BTI 2018 Country Report Cambodia This report is part of the Bertelsmann Stiftung’s Transformation Index (BTI) 2018. It covers the period from February 1, 2015 to January 31, 2017. The BTI assesses the transformation toward democracy and a market economy as well as the quality of political management in 129 countries. More on the BTI at http://www.bti-project.org. Please cite as follows: Bertelsmann Stiftung, BTI 2018 Country Report — Cambodia. Gütersloh: Bertelsmann Stiftung, 2018. This work is licensed under a Creative Commons Attribution 4.0 International License. Contact Bertelsmann Stiftung Carl-Bertelsmann-Strasse 256 33111 Gütersloh Germany Sabine Donner Phone +49 5241 81 81501 [email protected] Hauke Hartmann Phone +49 5241 81 81389 [email protected] Robert Schwarz Phone +49 5241 81 81402 [email protected] Sabine Steinkamp Phone +49 5241 81 81507 [email protected] BTI 2018 | Cambodia 3 Key Indicators Population M 15.8 HDI 0.563 GDP p.c., PPP $ 3736 Pop. growth1 % p.a. 1.6 HDI rank of 188 143 Gini Index - Life expectancy years 68.5 UN Education Index 0.493 Poverty3 % - Urban population % 20.9 Gender inequality2 0.479 Aid per capita $ 43.6 Sources (as of October 2017): The World Bank, World Development Indicators 2017 | UNDP, Human Development Report 2016. Footnotes: (1) Average annual growth rate. (2) Gender Inequality Index (GII). (3) Percentage of population living on less than $3.20 a day at 2011 international prices. Executive Summary Between 2015 and 2017, the government drastically increased repressive measures against critics of the government. The murder of prominent dissident Kem Ley in July 2016 was the most prominent example of numerous efforts widely perceived to be an attempt to frighten political opponents. In reaction to the increasing popularity of the main opposition party Cambodia National Rescue Party (CNRP), its president Sam Rainsy was sentenced in absentia to perennial imprisonment and later de facto exiled by the government. Moreover, his deputy Kem Sokha was forced to live in self-imposed house arrest for half a year in order to avoid detention – despite enjoying parliamentary immunity. At the time of writing, two opposition lawmakers and more than a dozen lower-level CNRP politicians and followers have been imprisoned by the regime, serving jail terms up to twenty years. Prime Minister Hun Sen seems to be willing to pull out all the stops to remain in power. By succeeding the late Chea Sim as party president in 2015, he strengthened his grip on the ruling Cambodian People’s Party (CPP). In addition, several newly adopted laws put the regime in the position to easily take legal action against any unfriendly civil society organization and other (potential) critics. With the exception of increased legal persecution and physical violence against political rivals, the management of the public sector remained largely unchanged. Weak law enforcement, rampant corruption, and red tape are still core characteristics at most administrative levels. International cooperation was shaped by further intensification of political and economic relations to the People’s Republic of China. With ongoing lobbying for Chinese interests, mainly in relation to Beijing’s territorial claims in the South China Sea, Cambodia’s role within the Association of Southeast Nations (ASEAN) is widely unchanged, but without particular strains on bilateral relations with other member states so far. After generating extensive growth of Gross Domestic Product (GDP) for years, the government reaped the rewards of reclassification to “lower middle-income country” status by the World Bank in 2016. Despite this success and effective poverty reduction in the last two and a half decades, BTI 2018 | Cambodia 4 the overall sustainability of the economic recovery has to be questioned. Whereas the growth has been fueled by over-exploitation of Cambodia’s natural resources for many years, the pillars of the economy face more and more challenges. In particular, the rice sector came under increased pressure due to reduced competitiveness compared to neighboring countries. The risks of a real estate bubble in Phnom Penh increased, while growth in tourism declined. Impediments to further industrialization remain considerably high due to the lack of a skilled workforce, high energy costs and grave deficits in logistics. At the very least, the yearly minimum wage increases in the apparel industry have not reduced the attractiveness of Cambodia as a manufacturing base for shoes and textiles. History and Characteristics of Transformation Following the 1991 Paris Peace Accords, the United Nations Transitional Authority in Cambodia (UNTAC) cleared the way for the country’s first multiparty national