With investment and foreign aid prospects looking bright, Cambodia should be given
enough freedom to chart its own future, says Din Merican, an economist of
30 years' experience.
THE First Cambodia Roundtable organized by The Economist Group is now behind us.
Coming soon after The World Economic Forum, it reflects continued interest among
investors in Cambodia. It also coincided with the arrival of a high-powered business
delegation from South Korea. The Roundtable was yet another opportunity for entrepreneurs,
business executives and others to network with Ministers and technocrats of the Royal
Government of Cambodia to discuss its development blueprint, CAMBODIA VISION 2000,
and exchange views on foreign investment and poverty eradication through economic
growth.
According to this blueprint, Cambodia plans to almost double its per capita Gross
Domestic Product (GDP) from US$287 in 1995 to US$470 in 2000. The economy is projected
to register a real growth rate of 7-7.5 percent while the government will maintain
macro-economic stability (inflation at five percent and a stable riel-$US rate of
2,500) and enhance the quality of life and the environment. Both the private sector
and the donor community are expected to play an important role in partnership with
the Royal Government of Cambodia under a "Cambodia Inc." approach to secure
sustainable development. The policy framework will also be conducive to domestic
savings mobilization and investment. Tax reforms will also be undertaken to broaden
and diversify the sources of Government revenue and effectively control expenditure.
The Council for the Development of Cambodia (CDC) informed the Roundtable that CAMBODIA
VISION 2000 had the support of both the CPP and the Funcinpec. This can only be a
source of comfort since political will and cooperation are essential if the targets
in this document are to become reality. The Donor Group at the Tokyo meeting in July
would have to be convinced that the coalition government will remain united in purpose,
if they are to be persuaded to provide much-needed budget support.
Recent political tensions have abated somewhat, but more tangible and clearer evidence
is required to show that goodwill, understanding and mutual respect are sustainable.
Serious long term foreign investors remain sensitive to factious politics.
Translating Cambodia's development potential to create jobs and upgrade educational
and health standards requires leadership. In particular, a dedicated, professional
and development-oriented civil service will make efficient use of resources. Donors
at the Tokyo meeting may insist on greater transparency and accountability as a pre-condition
for more budget support. Over time, Cambodia should find this stipulation less onerous.
Pledges of $2 billion ($500 million a year to 2000) will be difficult without some
agreement on this matter, given growing donor fatigue and other priorities. However,
pledges should not be constrained on the grounds of "lack of absorptive capacity."
That argument is no longer valid since the Royal Government, in cooperation with
the ADB, IMF/World Bank and other multilateral and bilateral agencies, is currently
engaged in institutional capacity building through civil service and other reforms
and human resource development. This process takes time to bear fruit.
Furthermore, linking donor support with Cambodia's human rights record and progress
towards democracy will be tantamount to discounting the quantitative and qualitative
improvements which have taken place since the formation of the Royal Government.
The success of Cambodia's macro-economic policies is, after all, the result of cooperation
between the Royal Government, the donor community, the ADB, IMF/World Bank and the
UNDP. A lot of time will be needed to see significant progress on human rights and
democracy.
The international community invested some $ 1.7 billion in peacekeeping, and the
establishment of the present government in 1993 after the United Nations supervised
nation-wide free and fair elections. Today, restoring order and stability is a real
possibility.
CAMBODIA VISION 2000 seeks to consolidate the gains made over the last three years.
It is committed to pursuing with added vigour the pace of policy and administrative
reforms. Agriculture, especially rural development, will be revived.
With political stability and the gradual restoration of the Rule of Law, the investment
climate should improve dramatically. As a result, meaningful private capital inflows
from abroad, especially from the Asia-Pacific Region, will boost economic growth.
The private sector will no doubt be taking advantage of Cambodia's strategic position
as the hub of the Mekong Sub-Region. Growth, other things being equal, brings prosperity
in a "virtuous circle." Consequently, Cambodia's dependence on foreign
assistance will decline over the medium term.
The Tokyo meeting in July should, therefore, regard CAMBODIA VISION 2000 as Phase
2 of their investment in peace building and the creation of a free and democratic
society and a modern market economy in Cambodia. Continued international support
for Cambodia's socio-economic and political transformation is at a critical stage.
It was clear from the Roundtable that the Royal Government is committed to the Rule
of Law, democracy and market economics.
The process is irreversible. It has been proven from the experiences of East Asian
democratic governments that market-friendly and pragmatic economic policies which
promote government-private sector cooperation will contribute to high and sustained
economic growth and prosperity.
Donor support remains essential to move Cambodia forward on its path outlined in
CAMBODIA VISION 2000. While continuing to monitor its progress on human rights and
democracy, and by ensuring transparency and accountability in the use of funds, donors
should allow Cambodia to chart its own course, preserving its sovereignty and national
pride.
Hopefully at the Tokyo meeting, Cambodia will be allowed to present its case directly
to the donors with the IMF/World Bank and others in the role of supporting cast.
The recent Roundtable proves that Cambodians can eloquently make a strong bipartisan
case for support of CAMBODIA VISION 2000.
