T heir Excellencies Prince Norodom Ranariddh and Samdech Hun Sen reflect on the year that was THE Royal Government of Cambodia completed its first year of office in November 1994.

The first achievement was establishing the political environment which is favorable to rehabilitation, reconstruction and development. In this respect, the Government is promoting national reconciliation among the parties which joined the election in May 1993.

From a situation of permanent confrontation, the Government has been adopting a policy of cooperation, under the framework of the Constitution. During the first year, the Government has been promoting political stability, which means that any difference, any quarrel, any problem that occurs can be settled through the democratic process.

The successful suppression of the coup attempt in July 1994 was a demonstration of the firm determination of the Government to enforce the Constitution, to respect the law of the country.

The second achievement is the smooth transfer of power from the pre-election authority to the legitimately-elected Government. The ruling majority understands it will run the country only for a period of time, as defined by the Constitution. The majority also understands it has to listen to the minority, and the minority usually expresses its voice through a free press.

The Government has successfully integrated the three main parties, and is making every effort to integrate the armed units of the former political factions into one unique Royal Cambodian Armed Forces. The Government is also continuing to make efforts to reform, so that the RCAF becomes truly an army of the people, of the nation of Cambodia.

As far as the Khmer Rouge are concerned, the Government's policy is to fight the outlaws with rural development, anti-guerrilla techniques and psychological warfare and by building up the village militia.

At the same time, the Government is encouraging Khmer Rouge soldiers to defect in the framework of national reconciliation. Many of the thousands who defected in 1994 have been integrated into the RCAF, and others have been provided with training in alternative areas. The Government's continued strategy is to promote economic development in rural areas so villagers in Khmer Rouge areas will also join the Government side.

The third achievement of the Government during its first year of office is economic development. We have succeeded in reducing inflation-from 31 percent for the 1993 year to 7.9 percent for 1994. In monthly terms, the inflation rate has been reduced from 137 percent for the month of October 1993 to 0.1 percent in October 1994. The Government has also succeeded in maintaining monetary stability-the riel is now stable compared to the US dollar for the first time.

We now have a national budget within a budget law, adopted by the National Assembly, which means any expenditure must be in the framework of the law and all State income must go through the State coffers. In addition, the Government has undertaken economic reforms, including reforms in the areas of banking, taxation and customs. Private investment is the highest it has ever been, with more than $US 1.5 billion registered in 1994, in many fields, from agriculture to manufacturing to tourism. This encouraging fact can bring hope to our people. In the area of tourism, despite frequent bad reporting about Cambodia in the national and international media, the country continued to receive a large number of tourists compared to 1993. Daily flights from Phnom Penh to Siem Reap increased from one to five-and sometimes seven-flights a day.

Fourth, for the first time in many years, Cambodians can enjoy democracy, seen especially in the proliferation of the free media and the large number of non-government organizations (NGOs) spread throughout the country.

Finally, the Royal Government of Cambodia is continuing to set up the constitutional institution which is constituting the foundation of the rule of law state. We are working hard to draft new laws so that these laws will replace the laws of other regimes.

We are working on different studies in order to make reforms - reform in the civil administration, reform in the judiciary, reform in the police. So that all the institutions of the State become the civil administration of the people, of the country. The objective is to make the administration an effective, neutral, simple one, to make the administration responsive to the interests of the people, to provide public services with high efficiency, and to support projects for development.

Because Cambodia has just emerged from 23 years of war, destruction and violence, the Government faces a daunting task. But these accomplishments have been carried out despite the continued efforts of the Khmer Rouge, and these achievements are encouraging.

The path is long and difficult, but the Government is determined to overcome any obstacle to attain the final objective which is to build a new nation in which the people will enjoy real democracy, freedom and economic development. So sweat and courage are needed.