Country Information
A. Development Context
Cambodia is at a crossroads in its development as it moves away from a post-conflict situation toward a more stable development paradigm. Several decades of isolation and conflict devastated much of Cambodia's physical, social and human capital. Much has been achieved since the signing of the 1991 Paris Peace Accords and Cambodia has made important progress in ensuring peace and security, including rebuilding institutions, establishing a stable macroeconomic environment, and a liberal investment climate. Notwithstanding these achievements, the development agenda remains daunting. Poverty rates remain very high with around 30 percent of the population subsisting below the poverty line, and some 15 percent living in extreme poverty. Economic growth remains narrowly based, and has not yet led to reduction in poverty. And inequality is increasing.
With peace and macroeconomic stability more firmly entrenched, the country has the opportunity to make far-reaching reforms to achieve sustained socio-economic development. Within this context, the government has developed the Rectangular Strategy for development, a tool to implement its political platform and to meet the Cambodia Millennium Development Goals (CMDGs). The Rectangular Strategy articulates four key operational priorities, 1) improved agricultural investment, 2) continued rehabilitation and construction of physical infrastructure, 3) private sector growth and employment development and; 4) capacity building and human resource development. Good governance forms the centre of the strategy as the single most important prerequisite to sustainable development.
B. Economic Growth
Cambodia's gross domestic product (GDP) averaged almost 10% over the past decade. The industrial sector was the main engine of growth, with garment manufactures forming 85 percent of Cambodia's total exports. Tourism has begun to contribute to growth, while agriculture has grown only modestly, lagging behind population growth.
New sources of growth must be tapped to achieve the 6-7 percent GDP growth target projected in the Rectangular Strategy. While 80 percent of the poor live in rural areas, agricultural production remains far below potential due to low investment and constrained access for the poor to markets and arable land.
The Government has moved quickly to address some of these issues, particularly reducing the costs associated with import and export procedures, company registration, and in ratifying Cambodia's accession to the World Trade Organization. While benefits from the latter are expected to be wide ranging with more than 40 pieces of legislation relating to improvement of commercial transactions to be adopted over the coming years, strong effort will need to be placed on dealing with possible negative consequences and on the proper implementation of the legislation if the benefits are to materialize.
C. Poverty
There is consensus that around 30-35 percent of the population have expenditure levels below the income poverty line, with 15-20 percent in extreme poverty. Poverty in Cambodia is overwhelmingly rural. Factors aggravating Cambodia's poverty include the very limited sources of growth, with few if any linkages to the domestic economy, the poor quality of and lack of access to social services, landlessness, environmental degradation, and a lack of genuine participatory processes engaging the poor in the decisions that shape and affect their lives.
Progress in reducing the non-income dimensions to poverty has been mixed. There has been considerable movement toward attainment of universal primary education, with the net primary school enrolment rate increasing from 76 percent in 1997 to 93.3 percent in 2007. The quality and affordability of education has also improved, but further progress is needed. There remains significant gender inequality in education, with girls still suffering higher drop-out rates. Health measures are of concern, particularly the very high a maternal mortality rate of 472 per 100,000 live births. Around 85 percent of babies are delivered at home and skilled personnel attend less than 45 percent of all births. While an unmet demand for family planning services remains, progress has been made and population growth has decreased over the last six years from 2.5 percent in 1998 to 1.81 percent in 2004. Cambodia is considered a world leader in the fight against HIV & AIDS reducing adult prevalence rate from 3 percent in 1997 to 0.9 percent in 2007.
Widespread illicit drug use amongst youth and people in labour-intensive activities including agriculture - has emerged in recent years. Such illicit drug use is forcing a rapidly increasing number of people into poverty. The lack of community-based drug dependence treatment and rehabilitation services means that drug addicts and their families are challenged by increased and chronic diversion of already limited family resources to finance the purchase of illicit substances.
Poverty increases with household size and number of children. It is highest when the household head is engaged in agriculture. While households with women heads are not significantly poorer than others, they are often more vulnerable, having less land and thus rely more on risky coping strategies, such as selling assets, or taking children out of school and sending them to work. Education and health also play important roles in poverty. Poverty rates are significantly lower when the household head has secondary, technical, or higher education. Likewise, high out-of-pocket health costs are a major cause of indebtedness and loss of land.
