18 - The Cambodian Economy: Charting the Course of a Brighter Future

Summary

INTRODUCTION

Since 1993, the Cambodian economy has undergone a dramatic and rapid transformation. The traditional economy, based on agriculture, is now driven increasingly by the industrial and the tertiary sectors. With the return of peace in the early 1990s, a sense of confidence and pride pervades the country. All Cambodians now share a common vision of sustained economic growth with employment and a secure future for all. The government strategy is to help realize this vision by reinforcing Cambodia's comparative advantages both regionally and internationally. In the era of globalization the fortunes of all countries in the world are intertwined; autarky is not an option for sustained high economic growth for a small sized economy as Cambodia. Hence Cambodia's continued economic success will depend on the availability of full market access for its products and the cooperation of its development partners.

Cambodia had to virtually start from the scratch to rebuild the country after the defeat of the Khmer Rouge regime. At the very outset, the country had to face the harmful consequences of the economic embargo imposed in1979. The annual rate of economic growth did not exceed 3.4 per cent during 1988–91, even though average annual growth in the manufacturing sector reached 6.3 per cent. Growth has been particularly strong since the early 1990s, with the implementation of macroeconomic reforms and normalization of economic and trade relations with the countries of the region. An annual average rate of growth of 6.3% was achieved during 1994– 98, despite the upheaval caused by the Asian financial crisis of 1997–98.

It was only after the successful implementation of the “win-win” policy put forward by Samdech Hun Sen in 1998 that the RGC was able to finally dismantle the politico-military organization of the Khmer Rouge, thus re-establishing peace throughout the Kingdom, and achieving the physical and political unification of the country. The government could then take steps to strengthen the spirit of national reconciliation. The elections of 1998 created the conditions for political stability in the country and allowed the government to focus on macroeconomic management.

Following the July 1998 elections, the RGC adopted the Triangular Strategy with the objective of promoting sustainable development in Cambodia. The strategy aimed at restoration of peace and stability, as well as maintenance of security for the country and its people.