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COUNTRY REPORT Cambodia Laos 4th quarter 1997 The Economist Intelligence Unit 15 Regent Street, London SW1Y 4LR United Kingdom The Economist Intelligence Unit The Economist Intelligence Unit is a specialist publisher serving companies establishing and managing operations across national borders. For over 50 years it has been a source of information on business developments, economic and political trends, government regulations and corporate practice worldwide. The EIU delivers its information in four ways: through subscription products ranging from newsletters to annual reference works; through specific research reports, whether for general release or for particular clients; through electronic publishing; and by organising conferences and roundtables. The firm is a member of The Economist Group. London New York Hong Kong The Economist Intelligence Unit The Economist Intelligence Unit The Economist Intelligence Unit 15 Regent Street The Economist Building 25/F, Dah Sing Financial Centre London 111 West 57th Street 108 Gloucester Road SW1Y 4LR New York Wanchai United Kingdom NY 10019, USA Hong Kong Tel: (44.171) 830 1000 Tel: (1.212) 554 0600 Tel: (852) 2802 7288 Fax: (44.171) 499 9767 Fax: (1.212) 586 1181/2 Fax: (852) 2802 7638 e-mail: [email protected] e-mail: [email protected] e-mail: [email protected] Website: http://www.eiu.com Electronic delivery EIU Electronic Publishing New York: Lou Celi or Lisa Hennessey Tel: (1.212) 554 0600 Fax: (1.212) 586 0248 London: Moya Veitch Tel: (44.171) 830 1007 Fax: (44.171) 830 1023 This publication is available on the following electronic and other media: Online databases CD-ROM Microfilm FT Profile (UK) Knight-Ridder Information World Microfilms Publications (UK) Tel: (44.171) 825 8000 Inc (USA) Tel: (44.171) 266 2202 DIALOG (USA) SilverPlatter (USA) Tel: (1.415) 254 7000 LEXIS-NEXIS (USA) Tel: (1.800) 227 4908 M.A.I.D/Profound (UK) Tel: (44.171) 930 6900 Copyright © 1997 The Economist Intelligence Unit Limited. All rights reserved. Neither this publication nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of The Economist Intelligence Unit Limited. All information in this report is verified to the best of the author’s and the publisher’s ability. However, the EIU does not accept responsibility for any loss arising from reliance on it. ISSN 1361-1437 Symbols for tables “n/a” means not available; “–” means not applicable Printed and distributed by Redhouse Press Ltd, Unit 151, Dartford Trade Park, Dartford, Kent DA1 1QB, UK 1 Contents 3 Summary Cambodia 5 Political structure 6 Economic structure 7 Outlook for 1998-99 12 Review 12 The political scene 21 Economic policy 23 The economy 25 Communications 26 Tourism 26 Foreign trade and payments Laos 29 Political structure 30 Economic structure 31 Outlook for 1998-99 33 Review 33 The political scene 35 Economic policy and the economy 37 Infrastructure 37 Energy 37 Foreign trade and payments 40 Quarterly indicators and trade data List of tables 22 Cambodia: government finances 25 Cambodia: money supply 27 Cambodia: current account 40 Cambodia: quarterly indicators of economic activity 40 Laos: quarterly indicators of economic activity 41 Cambodia and Laos: French trade 41 Laos: foreign trade EIU Country Report 4th quarter 1997 © The Economist Intelligence Unit Limited 1997 2 List of figures 12 Cambodia: gross domestic product 12 Cambodia: riel real exchange rate 24 Cambodia: consumer prices and the exchange rate, 1997 27 Cambodia: current-account balance 28 Cambodia: reserves excl gold 32 Laos: gross domestic product 32 Laos: kip real exchange rate 38 Laos: reserves excl gold EIU Country Report 4th quarter 1997 © The Economist Intelligence Unit Limited 1997 3 October 30, 1997 Summary 4th quarter 1997 Cambodia Outlook for 1998-99: Despite some opposition within the CPP, Hun Sen will retain his hold on power at least until after the election, which will probably go ahead in May 1998, as scheduled. The CPP will have no difficulty in winning. The ousted forces of Prince Ranariddh can be expected to continue to oppose Hun Sen’s takeover, including through armed resistance. GDP growth will slow sharply in 1997-98, and any recovery in 1999 will be modest. Aid and invest- ment inflows will fall, inflation will rise and the riel may be forced into another sharp drop. The political scene: Ung Huot has been appointed as a new first prime minister. King Sihanouk has refused fully to recognise Ung Huot’s appoint- ment. The UN credentials committee has left Cambodia’s seat at the UN empty. Hun Sen has sought legitimacy by trying to fill vacant FUNCINPEC posts. The government has promised to hold an election in May as planned, but needs to find funds. There have been rumours of splits within the CPP, but the party conference has stressed unity. Prince Ranariddh has been stripped of his immunity and Hun Sen has said that he must be tried. Prince Ranariddh has