>Strong economy boosts Cambodia’s ruling party ahead of polls

>People walk past a cut out model of the International Finance Complex (IFC) Phnom Penh in Phnom Penh

PHNOM PENH (AFP) — Once sleepy streets in Cambodia’s capital are crammed with construction sites, crowned by towering cranes building the first skyscrapers in the leafy, low-rise city.

Phnom Penh’s building boom is one of the most visible signs of the sweeping changes in one of the world’s poorest countries, which according to some estimates has averaged 11 percent economic growth over the last three years.

It’s also a key reason why voters are expected to hand Prime Minister Hun Sen and his Cambodian People’s Party (CPP) a victory in general elections on Sunday, analysts say.

“Generally we agree that economic growth in Cambodia is a very good sign” of the country’s progress, said Yang Saing Koma, president of the Cambodian Centre for the Study and Development of Agriculture, which monitors the effects of the economy on the rural poor.

Thirty years ago Phnom Penh was almost deserted, after the Khmer Rouge forcibly evacuated the capital as they plunged the nation into the darkness of the “Killing Fields” that would claim up to two million lives.

They dismantled the economy and even banned the use of currency in a genocidal drive to create a Maoist agrarian utopia.

After the Khmer Rouge were forced from power, they continued to battle the government until 1996, leaving a shattered nation strewn with landmines and a population struggling to survive.

Now that’s slowly changing.

Economic data on Cambodia remains sketchy, but international estimates agree that the country’s growth in recent years has been among the strongest in Southeast Asia. Foreign investment, mainly from other Asian nations, is pouring into hydro-electric dams, property and tourism.

Tourism, which brought in 1.4 billion dollars last year, is expected to grow by at least 20 percent in 2008, according to the government.

The garment industry has also thrived, sheltered for years under a unique labour-friendly deal with the United States.

The growth has helped power the construction boom, with realtors estimating that prime pieces of property in the capital can fetch 3,000 dollars a square metre (yard), a six-fold increase from eight years ago.

But the growth also has a dark side. Soaring land values have resulted in mass evictions and land grabs in Phnom Penh.

The garment industry faces tough competition from China and Vietnam, creating fears of job losses in an industry that is the country’s biggest private employer.

Corruption remains rampant, posing a drain especially for small entrepreneurs trying to start up local businesses that could help Cambodia end its dependence on imports for many basic goods, said Yang Saing Koma.

“You have to take a lot of time, and you have to pay extra money to get something done,” he said.

Inflation, driven by high fuel and food prices, hit 18.7 percent in January and prices for staples such as rice have risen by as much as 80 percent. The government has since stopped releasing inflation data, drawing accusations that it’s trying to hide the bad news.

“Income of the poor has to keep up with inflation,” said Chan Sophal, head of the Cambodian Economic Association, warning that poor farmers were struggling to cope with rapidly rising prices.

Some 35 percent of the country’s 14 million people live on under 50 US cents a day. Those people in desperate poverty spend most of their money on food, but are struggling to keep up with rising prices, he said.

Despite the troubles, Cambodians overall are still pleased with the visible signs of their nation’s recovery — the construction in Phnom Penh and the main tourist areas, as well as new roads and bridges spreading into the countryside, said political analyst Chea Vannath.

“Cambodia needs infrastructure, and that’s what the ruling party provides to the people,” she said. “The CPP gets support from the people for that.”

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