Cambodian History: No one knows for certain how long people have lived in what is now Cambodia, as studies of its prehistory are undeveloped. A carbon-l4 dating from a cave in northwestern Cambodia suggests that people using stone tools lived in the cave as early as 4000 bc, and rice has been grown on Cambodian soil since well before the 1st century ad. The first Cambodians likely arrived long before either of these dates. They probably migrated from the north, although nothing is known about their language or their way of life.

By the beginning of the 1st century ad, Chinese traders began to report the existence of inland and coastal kingdoms in Cambodia. These kingdoms already owed much to Indian culture, which provided alphabets, art forms, architectural styles, religions (Hinduism and Buddhism), and a stratified class system. Local beliefs that stressed the importance of ancestral spirits coexisted with the Indian religions and remain powerful today.

Cambodia’s modem-day culture has its roots in the 1st to 6th centuries in a state referred to as Funan, known as the oldest Indianized state in Southeast Asia. It is from this period that evolved Cambodia’s language, part of the Mon-Khmer family, which contains elements of Sanskrit, its ancient religion of Hinduism and Buddhism. Historians have noted, for example, that Cambodians can be distinguished from their neighbors by their clothing – checkered scarves known as Kramas are worn instead of straw hats.

Funan gave way to the Angkor Empire with the rise to power of King Jayavarman II in 802. The following 600 years saw powerful Khmer kings dominate much of present day Southeast Asia, from the borders of Myanmar east to the South China Sea and north to Laos. It was during this period that Khmer kings built the most extensive concentration of religious temples in the world – the Angkor temple complex. The most successful of Angkor’s kings, Jayavarman II, Indravarman I, Suryavarman II and Jayavarman VII, also devised a masterpiece of ancient engineering: a sophisticated irrigation system that includes barays (gigantic man-made lakes) and canals that ensured as many as three rice crops a year. Part of this system is still in use today.

The Khmer Kingdom (Funan)

Early Chinese writers referred to a kingdom in Cambodia that they called Funan. Modern-day archaeological findings provide evidence of a commercial society centered on the Mekong Delta that flourished from the 1st century to the 6th century. Among these findings are excavations of a port city from the 1st century, located in the region of Oc-Eo in what is now southern Vietnam. Served by a network of canals, the city was an important trade link between India and China. Ongoing excavations in southern Cambodia have revealed the existence of another important city near the present-day village of Angkor Borei.

A group of inland kingdoms, known collectively to the Chinese as Zhenla, flourished in the 6th and 7th centuries from southern Cambodia to southern Laos. The first stone inscriptions in the Khmer language and the first brick and stone Hindu temples in Cambodia date from the Zhenla period.

Angkor Era

Bayon Temple, Angkor Thom The giant faces carved on the Bayon temple at the Angkor Thum complex in northwestern Cambodia represent both the Buddha and King Jayavarman VII (ruled about 1130-1219). Although a Buddhist temple, Angkor Thum was modeled after the great Hindu temple complex of Angkor Wat.

In the early 9th century a Khmer (ethnic Cambodian) prince returned to Cambodia from abroad. He probably arrived from nearby Java or Sumatra, where he may have been held hostage by island kings who had asserted control over portions of the Southeast Asian mainland.

In a series of ceremonies at different sites, the prince declared himself ruler of a new independent kingdom, which unified several local principalities. His kingdom eventually came to be centered near present-day Siemreab in northwestern Cambodia. The prince, known to his successors as Jayavarman II, inaugurated a cult honoring the Hindu god Shiva as a devaraja (Sanskrit term meaning “god-king”). The cult, which legitimized the king’s rule by linking him with Shiva, persisted at the Cambodian court for more than two hundred years.

Between the early 9th century and the early 15th century, 26 monarchs ruled successively over the Khmer kingdom (known as Angkor, the modern name for its capital city).

King Jayavarman VII

The successors of Jayavarman II built the great temples for which Angkor is famous.

Historians have dated more than a thousand temple sites and over a thousand stone inscriptions (most of them on temple walls) to this era.

Notable among the Khmer builder-kings were Suyavarman II, who built the temple known as Angkor Wat in the mid-12th century, and Jayavarman VII, who built the Bayon temple at Angkor Thum and several other large Buddhist temples half a century later. Jayavarman VII, a fervent Buddhist, also built hospitals and rest houses along the roads that crisscrossed the kingdom. Most of the monarchs, however, seem to have been more concerned with displaying and increasing their power than with the welfare of their subjects.

Ancient City of Angkor This map shows the layout of the ancient city of Angkor, capital of the Cambodian Khmer kingdom from the 9th century to the 15th century. The city’s huge stone temples were both civic centers and religious symbols of the Hindu cosmos. Historians believe that Angkor’s network of canals and barays (reservoirs) were used for irrigation.

At its greatest extent, in the 12th century, the Khmer kingdom encompassed (in addition to present-day Cambodia) parts of present-day Vietnam, Laos, Thailand, Myanmar (formerly Burma), and the Malay Peninsula. Thailand and Laos still contain Khmer ruins and inscriptions. The kings at Angkor received tribute from smaller kingdoms to the north, east, and west, and conducted trade with China. The capital city was the center of an impressive network of reservoirs and canals, which historians theorize supplied water for irrigation. Many historians believe that the abundant harvests made possible by irrigation supported a large population whose labor could be drawn on to construct the kings’ temples and to fight their wars. The massive temples, extensive roads and waterworks, and confident inscriptions give an illusion of stability that is undermined by the fact that many Khmer kings gained the throne by conquering their predecessors. Inscriptions indicate that the kingdom frequently suffered from rebellions and foreign invasions.

Historians have not been able to fully explain the decline of the Khmer kingdom in the 13th and 14th centuries. However, it was probably associated with the rise of powerful Thai kingdoms that had once paid tribute to Angkor, and to population losses following a series of wars with these kingdoms. Another factor may have been the introduction of Theravada Buddhism, which taught that anyone could achieve enlightenment through meritorious conduct and meditation. These egalitarian ideas undermined the hierarchical structure of Cambodian society and the power of prominent Hindu families. After a Thai invasion in 1431, what remained of the Cambodian elite shifted southeastward to the vicinity of Phnom Penh.

Cambodia Dark Age

This map of Southeast Asia in the mid-16th century shows the major centers of power in the region prior to the arrival of Europeans. During this period, these kingdoms were constantly at war. Eventually the Kingdom of Ayutthaya (modern Thailand) expanded to the north and east, absorbing much of Lan Na and Lan Xang (modern Laos). Dai Viet (modern Vietnam) expanded to the south, taking over the remaining territory of the Kingdom of Champa and the southern tip of the Kingdom of Lovek (modern Cambodia). Toungoo evolved into modern Myanmar.

The four centuries of Cambodian history following the abandonment of Angkor are poorly recorded, and therefore historians know little about them beyond the bare outlines. Cambodia retained its language and its cultural identity despite frequent invasions by the powerful Thai kingdom of Ayutthaya and incursions by Vietnamese forces. Indeed, for much of this period, Cambodia was a relatively prosperous trading kingdom with its capital at Lovek, near present-day Phnom Penh. European visitors wrote of the Buddhist piety of the inhabitants of the Kingdom of Lovek. During this period, Cambodians composed the country’s most important work of literature, the Reamker (based on the Indian myth of the Ramayana).

In the late 18th century, a civil war in Vietnam and disorder following a Burmese invasion of Ayutthaya spilled over into Cambodia and devastated the area. In the early 19th century, newly established dynasties in Vietnam and Thailand competed for control over the Cambodian court. The warfare that ensued, beginning in the l830s, came close to destroying Cambodia.

