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Cambodia Laos COUNTRY REPORT Cambodia Laos 3rd 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 1997-98 10 Review 10 The political scene 18 Economic policy 20 The economy 21 Energy 21 Foreign trade and payments Laos 24 Political structure 25 Economic structure 26 Outlook for 1997-98 28 Review 28 The political scene 30 Economic policy and the economy 32 Agriculture 33 Infrastructure 34 Energy 34 Foreign trade and payments 36 Quarterly indicators and trade data List of tables 22 Cambodia: merchandise trade 32 Laos: consumer prices 36 Cambodia: quarterly indicators of economic activity 36 Laos: quarterly indicators of economic activity 37 Cambodia and Laos: French trade 37 Laos: foreign trade EIU Country Report 3rd quarter 1997 © The Economist Intelligence Unit Limited 1997 2 List of figures 10 Cambodia: gross domestic product 10 Cambodia: riel real exchange rate 21 Cambodia: employment, by sector 23 Cambodia: reserves excl gold 27 Laos: gross domestic product 27 Laos: kip real exchange rate 35 Laos: reserves excl gold EIU Country Report 3rd quarter 1997 © The Economist Intelligence Unit Limited 1997 3 July 11, 1997 Summary 3rd quarter 1997 Cambodia Outlook for 1997-98: Following Hun Sen’s seizure of power, further sporadic fighting is likely but forces loyal to FUNCINPEC are unlikely to attempt a military comeback. FUNCINPEC may continue to deepen ties with the Khmer Rouge hardliners. The elections may be delayed. The international community has withdrawn some aid. If the fighting continues, and if there is a prolonged freeze on aid, there will be a fall in growth in 1997-98, and inflation will rise sharply. The political scene: Hun Sen has seized control. Prince Ranariddh has been forced to flee to France. The coup followed several earlier battles in the capital. The CPP has engineered a split in FUNCINPEC. The National Assembly has not reconvened as scheduled. Two other new political parties have been formed. FUNCINPEC has been wooing the Khmer Rouge faction led by Khieu Samphan. Following a further split in the Khmer Rouge, Pol Pot may, or may not, have been captured alive. The Khmer Rouge has declared its support for the NUF. There has been talk of an international trial for Pol Pot. Next year’s commune and National Assembly elections may be postponed. Sam Rainsy has challenged Hun Sen to sue him. The KNP hopes to set up a radio station. A television station has been attacked. Prince Sirivudh has been unable to return. King Sihanouk has decided not to abdicate—for now. ASEAN decided to admit Cambodia, but has now changed its mind. The Thai prime minister has visited Phnom Penh. The US secretary of state has cancelled her visit. A new UN representative to Cambodia has been named. A war memorial to Vietnamese war dead has been damaged and there have been attacks on ethnic Vietnamese. Economic policy, the economy and sectoral trends: The international donor community has pledged $450m in aid, but some of these funds may be withheld. Promises on reform will be hard to achieve. Revenue collected in the first quarter was below target. Cambodia had planned to cut tariffs in 1998 in order to meet AFTA targets. Cambodia is still waiting for GSP benefits from the USA. Inflationary pressure has moderated further. Actual foreign investment rose in 1996. Investment approvals rose in January-April 1997. A Chinese business delegation has paid a visit. An agreement on combating child labour has been signed with the ILO. The agricultural sector accounts for the highest share of employment. A three-way energy strategy has been discussed with Cambodia’s neighbours. Foreign trade and payments: The merchandise trade deficit widened in 1996 as re-exports collapsed. Trade with Thailand has shifted into deficit. More border crossings with Thailand are due to be opened. The riel has depreciated. Reserves have stabilised. Laos Outlook for 1997-98: The National Assembly elections due later this year will have little impact on policy. ASEAN membership will result in further trade liberalisation. Growth in 1997-98 will pick up modestly. Further depreci- ation of the kip is likely as the trade deficit widens. EIU Country Report 3rd quarter 1997 © The Economist Intelligence Unit Limited 1997 4 Review: Election preparations have begun. A survey on unexploded ordi- nance has been published. Laos’s impending ASEAN membership has been confirmed. There have been protests over demarcation of the border with Thailand. Efforts to resolve the resettlement of Lao refugees in Thailand have continued. Relations with Thailand have been strained by an attack on four Lao women. The prime minister has visited Cuba, France and India. The de- fence minister has visited Russia. The government has defended its develop- ment strategy. The USA may soon grant MFN status. Laos’s AFTA timetable has been set out. The prime minister has been courting investment from France and India. A Vietnamese business delegation has visited. A Singapore firm has invested in the construction industry. Evidence suggests there has been a rise in inflation. The kip has continued to depreciate. Restrictions have been placed on the use of foreign exchange. The dry-season rice crop has been harvested. The Australian government has tripled its food-aid contribution. Japan has offered to fund a third bridge over the Mekong river. Work on the renovation of Vientiane airport has begun. Japan has donated an international direct dialling system. There has been no leap forward for the Nam Theun 2 hydro- electric power project. Thailand’s EGAT has agreed to buy more power. A trilateral energy strategy has been discussed with Cambodia and Vietnam. The trade gap widened in 1996. A bilateral transport accord with Thailand has been drafted. An agreement has been reached on new Thai-Lao border passes. Editor: Lucy Elkin All queries: Tel: (44.171) 830 1007 Fax: (44.171) 830 1023 EIU Country Report 3rd 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 elections due by 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 elections. After the 1993 election, two prime ministers were selected, one from the CPP, and one from FUNCINPEC Main political organisations FUNCINPEC (F); Cambodian People’s Party (CPP); Buddhist Liberal Democratic
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