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Thursday, August 20, 2009

Q+A-Will Cambodia's economic woes affect stability?


BANGKOK, Aug 20 (Reuters) - Cambodian Prime Minister Hun Sen is facing pressure from rights groups and foreign donors while he battles to minimise the damage to the country's fragile economy from the global financial crisis.

Foreign governments, rights groups, non-governmental organisations and political rivals continue to hound the former Khmer Rouge soldier over his authoritarian leadership style and his attempts to muzzle critics.

However, analysts say neither the criticism of Hun Sen's government nor the effects of the slowing economy are likely create instability in the near future.


Hun Sen's government has filed a series of lawsuits against journalists and opposition lawmakers for defamation or "disinformation", which rights groups and foreign diplomats say are attempts to silence critics and strengthen his grip on power.

Two opposition MPs critical of Hun Sen and his party were recently stripped of parliamentary immunity, effectively unseating them from the national assembly. Other cases have included a young political activist jailed for painting anti-government slogans on his house and an advocate of cultural preservation who criticised lighting plans for the ancient Angkor Wat temple.

"Hun Sen does not know how to respond to criticism and the fear is he will respond with an iron fist through more suppression, which would undermine Cambodia's democratic progress," said Ou Vireak, president of the U.S-funded Cambodian Centre for Human Rights.


Tens of thousands of people have been evicted by force from prime land in the capital, Phnom Penh. Rights groups say as many as 250,000 people have been affected nationwide. The government says the dwellers are land-grabbers who refuse to accept their offers of compensation.

The World Bank and other donors say the evictions are hampering efforts to tackle poverty in a country where 35 percent of the population live on less than $1 a day. The ruling party's control over the police, military and the courts means those made homeless have limited power to fight the evictions.

The government has also come under fire for failing to deal with rampant corruption, which the United States says costs the country $500 million a year. Cambodia, which anti-graft watchdogs rank as one of the world's most corrupt countries, has dismissed the claims as foreign interference. An anti-corruption bill drafted in the 1990s is also yet to be approved.

Analysts say the failure to tackle graft will restrict the amount of foreign investment in the country.


Hun Sen's Cambodian People's Party (CPP) enjoyed a landslide election victory in 2008 on the back of four years of double-digit growth driven by pro-investment policies, which helped create jobs and improve infrastructure and public services.

Analysts say that after decades of war and political strife, Cambodians are better off under Hun Sen. Although he is criticised for his authoritarian style, people are largely supportive of his nationalist and conservative approach to running the country.

"He has a desire to maintain Khmer traditions and morals and that maintains some strong fabric on which to base policy decisions. That's good for political stability," said Ian Bryson, a specialist on Cambodia at Control Risks in Singapore.


A boom in the garment manufacturing industry in the 1990s helped lift many rural people out of poverty, but the global financial crisis has hurt tourism and slashed demand for Cambodian-made clothes in countries like the United States.

Analysts believe victims of lay-offs are unlikely to blame the government or protest against factory closures. They say stability rests on the government's future handling of inflation, diversifying its economy and improving its investment climate.

"The government should invest more in agriculture and other industries and reduce its reliance on garments and tourism," said Pou Sothirak, a senior research fellow at Singapore's Institute of South East Asian Studies (ISEAS). (Compiled by Martin Petty and Ek Madra in Phnom Penh; Editing by Alan Raybould and Bill Tarrant)

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Cambodia's Hun Sen looks safe despite some unease

By Ek Madra

PHNOM PENH (Reuters) - Trouble is mounting for Cambodia's long-serving prime minister, Hun Sen, with rising unemployment and an economic slowdown on top of growing criticism from diplomats, rights activists and political rivals.

But analysts see little threat to his power or the long-term investment outlook in a country that has made great strides after decades of poverty, brutalilty and instability.

"Things are far from perfect in Cambodia, but democracy is a slow process and we have to see the bigger picture," said Pou Sothirak, a senior research fellow at Singapore's Institute of South East Asian Studies (ISEAS).

"Hun Sen's priority has been the economy, social order and the avoidance of conflict, and the current situation is a significant improvement from the past."

Hun Sen's government has come under fire recently, accused of corruption, abuse of power, and undermining the judiciary, raising concerns about future stability and its sincerity about carrying out long-awaited reforms.

Tens of thousands of people have been driven out of their homes in a slew of land seizures, while critics have blasted Hun Sen for filing lawsuits they say are merely attempts to intimidate journalists, activists and political opponents.