French Rule

Phnom Penh, as planned by the French, came to resemble a town in provincial France. By the second half of the 19th century, France had begun to expand its colonial penetration of Indochina (the peninsula between India and China). In 1863 France accepted the Cambodian king’s invitation to impose a protectorate over his severely weakened kingdom, halting the country’s dismemberment by Thailand and Vietnam. For the next 90 years, France ruled Cambodia. In theory, French administration was indirect, but in practice the word of French officials was final on all major subjects-including the selection of Cambodia’s kings. The French left Cambodian institutions, including the monarchy, in place, and gradually developed a Cambodian civil service, organized along French lines. The French administration neglected education but built roads, port facilities, and other public works. Phnom Penh, as planned by the French, came to resemble a town in provincial France.

The French invested relatively little in Cambodia’s economy compared to that of Vietnam, which was also under French control. However, they developed rubber plantations in eastern Cambodia, and the kingdom exported sizable amounts of rice under their rule. The French also restored the Angkor temple complex and deciphered Angkorean inscriptions, which gave Cambodians a clear idea of their medieval heritage and kindled their pride in Cambodia’s past. Because France left the monarchy, Buddhism, and the rhythms of rural life undisturbed, anti-French feeling was slow to develop.

King Sihanouk, through skillful maneuvering, managed to gain Cambodia’s independence peacefully in 1953. During World War II (1939-1945), Japanese forces entered French Indochina but left the compliant French administration in place.

King Norodom Sihanouk

On the verge of defeat in 1945, the Japanese removed their French collaborators and installed a nominally independent Cambodian government under the recently crowned young king, Norodom Sihanouk. France reimposed its protectorate in early 1946 but allowed the Cambodians to draft a constitution and to form political parties.

Soon afterward, fighting erupted throughout Indochina as nationalist groups, some with Communist ideologies, struggled to win independence from France. Most of the fighting took place in Vietnam, in a conflict known as the First Indochina War (1946-1954). In Cambodia, Communist guerrilla forces allied with Vietnamese Communists gained control of much of the country. However, King Sihanouk, through skillful maneuvering, managed to gain Cambodia’s independence peacefully in 1953, a few months earlier than Vietnam. The Geneva Accords of 1954, which marked the end of the First Indochina War, acknowledged Sihanouk’s government as the sole legitimate authority in Cambodia.

Modern State

Sihanouk’s campaign for independence sharpened his political skills and increased his ambitions. In 1955 he abdicated the throne in favor of his father to pursue a full-time political career, free of the constitutional constraints of the monarchy. In a move aimed at dismantling Cambodia’s fledgling political parties, Sihanouk inaugurated a national political movement known as the Sangkum Reastr Niyum (People’s Socialist Community), whose members were not permitted to belong to any other political group. The Sangkum won all the seats in the national elections of 1955, benefiting from Sihanouk’s popularity and from police brutality at many polling stations. Sihanouk served as prime minister of Cambodia until 1960, when his father died and he was named head of state. Sihanouk remained widely popular among the people but was brutal to his opponents.

In the late 1950s the Cold War (period of tension between the United States and its allies and the Union of Soviet Socialist Republics, or USSR, and its allies) intensified in Asia. In this climate, foreign powers, including the United States, the USSR, and China, courted Sihanouk. Cambodia’s importance to these countries stemmed from events in neighboring Vietnam, where tension had begun to mount between a Communist regime in the north and a pro-Western regime in the south. The USSR supported the Vietnamese Communists, while the United States opposed them, and China wanted to contain Vietnam for security reasons. Each of the foreign powers hoped that Cambodian support would bolster its position in the region. Sihanouk pursued a policy of neutrality that drew substantial economic aid from the competing countries.

In 1965, however, Sihanouk broke off diplomatic relations with the United States. At the same time, he allowed North Vietnamese Communists, then fighting the Vietnam War against the United States and the South Vietnamese in southern Vietnam, to set up bases on Cambodian soil. As warfare intensified in Vietnam, domestic opposition to Sihanouk from both radical and conservative elements increased. The Cambodian Communist organization, known as the Workers Party of Kampuchea (later renamed the Communist Party of Kampuchea, or CPK), had gone underground after failing to win any concessions at the Geneva Accords, but now they took up arms once again. As the economy became unstable, Cambodia became difficult to govern single-handedly. In need of economic and military aid, Sihanouk renewed diplomatic relations with the United States. Shortly thereafter, in 1969, U.S. president Richard Nixon authorized a bombing campaign against Cambodia in an effort to destroy Vietnamese Communist sanctuaries there.

Khmer Republic

In March 1970 Cambodia’s legislature, the National Assembly, deposed Sihanouk while he was abroad. The conservative forces behind the coup were pro-Western and anti-Vietnamese. General Lon Nol, the country’s prime minister, assumed power and sent his poorly equipped army to fight the North Vietnamese Communist forces encamped in border areas. Lon Nol hoped that U.S. aid would allow him to defeat his enemies, but American support was always geared to events in Vietnam. In April U.S. and South Vietnamese troops invaded Cambodia, searching for North Vietnamese, who moved deeper into Cambodia. Over the next year, North Vietnamese troops destroyed the offensive capacity of Lon Nol’s army.

In October 1970 Lon Nol inaugurated the Khmer Republic. Sihanouk, who had sought asylum in China, was condemned to death despite his absence. By that time, Chinese and North Vietnamese leaders had persuaded the prince to establish a government in exile, allied with North Vietnam and dominated by the CPK, whom Sihanouk referred to as the Khmer Rouge (French for “Red Khmers”).

In 1975, despite massive infusions of U.S. aid, the Khmer Republic collapsed, and Khmer Rouge forces occupied Phnom Penh.

The United States continued bombing Cambodia until the Congress of the United States halted the campaign in 1973. By that time, Lon Nol’s forces were fighting not only the Vietnamese but also the Khmer Rouge. The general lost control over most of the Cambodian countryside, which had been devastated by U.S. bombing. The fighting severely damaged the nation’s infrastructure and caused high numbers of casualties. Hundreds of thousands of refugees flooded into the cities. In 1975, despite massive infusions of U.S. aid, the Khmer Republic collapsed, and Khmer Rouge forces occupied Phnom Penh. Three weeks later, North Vietnamese forces achieved victory in South Vietnam.

Democratic Kampuchea

Pol Pot Pol Pot is a pseudonym for the Cambodian guerrilla commander Saloth Sar, who organized the Communist guerrilla force known as the Khmer Rouge. The Khmer Rouge ousted General Lon Nol in 1975, establishing a brutal Communist regime that ruled until 1979.

Immediately after occupying Cambodia’s towns, the Khmer Rouge ordered all city dwellers into the countryside to take up agricultural tasks. The move reflected both the Khmer Rouge’s contempt for urban dwellers, whom they saw as enemies, and their utopian vision of Cambodia as a nation of busy, productive peasants. The leader of the regime, who remained concealed from the public, was Saloth Sar, who used the pseudonym Pol Pot. The government, which called itself Democratic Kampuchea (DK), claimed to be seeking total independence from foreign powers but accepted economic and military aid from its major allies, China and North Korea.

Khmer Rouge Carnage The Khmer Rouge, led by Pol Pot, killed close to 1.7 million people in the mid- to late 1970s. In this photo, human bones and skulls fill a museum in Cambodia that had been used as a prison and torture center during Pol Pot’s reign, Sygma.

Without identifying themselves as Communists, the Khmer Rouge quickly introduced a series of far-reaching and often painful socialist programs. The people given the most power in the new government were the largely illiterate rural Cambodians who had fought alongside the Khmer Rouge in the civil war. DK leaders severely restricted freedom of speech, movement, and association, and forbade all religious practices. The regime controlled all communications along with access to food and information. Former city dwellers, now called “new people,” were particularly badly treated. The Khmer Rouge killed intellectuals, merchants, bureaucrats, members of religious groups, and any people suspected of disagreeing with the party. Millions of other Cambodians were forcibly relocated, deprived of food, tortured, or sent into forced labor.

