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Cambodia Economic Policy



The economy is a principle domain to support thenational development program, which involves sustainability and macro-economy.It should effectively use its natural and human resources. Cambodia wouldpromote free market economy linked with the program of combat the poverty, andsocial justice. The economic mechanism runs its course within rules andregulations of free market economy.

The Royal Government would not manage the market, butit would support it. The Royal Government would grand the private sector theright of self- determination on productivity, investment, and expenditure, andit would intervene much less. For the reasons, it would set legal andadministrative structures to ensure freedom and autonomy of the private sectorto property right, employment, profession, and the right to compete freely.

It would improve mechanism and structure of economicmanagement to ensure the effectiveness and transparency to cope with corruptionand violation of law. That is very important to stabilize the macro-economy, toboost the people's standard of living, and to encourage the investment.

It prioritizes the physical agriculturalinfrastructure, electricity and human resources, which are the basic of overalldevelopment. The following goals must be achieved:

1. To speed the economic growth in order to improvethe popular living standard and to create more employment. The chief potentialto promote the economic growth is the amass and to transform the naturalresources and the national products into the products of export. The RoyalGovernment would improve economic rules and regulations and to promote Cambodiato be a goods producer in order to attract more foreign investment.

2. To ensure the stability of Riel currency, to keep the inflationrate at bay, to prevent the loss of revenue and private saving by the Rielfluctuation, and to build confidence in Riel by devaluating with caution thedollar.

3. To increase the export of agricultural and manufacturing productswith high expertise and quality.

4. The Royal Government would do it best to alleviate the poverty. Thealleviation of poverty is not only the basic of sustainability of the economicdevelopment, but it also the priority to implement the social program.

To attain the above goals, the Royal Government would seize down thefollowing imbalances:

    Between the need and supply, especially on foods, housing, transportation, education and health care.
    Between the revenue and expenditure within the national budget.
    Between the import and export.
    Between the currency and goods.
    Between salary and the standard of living of civil servant and servicemen.
    Between the increase in the work force and the employment.
    Between the need for national development and the training of human resources.

The Royal Government would continue to carry out theprojects, which are identified in the national program of rehabilitation anddevelopment of Cambodia. It would focus on the long-term program for theeconomic and social development in the first five years from 1996-2000. It alsoattempts to achieve the urgent need for the investment on public sector.

Based on these basics and the on going achievements,the Royal Government may carry out the following economic strategies:

The Royal Government strongly believes in the processof selecting the ones, who are healthy, well educated, well-disciplined, honest,independent, and responsible. In this spirit, the improvement of quality ofeducation, health services, and food security must be strongly promoted by theRoyal Government, it would prioritize the investment on the vocational trainingand on higher education. The Cambodian workers would be better equipped withskill and the know-how.

The Royal Government would cooperate with the Chamberof Commerce and other professional institutions to set up the center of transferof the know-how.

The present shortcoming of the national infrastructuretremendously undermines the economic growth of Cambodia. The Royal Governmentwould continue to rehabilitate the national infrastructure. Eventually it wouldprivatize the mass transportation and communication, the telecommunication, andthe electrical power supply.

II. Economic Policy:

The economy is a principle domain to support thenational development program, which involves sustainability and macro-economy.It should effectively use its natural and human resources. Cambodia wouldpromote free market economy linked with the program of combat the poverty, andsocial justice. The economic mechanism runs its course within rules andregulations of free market economy.

The Royal Government would not manage the market, butit would support it. The Royal Government would grand the private sector theright of self- determination on productivity, investment, and expenditure, andit would intervene much less. For the reasons, it would set legal andadministrative structures to ensure freedom and autonomy of the private sectorto property right, employment, profession, and the right to compete freely.

It would improve mechanism and structure of economicmanagement to ensure the effectiveness and transparency to cope with corruptionand violation of law. That is very important to stabilize the macro-economy, toboost the people's standard of living, and to encourage the investment.

It prioritizes the physical agriculturalinfrastructure, electricity and human resources, which are the basic of overalldevelopment. The following goals must be achieved:

1. To speed the economic growth in order to improvethe popular living standard and to create more employment. The chief potentialto promote the economic growth is the amass and to transform the naturalresources and the national products into the products of export. The RoyalGovernment would improve economic rules and regulations and to promote Cambodiato be a goods producer in order to attract more foreign investment.