D. Progress in Achieving the Cambodia Millennium Development Goals.
While Cambodia has made some progress towards achieving the CMDGs, attaining a number of the targets will be difficult and will need a more concerted effort by all. The country is likely to meet the CMDG target for universal primary education, however, meeting the targets for secondary education (including female secondary school enrolment) seems unlikely. While some progress has been made toward achieving health-related goals, at current rates the increases are probably not sufficient to meet the CMDGs. The CMDG target of reducing HIV prevalence rates by 2015 should be achieved although HIV transmission patterns are shifting, with most new infections occurring among married women and their children. Furthermore increasing youth risk behaviour, and illicit drug use amongst youth and people in labour-intensive activities could act as a new potential driver of HIV transmission.
Meeting the CMDG target of halving the population in poverty by 2015 will require considerably faster economic growth and a more pro-poor orientation to that growth. A number of governance reforms to create an enabling environment for poverty reduction will also be essential.
E. Political Environment
Following the Paris Peace Agreements of October 1991 and multi-party elections in July 1993 a new Constitution was adopted, which envisaged the Royal Government of Cambodia (RGC) as a multiparty liberal democracy under a constitutional monarchy. The new Constitution explicitly incorporated the Universal Declaration of Human Rights and the international human rights treaties to which Cambodia is party.
Three main political parties have since dominated Cambodian politics: The Cambodian People's Party (CPP), the United Front for an Independent, Neutral, Peaceful, and Cooperative Cambodia (FUNCINPEC) and, the Sam Rainsy Party (SRP). Since the first mandate of the National Assembly (NA), four nation-wide elections have been organized, including the elections for the NA in July 1998, July 2003 and July 2007 and the first commune elections in February 2002.
The commune elections of 2002 were an important step in a comprehensive program of political, administrative and financial decentralization. There is also increasing participation of civil society and NGO groups and a relatively underdeveloped media is beginning to exercise its function. However, civil society organizations and Cambodian citizens continue to face significant challenges, for example in accessing information, establishing dialogue and developing participatory processes. The Government's capacity to engage in policy dialogue with civil society is growing, but participatory mechanisms have yet to be regularised and mainstreamed into policy development, public planning or monitoring processes.
The coronation of HRH King Norodom Sihamoni in October 2004 is further testament to the growing stability of the nation. The smooth transition of the Monarchy has provided a fresh voice to promote values, moral authority and national traditions.
F. Governance and Human Rights
Few institutions1 in Cambodia were functioning when the Government began its first mandate in 1993. Although important progress has been made in rebuilding institutions, the country operates far below its economic and social potential due primarily to weak governance2. Key areas that require urgent attention include: corruption; the legal and judicial system; public financial management; and public administration. A strong start has already been made in decentralization and local governance.
The Constitution of Cambodia has incorporated the six international human rights treaties to which Cambodia is party. However implementation has been slow. In the administration of justice, issues of neutrality and independence, impunity, access to justice and legal aid for the poor are still a concern. Access to information held by public authorities remains extremely limited, including access to laws and executive regulations.
Reforming the justice system and upholding the integrity of the courts is key to ensuring the rule of law, in empowering the poor, providing effective guarantees to private investors and ensuring impartial dispute resolution. Other issues include judicial corruption, executive interference, the need for reform of the Supreme Council of Magistracy, the small number of trained judges and lawyers, the low budget allocated to the judiciary and budget disbursement.
Weak institutions and limited mechanisms of accountability contribute to high levels of corruption seriously constraining economic growth, private sector development, poverty reduction, and the development of the rule of law. A recent study of the country's competitiveness identified corruption as the single most important constraint faced by the private sector in doing business in Cambodia3. The November 2004 report by the Special Representative of the Secretary-General for human rights in Cambodia highlights the negative impact of present land concession policies and practices on rural livelihoods and human rights4.
The Government sees further decentralization5 as crucial to enabling a local voice in governance and improving public service delivery. While the holding of commune elections was an important first step, further effort is needed to expand opportunities for citizens to influence and participate in governance. Currently the commune councils control very limited resources severely limiting their options to improve services or facilities. An effort is currently being made to develop a comprehensive vision and framework for decentralization and de-concentration.