While in power, the Khmer Rouge murdered, worked to death, or killed by starvation close to 1.7 million Cambodians.

The Khmer Rouge also attacked neighboring countries in an attempt to reclaim territories lost by Cambodia many centuries before. After fighting broke out with Vietnam (then united under the Communists) in 1977, DK’s ideology became openly racist. Ethnic minorities in Cambodia, including ethnic Chinese and Vietnamese, were hunted down and expelled or massacred. Purges of party members accused of treason became widespread. People in eastern Cambodia, suspected of cooperating with Vietnam, suffered severely, and hundreds of thousands of them were killed. While in power, the Khmer Rouge murdered, worked to death, or killed by starvation close to 1.7 million Cambodians-more than one-fifth of the country’s population.

Recent Development

In October 1991 Cambodia’s warring factions, the UN, and a number of interested foreign nations signed an agreement in Paris intended to end the conflict in Cambodia. The agreement provided for a temporary power-sharing arrangement between a United Nations Transitional Authority in Cambodia (UNTAC) and a Supreme National Council (SNC) made up of delegates from the various Cambodian factions. Prince Norodom Sihanouk, the former king and prime minister of Cambodia, served as president of the SNC.

The Paris accords and the UN protectorate pushed Cambodia out of its isolation and introduced competitive politics, dormant since the early 1950s. UNTAC sponsored elections for a national assembly in May 1993, and for the first time in Cambodian history a majority of voters rejected an armed, incumbent regime. A royalist party, known by its French acronym FUNCINPEC, won the most seats in the election, followed by the CPP, led by Hun Sen. Reluctant to give up power, Hun Sen threatened to upset the election results. Under a compromise arrangement, a three-party coalition formed a government headed by two prime ministers; FUNCINPEC’s Prince Norodom Ranariddh, one of Sihanouk’s sons, became first prime minister, while Hun Sen became second prime minister.

In September 1993 the government ratified a new constitution restoring the monarchy and establishing the Kingdom of Cambodia. Sihanouk became king for the second time. After the 1993 elections, no foreign countries continued to recognize the DK as Cambodia’s legal government. The DK lost its UN seat as well as most of its sources of international aid.

The unrealistic power-sharing relationship between Ranariddh and Hun Sen worked surprisingly well for the next three years, but relations between the parties were never smooth. The CPP’s control over the army and the police gave the party effective control of the country, and it dominated the coalition government. In July 1997 Hun Sen staged a violent coup against FUNCINPEC and replaced Prince Ranariddh, who was overseas at the time, with Ung Huot, a more pliable FUNCINPEC figure. Hun Sen’s action shocked foreign nations and delayed Cambodia’s entry into the Association of Southeast Asian Nations (ASEAN). By the end of 1997, Cambodia was the only nation in the region that was not a member.

Despite the coup, elections scheduled for July 1998 proceeded as planned. Hundreds of foreign observers who monitored the elections affirmed that voting was relatively free and fair; however, the CPP harassed opposition candidates and party workers before and after the elections, when dozens were imprisoned and several were killed. The election gave the CPP a plurality of votes, but results, especially in towns, where voting could not be dictated by local authorities, indicated that the party did not enjoy widespread popular support. Prince Ranariddh and another opposition candidate, Sam Rainsy, took refuge abroad and contested the outcome of the election. In November the CPP and FUNCINPEC reached an agreement whereby Hun Sen became sole prime minister and Ranariddh became president of the National Assembly. The parties formed a coalition government, dividing control over the various cabinet ministries. In early 1999 the constitution was amended to create a Senate, called for in the 1998 agreement. These signs that Cambodia’s political situation was stabilizing encouraged ASEAN to admit Cambodia to its membership a short time later.

Pol Pot died in 1998, and by early 1999 most of the remaining Khmer Rouge troops and leaders had surrendered. Rebel troops were integrated into the Cambodian army. In 1999 two Khmer Rouge leaders were arrested and charged with genocide for their part in the atrocities.

Since the Paris Accords of 1991, Cambodia’s economic growth has depended on millions of dollars of foreign aid. Foreign interest in Cambodia has decreased, however, and the country has received diminishing economic assistance. This development, along with the continued lack of openness in Cambodian politics, has made Cambodia’s prospects for democratization dim, as well as its chances for sustained economic growth.

Cambodia Geography: Cambodia has a land area of 181,035 square kilometers in the southwestern part of the Indochina peninsula, about 20 percent of which is used for agriculture. It lies completely within the tropics with its southern most points slightly more than 10° above the Equator. The country capital city is Phnom Penh.

International borders are shared with Thailand and the Lao People’s Democratic Republic on the West and the North, and the Social Republic of Viet Nam on the East and the Southeast. The country is bounded on the Southeast by the Gulf of Thailand. In comparison with neighbors, Cambodia is a geographical contact country administratively composed of 20 provinces, three of which have relatively short maritime boundaries, 2 municipalities, 172 districts, and 1,547 communes. The country has a coastline of 435 km and extensive mangrove stands, some of which are relatively undisturbed.

The dominant features of the Cambodian landscape are the large, almost generally located, Tonle Sap (Great Lake) and the Bassac River Systems and the Mekong River, which crosses the country from North to South. Surrounding the Central Plains which covered three quarters of the country’s area are the more densely forested and sparsely populated highlands, comprising: the Elephant Mountains and Cardamom Mountain of the southwest and western regions; the Dangrek Mountains of the North adjoining of the Korat Plateau of Thailand; and Rattanakiri Plateau and Chhlong highlands on the east merging with the Central Highlands of Viet Nam.

The Tonle Sap Basin-Mekong Lowlands region consists mainly of plains with elevations generally of less than 100 meters.

As the elevation increases, the terrain becomes more rolling and dissected.

The Cardamom Mountains in the southwest rise to more than 1,500 meters and is oriented generally in a northwest-southeast direction. The highest mountain in Cambodia –Phnom Aural, at 1.771meters – is in the eastern part of this range.

The Elephant Range, an extension of Cardamom Mountains, runs towards the south and the southeast and rises to elevations of between 500 and 1,000 meters. These two range are bordered on the west are narrow coastal plain facing the gulf of Thailand that contains Kampong Som Bay. The Dangrek Mountains at the northern rim of Tonle Sap Basin, consisting of a steep escarpment on the southern edge of the Korat Plateau in Thailand, marks the boundary between Thailand and Cambodia. The average elevation of about 500 meters with the highest points reaching more than 700 meters. Between the northern part of the Cardamom ranges and the western part of the Dangrek, lies and extension of the Tonle Sap Basin that merges into the plains in Thailand, allowing easy accesses from the border of Bangkok.

The Mekong River Cambodia’s largest river, dominates the hydrology of the country. The river originates in mainland China, flows through Myanmar, Laos, Thailand before entering Cambodia. At Phnom Penh, with alternative arms, the Bassak River from the south, and the Tonle Sap River linking with the ” Great Lake ” itself –Tonle Sap – form northwest. It continues further southeastward to its lower delta in Viet Nam and to the South China Sea.

The section of Mekong River passing through Cambodia lies within the topical wet and dry zone. It has a pronounced dry season during the Northern Hemisphere winter, with about 80 percent of the annual rainfall occurring during the southwest monsoon in May-October. The Mekong River average annual flow at Kratié of 441 km3 is estimated as 93 percent of the total Mekong run-off discharge into the sea. The discharge at Kratié ranges from a minimum of 1,250m3/s to the maximum 66,700m3/s.

