Cambodia has become more autocratic and its government’s claim of stable economic development rests on uncertain basis, according to a comprehensive new report.
The Bertelsmann Stiftung’s Transformation Index (BTI), published on Thursday, claims that the quality of Cambodia’s democracy, market economy and governance performance has deteriorated since its 2016 report.
The biennial index assesses transitioning countries and ranks Cambodia 103rd out of 129, with a score of 4 out of 10.
Though the latest report only covers events through January 2017 – before a widespread crackdown on the political opposition – the report’s authors still found that the “government drastically increased repressive measures against critics of the government”.
This repression was conducted mainly through judicial persecution and intimidation of politicians, they write, but the murder of political analyst Kem Ley was cited as an example of physical force used to intimidate.
Markus Karbaum, author of the chapter on Cambodia, said in an email that the recent developments, including the dissolution of the opposition Cambodia National Rescue Party in November – which he called a “dramatic cut and a very crucial factor” – fell in line with the regressive trend. But, he added, Cambodia “has always been a façade democracy which has just been torn off”.
Phay Siphan, Council of Ministers spokesman on Sunday rejected the assessment as “biased”. “It’s not fake democracy. It’s from the people.”
The report also questions the sustainability of Cambodia’s economic growth. It attributes this to deep corruption, over-exploitation of natural resources, reduced competitiveness of the rice sector and a lack of skilled workers. The risk of a real estate bubble in Phnom Penh had increased, while growth in tourism declined, they write.
“Massive social inequalities and the country’s large number of people living in poverty pose a serious challenge to the sustainability of economic growth,” the report adds. A lack of substantial welfare-state policies, they write, increased poverty risks.
Siphan, however, rejected this assessment. “We feel confident about economic growth,” he said. “Inflation is under control, we never ask a foreigner to pay a salary . . . We don’t depend on the garment factory.”
But Miguel Chanco, lead Asean analyst for the Economist Intelligence Unit, agreed that Cambodia’s economic growth seemed unsustainable. “I certainly agree that Cambodia’s current rate of economic growth is unsustainable – owing in large part to the narrowness of the economy (ie it’s reliance on garment exports) and the threat posed by nearby countries that boast much lower labour costs,” he said in an email.
Decreasing competitiveness in Cambodia’s garment industry, he wrote, is expected to lead to a decline to 6.5 percent GDP growth by 2022.
Stephen Higgins, managing partner at Mekong Strategic Partners, explained that although Cambodia’s growth was mainly owed to the garment industry, the sector could not support such growth long-term. “As Cambodia becomes wealthier, income expectations also increase, which will price Cambodia out of the global garment industry, along with other sectors that rely on low wage costs,” he said.