elections. Elections for the National Assembly were held in 1993. Although the royalist National United Front for an Independent, Neutral, Peaceful and Cooperative Cambodia (FUNCINPEC) defeated the post- socialist Cambodian People’s Party (CPP), the latter party threatened to lead three provinces in secession should the CPP be excluded from government. Finally, the rivals agreed to create a coalition government with two prime ministers Prince Norodom Ranariddh (FUNCINPEC) and Hun Sen (CPP). The coalition government was unstable from the beginning. In 1997, Ranariddh was ousted by de facto CPP leader Hun Sen in a bloody military coup. Cambodia’s accession to ASEAN was postponed following massive international criticism of Cambodian politics and external donors’ pressure on the government to allow a return of pluralism. Parliamentary elections in 1998 resulted in another CPP and FUNCINPEC coalition government. Some stability was achieved after that year’s official dissolution of the Khmer Rouge, but the elections were again preceded by systematic and widespread political intimidation and violence by the CPP. The Sam Rainsy Party (SRP), led by the eponymous former finance minister, emerged as a new opposition force despite attempts to keep SRP from equal participation in the vote. With Hun Sen as sole prime minister following the elections, the CPP developed into the country’s strongest political force, a trend that continued throughout the 2000s as Hun Sen has taken broad control over the ruling party, security apparatus, civil service, all TV stations, almost all radio stations, major newspapers, electoral administration and the judiciary. His CPP remains the largest party, with a firmly established patronage network. The 2012 Senate election, the commune elections of 2012 and the national elections of 2008 all resulted in landslide wins for the CPP. FUNCINPEC was weakened by internal fighting; in the latest elections, it won no seats. Sam Rainsy and some of his party members were stripped of parliamentary immunity in 2005 for the alleged defamation of Hun Sen and Prince Ranariddh, subsequently fleeing the country until Rainsy was pardoned after publicly apologizing. In 2009, BTI 2018 | Cambodia 5 Sam Rainsy again lost his immunity and fled to self-imposed exile in France after being sentenced to 12 years in prison. To challenge the ruling party more efficiently, the SRP and the Human Rights Party (HRP) combined their limited forces and formed the new Cambodia National Rescue Party (CNRP) in 2012. While many observers doubted that the 2013 National Assembly elections would result in any significant changes, the CNRP – supported by countless young followers in an unprecedented election campaign that climaxed with the return of opposition leader Sam Rainsy from exile nine days before the vote – emerged as a strong competitor of the ruling party and captured 55 out of 123 seats in parliament. Many national and international observers agreed that Hun Sen’s thin victory was dependent on unfair voting conditions, primarily because tens of thousands of opposition supporters were unable to cast their ballots. The CNRP subsequently boycotted parliament for nearly a year, taking its seats only after wresting several concessions. After the short-lived rapprochement of Hun Sen and Sam Rainsy, political tensions quickly raised again. Government-initiated repression was mainly aimed at the CNRP, but were also directed at other critics of the regime in general. Since November 2015, Sam Rainsy has lived abroad to avoid imprisonment whereas more than a dozen CNRP activists were put in jail. With the murder of prominent dissident Kem Ley in 2016, the regime once more raised the stakes in its struggle to stay in power in times of declining popularity. The process of economic liberalization has been underway since before political transformation accelerated in the late 1990s, with significant progress made in recent years. Despite a serious setback due to the effects of the global financial crisis in 2009, annual growth rates have been consistently above 5% since 1991, and have fluctuated around 7% since 2010. During the past five years, the most positive development has been the successful implementation of fiscal and monetary-policy reforms. However, massive social inequalities and the country’s large number of people living in poverty pose a serious challenge to the sustainability of economic growth. Significant reforms such as welfare-system improvements and poverty-reduction policies need to be implemented in order to increase the efficiency and sustainability of economic development. BTI 2018 | Cambodia 6 The BTI combines text analysis and numerical assessments. The score for each question