2018: A challenging year indeed for Cambodia

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Cambodian officials pay tribute to late King Father Norodom Sihanouk in Phnom Penh, Cambodia, Oct. 15, 2015. Xinhua/Sovannara

2018 was a dramatic, challenging year for Cambodia. It will be remembered amongst others, for the movers and shakers in the political sector, external pressure on trade and politics and domestic policies, which either shapes the future or irks trading partners.

The most important event in 2018 was the general election in July, which was conducted peacefully with the participation of 20 political parties and thousands of election observers, both local and international. The elections were the testimony of a thriving democracy in Cambodia although there were some shortcomings. Local on-the-ground realities and context define the evolution of democracy – and the so-called proponents of liberal democracy must realise that a one-size model does not fit all. After all, in the era of Donald Trump, is there a notion of liberal democracy?

The opposition movement that boycotted the election did not, in the least, dent the democratic process but instead paved the way for the Cambodian People’s Party (CPP) to gain predominant power with a landslide victory. The boycott call had the reverse effect with opposition parties, who were traditionally sympathetic to the CNRP. They openly bashed and demonised Sam Rainsy for his boycott call as it affected turnout and votes for their own parties.

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Democracy was still in play although the spoilt votes were remarkably high. The spoilt votes were a silent expression of disappointment and disillusionment with the CPP and the government. No matter what one calls it, that is democracy in itself.

On the economic front, Cambodia’s GDP continued to be robust with a growth rate of 7.1 percent despite the threat and punitive measures from the EU and the US. Concerning the Everything But Arms (EBA) duty-free scheme negotiations with the European Union, it seems to be going quite positively from confrontation to engagement. The visit to the EU by Cambodia’s Foreign Minister Prak Sokhonn in January 2019 will be a significant milestone.

The fact that the EU is considering the withdrawal of EBA, but has not imposed any form of sanctions, demonstrates that it is interested in dialogue with the Cambodian government and believes that the current standoff can be fixed through cooperation.

Sanctions are seen as a punishment that closes off cooperation, and the EU has so far avoided imposing such measures because it wants to keep the channels for cooperation open. However, it is also needs to be noted that the EU demands placed on Cambodia are politically motivated, and they could be partially met like the amendments which are taking place in the National Assembly and Senate. Nonetheless, it has to be borne in mind that Cambodia cannot go all the way in meeting all of the EU’s stringent demands, which infringes upon Cambodia’s sovereignty.

Concerning the withdrawal procedure, the European Commission launches the process by making a formal announcement in the Commission’s Journal. This is followed by a 6-month period of monitoring and evaluation. The Commission has two months to produce a report, to which the beneficiary has one month to respond. Based on the beneficiary’s response, the Commission decides on the withdrawal within two months (not more than six months after the end of the monitoring period). The decision is made by the Commissioner for Trade, but needs the approval of the other Commissioners. If the decision is to suspend EBA, a grace period of 6 months is provided, before EBA is withdrawn. At any point throughout this process, including during the grace period, the Commission can decide to halt the process and cancel the withdrawal.

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What astonishes many is why Cambodia is still pleading and negotiating for the EBA to remain when they know very well that the moment the UN declassifies them as a Less Developed Country, the EBA privileges would be gone and in any event could still be gone within 24 months, irrespective of whether Cambodia meets their demands or not.

Cambodia should rely on its nationalism to say good bye to the EBA and voluntarily give up the privileges as this will compel Cambodian exporters and authorities to shape up, shrug their lethargy and look into serious concerted measures to become more competitive in all aspects – from productivity, trimming the bureaucratic fat, unofficial fees, speedier documentation processing and approval and cheaper transportation and utility costs, to name a few.

This would be the positive side of saying goodbye to the EBA as otherwise, Cambodian exporters and anyone linked with their business such as logistics, ancillary support like terminal handling, cargo handling (including bureaucrats who push and shuffle papers) will remain in a state of complacency and maintain their illicit inactivity and ineffectiveness instead of getting a rude wake up call.

Irrespective of the EBA, the EU has already triggered the safeguard measures for the rice sector. Cambodian rice of all grades will be liable to be hit with taxes, as high as 175 euros per ton ($200 per ton) come the third week of January 2019.

The poor coordination, unprofessional and lackadaisical efforts by the Cambodia Rice Federation and the Ministry of Commerce destroyed whatever chance Cambodian rice had in their attempts to maintain high export targets to the EU.

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The Cambodian government has been striving hard to diversify its economy and expand into manufacturing and knowledge-based economy. Investment in human capital is the key to economic diversification. Yet lack of leadership and coordination remain the stumbling blocks. Lack of transparency and accountability remain rampant across government institutions.

Cambodia was also in the international crosshairs for the wrong reasons by the purported rumor – a well coordinated and strategically driven rumor, one must add – about the possibility of China having a naval base in Koh Kong, courtesy of Union Development Group, a Chinese state-owned enterprise.

Despite repeated attempts being made to deny this, the rumor lingers on – a year after the UDG had revealed their master plan to develop Koh Kong into a bustling seaport city with an airport, deep-sea port, economic zones, infrastructure, tourism facilities and so forth. They were continuously hit by Cambodia’s now ubiquitous problem – land grabbing issues which remains to be completely resolved.

Back to the political front, Prime Minister Hun Sen again showed that he is a deft political maverick in his approach and that he is a chess grandmaster with only him knowing what or which moves he is going to make and when.

By proposing an amendment to the Electoral Law and the internal rules of the National Assembly, he is giving a lifeline to some 118 currently banned political actors to resuscitate their political career, albeit not with the banned CNRP – which does not stand a chance of a similar resurrection – but with existing parties or even form new ones.

There are some wise politicians who have welcomed these initiatives and signaled their interest to apply for the amnesty which will enable them to return to active politics. Sam Rainsy’s antics and his recalcitrant hardcore radical followers, as usual and as always the case, want a back door entry to political life with a package deal that also includes the resurrection of the CNRP.

As the political and trade intrigues draw to a close today, Prime Minister Hun Sen has once again shown his deft political skills, his maneuvering and strategies, which have given him his international legitimacy. It is a clear checkmate. Mr Hun Sen, in one go, has given a lifeline to the once recalcitrant 118 banned politicians as well as opening a channel for services to be given, in the form of decentralisation, using commune and lower ranking officials who are way below the national political food chain.

The economy remains strong, growth potentials remain equally strong and while the headwinds are still coming Cambodia’s way, the Kingdom, under the leadership of the deft political master Mr Hun Sen, could possibly face off impending challenges with new policies and more astute measures – such as an early cabinet reshuffle, re-engineering or bleeding out the bloated bureaucracy, and doing away with institutions which are ineffective. Whether these will be done remains to be seen.

On this note, the editors of Khmer Times say goodbye 2018 and say hello to 2019 with renewed vigour, anticipation and some levels of apprehension as to what may behold for the coming year that starts tomorrow.

Here’s to goodbye 2018 and hello 2019 Cambodia – Kingdom of Wonder, indeed.

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