The role of Tonle Sap as a buffer of the Mekong River system floods and the source of beneficial dry season flows warrants explanation. The Mekong River swells with waters during the monsoon reaching a flood discharge of 40,000m3/s at Phnom Penh. By about mid-June, the flow of Mekong and the Bassak River fed by monsoon rains increases to a point where its outlets through the delta cannot handle the enormous volume of water, flooding extensive adjacent floodplains for 4-7 months. At this point, instead of overflowing its backs, its floodwaters reserve the flow of the Tonle Sap River (about 120 km in length), which then has the maximum inflow rate of 1.8m/s and enters the Grate Lake, the largest natural lake in Southeast Asia, increasing the size of the lake from about 2,600 km2 to 10,00 km2 and exceptionally to 13,000 km2 and raising the water level by and average 7m at the height of the flooding. This specificity of the Tonle Sap makes it the only “river with return ” in the world.

After the Mekong’s water crest (when its downstream channels can handle the volume of water), the flow reverses and water flows out of the engorged lake. The Great Lake then acts as a natural flood retention basin. When the floods subside, water starts flowing out of the Great Lake, reaching a maximum outflow rate of 2.0m/s and, over the dry season, increase mainstream flows by about 16 percent, thus helping to reduce salinity intrusion in the lower Mekong Delta in Viet Nam. By the time the lake water level drops to its minimum surface size, a band 20-30 km wide of inundate forest is left dry with deposits of a new layer of sediment. This forest, which is of great significance for fish, is now greatly reduced in size through salvation and deforestation. The area flood around Phnom Penh and down to the Vietnamese border is about 7,000 km2.

Cambodia Religion: hearavada Buddhism is the official religion in Cambodia which is practiced by 95 percent of the population– just like that of Thailand, Burma, Sri Lanka. However, Christianity and Cham Muslim are being active and popular among a large number of population as well in the capital and provinces, showing a sign of growth. Daoism and Confuism are also commonly practiced among the Chinese people.

Buddhist monks are highly disciplined and must follow 227 rules in addition to the ten basic precepts of being a good Buddhist. Monks cannot take part in entertainment. They lead simple lives dedicated to Buddhism and the temple.

Buddhists see the universe and all life as part of a cycle of eternal change. They follow the teaching of Buddha, an Indian prince born in the sixth century B.C. Buddhists believe that a person is continually reborn, in human or nonhuman form, depending on his or her actions in a previous life. They are released from this cycle only when thy reach nirvana, which may be attained by achieving good karma through earning merit and following the Buddhist path of correct living.

Earning merit is an important of Buddhist life. Buddhists in Cambodia earn merit by giving money, goods, and labor to the temples, or by providing one of the two daily meals of the monks.

Children often look after the fruits trees and vegetable gardens inside their local wat, or temple. Boys can earn merit by becoming temple servants or novice monks for a short time. Most young men remain monks for less than a year.

Cambodia Khmer People

Ethnic Composition

The population of Cambodia today is about 10 million. About 90-95 percent of the people are Khmer ethnic. The remaining 5-10 percent include Chinese-Khmers, Khmer Islam or Chams, ethnic hill-tribe people, known as the Khmer Loeu, and Vietnamese. About 10 percent of the population lives in Phnom Penh, the capital, making Cambodia largely a country of rural dwellers, farmers and artisans.

The ethnic groups that constitute Cambodian society possess a number of economic and demographic commonalties- for example. Chinese merchants lived mainly in urban centers and play middlemen in many economic cycles, but they also preserve differences in their social and cultural institutions. They were concentrated mostly in central and in southeastern Cambodia, the major differences among these groups lie in social organization, language, and religion.

The majority of the inhabitants of Cambodia are settled in fairly permanent villages near the major bodies of water in the Tonle Sap Basin-Mekong Lowlands region. The Khmer Loeu live in widely scattered villages that are abandoned when the cultivated land in the vicinity is exhausted. The permanently settled Khmer and Cham villages usually located on or near the banks of a river or other bodies of water. Cham villages usually are made up almost entirely of Cham, but Khmer villages, especially in central and in southeastern of Cambodia, typically include sizable Chinese communities.

The Khmer Loeu

The Khmer Loeu are the non-Khmer highland tribes in Cambodia. The Khmer Loeu are found namely in the northeastern provinces of Rattanakiri, Stung Treng, Mondulkiri and Crate. Most Khmer Loeu live in scattered temporary villages that have only a few hundred inhabitants. These villages usually are governed by a council of local elders or by a village headman.

The Khmer Loeu cultivate a wide variety of plants, but the man crop is dry or upland rice growth by the slash-and-burn method. Hunting, fishing, and gathering supplement the cultivated vegetable foods in the Khmer Loeu diet.

Houses vary from huge multi-family long houses to small single family structures. They may be built close to the ground or on stilts. The major Khmer Loeu groups in Cambodia are the Kuy, Phnong, Brao, Jarai, and Rade. All but about 160,000 Kuy lived in the northern Cambodia provinces of Kampong Thom, Preah Vihear, and Stoeng as well as in adjacent Thailand.

The Cham

The Cham people in Cambodia descend from refugees of the Kingdom of Champa, which one ruled much of Vietnam between Gao Ha in the north and Bien Hao in the south.

The Cambodian Chams are divided into two groups, the orthodox and the traditional- base on their religious practices. The orthodox group, which make up about one-third of the total number of Chams in the country, were located mainly in Phnom Penh – Oudong area and in the provinces of Takeo and Kapot.

The traditional Chams were scattered throughout the midsection of the country in the provinces of Battambang, Kompong Thom, Kompong Cham, and Pursat. The Chams of both groups typically live in villages inhabited only by other Chams; the villages may be along the shores of watercourses, or they may be inland. The inhabitants of the river villages engage in fishing and growing vegetables. They trade fish to local Khmer for rice.

The women in these villages earn money by weaving. The Chams who live inland support themselves by various means, depending on the villages. Some villages specialize in metalworking; others raise fruit trees or vegetables. The Chams also often serve as butchers of cattle for their Khmer Buddhist neighbors and are, in some areas, regarded as skillful water buffalo and ram breeders.

The Chinese

The Chinese in Cambodia formed the country es largest ethnic minority. Sixty percent of the Chinese were urban dwellers engaged mainly in commerce; the other 40 percent were rural residents working as shopkeepers, as buyers and processors of rice, palm sugar, fruit, and fish, and as money lenders.

It is estimated that 90 percent of the Chinese in Cambodia were in commerce and that 92 percent of those involved in commerce in Cambodia were Chinese. In rural Cambodia, the Chinese were moneylenders, and they wielded considerable economic power over the ethnic Khmer peasants through usury.

The Chinese in Cambodia represented five major linguistic groups, the largest of which was the Teochiu (accounting about 60 percent), followed by the Cantonese (accounting about 20 percent), the Hokkien (accounting about 7 percent), and the Hakka and the Hainanese (each accounting for 4 percent). Those belonging to the certain Chinese linguistic groups in Cambodia tended to gravitate to certain occupations.

The Teochiu, who make up about 90 percent of the rural Chinese population, ran village stores, control rural credit and rice marketing facilities, and grew vegetables. In urban areas they were often engaged in such enterprises as the import-export business, the sale of pharmaceuticals, and street peddling. The Cantonese, who were the majority of Chinese groups before Teochiu migrations began in the late 1930s, live mainly in the city. Typically, the Cantonese engages in transportation and in constriction, for the most part as mechanics or carpenters.

The Hokkien community was involved import-export and in banking, and it included some of the countryfs richest Chinese. The Hainanese started out as pepper growers in Kompot Province, where they continued to dominate that business. Many moved to Phnom Penh , where, in the late 1960s, they reportedly had virtual monopoly on the hotel and restaurant business. They also often operated tailor shops. In Phnom Penh, the newly arrived Hakka were typically folk dentists, sellers of traditional Chinese medicines, and shoemakers.

