31st December 2011
We may well look back on the year 2011 as a watershed – both from a global viewpoint as well as here in Cambodia. As the aftershocks of the Global Financial Crisis continue to roll forward, possibly signalling the largest economic shifts since WWII, similar tectonic changes appear to be happening here in Cambodia.
To start with, the Cambodian People’s Party government continues to be in an unassailable position, with the opposition weak and lacking any real credibility. The upcoming elections are pretty-much a forgone conclusion – bar unforeseen events.
The premier seems to have totally outplayed the UN and the World Bank in a high stakes game of political poker, as well as putting the innumerable civil society groups that fancy themselves as providing an alternative opposition onto the back foot.
The Khmer Rouge Tribunal has collapsed even further into farce, with the UN appearing to be totally outflanked by the government, who have made it plain who is really running the show.
As well, just as foreign donors choose the worst possible time to try and make a stand over government policies it didn’t like, China stepped in to fill the breech by providing soft loans to build high profile infrastructure projects without the fussy social programmes that ran the risk of embarrassing the government by exposing its disinterest in these matters.
Moreover, the government made it clear it would look to the money markets for funds (something experts have been advising developing countries to do for years) rather than kowtow to foreign meddlers, passing a budget that included plans to borrow a $US1 billion. This may come back to bite them, however, when they realise the lenders actually expect them to pay the money back.
The government may be counting on earning some big fat cheques from the boom in oil revenues it anticipates gushing forth over the next decade, to fund the budget shortfall.
2011 was also the year that China cemented a central role for itself in the Kingdom with key stakes in telecommunications, infrastructure and power generation. 2012 is likely to see more of the same. Vietnam, meanwhile, although still an important player, appears to have lost its lock on the country. Japan has suddenly also begun sniffing around, looking to relocate some of its manufacturing units following the country’s tsunami and Thailand’s floods, which exposed the risks of concentrating these in one or two areas, which could have the benefit of diversifying manufacturing in the Kingdom.
The floods here, though less severe that in Thailand, still destroyed vast swathes of paddy in a number of provinces. Fortunately, again as in Thailand, this didn’t seem to impact the volume of the rice harvest for export significantly. Only poor subsidence farmers were affected – and they hardly count – at least as far as the authorities are concerned.
The ongoing Beoung Kak lake debacle appeared to be settled at the eleventh hour by a timely government concession. However, it failed to make everyone in the affected area happy, and another feature of 2011 was the escalation in dramatic public gestures of self-harm as a form of protest. This was accompanied by an increasing fierce fight-back by the local peasantry in many provinces against land-grabs, which are also likely to intensify in the coming year, and may yet presage trouble for the government and its well-connected friends.
The property market, that has been largely moribund since the GFC had been starting to show some signs of life despite prices – especially in the major cities – failing to float back to earth. The government is experimenting with laws that could radically change the property development game, however, designed to protect small investors by requiring developers to post a bond equivalent to the value of the project in a Cambodia-based commercial bank.
Hard to see how this could possibly work, beyond stopping the industry in its tracks.
The garment industry also had an interesting year in 2011, expanding in some areas as it benefited from consumers in the developed world moving to the cheaper purchases. One black mark, however, was the frequent occurrence of mass faintings of garment workers . While more that one cause was suspected, a common characteristic appears to have been long hours of overtime combined with inadequate nutrition. The latter was attributed to a combination of a spike in food inflation, putting pressure on many of the rural lasses in the factories to increase their remittances back to the farm, and stagnating wages.
The Maid in Malaysia controversy appears to be largely resolved with, on the one hand, a code of conduct for recruitment agencies finally hammered out, and on the other, demand for Cambodian domestic help likely to fall now that the Indonesian government has agreed to let its own return to the market.
The creation of the Anti-corruption Unit has been a nice little diversion, as well as seeing the former head of drug enforcement, Moek Dara, hoist by his own petard. The ACU may still be largely toothless when it comes to the more flagrant members of the governing class, but these things have a habit of taking on a life of their own and may yet may signal interesting things to come.
The dispute on border with Thailand, while not settled, has gone onto the back burner, at least for now, although our southern neighbour is looking increasingly unstable as their own succession looms, so anything is yet possible. The oil fields in the ocean border area may yet prove to be flashpoints.
Various laws are pending and may even be passed this year, although whether they make any real difference is moot. The NGO law remains unresolved, for example, but the government is showing every sign of confidence that it will eventually get its way. On a minor note, the authorities are threatening to force all motorcyclists to wear helmets, which might suggest the country is becoming ‘normal’, but only time will tell. More likely, it will help the constabulary augment their meagre salaries.
The European debt crisis could still have a serious impact on exports of garments, the damming of the Mekong and other tributaries of the Tonle Sap could cause fish stocks to collapse, and global warming’s impact on the weather could yet throw a spanner in the works. This year’s rainy season could be challenging if 2011′s floods are repeated.
Nevertheless, the Prime Minister appears to be at the top of his game. Power is more concentrated than ever now that the Chea Sim network has been largely dismantled in what seems to be a piece of presumptive succession planning. No doubt there are other pretenders to the throne but truth is that the premier is one of the youngest of the leaders. However, rumours about incipient health issues have surfaced several times this year, and a handover to the next generation cannot be that far away – always a nervous time – and especially in a regime with little practice in handing over the reins.
It looks like 2012 could be an interesting year.