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Cambodia Laos COUNTRY REPORT Cambodia Laos 2nd quarter 1998 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, US 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: Jeremy Eagle Tel: (44.171) 830 1007 Fax: (44.171) 830 1023 This publication is available on the following electronic and other media: Online databases Microfilm FT Profile (UK) NewsEdge Corporation (US) World Microfilms Publications (UK) Tel: (44.171) 825 8000 Tel: (1.781) 229 3000 Tel: (44.171) 266 2202 DIALOG (US) Tel: (1.415) 254 7000 CD-ROM LEXIS-NEXIS (US) The Dialog Corporation (US) Tel: (1.800) 227 4908 SilverPlatter (US) M.A.I.D/Profound (UK) Tel: (44.171) 930 6900 Copyright © 1998 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 10 Review 10 The political scene 18 Economic policy and the economy 21 Agriculture 21 Infrastructure 21 Tourism 22 Foreign trade and payments Laos 24 Political structure 25 Economic structure 26 Outlook for 1998-99 28 Review 28 The political scene 31 Economic policy and the economy 32 Agriculture 33 Infrastructure 33 Energy 34 Tourism 34 Money and finance 35 Foreign trade and payments 37 Quarterly indicators and trade data List of tables 20 Cambodia: inflation 20 Cambodia: money supply 22 Cambodia: merchandise trade 23 Cambodia: international reserves 37 Cambodia: quarterly indicators of economic activity 37 Laos: quarterly indicators of economic activity 38 Cambodia and Laos: French trade 38 Laos: foreign trade EIU Country Report 2nd quarter 1998 © The Economist Intelligence Unit Limited 1998 2 List of figures 10 Cambodia: gross domestic product 10 Cambodia: riel real exchange rate 20 Cambodia: consumer prices and the exchange rate 28 Laos: : Gross domestic product 28 Laos: kip real exchange rate 36 Laos: reserves excl gold EIU Country Report 2nd quarter 1998 © The Economist Intelligence Unit Limited 1998 3 May 30th 1998 Summary 2nd quarter 1998 Cambodia Outlook for 1998-99: Obstacles still remain to Prince Ranariddh’s partici- pation in the election, which the opposition may boycott. A CPP-dominated coalition is likely to remain in power, whether by the ballot box or through military intervention. GDP growth will pick up slowly in 1998-99. FDI inflows will remain sluggish. If aid is not resumed, there is a risk of an external pay- ments crisis. The political scene: Japan has brokered a peace plan. Prince Ranariddh has been sentenced to 35 years in jail, but has been pardoned by King Sihanouk and has returned to Cambodia. There is deadlock over a royal pardon for Prince Ranariddh’s generals. The opposition has threatened to boycott the election. Politically motivated killings have increased. Political tensions spill over to the National Assembly. Preparations for the election have continued, but much remains to be done. There are still doubts over election funding. The UN has agreed to assist in monitoring the election. An opinion poll has suggested support for Hun Sen is limited. Tensions remain within the CPP. FUNCINPEC and the BLDP have both split. There have been moves to ban royal family members from politics. The Khmer Rouge hardliners have split again. Pol Pot has died. There is pressure for a war crimes trial of surviving leaders. Ethnic Vietnamese in Kompong Chhang have been attacked. Vietnam has declared its support for Cambodia’s bid to join ASEAN. The economy and economic policy: Revenue remains weak and budget financing is limited. The government has forecast 3.5% growth in 1998. Invest- ment remains depressed. Workers have held strikes over pay and conditions. Inflation and money supply growth have picked up again. A new central bank governor has been appointed. A nationwide census has been held. Sectoral trends: Illegal logging continues to be a problem. A South Korean firm has entered the pager market. The government has set an ambitious tourism target. Foreign trade and payments: The merchandise trade deficit narrowed in 1997 in riel terms. Import tariffs have been raised. The riel has remained weak. External reserves have strengthened. Cambodia’s creditors are reported to be closing in. The debt stock reached $2.1bn in 1996. Laos Outlook for 1998-99: The new president and prime minister are likely to deliver strong and stable leadership. Economic reform will continue, but the regional economic crisis means that GDP growth will slow in 1998-99 and inflation will be in double-digit figures. The kip will remain weak and export growth will remain depressed. International funding should prevent an exter- nal payments crunch. The political scene: General Khamtai has become president and his close ally, General Sisavat, has been appointed prime minister. Two new deputy prime ministers have been appointed. The cabinet has been reshuffled. Lao EIU Country Report 2nd quarter 1998 © The Economist Intelligence Unit Limited 1998 4 Christians have been jailed. Co-operation with the US over servicemen missing in action (MIAs) and drug control has continued. The Thai navy has fired on a Lao vessel. Demarcation of the Thai-Lao border has resumed. The new Vietnamese party chief has visited. The economy and economic policy: New ministers have been appointed to economic posts. Economic reform will continue, but the Asia crisis has led to debate about the pace of change. The Asia crisis will slow FDI inflows in 1998. The working week has been cut for public servants. Inflation will remain in double digits. Sectoral trends: Expanded coffee production targets have been set out. Fund- ing for the second bridge over the Mekong river has been renegotiated. The Theun Hinboun power plant has come on line but the recession in Thailand will weaken demand for Laos’s power. Currency volatility has increased the risk of financing hydroelectric power projects. The government hopes to boost tourist arrivals in Visit Laos Year (1999). Australia has pledged funding for an audit of state-owned commercial banks. Foreign trade and payments: The trade deficit with Thailand remains high. Laos’s WTO application has been discussed. The kip has been devalued. Reserves remain low. Laos has secured some new aid, although the Asia crisis has caused some cutbacks. Editor: Lucy Elkin All queries: Tel: (44.171) 830 1007 Fax: (44.171) 830 1023 EIU Country Report 2nd quarter 1998 © The Economist Intelligence Unit Limited 1998 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 23rd-28th 1993; next election scheduled for July 26th 1998 National government The royal government of the Kingdom of Cambodia, a coalition formed in November 1993, in which the two main parties are the National United Front for an Independent, Neutral, Peaceful and Co-operative Cambodia (FUNCINPEC) and the Cambodian People’s Party (CPP). After the 1993 election two prime ministers were selected, one from the CPP and one from FUNCINPEC. The first prime minister, Prince Ranariddh of FUNCINPEC, was ousted from power by the CPP’s Hun Sen in July 1997 Main political organisations National United Front for an Independent, Neutral, Peaceful and Co-operative Cambodia (FUNCINPEC—F); Cambodian People’s Party (CPP); Sam Rainsy Party; Party of Democratic Kampuchea (PDK, the Khmer Rouge)
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