The Vietnamese

The Vietnamese community is scattered throughout southeastern and central Cambodia. They were concentrated in Phnom Penh, and in Kandal, Prey Veng, and Kampong Cham provinces. No close cultural or religious ties exist between Cambodia and Vietnam.

The Vietnamese fall within the Chinese culture sphere, rather within the Indian, where the Thai and Khmer belong. The Vietnamese differ from the Khmer in mode of dress, in kinship organization, and in many other ways- for example the Vietnamese are Mahayama Buddhists while most of the Cambodians are Theravada Buddhists. Although Vietnamese lived in urban centers such as Phnom Penh, a substantial number lived along the lower Mekong and Bassac rivers as well as on the shores of the Tonle Sap, where they engaged in fishing.

Khmer Languages: The Cambodian language is Khmer, which is inherited itself – and advanced in education with application of Indic languages Pali and Sangkrit from India.

Also, the Khmer language is influenced by spoken and written Thai. Some technical languages are borrowed from French. However, English is commonly communicated in hotels and business compounds at present days.

English and French are popular second languages and Chineses is the third.

The King of Cambodia: His Majesty King Norodom Sihamoni is the son of His Majesty Norodom Sihanouk, former King of Cambodia and of Her Majesty Queen Norodom Monineath Sihanouk of Cambodia.

King Sihamoni’s selection was endorsed by Prime Minister Hun Sen and National Assembly Speaker Prince Norodom Ranariddh (the new king’s brother), both members of the throne council.

The King of Cambodia

He was crowned in Phnom Penh on October 29. Born on Thursday 14 May 1953, in Phnom Penh, His Majesty King Norodom Sihamoni is the son of His Majesty Norodom Sihanouk, King of Cambodia and of Her Majesty Queen Norodom Monineath Sihanouk of Cambodia. Sihamoni remains a bachelor and has no children, which means he does not have a direct successor if one were to be required.

However, this should not be a problem as the King in Cambodia is selected by the throne council.
Norodom Sihamoni speaks Khmer, French, Czech, English and Russian. He is the first Czech speaking monarch after Ferdinand I of Austria.

Education Background

1959-1962: Primary schooling at the Norodom school and then at the Descartes high school in Phnom Penh (Cambodia)

1962-1967: Primary and Secondary schooling at Prague’s high school (Czechoslovakia)

1967-1971: Dance, music and theatre courses at the National Conservatory of Prague

1970: High school certificate -Prague (with “very good” marks)

1971: First prize course of classical dance of the National Conservatory of Prague

1971-1975: Higher dance, music and theatre courses, Academy of Musical Art of Prague

1975: Graduated from the Academy of Musical Art of Prague

1975: Author of a thesis on the conception and administration of artistic schools in Cambodia

1975-1976: Higher studies of Cinematography in the D.P.R. of Korea

1976-1979: Prisoner of the Khmer Rouge along with his parents and his younger brother, H.R.H Prince Norodom NarinDrapong

1979-1980: Served his father in exile abroad as his Private Secretary

1981-2000: Professor of classical dance and artistic pedagogy at the Marius Petipa conservatory, the Gabriel Faure conservatory and the   W.A. Mozart conservatory of the city of Paris

1984-1988: President of the Khmer dance association in France and director general and artistic director of the ballet group “Deva”

1988-1993: Director general and artistic director of the Khmer cinematographic corporation “Khemara Pictures”. H.M. Norodom Sihamoni, then Prince, has produced two creations (Ballet-Films): Dream and the 4 Elements

1992-1993: Chosen unanimously by the members of the Supreme National Council of Cambodia to be permanent representative of Cambodia to the United Nations

1993-2004: Ambassador of the Kingdom of Cambodia to Unesco

2004: Member of the High Council of French-Speaking Countries (Francophonie)

1st Feb 1994: Elevated by H.M. the King to the rank of Sdech Krom Khun (Great Prince)

17 Oct 2003: Appointed high privy Councillor to His Majesty the King

31 Aug 2004: Elevated by H.M the King to the Rank of SAMDECH PREAH BAROMNEATH

14 Oct 2004: Elected unanimously by the members of the throne council as King of Cambodia to succeed his august father who has decided to retire

Languages: Khmer, fluent in French and Czech, good English and Russian

Decorations:    

• Grand cross of the Royal order of Cambodia
• Grand cross of the Royal order of Monisaraphon (Cambodia)
• Grand officer of the legion d’honneur (France)

• Silver medal of the city of Paris (France)

Royal Government of Cambodia

Samdech HUN SEN
Prime Minister of Cambodia

In the past two decades, Cambodia has gone through many major changes reflecting the heroic sacrifice of the Cambodian people to protect and to rebuild their homeland, the standard of their living, and the prosperity of their future. With the October 23, 1991 Paris Peace Agreement, Cambodia achieves full right and sovereignty. For the result, the Cambodian people may fervently develop their country with generous assistance from international communities.

Before reaching their goal of prosperity, they facedmany critical proceedings. With His Majesty vision of Preah Bat Samdech NorodomSihanouk, the beloved king of the Cambodia people, peace and nationalreconciliation were finally achieved.

At the second session of the auspicious plenarymeeting of the National Assembly, I (Samdech Hun Sen, Prime Minister) have the honor to submit the Royal Government of Cambodia’s Platform for approval from the august legislative body, the National Assembly. It is a foundation of governance to ensure peace, stability, democracy and development for the Cambodian people and to rebuild their country.

I. Policies:

A. Domestic Policies:

The main goal of the Royal Government is to ensure peace, stability,and national unity. In order to create a political stability conducive to theeconomic and social development, and the alleviation of poverty, Cambodiarespect of human rights must be firmly promoted.

1. Pacification:

The Royal Government adheres to national solidarity.To respect the consuls of His Majesty the King, the Cambodians from all walks oflife and political backgrounds from every corner of the world must come togetherto defense their national’s independence, peace and prosperity.

To restore permanent peace and political stability,the Royal Government would welcome the return of the remnant of the Khmer Rouge.It continues to integrate the armed force and the people, who support the policyof pacification successfully implemented in Pailin, Samlot, Malai, Anlong Veng,Preah Vihea, and in other areas.

The Royal Government continues to cooperate withinternational organizations to set up the repatriation program to settle theCambodian refugees into their society. It would pay at any price to stop thereturn of the genocidal regime, and the recurrence of the recent past tragedies.The hard-line leaders of the outlawed Khmer Rouge would be put on trail by thecourt. In the meantime, the Royal Government would reinstate a handful of formerservicemen into the Royal Armed Forces. Under the chairmanship of His Majestythe King, the November 13 statement clearly emphasized that the working group incharge of military affairs must immediately and properly implement theagreements set forth in the spirit of the November 12-13 summit. The Kingdom ofCambodia has full sovereignty. It is a unified state, not a seceded state.

2.  Liberal Democratic Process andRespect of Human Rights:

The Royal Government adheres to the principle ofdemocratic pluralism and to the respect of human rights for which, it stronglybelieves they are fundamental to the social progress. The democratization andliberalization of all social fabrics must be rapidly addressed, because they arethe essential forces of economic and social developments. The Royal Governmentassures and protest freedom of its citizenry bestowed in the Constitution, inthe Universal Declaration of Human Rights, in the Convenants on Civil andPolitical Rights and Social, Economic and Cultural Right, and in the Conventionon the Rights of Women and Children. It strongly opposes racial hatred. Theoverall structure of the state run human rights institution would be upgraded.

3. Freedom of the Press and of Expression:

The Royal Government vigorously supports freedom ofthe press, freedom of expression and of assembly, which freely contribute tosocial and political conscience. In order to seek different shade and color ofopinions, public forums are encouraged to take place. At the same time, freedomand anarchy should be clearly differentiated. The Constitution provides itcitizenry their freedoms to be enjoyed and honored, not to be destructive andintrusive.

