Will new NGO law in Cambodia curtail foreign investment?

Will new NGO law in Cambodia curtail foreign investment?

The Cambodian government recently announced plans to revive controversial nongovernmental organization (NGO) legislation that would seriously curtail the activities of NGO groups. Confronted by domestic and international backlash, the legislation will undoubtedly affect the country’s image as a recipient of foreign direct investment.    

The Cambodian government recently announced plans to revive a law that would seriously limit the activities of non-governmental organizations (NGOs). The proposed legislation has been criticised by a range of pro-democracy and human rights organisations, including Amnesty International and Human Rights Watch.

This week, sixteen international human rights groups wrote to the Cambodian government, stating that the draft law violates the right to freedom of association, and if passed, “will severely undermine the crucial role that civil society plays in Cambodia.” Approximately 5,000 NGOs operate in Cambodia.

According to U.S. Ambassador William Todd, the Cambodian government should properly consider the controversial new legislation, which could seriously impact on Cambodia’s image as a destination for foreign investment. To date, the Cambodian government appears largely unfazed by this domestic and international backlash. But is this position sustainable?

The draft legislation

In speeches on April 1 and 5, 2015, Prime Minister of Cambodia Hun Sen announced plans to pass the draft law on Associations and Non-Governmental Organisations (LANGO). Hun Sen argued that the law would enhance transparency of NGO funding sources, with the aim of curtailing funds from terrorist groups from entering the country.

According to Hun Sen, the law would be used to “handcuff” those groups which failed to comply, and to prevent organizations operating “outside the law” and “cursing” the ruling party. The legislation was first proposed in 2010. Between 2010 and 2012, four successive draft laws were delayed following a successful Cambodian advocacy campaign.

The fourth draft of the legislation, if passed, would have enabled the Cambodian government to deny registration to organizations of its choosing, compel groups to provide advance notice to the state of their activities, and implement laws criminalizing defamation, disinformation, and incitement. Following the advocacy campaign, the fourth draft was temporarily shelved. However, it has now been revived, and its contents are shrouded in secrecy.

Opposition to the legislation

In April 2015, the United Nations Human Rights Committee criticized the government’s lack of transparency regarding the revived legislation. The Committee urged all draft legislation to be made public to allow a process of open consultation with NGOs.

Those who oppose the legislation argue that it will restrict the activities of NGOs and prevent criticism of government behavior and activities. In a letter dated 18 May, Cambodia’s Ministry of Foreign Affairs accused four United Nations (UN) representatives of acting in violation of the UN Charter by publicly criticising the draft NGO law. Cambodia’s Foreign Minister Hor Namhong, called for UN officials to refrain from interfering in Cambodia’s internal affairs.

On 23 June, a group of 300 Cambodian pro-democracy organizations and their supporters protested outside of the Cambodian National Assembly, where the law is currently being considered. These organizations delivered a petition to the National Assembly, in an attempt to prevent the draft law from being approved.

Foreign investment in Cambodia

On 17 May, US Ambassador William Todd called on the Cambodian government to consider the implications of the NGO law. During a trade mission to the United States, Todd confirmed that he had encountered a growing number of US companies seeking to do business in Cambodia.

Cambodia is a developing economy, which grew by an estimated 7% in 2014, and is expected to grow at a similar rate in 2015 and 2016. The U.S. is one of Cambodia’s largest trading partners. It attracts 33% of Cambodia’s total exports, which are largely driven by the garment sector, construction, and agriculture.

Cambodia also has a rapidly expanding tourism industry, with the number of foreign arrivals increasing 12.5% between 2013 and 2014. Ambassador Todd warned Cambodia to “take an advantage of this interest” and to project an image that attracts foreign investment, technology, and human resources.

Impact of the draft legislation

Despite Ambassador Todd’s warning to the Cambodian government, his advice largely appears to have gone unheeded. On 20 May, Cambodia’s Ministry of Foreign Affairs criticized the ambassador’s comments, stating that ambassadors have a duty not to interfere in the internal affairs of the state.

Any legislation that restricts the rights of NGO’s is highly likely to damage the country’s reputation as a developing market economy. This could also impact external financial support from donor countries, which currently accounts for more than 30% of the government’s budget.

The Cambodian parliament has yet to conclusively determine the future of the legislation. The government will need to seriously consider the potential short term and long term impact of the legislation on the country’s economic development. To quote Ambassador Todd’s recent warning to the Cambodian government: “It is important to realize that the world is watching.”

Categories: Asia Pacific, Economics

About Author

Laura Southgate

Dr Laura Southgate is a Lecturer in Politics and International Relations at Aston University in Birmingham, United Kingdom. She has a PhD in International Relations from the University of Otago, New Zealand, and an MA in International Relations and Security, and a BA in Law and Politics, from the University of Liverpool. Her research focuses on the Association of Southeast Asian Nations (ASEAN) and the international relations and security of Southeast Asia.