Cambodia's Economic Challenge
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Cambodia's Economic Challenge

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At 187 meters, Vattanac Tower is currently the tallest building in Cambodia. Workers are still adding the last window frames to the top floors but the structure stands finished.

It overtook 118m Canadia Tower last year and may soon be overtaken by the more ambitious Gold Tower 42, a project currently stalled at around 20 stories, which all but completes this triumvirate of new skyscrapers in Phnom Penh’s rapidly rising Central Business District.

Designed to look like a Chinese dragon pointing out to the Mekong River, Vattanac Tower is all feng shui, glass and steel designed by British architects and built with an estimated $170 million of Cambodian cash.

David George, country manager of CBRE, one of the building’s letting agents, notes that Vattanac will be the first and only Grade-A office space in Cambodia when the first eight floors open for business in the first quarter of 2013.

“If you were in Thailand or Hong Kong, this is comparable in terms of quality,” he says.

Meaning “progress” in Khmer, Vattanac symbolizes an economy that stalled during the financial crisis, causing construction to slow, but which is once again on the upswing.

“You need the domestic market to be working for these kinds of buildings to go up,” says George.

On the surface, Cambodia’s economy is certainly improving. In September, the IMF raised its 2012 GDP growth forecast from 6.3 to 6.5 percent and, in Asia, only China and Laos are tipped to grow faster in 2013. The World Bank’s December forecast predicts Cambodia will experience an average annual GDP growth rate of 7 percent over the next five years.

But the positive statistics obscure the potentially debilitating structural issues: namely, the economy is susceptible to external shock.

The World Bank forecasts a 0.5-percentage point fall in GDP growth for 2012 versus the previous year mainly due to an anticipated drop in garment and agricultural shipments, which together account for 90 percent of Cambodia’s total export earnings.

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18

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Tall Man
April 4, 2013 at 17:13

@ Jean-Paul

I guess you completely lost sense. Since when Pakistan is a communist country? Also, they dont have support of China. Name the country that has the biggest support of China. Guess what? USA. Go back and read the political history and get out of your small thinking and see the real world. If you keep watching a lot Fox News or similar things, you will always be like this. Enough said.

[...] http://thediplomat.com/2013/01/03/cambodias-failed-trickle-down-economy/ [...]

[...] Cambodia’s Economic Challenge (thediplomat.com) [...]

January 31, 2013 at 17:04

[...] Cambodia’s Economic Challenge (thediplomat.com) [...]

Lyza
January 19, 2013 at 19:48

Wait, is Cambodia a hell, to you?

saran
January 17, 2013 at 01:57

In many countries a higher standard of living than our parents is practically a birthright.
As the US economy begins to disintegrate, civil unrest may become increasingly violent and widespread. The anticipation of massive unrest may be the real reason why the Department of Homeland Security has contracted with a Halliburton subsidiary to build massive new domestic detention camps …….
Paying interest on unpaid interest will soon accelerate the debt crisis.
read more about what will happen in decades ahead at the most amazing secret book ever published here:
http://www.scribd.com/doc/105212391/The-Battle-of-Armageddon-WWIII-in-2012-Protocols-of-Zion-Audiobook-economic-and-energy-crises-by-Annafarahmand-lord-Lindsey

Lalit J Jhaveri
January 6, 2013 at 18:46

Simple solutions for Hun Sen: this guy grabbed, snatched power; he is ruthless; no problem! if he uses some common sense: establish new landmarks; think in terms of QUANTUM GROWTH for people of Cambodia; LEASE your country to e.g. Russia or some EU nation, e.g. France and Denmark combined administrative system; establish new rules, new ball-game! all jobs to go to Cambodians; have all, all systems and all leak proof; absolute compact and in sync with intl. regulatory framework; new laws and new regulations to administer every level of Govt. administration & bureaucratic processes, etc. Let the lease period be – say, 30 years; one would see all poverty eliminated; capitalist systems in play; Cambodians can be made hard working; they’re intelligent like the Vietnamese; then see Cambodia emerge as the second Hong Kong in ASAN after Singapore. Simple; do something different form same rule splayed by stupid politicians world over;

kangmin the meanie
January 6, 2013 at 09:25

China via its loud dengist pro-western policy has been supporting the U.S. the biggest global thug and mass killer-murderer in the modern world. China did not object to U.S.-machinated coups in Cambodia, Latin America and even in Africa that led to terrible bloodbaths and the dengist leaders in China are silent about the regular air strikes in Pakistan, Afghanistan, Yemen that have killed many. The U.S. has committed war crimes such as double-tapping ( the killing of first responders) and the dengists have been silent. Yes, all over the world, kangmins like you agree that China is responsible. Stick this up your arse will you !

Vic
January 5, 2013 at 19:48

One other thing – the author states that Cambodia's economy is vulnerable to external shock.  Not a very meaningful argument in a region full of export-based economies.  Cambodia and almost all of its neighbors, China, Korea and Japan are all vulnerable to external shock…
The article is written well but it premises are weak.