4. The Role of Oppositions:

To mobilize the wisdom from all walks of life andbackgrounds to build the nation, the Royal Government widely supports the roleof oppositions for constructive criticism, and for good services to the nation.The oppositions have full legal rights to perform its political activities. Theyare fully guarantied by the Royal Government equal social and politicalbenefits, such as freedom, justice, security, and employment. They may assistCambodia’s young democracy to be fully developed. They do not have to implicatethemselves in order to be labeled oppositions. The Royal Government and theoppositions would have to promote jointly the national interest, the socialstability, and the welfare of the people, so that Cambodia and her people mayenjoy the fruits of long lasting political strength and national stability.

The role of the oppositions shall be defined in the law.

5. The Participation of the Civil Society:

The Royal Government and the civil society shallincorporate their principle of state of law into strengthening democracy,liberty, and social law and order. They may not develop the country byconflicting interests between civil and political societies. The civil societyshall be a key partner of the Royal Government in the construction of Cambodia.In view, the Royal Government would endorse the multiple activities of thenon-governmental organizations and of associations, which have served theCambodian people nationwide. It will appropriate special funds and allocate themto the non-governmental organization in providing services on its behalf to theneedly. The Royal Government would welcome the participation of theinternational non-government organizations in the process of rehabilitation ofeconomic development and in the promotion of democracy and human rights.Therefore, it needs drafting a law on the non-government organizations andassociations.

6. The Rule of Law:

The rule of law is the basic principle of democracy,the sustainability of the government, and of all institutions. It is to ensurefreedom, national interest, justice, harmony, and social sustainability. Aforceful legal structure to end assaults on human dignity is urgently needed.The enforcement and education of law would be widely disseminated. All men areborn free and equal, but they must not be allowed to be above the law. A set oflaw must be applied equally to all.

7. Reforms:

Presently, administrative, judicial, military andpoloce, and economic reforms are urgently to be addressed.

Today, Cambodia’s administrative machine is excessive.The Royal Government can not further support it. It would take steps to reformit. It should gradually trimmed. It should be neutral and sound administration,which is capable to effectively serve the people. The rule of civil servantsmust be strictly applied. The training program to update the knowledge and skillof the employs must be spontaneously upgraded and maintained.

The physical structure of provinces and its citiesmust be reviewed. The provincial administration autonomy should seriouslyconsidered. The management of provinces, districts, communes and villages shouldbe properly carried out to rules and regulations.

The judicial system and the court are necessary to beentirely overhauled. By law, they ought to be independent, honest, andtrustworthy. To succeed their quest, the corporations among the nationalinstitutions, such as the National Assembly, the Government, the ConstitutionalCouncil, the Council of Magistracy, and the court, should be overcome. Judges’salaries must be adequately raised. Especially, they judges in the Supreme Courtmust request their summons be properly recorded and executed. However, if thereis a judge committing a violation, the Council of Magistracy should immediatelyreprimand him or her.

The corruption and power abuses, which obstruct thepromotion and supports of the people’s living conditions, ought to be stopped.The Cambodia’s, the businessmen, and the investors must not be victimized bythose exploitations. The Royal Government of Cambodia considers the fightagainst the corruption as its matter of priority.

The Royal Government would set transparency in everywork force. The anti-corruption institution would be soon formed. To ensure theeffectiveness in the work force, the following measures would urgently berealized:

1. The anti-corruption law against the corrupt,
2. The creation of an agency to monitor and to fight corruption,
3. The wealth clearance decree,
4. The State estates control,
5. The encouragement of citizenry to participate in the corruption fight,
6. The appropriation of pay raise for the civil servants in accordance to the national budget.

B. National Defense and Security:

The Royal Cambodian Armed Forces (RCAF), the MilitaryPolice, and the National Police would fulfill their roles according to theMilitary and Police rules of order. They must be neutral, obedient, andself-restraint. They must sacrifice their lives to protect the Constitution ofthe Kingdom of Cambodia. They would bravely defense the national independence,sovereignty, and territorial integrity, to maintain peace, security, andstability, and to enforce law and order. They must end insurgency, terrorism,and secession. They must completely eradicate kidnapping, armed robbery, drugtrafficking, artifact smuggling, money laundering, and sexual exploitation ofminor children and women. They must properly enforce the law to make theirhomeland prosperous and safe for all, including diplomats, investors, tourists,and foreign workers.

They would participate in the national developmentprograms. They must be active in the rescue operation to save lives of thepeople from the natural causes. They ought to curtail the use of illegalweapons, and close down the arms black markets.

The service of militia may be reviewed. Some placesstill its assistance. For other places, it help is not applicable. However, thedemobilization of militia and its disarmament should be highly considered.

C. Foreign Policies:

Cambodia adheres to policy of neutrality andnon-alliance. It indiscriminately establishes relations with all friendly statesworldwide. It conducts policies of mutual understanding, equality, respect, andnon-interference in other state’s internal affairs.

Cambodia would fortify bilateral friendship andcooperation with its neighbors. The border issues with its neighbors would beresolved through negotiations, and peaceful means.

Cambodia would establish bilateral and multilateralfriendships with regional countries, especially with ASEAN. It wants tocontribute as it may in jointly building the Southeast Asia to be a region ofpeace, tranquility, and prosperity.

When it becomes an active member of ASEAN, Cambodiawould conduct itself within the principle of the agreements.

Cambodia is a member of non-aligned movement. Withinthe principle of agreements it would increase its diplomatic relationship witother nations, and set up embassies within its financial and human resources.

Cambodia with high respect to humanity would conductitself to be a good member of the United Nations.

To solve the problem of illegal immigrants, Cambodiawould utilize its immigration law that enshrines the principle set forth in theUniversal Declaration on Human Rights.

The Royal Government of Cambodia is very grateful tothe international communities for their contribution, peace, democracy andprosperity in Cambodia.

II. Economic Policy:

1. The economy is a principle domain to support thenational development program, which involves sustainability and macro-economy.It should effectively use its natural and human resources. Cambodia wouldpromote free market economy linked with the program of combat the poverty, andsocial justice. The economic mechanism runs its course within rules andregulations of free market economy.
2. The Royal Government would not manage the market, butit would support it. The Royal Government would grand the private sector theright of self- determination on productivity, investment, and expenditure, andit would intervene much less. For the reasons, it would set legal andadministrative structures to ensure freedom and autonomy of the private sectorto property right, employment, profession, and the right to compete freely.
3. It would improve mechanism and structure of economicmanagement to ensure the effectiveness and transparency to cope with corruptionand violation of law. That is very important to stabilize the macro-economy, toboost the people’s standard of living, and to encourage the investment.
4. It prioritizes the physical agriculturalinfrastructure, electricity and human resources, which are the basic of overalldevelopment. The following goals must be achieved:
   1. To speed the economic growth in order to improvethe popular living standard and to create more employment. The chief potentialto promote the economic growth is the amass and to transform the natural resources and the national products into the products of export. The RoyalGovernment would improve economic rules and regulations and to promote Cambodiato be a goods producer in order to attract more foreign investment.
   2. To ensure the stability of Riel currency, to keep the inflationrate at bay, to prevent the loss of revenue and private saving by the Rielfluctuation, and to build confidence in Riel by devaluating with caution thedollar.
   3. To increase the export of agricultural and manufacturing productswith high expertise and quality.
   4. The Royal Government would do it best to alleviate the poverty. Thealleviation of poverty is not only the basic of sustainability of the economicdevelopment, but it also the priority to implement the social program.
5. To attain the above goals, the Royal Government would seize down thefollowing imbalances:
6. Between the need and supply, especially on foods, housing, transportation, education and health care.
7. Between the revenue and expenditure within the national budget.
8. Between the import and export.
9. Between the currency and goods.
10. Between salary and the standard of living of civil servant and servicemen.
11. Between the increase in the work force and the employment.
12. Between the need for national development and the training of human resources.
13. The Royal Government would continue to carry out theprojects, which are identified in the national program of rehabilitation anddevelopment of Cambodia. It would focus on the long-term program for theeconomic and social development in the first five years from 1996-2000. It alsoattempts to achieve the urgent need for the investment on public sector.