2. To ensure the stability of Riel currency, to keep the inflationrate at bay, to prevent the loss of revenue and private saving by the Rielfluctuation, and to build confidence in Riel by devaluating with caution thedollar.

3. To increase the export of agricultural and manufacturing productswith high expertise and quality.

4. The Royal Government would do it best to alleviate the poverty. Thealleviation of poverty is not only the basic of sustainability of the economicdevelopment, but it also the priority to implement the social program.

To attain the above goals, the Royal Government would seize down thefollowing imbalances:

    Between the need and supply, especially on foods, housing, transportation, education and health care.
    Between the revenue and expenditure within the national budget.
    Between the import and export.
    Between the currency and goods.
    Between salary and the standard of living of civil servant and servicemen.
    Between the increase in the work force and the employment.
    Between the need for national development and the training of human resources.

The Royal Government would continue to carry out theprojects, which are identified in the national program of rehabilitation anddevelopment of Cambodia. It would focus on the long-term program for theeconomic and social development in the first five years from 1996-2000. It alsoattempts to achieve the urgent need for the investment on public sector.

Based on these basics and the on going achievements,the Royal Government may carry out the following economic strategies:

The Royal Government strongly believes in the processof selecting the ones, who are healthy, well educated, well-disciplined, honest,independent, and responsible. In this spirit, the improvement of quality ofeducation, health services, and food security must be strongly promoted by theRoyal Government, it would prioritize the investment on the vocational trainingand on higher education. The Cambodian workers would be better equipped withskill and the know-how.

The Royal Government would cooperate with the Chamberof Commerce and other professional institutions to set up the center of transferof the know-how.

The present shortcoming of the national infrastructuretremendously undermines the economic growth of Cambodia. The Royal Governmentwould continue to rehabilitate the national infrastructure. Eventually it wouldprivatize the mass transportation and communication, the telecommunication, andthe electrical power supply.

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Agriculture:

The main economic infrastructure of Cambodia isagriculture. The Royal Government would enhance the irrigation system, becauseagricultural activities in Cambodia are solely dependent on the weather.Consequently, it is essential to upgrade the General Direction of Irrigation tothe level of Ministry of water Resources and Meteorology. In five years from1998-2003, it would increase the irrigation capacity from 16.62% to 20%, i.e. ancapacity from 374,603 ha. To 450,600 ha. of rice fields.

The water supply would be strictly monitored anddistributed. The high quality of clean water must be absolutely maintained.

The rubber plantation would be privatized. The RoyalGovernment would encourage a large or small scale of rubber production by theprovision of credit and ownership.

The Royal Government would consolidate the forestmanagement to ensure its sustainability. It strictly and completely bans illegallogging. It would take the following steps to:

    Cease further investment on wood processing.

    Review all forest concession contracts and cancel non-complied contracts. The forest under the non-complied contract would be used for national parks and habitats.

    Encourage the companies with complied contracts to modernize their factories in order to increase the value of timber, and to create more jobs for the Cambodians The Royal Government must strictly enforce its reforestation policy.

    Review and amend the law on forest management to benefit the investors, who do comply with the rules. Persons, who commit illegal logging and violate the forest law, must be brought to justice.

Industries

The Royal Government would encourage small and largeindustries to fulfill its tasks. It would focus on strategy of producing exportgoods rather than import ones. The liberalization of international trade makesthe local products difficult to compete in the foreign markets. The smallindustries produce its output enough for domestic use. It strives all efforts tomake the textile industries and agricultural industries to be the core structureof Cambodian industries.

The Royal Government promotes the research andexploitation of petrol, natural gas, and other minerals, which becomes thepotentiality of the national ensure adequate electric supply with low cost andto meet its economic goal.

Trade:

The Royal Government would enhance its policy of tradeliberalization. It would facilitate the free circulation of goods. The price andquantity of the growth of its production. It would also broaden internationaltrade relation by bridging the domestic markets to foreign markets. Finally itwould promoted the integration and global trade.

Tourism:

The Royal Government would promote the development oftourism and make it to become tourism of culture and nature. It would heightenthe private and public investments targeting at building up touristinfrastructure. It would ensure security and political stability. Tourist workhas to be linked by the preservation of natural cultural heritage and naturalenvironment.