sought to drum up international support. A new opposition alliance has been formed. Pol Pot has been sentenced to life imprisonment by a Khmer Rouge tribunal. Economic policy and the economy: Some donors, including the USA, the IMF and the World Bank, have suspended aid, though others, including Japan, have not. Revenue has fallen, and sharp budget cuts have been ordered. The need for improved intellectual property protection has been recognised. GDP growth forecasts have been cut. Foreign business confidence has been badly shaken. Taiwan’s trade office has been closed. Inflation has soared. Communications and tourism: Air travel and postal services have been disrupted. Royal Air Cambodge, the national carrier, has had its monopoly status revoked. The tourism sector has been hard hit, prompting government efforts to revive it. Foreign trade and payments: The merchandise trade and current-account deficits widened in 1996, but foreign investment inflows increased. The USA has put GSP into effect. The riel has fallen. Laos Outlook for 1998-99: The National Assembly election scheduled for December 21 will have little impact on policy. An upturn in GDP growth will be delayed by slower trade and investment with Thailand, and by the impact of flooding. Further depreciation of the kip is likely. Review: The national election date—December 21—has been announced. An anti-government group has been formed overseas. Laos has been admitted as a full member of ASEAN. Vo Van Kiet has visited from Vietnam. A border dispute with Thailand has been resolved. Chinese visits and trade agreements have strengthened ties. The USA has praised Laos’s anti-drug efforts. Defence ties EIU Country Report 4th quarter 1997 © The Economist Intelligence Unit Limited 1997 4 have been forged with India. Relations with Myanmar have remained good. The 1997/98 plan and budget have been adopted. The government has empha- sised the importance of developing the manufacturing sector. Plans have been announced for an industrial zone near Vientiane. Inflation has been affected by currency turmoil and energy price rises. A financial cooperation agreement has been signed with Vietnam. Financing problems may delay the second Mekong bridge. An environmental assessment of Nam Theun 2 has been com- pleted. The USA may grant MFN soon. The EU has lifted GSP restrictions for one year. The government has applied to join the WTO. Tariffs will have to be lowered to for the country to join AFTA. The kip has fallen against the US dollar. International reserves have fallen. Plans to develop tourism may be hit by slower Thai investment. Editor: Lucy Elkin All queries: Tel: (44.171) 830 1007 Fax: (44.171) 830 1023 EIU Country Report 4th quarter 1997 © The Economist Intelligence Unit Limited 1997 Cambodia 5 Cambodia Political structure Official name Cambodia Form of government Constitutional monarchy The executive The cabinet is constitutionally responsible to the National Assembly, which has terms of five years Head of state King Norodom Sihanouk. The king is selected by the Throne Council and holds office for life National legislature National Assembly, consisting of 120 directly elected members National elections May 23-28, 1993; next election due May 23, 1998 National government The royal government of the Kingdom of Cambodia, a coalition formed in November 1993, in which the two main parties are FUNCINPEC and the Cambodian People’s Party. The prime minister is chosen by the king from the party which wins the most seats in the National Assembly election. After the 1993 election, two prime ministers were selected, one from the CPP, and one from FUNCINPEC (see note below) Main political organisations National United Front for an Independent, Neutral, Peaceful and Cooperative Cambodia (FUNCINPEC—F); Cambodian People’s Party (CPP); Buddhist Liberal Democratic Party (BLDP); Khmer Nation Party (KNP); Party of Democratic Kampuchea (PDK, the Khmer Rouge); Democratic National Union Movement (DNUM) Main members of the First prime ministersa Prince Norodom Ranariddh (F) government Ung Huot (F) Second prime minister Hun Sen (CPP) Deputy prime ministers Ing Kieth (F) Sar Kheng (CPP) Key ministers Agriculture, forestry & fisheries Tao Seng Hour (F) Commerce Cham Prasidh (CPP) Defence General Tea Banh (CPP); Tea Chamrath (F) Finance & economy Keat Chhon (CPP) Foreign affairs Ung Huot (F) Health Chhea Thang (CPP) Industry, energy & mines Pou Sothirak (F) Information Ieng Mouly (BLDP) Interior & national security Sar Kheng (CPP); Yu Hockry (F) Justice Chem Sgnuon (CPP) Planning Chea Chanto (CPP) Public works & transport Ing Kieth (F) Tourism Veng Sereyvuth (CPP) Central bank governor Thor Peng Leath a In July 1997 Prince Ranariddh was ousted from power, and in August another first prime minister was elected. The UN credentials committee has not switched recognition, and Cambodia’s seat at the UN remains empty.
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