However, Hun Sen gets plenty of plaudits as well, and some analysts say the firm hand of the undisputed strongman is exactly what Cambodia and its economy needs.

"It's easy to criticise Hun Sen as a single-party ruler, authoritarian and totalitarian, but he's a pragmatist -- he does what he needs to do," said Ian Bryson, a regional analyst for Control Risks.
"There's no reason to forecast any instability in the near future. Cambodia's pretty rock solid. Hun Sen is healthy and he really is quite well-regarded."

Given the steady turnaround in Cambodia's fortunes since Hun Sen came to power 25 years ago, the popularity of the Khmer Rouge defector and former farmer and monk, comes as no surprise.


Six years after Vietnamese invaders ended the Khmer Rouge's 1975-79 "killing fields" reign of terror, Hun Sen became premier and cultivated a reputation as a moderate, investor-friendly democrat, which helped put Cambodia on the road to recovery.

Until the global economic crisis struck, Cambodia had seen four straight years of double-digit growth fuelled by Hun Sen's pro-business policies, which created new jobs and infrastructure and raised living standards among the rural poor, many of whom live on less than $1 a day.

With backing from the poor, his Cambodian People's Party (CPP) scored 73 percent of the vote in 2008 elections, which observers said had only minor irregularities, to win its first outright majority after years of bickering coalition governments.

"I see no party that can challenge the CPP. They've improved the livelihoods of the poor and boosted their hopes and expectations for the future," said a Cambodian political science lecturer, who asked not to be named.

"The criticism Hun Sen has received does not reflect the overall situation. I can see the ruling party will continue to hold power ... and foreigners will continue to invest here."

Analysts say complaints about graft, cronyism, lawsuits and forced evictions from donors, rights groups, diplomats and financial institutions have irked Hun Sen, but will have little impact on his popularity.

The biggest challenge for the CPP, they say, is to revive the economy and ensure jobs are created to minimise the threat of social problems or civil disorder that could undermine its grip on power.

Foreign direct investment has slowed since the global financial crisis took its toll. Economic growth slowed to 5.5 percent in 2008 and the economy is forecast to shrink by 0.5 percent this year, according to the International Monetary Fund.

With a slump in demand from key markets like the United States, at least 130 garment factories have closed since late last year, prompting an estimated 50,000-60,000 lay-offs in an industry that brought in $3.8 billion in 2007.

But analysts say workers have accepted this is not the fault of government mismanagment, and that it looks unlikely to pose a threat to Cambodia's stability.

Neither, they say, will long-running diplomatic disputes with traditional foe Thailand over border demarcations, near the 11th-century Preah Vihear temple and in the Gulf of Thailand, where oil and gas deposits have been found.

Both sides have beefed up their military presence in the areas and seven soldiers died in skirmishes over the past year. But too much is at stake for both countries, and that is preventing the disputes from escalating significantly.

"It's been a bumpy ride for Cambodia, but stability is, and will remain, very much intact," added Pou Sothirak of ISEAS. "And for that reason, I expect foreign investors will return when the global economic situation improves."
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Over 100,000 pills of drug substances destroyed in Cambodia

Phnom Penh Municipality on Thursday destroyed 107,958 pills of mixed drug substances including 21,499 grams of cocaine, 601 grams of heroin, over 80,000 pills of methamphetamines and amphetamines and other drugs substances, as well as some materials of drug lab.

"Drug substances and drug materials for labs that we burned off today were confiscated from criminals," Kep Chutema, Phnom Penh governor said in the ceremony of destroying at the outskirt of Phnom Penh.

"Drug trafficking cases have decreased after the authorities have cracked down on drug distribution places and drug using places," he said. However, he added that cases of crimes have increased in Phnom Penh and it has occurred among young people.

"So far this year, our authorities in Phnom Penh has cracked down 36 drug cases and arrested 80 criminals, and also seized some drug substances," he noted. "We have strengthened the law enforcement and our law enforcement officials have raised their law enforcement ability."

"We will establish a new drug-rehabilitation center for women in Phnom Penh and we considered drug users as drug victims without discrimination," he said.

"We have helped 2,143 people to get rid of drugs through the rehabilitation center, and other 215 people are in process of drug rehabilitation," Kep Chutema said, adding that "after they left this center, they will have jobs and skills for helping themselves and family."

Cambodia became the one of places of drug transmit, according to the governor. "Criminals used our country to distribute drugs to other countries and produce drug, even we destroyed it regularly," he said, "We must get together to stop the drug trafficking and fight against it to live with harmony at the local community."

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