Based on these basics and the on going achievements,the Royal Government may carry out the following economic strategies:

The Royal Government strongly believes in the processof selecting the ones, who are healthy, well educated, well-disciplined, honest,independent, and responsible. In this spirit, the improvement of quality ofeducation, health services, and food security must be strongly promoted by theRoyal Government, it would prioritize the investment on the vocational trainingand on higher education. The Cambodian workers would be better equipped withskill and the know-how.

The Royal Government would cooperate with the Chamberof Commerce and other professional institutions to set up the center of transferof the know-how.

The present shortcoming of the national infrastructuretremendously undermines the economic growth of Cambodia. The Royal Governmentwould continue to rehabilitate the national infrastructure. Eventually it would privatize the mass transportation and communication, the telecommunication, andthe electrical power supply.

Agriculture:

The main economic infrastructure of Cambodia isagriculture. The Royal Government would enhance the irrigation system, becauseagricultural activities in Cambodia are solely dependent on the weather.Consequently, it is essential to upgrade the General Direction of Irrigation tothe level of Ministry of water Resources and Meteorology. In five years from1998-2003, it would increase the irrigation capacity from 16.62% to 20%, i.e. ancapacity from 374,603 ha. To 450,600 ha. of rice fields.

The water supply would be strictly monitored anddistributed. The high quality of clean water must be absolutely maintained.

The rubber plantation would be privatized. The RoyalGovernment would encourage a large or small scale of rubber production by theprovision of credit and ownership.

The Royal Government would consolidate the forestmanagement to ensure its sustainability. It strictly and completely bans illegallogging. It would take the following steps to:

1. Cease further investment on wood processing.
2. Review all forest concession contracts and cancel non-complied contracts. The forest under the non-complied contract would be used for national parks and habitats.
3. Encourage the companies with complied contracts to modernize their factories in order to increase the value of timber, and to create more jobs for the Cambodians The Royal Government must strictly enforce its reforestation policy.
4. Review and amend the law on forest management to benefit the investors, who do comply with the rules. Persons, who commit illegal logging and violate the forest law, must be brought to justice.

Industries:

The Royal Government would encourage small and largeindustries to fulfill its tasks. It would focus on strategy of producing exportgoods rather than import ones. The liberalization of international trade makesthe local products difficult to compete in the foreign markets. The smallindustries produce its output enough for domestic use. It strives all efforts tomake the textile industries and agricultural industries to be the core structureof Cambodian industries.

The Royal Government promotes the research andexploitation of petrol, natural gas, and other minerals, which becomes thepotentiality of the national ensure adequate electric supply with low cost andto meet its economic goal.

Trade:

The Royal Government would enhance its policy of tradeliberalization. It would facilitate the free circulation of goods. The price andquantity of the growth of its production. It would also broaden internationaltrade relation by bridging the domestic markets to foreign markets. Finally itwould promoted the integration and global trade.

Tourism:

The Royal Government would promote the development oftourism and make it to become tourism of culture and nature. It would heightenthe private and public investments targeting at building up touristinfrastructure. It would ensure security and political stability. Tourist workhas to be linked by the preservation of natural cultural heritage and naturalenvironment.

Foreign Economic Policy:

The Royal Government adopts a precise politicalguideline of its external economic conforming to the liberalization ofinternational trade, and integrating national economic into the world economic.Through this policy, Cambodia prepares itself to attract and to face regionallyand globally the process of economic internationalization. At the same time, thecompetitive productivity and capacity of Cambodian economy in the international markets will be enhanced through the application of mass based on theavailability of the domestic resources.

Cambodia, however, will face the influx of foreignfinished products, which rejects a number of industries in the country. Thepressure of the integration process of the regional economy, in which Cambodiaexpects to join ASEAN, and the World Trade Organization in the near future, willadd more burden to the national budget through the fall of the tax revenue, andimport duties. These financial activities would change the economic structure of Cambodia. The Royal Government is optimistic and prepares to amend its legalprocedures to accommodate the economic integration.

Investment Policy:

The Royal Government of Cambodia promotes the internaland external investments through the application of the principle and theencouragement of the investment policy of the Kingdom of Cambodia. Itstrengthens its cooperation with friendly countries and their institutions inorder to attract more investment, developed countries and the expansion of themarkets.

To have a good environment for the investment, thesocial political stability and the stability of the macro-economy must beensured. The principle and the guidance of the investment policy must be firmlyadhered . The Royal Government of Cambodia may reform and strengthen theinstitution, which is responsible for the activities of the investment,especially for the improvement on the formality of the application for theinvestment undermining the illegal activities and corruption.

Financial and Monetary Policies:

The Royal Government must ensure the effectiveness ofthe execution of its financial and monetary policies. The fiscal policy recentlyimproved has not yet been properly carried out. The national budget, which has aduty to evaluate, to collect, and to distribute the national resources, is themost important tool to handle the economic and social policies of the RoyalGovernment of Cambodia. Therefore, the national budget must be disbursed distinctively for the support of public services, and for the handling of publicprojects with the economic sense of prudence, conscience, and proficiency, theRoyal Government must give the priority to the promotion of productivity, theprivate investment, the social programs, and public health care. The futureASEAN membership of Cambodia would influence tremendously the reform of therevenue of the national budget. The national revenue by taxation on the importand export goods will be decreased. For that, it would strengthen all faces oftax the entrepreneurs to be in the investment process, and to achieve the budgetsurplus for which it is to be the sources of internal credit, such as for thepublic investment and for the financial intervention to pay raises for theemployees of the government.

1. To achieve the effective control over the budget andfiscal policies, the Royal Government of Cambodia must immediately take thefollowing steps:
2. Use every measure at all costs to combat tax evasion.
3. Strongly prohibit revenue collection and shelter, and disbursement infringing the budgetary system.
4. Abolish tax exemption, which is not stipulated in the investment law, the law on fiscal policy, and the law on the annual financial management.
5. The Ministry of economy and Finance must strictly check and control goods before loading in order to properly tax the merchandises, while its services are being effectively conducted with high consideration of time consumption.
6. Carry out strict measure of austerity, especially against the unneeded expenses. The financial resources from privatization must only be used for the public investment such as the infrastructure, or the counterpart fund of the credit fund from the financial institution.
7. The fund used other than infrastructure purpose must be prohibited.

The Royal Government undertakes its political will toimpose punishment on fraud, illegal transfer of fund, and corruption. To ensurethe stability of buying power of Riel currency, the Royal Government would setthe spending rate of the national budget to be below the rate of the nationaleconomic growth, and the rate of reserve fund of the banks. The interest rateconducive to the promotion of private saving, and the intervention of theNational Bank in the domestic monetary markets in order to stabilize the rate ofRiel exchange.

The attempts of the Royal Government of Cambodia tocut down the economic imbalance will encounter numerous difficulties, becausethe limited financial resources force it to prioritize the use of the economicmeasure. But often the economic tools to came together at one time. At the sametime, the lingering economic crisis and the declined economic growth in theregion will impact the flow of the foreign investment and the domestic growth.The Royal Government would overcome those economic stumbling blocks in order toattain its economic goal, because of its last achievements. This task needs thejoint participation of national and international sectors to improve nationaleconomy and to strengthen the capacity building, the work sprit, ethics, andsocial obligation of public servants.

