Cambodia - The Economy

For more recent information about the economy, see Facts about Cambodia.

The economy

THE ECONOMY OF CAMBODIA in the late 1980s was dominated by subsistence agriculture; the industrial sector was still in its infancy. After it came to power in 1979, the new, Vietnameseinstalled government in Phnom Penh set restoration of the nation's self-sufficiency in food, a situation that the country had enjoyed throughout prewar times, as a major goal. A persistent guerrilla war and a ravaged infrastructure impeded the achievement of this goal and of economic recovery in general, however. At the Fifth Party Congress of the Kampuchean (or Khmer) People's Revolutionary Party (KPRP), held in Phnom Penh from October 13 to October 16, 1985, General Secretary Heng Samrin laid claim to some "important successes in agricultural production" in his political report. At the same time, he acknowledged that the country's "backward and unbalanced" economy still faced tremendous difficulties, including shortages of fuel, spare parts, raw materials, skilled labor, and a cadre of professionals possessing technical expertise and economic management skills. In short, the country's material and technical bases had not been restored to prewar levels. Prior to its adjournment, the KPRP Congress adopted the First Five-Year Program of Socioeconomic Restoration and Development (1986-90), hereafter referred to as the First Plan.

In 1987 there were signs that reforms legalizing private enterprise were revitalizing the country's economy. Small industrial enterprises reopened, and transportation and telecommunication systems were partially restored. As private market activities resumed, the population of Phnom Penh grew from 50,000 in 1978--the last year of the Pol Pot regime--to 700,000. Economic revitalization also occurred at Kampong Saom (formerly known as Sihanoukville), Cambodia's only seaport and its second largest city, which resumed its pre-1975 industrial and shipping activities.

Economic rehabilitation has been precarious and has been plagued by uncontrollable factors, such as adverse weather and serious security problems. In 1987 a severe drought in Southeast Asia reduced Cambodia's rice production. According to a senior official of the Ministry of Agriculture, estimated production of milled rice fell that year to approximately 1 million tons, about 300,000 tons below the level of fiscal year 1986. (Cambodia needs at least 1.9 million tons of rice annually for a population of 6.5 million).

The prospects for Cambodia's economic revitalization were poor in the late 1980s. The country's infrastructure was both weak and unstable. Factories and workshops, lacking electricity and supplies, operated only intermittently and at low capacity. The economy relied heavily--and almost completely after 1980--on foreign aid from communist countries, particularly the Soviet Union and the Socialist Republic of Vietnam (Vietnam); Western nations, Japan, and China had terminated economic assistance to Cambodia in 1980 to protest the presence of Vietnamese troops in that country. According to General Secretary Samrin, Cambodia would require "dozens of years" to restore its economy and to accomplish "a gradual passage toward socialism." Internationally, Cambodia in the future may have the option of joining the Council for Mutual Economic Assistance (CMEA, CEMA, or Comecon--see Glossary). If the Vietnamese troops leave, the country also may be offered some form of economic cooperation by other Asian and Western nations. In either case, however, Cambodia is very poor, produces little, and is not likely to prove an enticing economic partner. For this reason, in the forging of new economic links with the East and with the West, the country is likely to be relegated to a passive role, and the initiative will probably belong to the larger states, who will decide on what terms to share their largesse with Cambodia.

Because of insufficient and inconsistent--and therefore unreliable--data, analysis of Cambodia's war-torn economy can only be tentative. In the late 1980s, key economic indicators were missing or were difficult to reconcile, particularly for the Pol Pot period (1975-78). Since 1979 government economic publications have been scarce, and official statistics represent targets and estimates spelled out in the country's economic development plans rather than actual figures.

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