Cambodia's Political and Economic Outlook for 2010-2011

The Kingdom of Cambodia has had its share of political and economic rise and fall. The most recent rise was enjoyed from 1998 to 2008 as Prime Minister Hun Sen gained dominance over the domestic political scene and the GDP grew at the highest average annual rate in Asia, second only to China. However, while Prime Minister Hun Sen continues to preside over a stable political environment, the economic climate contracted in 2009 and was predicted by some to stay sluggish throughout 2010 and 2011. This hub examines the political and economic outlook for Cambodia as reported by Economist Intelligence Unit (EIU) in its May 2010 country report.

According to the EIU country report, the Prime MInister Hun Sen and his Cambodian People's Party (CPP) will continue to dominate the country's political scene in 2010 and 2011. As of the last general elections in 2008, the CPP gained control of two-thirds of the seats in the National Assembly (the lower house of the Cambodian parliment). Essentially, Hun Sen has retained power as the top governing official in Cambodia since the mid-1980s when he brokered a deal between Vietnam and Cambodian King Norodom Sihanouk. The Prime MInister solidifed his grip on the country's political reins when he and his loyal following staged a coup d' etat in 1998. Since taking full power over Cambodian affairs in 1998, the country's economy grew at a remarkable rate despite outcries of corruption.

 According to the EIU May 2010 report about Cambodia, Cambodia's real GDP is expected to expand at modest rates in 2010 and 2011. The report predicts the Cambodian economy will grew in each of the next two years at estimated rates of 4.1% in 2010 and 5% in 2011. These modest expansions will come as a welcome relief in comparison to the 15.1% contraction the Cambodian economy weathered during 2009. Even so, the EIU numbers come in well below the forecasted estimates of the Cambodian government.

Cambodia and Thailand

Cambodia's relationship with Thailand will remain less than ideal due to Cambodia's interference in Thailand's domestic affairs. In October of 2009, the Thai officials became angered when Hun Sen appointed ousted Thai Prime Minister Thaksin Shinawatra as an economic advisor to his government. The appointment of the former Thai PM added to already high tensions between the two neighboring countries caused by the Thai-Cambodian border dispute in October 2008. The border dispute centered around ownership of territories surrounding the ancient Preah Vihear temple ruins.

Cambodia and Vietnam

As Cambodia will continue its problems with Thailand to the west, its relations with Vietnam to the east are likely to grow. Vietnam played a heavy role in the advancement of Prime Minister Hun Sen and his CPP party and trade between the two countries is likely to increase in the time ahead.

Cambodian and the West

While the United States and the European Union will continue their involvement in Cambodia, the relations will be less than it could be due to objections over human rights issues. Hun Sen's CPP party continues to crackdown on political opponents and dissidents by using the full weight of the government to punish those who speak out including political opposition leader Sam Rainsy.

Cambodia and China

China is forecasted to continue its generous stance towards Cambodia. China has been heralded by Cambodia Prime Minister Hun Sen about helping Cambodia without strings attached e.g. demands for improvement in good governance or respect of basic human rights.

• Despite a two-month campaign to crack down on illegal logging, the director of the Forestry Administration in Cambodia was dismissed early in April 2010. This despite the fact that several high-profile officials were detained during the crack down.
• The United States government suspended shipments of surplus military vehicles to Cambodia in reponse to Cambodia's deportation of 20 ethnic Uighurs from China's Xinjiang province.
• The Cambodian National Assembly passed a law on favoring property ownership by foreigners. Developers within the country hope the new law will encourage foreigners to invest in the construction sector of the economy.
• Construction work began on two large hydropower dams in Koh Kong province. Cambodian officials hope these plants will allow Cambodia to become an electricity exporter.
• The Asian Development Bank and the World Bank published reports that the Cambodian economy contracted in 2009 despite the Cambodian governments claims to the contrary.