Cambodia’s Ball-and-Chain of Corruption and Inequality

Recent Features

ASEAN Beat | Politics | Southeast Asia

Cambodia’s Ball-and-Chain of Corruption and Inequality

COVID-19 offered the Cambodian government an opportunity to curb the worst excesses of corruption. Instead, things went in the other direction.

Cambodia’s Ball-and-Chain of Corruption and Inequality
Credit: Flickr/Steve Bernacki

Speaking in 1962, eight years before it actually happened, Cambodia’s leader Norodom Sihanouk knew enough about the political system he had created to forewarn: “This ball and chain of corruption will finish by bringing me down.” It did. In 1970, while he was on a visit to South Korea, Sihanouk’s military commander and on-and-off prime minister Lon Nol and his distant relative Sisowath Sirik Matak (two politicians considered irremediably corrupt) conspired to remove him from power. The graft that was allowed to rot for decades would also bring down Lon Nol’s new republic in 1975, making way for the Khmer Rouge’s four-year genocidal regime, which left as many as a third of Cambodians dead.

So should Cambodia’s current prime minister, Hun Sen, have been more thoughtful when last week he sat in the front row of an opulent wedding of the daughter of Ouk Savuth, head of Phnom Penh’s Regional Court of Appeal, and the son of an okhna, an honorific title bought by business tycoons? The conspicuous wealth inequality that has come to define Cambodian society clearly hasn’t receded because of the COVID-19 pandemic, which has resulted in an ever greater gulf between the rich and the poor – or, rather, between those who work for a living and the new aristocrats who skim their wealth from corruption and “rent” extracted from the ever ballooning property sector and foreign investment.

Indeed, Cambodia has a new aristocracy: landed and rentier, a troika of civil servants, business tycoons and political elites who have grown fat by taking for themselves a slice of Cambodia’s fast economic growth. And all owe their place to the acquiescence of the Cambodian People’s Party (CPP), which has been in power since 1979. The wedding was a microcosm: The union of the daughter of a state functionary and the son of a business tycoon, consecrated before the political elite.

After photos of the wedding leaked online, Ou Virak, a respected commentator, said it best: “The inequality is quite ugly!” But we didn’t see its full ugliness. We didn’t see the enormous and repellent buffet that must have been laid out for the guests. We didn’t see the size of the envelopes that, as per Cambodian custom, were stuffed with large-denomination U.S. dollar bills for the bride and groom. We do not know what was discussed as the guests sat down; what business deals were cut; what favors were negotiated between the politicians and businessmen in attendance.

All societies are unequal, and only the utopianists believe it can be otherwise, but Cambodia’s political system is designed to ensure that inequality widens. Instead of redistribution there is noblesse oblige. Instead of trickle-down economics there is patronage. Instead of bureaucratic competency there is political loyalty. Instead of reinvesting their wealth in Cambodia, the rentier elite funnel it away abroad, reaping ever greater profit from their ill-gotten capital. Instead of checks-and-balances there is only the question of whether you are dispensable or not to the political elites. Instead of sustainable growth there is mass speculation; a property and construction boom built on money laundering; an export sector where the greatest commodity is cheap labor. Instead of ordinary people raising themselves out of poverty, many have indebted themselves to an unscrupulous microfinance industry, trapping themselves in a cycle of credit that most will never be able to leave.

But the wedding photos were a mere glimpse into the lives of the fabulously wealthy, a low-resolution image captured in freeze-frame. But that is, for the most part, how we must see the twin torments of corruption and inequality. I can, for instance, tell you that in 2019 the top 1 percent in Cambodia controlled 16.3 percent of the country’s income and the top 10 percent controlled 44.2 percent. Or that the bottom 50 percent has not taken more than 18 percent of the country’s earnings in decades;  the proportion sat at just 17.6 percent in 2019. Or I could inform you that Cambodia was ranked worst out of the 11 Southeast Asian nations (and 160th out of 180 countries globally) for corruption in Transparency International’s latest Corruption Perceptions Index, released last month.

But what does that mean in reality? How is it experienced by those who have to suffer it? Like poverty, inequality is temporal, rationalized differently depending on circumstances. Inequality and corruption might have been swept under the rug for as long as the economy kept growing at around the 7 percent mark over the 2010s, which meant that ordinary Cambodians could become a little richer each year. That’s going to be much more difficult as Cambodia will experience lean years following an estimated 2 percent economic contraction last year. The envy and resentment over how the rich have become richer more quickly than the poor have become less poor will start to peak unless the situation is rectified.

The sectors that typically employ young migrants from the countryside – garment manufacturing and tourism – have weakened because of the pandemic. Tourism may not recover fully for several years. Phnom Penh’s long-held plans to saunter up the supply chain to higher-end tech assembly will now have to be delayed for some time.

But the pandemic isn’t the only worry. Automation waits around the corner. The International Labor Organization estimates that at least 7.1 million jobs in Cambodia could be lost due to automation, since “56 per cent of all employment has a high risk of automation in the next couple decades,” it noted in a recent report. If wealth inequality is wide today, it will become a gaping gulf in only a few years’ time. More so as Cambodia’s productivity isn’t keeping up with wage increases. Nor is the country keeping up with its neighbors.

Just take education, a prerequisite if Cambodia hopes to transition from low-skilled garment production to more profitable tech assembly. The expected number of years of schooling rose by 3.6 years during the 2000s – from 7.2 in 2000 to 10.8 years in 2010 – but increased by just 0.7 years during the 2010s, rising up to 11.5 in 2019. And it’s unlikely to climb much higher as state investment in education is slashed. The average child in Vietnam can now expect 1.2 more years of schooling than the average Cambodian child in 2019. A Thai child can expect 3.5 more years. Things have actually gone backwards for university education. In 2011, 15 percent of university-aged Cambodians were enrolled in tertiary education, compared to 14 percent in 2018. And that compares to 29 percent in Vietnam and 49 percent in Thailand.

Hun Sen thought he could ventriloquize my thoughts last month. Let me repay the gesture. Perhaps he now senses that corruption and wealth inequality have become the ball-and-chain of his regime. Grand promises have been made to tackle graft but they can only remain mere rhetoric unless the entire system is reformed. That is now sapping economic performance. His children and heirs apparent now occupy most powerful positions but they aren’t trusted, creating a political impasse. There are too many loyalists and not enough technocrats in the civil service as the economy grows more complex. In 1963, Sihanouk cancelled all U.S. military aid, which contributed up to 15 percent of the national budget, to stop his corrupt underlings enriching themselves from kickbacks. Hun Sen now cannot do the same with Chinese largess, which swells the pockets of the political and business elite.

The pandemic gave the Cambodian regime a rare moment to rid itself of its ball-and-chain. But it didn’t.