III. Culture, Health , Social Obligation:

The Royal Government initiates tough measure torestore and to promote culture heritage and national civilization, to end thedeclination of national culture, to highlight the social ethic, and to promotethe national cultural characteristic and progress. For that, the RoyalGovernment has to expand the education of culture and civilization, to promotethe general understanding of the national identity and pride, and to stop theflow of the foreign culture, which affects the national culture.

On health matter, the Royal Government would promotehealth service to public and private sectors, disease prevention, mother andchild care, flight against the contagious disease, and health check up andtreatment in State hospitals and clinics.

On social issues, the Royal government would upgradethe standard of living of the people and to ensure the equal benefits for thepeople from all walks of life. Primarily,

The Royal Government would cut down to the maximum ofthe vulnerability, and increase the chance for the poor and indigent citizens tobe able to participate in the social and economic programs. It would firmlycarry out the labor law and the international convention on labor unions inorder to secure the right and privilege for the workers, employees, andemployers. It would establish a good working condition to benefit thehandicapped persons, the orphans, the widows, and the indigent men and women, sotheir livings could be better conditioned. It would defense the right of womenand children according to the universal convention. It would engage the women inpolitics and in other social and economic fields. It would assist the minorityto involve in restoring the economic, social, and cultural heritage.

To succeed the social rehabilitation and development,there is an important factor to be addressed; that is the task of buildingsocial conscience, confidence, and self- determination, which produce qualitywork. The idea and stand on ordinary productivity to improve the skill and theknowledge of know-how in agreement with the rules of development must beencouraged.

Cambodian Economy

Macro-Economic Development

Growth, Poverty, Reform Priorities

The development challenge facing Cambodia is to sustain growth, reduce poverty, and accelerate the completion of the reform agenda. To accomplish these medium term goals will require effective economic management and considerable inflows of external assistance in order to support the implementation of public investment priorities and raise the pace and consistency of structural reform. Moreover, mechanisms to reduce poverty and protect vulnerable groups from accelerated transformation must be put in place. The development needs of Cambodia have shifted from survival mode to a medium term strategic framework for rapid adjustment and growth supported by sound macro and sectorial policies, and complementary public investment and technical assistance programs.

Adjustment and growth, such are the objectives pursued by the MEF. It is important to strengthen the macroeconomic balances in order to allow for the healthy, sustainable growth of the economy. On this basis, sector-driven strategies tended to increase and diversify production, parallel with the budget strategy of reducing financial dependence and encouraging social progress.

The path covered in five years (1994-98), albeit one that shows deficiencies to be corrected and delays to be resolved, seems satisfactory, overall. Progress has been noteworthy and the results indicators positive mainly due to a good concurrence of external factors affecting economic development, and also to the clear direction given by national policies.

Results Indicators – Positive Development

The outcomes of the results indicators appears to be positive, according to the information in Table below:

1. A real average annual growth rate of 5.2% for the period. Had it not been for the downturn in 1997 which will continue to make be felt to a lesser extent in 1998, the average annual growth rate could have reached 6.0%. In this regard, 1995 and 1996 have clearly very high scores, which were lining Cambodia up among the Asian dragons until the recent crisis occurred;

2. A per capita GDP on a constant growth curve, from US$241 in 1994 to US$303 in 1996, with a slight decline in 1997 ($290.9);

3. A CPI that broke free from the soaring increases of the previous years to stabilize from 1996 onwards at a about 9%;

4. A deficit in t he current balance excluding transfers, which is sustained at 14-15% of GDP, despite the. increase in imports due to investments;

5. Foreign exchange reserves that reached over two months of goods and services imports;

6. Foreign contributions that covered the gross deficit of the current balance on an annual average for 1994-97, in the amount of 134%, with the surplus helping to improve the gross foreign exchange reserves.

External Factors and the Funding or Deficits

Factors external to the evolution of the economy are related to official transfers such as donations, capital transfers in the form of loans from international organizations and, lastly, to foreign direct investments (FDI). The aggregate of such external contributions covered, on a annual average from 1994-97, the gross deficit of the current balance in the amount of 134% (the surplus contributed to the improvement of the gross foreign exchange reserves to cover 2.7 months of imports in 1997). However, although official transfers and capital transfers are being maintained from one year to the next, about 8-

1 1 % and from 2-3 % respectively of GDP, these did drop in 1997 by about 8 % with relation to the initial forecasts and by 20% compared to 1996. On the other hand ‘ FDI that had grown at a very sustained pace since 1093, dropped by 21% in 1997 with relation to the forecasts. There is reason to fear that, in view of the Asian financial cataclysm, such investments will not rapidly pick up the dynamic growth that they experienced up till now.

National Policies and Economic Development – Budget and Monetary Policies.

Expansion of the monetary supply was strong during the years 1994-97, with an annual average rate of 35.7%, and for an average 5.2% of GDP. However, no monetary financing of the Treasury was undertaken with -the National Bank of Cambodia until late 1997. In reality, the foreign currency deposit component explains this growth; liquidity in Riels has grown at an annual average rate of 13.7%. Still, this development is especially due to the exceptional year in 1997 (+33.4%). Nevertheless, the Riel-US Dollar parity has remained very stable during the period, i.e. at the end of the period 2,593 in 1994; 2,560 in 1995; and 2,720 in 1996. It was only during the second half of 1997 that, suffering the effects of the Asian monetary cataclysm, the Riel went up to 3,500 for US$I; since that time, it has basically maintained itself at this level.

However, a good macroeconomic performance was obvious in the – liberalization of the rate of exchange, the stabilization of inflation to a tolerable level, and the revamping of the commercial framework (removal of restrictions on imports and obstacles to exports).

Taxation-an up-to-date tax system, but still yielding inadequate results

The Government undertook the renovation and reinforcement of a taxation and duty system that was still in infancy. The country was slowing getting away from a command economy. The option was made for a modern, performing tax system, but by means of a progressive approach that would allow for reasonable time for the new economic structures to adapt and for State employees to be trained. With the year 1998-after the Taxation Code of February 1997, pending enforcement of the VAT on large commercial enterprises in 1999, and with the Customs Code yet to come out-the Cambodian approach will be five years old.

The current nomenclature of é taxes and duties is a good reflection of the tax structure as it is found in most countries in the world. An analysis of the relationship between tax revenue and the components of GDP that are the basis thereof gives rise to the following observations:

What is called the tax ratio and which means the actual levy made on GDP, experienced a rapid increase between 1993 (4.32%) and 1994 (5.95%), when the initial tax measures kicked in. Since that time, the tax ratio continues to be around 6% — with a peak of 6.46% reached in 1997 — the lowest rate in the world, even compared to the Least Developed Countries (LDCs). In the Southeast Asian region, the tax ratio rate was already 9.53% in 1984 in the Philippines; 14.34% in Thailand; 1 26.93% in Indonesia; 21.53% in Malaysia. the Philippines is the only country where the rates appear relatively low-, although the rate quickly increased to 15.5 1 % in 1992. That is about the same rate as in Vietnam (I 5.4% in 1993 for a GDP per capita that is lower than that of Cambodia), while Laos was at 7.4% in 1991.

* 43% to 46% of GDP is not subject to taxation due to the rightful exemption of agricultural production;

* When only the potentially taxable GDP is considered, the average tax rate of national production barely reaches,8% (from 7.63-7.95% depending on the year);

* Internal taxation, aside from customs duties, remains weak, if not negligible; income- profit taxes carried over to the potentially taxable GDP is less than 1% (0.36 – 0.77%, except for 1998 which is forecast for 1.23 ˜%). At the same time, the ratio between domestic indirect taxes and potentially taxable GDP is barely above 1% (0.59 – 1.36% depending on the year);

 * The average rate of tax on imports remains at a very reasonable level (IO – 13 % on total imports);

 * Private consumption that supports both the domestic indirect and import taxes is only a very small contributor to taxation, between 7 – 8% — whereas in all the countries of the world this is the main source of tax receipts.