be around 5-7% in 2011. The financial sector is buoyant, with loan growth increasing.

Cambodia remains largely agrarian with a large percentage of the population engaged in subsistence agriculture. An estimated 31% of Cambodians lived below the poverty line in 2007.
Inequality has grown over the last two decades. Much infrastructure is rudimentary and the country remains dependent on external donor funding for over a third of its expenditure. From 1997-2007, economic growth was narrowly based (primarily in the garment, construction and tourism sectors) with modest linkages to the rest of the economy and this pattern has resulted in limited benefits to the 84% of the population who live in rural areas. To produce more sustainable, faster and broader growth the priority of the Cambodian government is now to tackle core governance issues and improve the climate for investment, especially in agriculture.

Cambodia has made progress in education enrolment rates and in some health reforms, although there is still concern about high rates of maternal and child mortality. Cambodia has also instituted broad governance reforms in public financial management, and in decentralising government from the centre to local governments. Further progress is needed in those, and in tackling corruption and in judicial reform, and improving revenue transparency. A long-awaited anti-corruption law was passed in March 2010 and government is setting up the structures to implement that law.

The government has made progress on adopting new and amended legislation to fulfil its World Trade Organisation (WTO) membership commitments (Cambodia was the first LDC to conclude membership negotiations with WTO). In 2005, Oil and natural gas deposits were found in Cambodian territorial waters but quantities have not yet made public. Commercial extraction is expected to begin in 2012. Further oil and gas fields lie within an area of overlapping territorial claims in the Gulf of Thailand. Limited progress has been made with Thailand over resolving rights within this area.

HISTORY
The Khmer people have lived in the Indochina area for at least 2,000 years. The Khmer Kingdom, with its capital at Angkor from around 900 AD, was the most powerful mainland Southeast Asian state for most of the period from 802 to 1432. Most Cambodians consider themselves to be Khmer, descendants of the Angkor Empire. The Kingdom enjoyed its heyday around 1200, when it included much of present-day Laos, Thailand and Vietnam. From 1432 the Kingdom declined, losing much territory to increasingly powerful neighbours.

Cambodia was governed from Hanoi as part of French Indo-China from 1864 until 1953 when King Norodom Sihanouk, who had been placed on the throne by the French in 1941, achieved full independence. He ruled Cambodia until 1970, when Marshal Lon Nol ousted him in a coup. The Lon Nol government was defeated by the insurgent forces of the Khmer Rouge, an extreme left-wing party, led by Saloth Sar (known as Pol Pot), which ruled Cambodia from 1975 to 1979, when it is estimated around 1.7m Cambodians (over 20% of the population) died from starvation, disease or execution. In early 1979 Vietnam invaded Cambodia, ousted the Khmer Rouge and established the People’s Republic of Kampuchea (1979-1989), later renamed the State of Cambodia (1989-91).

The Khmer Rouge regrouped their forces along the Thai border and waged a war against the Phnom Penh government, in a loose alliance with royalist and other anti-Vietnamese groups. The Vietnamese eventually withdrew their forces from Cambodia in 1989. The Paris Peace Agreements of 1991 and the establishment of the UNTAC (the United Nations Transitional Authority in Cambodia) from 1991-1993, helped bring stability to Cambodia.

In 1993, the country adopted its current name of the Kingdom of Cambodia. The first democratic elections, organised by the UNTAC in 1993, were narrowly won by the royalist National United Front for an Independent, Neutral, Peaceful and Cooperative Cambodia (FUNCINPEC) who formed a coalition government with the Cambodian People’s Party (CPP). However, heavy fighting broke out between the two coalition partners in 1997 in advance of the 1998 elections, which established CPP as the dominant party. The subsequent 1998 elections were won by the CPP. A new coalition government between CPP and FUNCINPEC was formed in November 1998 with Hun Sen as Prime Minister. A Senate was established in 1998.

GEOGRAPHY
Cambodia, with an area of 69,898 square miles, is bordered by Thailand, Laos and Vietnam and has a coastline on the Gulf of Thailand. Apart from the Cardamom Mountains in the south-west and uplands in the north-east, the country is predominantly flat. The scarp slope of the Dangrek Mountains marks much of the northern border with Thailand. In the centre of the country is the largest lake in South East Asia, the Tonle Sap. The capital, Phnom Penh, is located at the confluence of the Mekong, Tonle Sap and Bassac rivers. Beyond the river valleys the land is frequently infertile, because rainfall is scant and there is little irrigation. Most Cambodians live in rural areas, cultivating rice as their staple crop.

POLITICS
Political system
Cambodia is a constitutional monarchy. The cabinet is constitutionally responsible to the National Assembly. The Head of State is King Norodom Sihamoni. The King is selected by the Throne Council. The National Assembly (Lower House) is made up of 123-seats and has a term of 5 years. The term of the 61-member Senate (Upper House) runs concurrently with the National Assembly.

Political developments
Inaugural local elections were held in February 2002 as part of the Cambodian Government’s drive towards decentralisation. The CPP won a landslide victory.

The third general election was held in 2003. Out of the 123 MPs elected, 73 were from the CPP, 26 from FUNCINPEC, and 24 from the Sam Rainsy party.

On 22 January 2006, Cambodia held its first Senate election with 11,261 commune councillors throughout the country and 123 parliamentarians taking part. Four political parties competed for 57 of the 61 Senate seats while the remaining four seats were evenly appointed by the National Assembly and the King. The four parties included the ruling CPP, the FUNCINPEC party, the opposition Sam Rainsy Party and the lesser-known Khmer Democratic Party (KDP).

The fourth general election was held on 27 July 2008. Out of the 123 MPs elected, 90 were from the CCP, 26 from the Sam Rainsy Party, three from the Human Rights Party, two from the Norodom Ranharidh Party (NRP) and two from FUNCINPEC.

In June 2010, discussions began about a possible merger between FUNCINPEC and the Norodom Ranariddh Party, although negotiations subsequently stalled. There have also been ongoing discussions between HRP and SRP about a merger or electoral alliance.

During the past 10 years Cambodia has enjoyed greater political stability and territorial unity than for decades, with an increased sense of security amongst the general population.

INTERNATIONAL RELATIONS

Relations with Neighbours
Since Cambodia joined the Association of South East Asian Nations (ASEAN) in 1999, its foreign policy has been largely regionally-focused, and Cambodia generally enjoys cordial bilateral relations with all its regional neighbours.

Relations with Thailand, however, are complicated by a border dispute in the region of the Preah Vihear temple. The International Court of Justice has ruled that the temple is in Cambodian territory, but Thailand continues to contest the line of the border. Tensions increased following Cambodia’s successful bid to have the temple declared a UNESCO World Heritage Site in 2008, which led to an outbreak of fighting between troops at the border. Both sides have publicly committed to resolving the dispute peacefully, but there have been occasional flare ups of fighting subsequently, most significantly in February 2011.

Bilateral relations between Cambodia and Thailand deteriorated further in 2009 when Hun Sen appointed Thaksin Shinawatra (ousted PM of Thailand, subsequently convicted of corruption charges) as an Economic Adviser. Thailand recalled its Ambassador from Phnom Penh and Cambodia did the same with the Ambassador to Bangkok.

Cambodia co-operates closely with neighbouring Laos and Vietnam, including on demarcation of its land borders with these countries. Some opposition politicians have claimed that Cambodian territory is being surrendered during the border demarcation with Vietnam.