Vic
January 5, 2013 at 19:34

It isn't a bad article but it oversimplifies some complex issues.  Naming Senator Ly Yong Phat as one of the worst abusers of land rights isn't entirely accurate.  It would be more accurate to say he is among the most prominent.
The GINI reference is meaningless in a world where universally the gap between the richest and the poorest is expanding.  A more important point is whether or not the poor are better off.  It is clear that even in Cambodia the lives of poor people have steadily improved over the last decade.  Case in point is the garment industry that mostly employs young females from rural areas who remit large portions of their salaries to their families.  This raises rural income levels and leads to higher standards of living and improved access to healthcare and education.  It is by no means perfect but certainly an improvement.
For years critics have predicted economic decline in Cambodia (for example, the decline of garment exports due to WTO accession), but so far they have been off the mark.  Cambodia has a long list of problems its leaders have to more adequately address, but the implication that it is on the brink of economic decline or collapse emanates from those who are ignorant and misinformed.  Unfortunately this seems to include the author of the article.
One last comment is Hun Sen's role in all of this.  He is widely viewed as a thug with his thumb on the throat of the entire country.  This too is simplistic.  His success at remaining in power since the mid-1980s is based on his ability to understand and manage competing factions within the CPP (not CCP Kangmin Zheng) and more broadly within Cambodia.  Also, its important to note that there is no leader in the world who has led his/her country from near annihilation through reconstruction and now to growth.  Hun Sen inherited a country traumatized by the Pol Pot regime and has led it to peace, stability and economic growth, despite being undermined by U.S./Chinese/ASEAN supported insurgent movements (including the Khmer Rouge) throughout the decade of the 1980s.  Do you think Barack Obama or Xi Jing Ping would be up to the challenge?

Thof
January 5, 2013 at 12:31

What make you think that "Cambodia today is the result of messy U.S. involvement in South East Asia filled with criminals, drug syndicates". Look like you never knew Cambodia

Jean-Paul
January 5, 2013 at 00:04

@ Wang
 
Don't forget Venezuela, Pakistan and North Korea; all of these states are part of what I like to call the "commie thug axis". All of these countries have at least one of the following (with China, the godfather, having all three): the absolute worst abuses in human rights, terrible overpopulation/pollution and corruption that permeates every inch of government and corporations. With China as their main patron it seems all of these traits have also rubbed off on these poor countries as well. The apple really does not fall far from the tree it seems.
 
@ Kangmin Zheng
 
Indeed, China has been supporting mass murderers since Mao Zedong, the mastermind of famine and death came into power there. It's a real shame that China would support mass murderers such as Pol Pot. It is even worse that they would defend a mass murderer such as him from Vietnamese justice by invading and killing thousands of poor Vietnamese.

Kangmin Zheng
January 4, 2013 at 10:36

@kangmin the meanie,
Then prove me wrong.   Did China directly involve in ethnic cleansing in Cambodia?    Did China use Cambodia to sabotage ASEAN?
One thing you learn from CCP very well: it's always someone else fault.
U.S. involvement in Asia in the 60s & 70s was a noble act to drive out Communist out of Korea & Vietnam.   CCP used Korea and Vietnam to fight a proxy war with U.S.   US should have bombed CCP too.
 

Wang
January 4, 2013 at 09:14

“The system is still very corrupt,” says economist Chan Sophal. “[This] may be good for some investors but not so good for others.”
The "some" referred to in this sentence are the Chinese. Chinese do not compete well in fair economies where the rule of law is enforced. Chinese "excel" only in highly corrupt systems where they can pay dirty money to corrupt politicians -situations like in Cambodia (and Laos, Myanmar, Indonesia, Africa…)

kangmin the meanie
January 4, 2013 at 05:33

You sound like a twelve-year old kid. Grow up will you. Cambodia today is the result of messy U.S. involvement in South East Asia filled with criminals, drug syndicates, acid throwers, prostitute rings and all the darkness that come with free market capitalism. You have a one–track mind that comes with a recorder spewing garbage and sheer  childish nonsense 24/7.

Glen
January 4, 2013 at 05:21

You highlighted some key points, but two additional points are relevant.  Regarding tourism there has been a percentage decline of Europeans and Americans which tend to travel independently and support the poor populations better.  Asian tourists tend to travel in larger groups and thus the bigger companies are benefitting, which makes it hard on independent taxi's, etc.
The biggest point has little to do with economic growth but demographics.   50% of the population is under 20 and a minimum of 125,000 jobs a year for 5 years need to be created for 5+ years to even make a dent in poverty.
Yes, the rich will get richer, but the poor will get poorer, which I believe you highlighted.

Kangmin Zheng
January 4, 2013 at 00:55

Cambodia must not let Communist China  use her to sabotage ASEAN.   Why?
1)  China never has a good intention with Cambodia (CCP was involved in 2 million Cambodian deaths).   Cambodia is just a tool for China to divide and conquer ASEAN.
2)  Cambodia can join and develop its economy with the rest of ASEAN.
3) Improve human rights.
4) Education.
5) FDI.
6) Jobs.

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