Foreign Economic Policy:

The Royal Government adopts a precise politicalguideline of its external economic conforming to the liberalization ofinternational trade, and integrating national economic into the world economic.Through this policy, Cambodia prepares itself to attract and to face regionallyand globally the process of economic internationalization. At the same time, thecompetitive productivity and capacity of Cambodian economy in the internationalmarkets will be enhanced through the application of mass based on theavailability of the domestic resources.

Cambodia, however, will face the influx of foreignfinished products, which rejects a number of industries in the country. Thepressure of the integration process of the regional economy, in which Cambodiaexpects to join ASEAN, and the World Trade Organization in the near future, willadd more burden to the national budget through the fall of the tax revenue, andimport duties. These financial activities would change the economic structure ofCambodia. The Royal Government is optimistic and prepares to amend its legalprocedures to accommodate the economic integration.

Investment Policy:

The Royal Government of Cambodia promotes the internaland external investments through the application of the principle and theencouragement of the investment policy of the Kingdom of Cambodia. Itstrengthens its cooperation with friendly countries and their institutions inorder to attract more investment, developed countries and the expansion of themarkets.

To have a good environment for the investment, thesocial political stability and the stability of the macro-economy must beensured. The principle and the guidance of the investment policy must be firmlyadhered . The Royal Government of Cambodia may reform and strengthen theinstitution, which is responsible for the activities of the investment,especially for the improvement on the formality of the application for theinvestment undermining the illegal activities and corruption.

Financial and Monetary Policies:

The Royal Government must ensure the effectiveness ofthe execution of its financial and monetary policies. The fiscal policy recentlyimproved has not yet been properly carried out. The national budget, which has aduty to evaluate, to collect, and to distribute the national resources, is themost important tool to handle the economic and social policies of the RoyalGovernment of Cambodia. Therefore, the national budget must be disburseddistinctively for the support of public services, and for the handling of publicprojects with the economic sense of prudence, conscience, and proficiency, theRoyal Government must give the priority to the promotion of productivity, theprivate investment, the social programs, and public health care. The futureASEAN membership of Cambodia would influence tremendously the reform of therevenue of the national budget. The national revenue by taxation on the importand export goods will be decreased. For that, it would strengthen all faces oftax the entrepreneurs to be in the investment process, and to achieve the budgetsurplus for which it is to be the sources of internal credit, such as for thepublic investment and for the financial intervention to pay raises for theemployees of the government.

To achieve the effective control over the budget andfiscal policies, the Royal Government of Cambodia must immediately take thefollowing steps:

    Use every measure at all costs to combat tax evasion.

    Strongly prohibit revenue collection and shelter, and disbursement infringing the budgetary system.

    Abolish tax exemption, which is not stipulated in the investment law, the law on fiscal policy, and the law on the annual financial management.

    The Ministry of economy and Finance must strictly check and control goods before loading in order to properly tax the merchandises, while its services are being effectively conducted with high consideration of time consumption.

    Carry out strict measure of austerity, especially against the unneeded expenses. The financial resources from privatization must only be used for the public investment such as the infrastructure, or the counterpart fund of the credit fund from the financial institution.

    The fund used other than infrastructure purpose must be prohibited.

The Royal Government undertakes its political will toimpose punishment on fraud, illegal transfer of fund, and corruption. To ensurethe stability of buying power of Riel currency, the Royal Government would setthe spending rate of the national budget to be below the rate of the nationaleconomic growth, and the rate of reserve fund of the banks. The interest rateconducive to the promotion of private saving, and the intervention of theNational Bank in the domestic monetary markets in order to stabilize the rate ofRiel exchange.

The attempts of the Royal Government of Cambodia tocut down the economic imbalance will encounter numerous difficulties, becausethe limited financial resources force it to prioritize the use of the economicmeasure. But often the economic tools to came together at one time. At the sametime, the lingering economic crisis and the declined economic growth in theregion will impact the flow of the foreign investment and the domestic growth.The Royal Government would overcome those economic stumbling blocks in order toattain its economic goal, because of its last achievements. This task needs thejoint participation of national and international sectors to improve nationaleconomy and to strengthen the capacity building, the work sprit, ethics, andsocial obligation of public servants.

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