G. Gender Situation
Cambodia has among the lowest levels of gender equity in Asia as measured by the gender development index (0.427)7 and the gender empowerment index (0.283) . Social attitudes and tradition deem women to be of lower status. The consequences are manifested in the significant gender inequities in access to education and levels of female literacy, higher rates of girl child labour, gender inequities in access to public services, and low representation of women in decision-making positions. Poverty is also greater among Cambodian women than men across all economic groups.
Women make significant contributions to the national economy and the incomes and well-being of their households. Women comprise 54 percent of the skilled agriculture and fisheries workers, and a substantial number of rural households receive regular income transfers from the almost 300,000 young women employed in the garment sector. Apart from of agriculture and garments, women are primarily self-employed in small, informal enterprises and comprise 49 percent of self-employed retail traders. Lack of access to, or control over, productive resources and services including credit, land and land titles, agricultural inputs and extension services are critical gender issues.
Although progress is being made in responding to gender inequities in social sectors, serious gaps remain. The female child labour rate of 50 percent in the 14-17 age group is considerably higher than the male child labour rate of 36 percent. Cambodia’s maternal mortality rate remains one of the highest in the region, suggesting the need for increased attention to reproductive health and improved access to both health information and services.
Women are under-represented in both elected and appointed positions as well as in mid to high levels of the civil service. Only 8.5 percent of the commune councillors and 12.2 percent of National Assembly members are women. General weaknesses in the judicial system together with their low social status leave women with little legal protection. As a result women are highly vulnerable to trafficking, domestic violence and rape. The legal standing of women in property disputes is also unequal. While some progress in formulating policies promoting gender equality has been achieved, mainstreaming gender is a serious challenge, and the political will to implement such policies remains weak.
H. Private Sector
The private sector in Cambodia is dominated by the informal sector, which accounts for over 80 percent of GDP and close to 90 percent of employment. Much informal sector activity is concentrated in agriculture. The informal industrial sector accounts for almost half of total industrial output and supplies mainly the domestic market. Some 7,000 registered private enterprises constitute the formal private sector which is narrowly focused on garments and tourism. Foreign direct investment drives the formal private sector which is the main source of exports. However since the late 1990’s FDI has been declining due to: (i) weak governance including an underdeveloped legal framework and an ineffective regulatory regime, excessive red tape, and widespread corruption; (ii) a lack of access to, and the high cost of, institutional finance; (iii) high costs and a lack of infrastructure services such as transport and energy; (iv) limited technical and managerial skills and; (v) limited access to land, information and competitive markets.
In joining the WTO and through efforts to enhance sub-regional trade, the Government recognizes the need to accelerate legal and judicial reforms and clarify market rules for the private sector. Equal effort is needed to ensure that negative consequences will be addressed and laws will be enforced. Developing a strong, independent private sector can also strengthen governance, as the private sector’s demands for transparency and impartial arbitration can catalyze reforms.
I. Environment and Natural Resources
Cambodia's people depend heavily on agriculture, fisheries, and natural resources and its unique eco-system centred on the Tonle Sap Basin. Yet environmental management is weak and the legal framework is inadequate. Information and guidelines to regulate crucial issues such as allowable forestry cut, fish yields, and groundwater resources are lacking and/or not enforced. Poor stakeholder participation also weakens community-based management. The roles and responsibilities of the environmental agencies at various levels need to be clarified. Management capacities are particularly weak at provincial level and crucial environmental management decisions are made at the national level. The land management also remains a critical issue.
The Government's listing of key environmental challenges include: (i) decreasing forest cover, which reduces biodiversity, increases erosion, accelerates river siltation, and worsens flooding; (ii) untreated wastewater; (iii) unsustainable irrigation; (iv) degradation of inland fisheries and coastal resources; and (v) poor protection of biodiversity and protected areas.
Over 20 percent of the income of poor households is sourced from common access resources, mainly fisheries and forestry, which serve as a safety net when other sources fail. Efforts to formalize community access rights to fisheries and forests are in their infancy. Although private forest concessions that were environmentally unsound or economically unviable have been cancelled, illegal logging remains prevalent. The government has freed many private fishing concessions in the Tonle Sap to community groups for management, an important step in enhancing the access of the poor to natural resources but further strengthening of the regulatory framework and local capacity to ensure that communities can enjoy the benefits of sustainable fisheries is required.
Soured by: http://www.un.org.kh/