Under the Radar: Cambodia’s political seesaw masks economic opportunities

Under the Radar: Cambodia’s political seesaw masks economic opportunities

Despite concerns amongst domestic and international observers about  the escalating political situation in Cambodia, the risk to the country’s overall progress is less significant. Instead, it reflects the hustle and bustle of an emerging Southeast Asian economy on the cusp of social transformation.

In 2013, the opposition Cambodian National Rescue Party (CNRP) came within a hair’s breadth of ousting the ruling Cambodian People’s Party’s (CPP) from power. Since then, political tensions have been on the rise. Despite a brief truce called last year, supporters from both parties have continued to clash, and the government has cracked down on dissent. Such political goings-on are a familiar sight in the region. They demonstrate that Cambodia, like other Southeast Asian states, is struggling to come to terms with its democratic transition.

The ‘alchemy’ of Southeast Asian politics

Southeast Asian nationalism expert Anthony Reid argues that states in this region are defined by a political ‘alchemy’. After a turbulent twentieth century, Southeast Asian states are coming to understand their political boundaries. A history of multiple colonialisms, failed political experiments, and – in some cases – brutal reigns of terror, has given way to a future of democratic upheaval. Politicians are learning to understand the risks of pushing societies to their limit – so as not to push beyond those limits.

These ideas are key to understanding the transition that Cambodia is currently undergoing. Certainly, Cambodia has a tortured historical past, with wounds from the Khmer Rouge genocide still fresh. It has a bad record for political violence, and – given its weak state institutions – an equally negative record for corruption: it is currently ranked 150th out of 168 countries in Transparency International’s Corruption Perceptions Index.

Despite this, Cambodia is oscillating between progress and regression, with an increasing emphasis on the former and a decreasing emphasis on the latter. David Hutt notes that currently-exiled opposition leader Sam Rainsy has entered self-imposed exile four times in the past twenty years; reflecting much about Cambodia’s political state. Rainsy’s plans to return once again, reflect – and reinforce – this ebb and flow of national politics. The risk, albeit an unlikely one, is that Cambodia fails to exit this state of political purgatory.

‘Our time is up’ fears Cambodia’s elite

Cambodia is at a critical point in its democratic transition, and – whether sooner or later – change is inevitable. It is safe to say, given Prime Minister Hun Sen’s historical record, that the ruling CPP is unlikely to relinquish power easily in the 2018 election, expected to be the most competitive to-date. Hun Sen has led the country for 31 years. This is a point at which the ruling party may begin to worry that ‘our time is up’. Yet, unwilling to relinquish power, it is scrambling to impose any kind of arbitrary punishment on the opposition just to maintain an air of authority.

Similarly, for the aging Sam Rainsy, he must realise that 2018 is his last chance for glory. Hutt surmises that Rainsy is awaiting his Aung San Suu Kyi ‘moment’, when he assumes his place at the summit of Cambodian power. But these hopes are misplaced.

Rainsy need only look over to Malaysia, where Southeast Asian counterpart, opposition figurehead Anwar Ibrahim, has ‘missed the boat’. The story is unerringly similar: Malaysia’s opposition coalition came close to winning the 2013 coalition, yet will struggle to push past this success in 2018. Anwar is currently serving a prison sentence, believed to be on trumped-up charges akin to those levelled against various CNRP figures. But even with his release, Anwar would be viewed as an obstacle to the transition and growth of a more youthful opposition politics in Malaysia.

In essence, the great risk to Cambodian politics does not concern the struggle between the CPP and CNRP. It is grounded in the inability of Cambodia’s old guard to usher in the new political generation. Albeit at an incremental pace, CPP is learning to adapt and mildly reform to better cater to this new youthful audience.

Upon closer inspection the CPP and CNRP are not vastly different on paper. Like the CPP, the CNRP advocates a free market economy based on economic liberalism, and a strong foreign investment climate. Meanwhile, aware of the risks of failing to evolve, the CPP has begun to combat the social media terrain – and in doing so has also appropriated many CNRP policies.

A wealth of opportunity

Cambodian politics has continued to ebb and flow, whilst being driven forward by strong currents of political change determined by a sizeable, young population. This same population will provide a good engine of economic growth and social transformation in the future, regardless of which party rules after 2018.

Business has continued as normal because investors realise there is a wealth of opportunity in this emerging economy. They are unlikely to give up on a country which has shown rapid GDP growth. Those aforementioned inter-party scuffles have drawn attention away from the progress Cambodia has made in its transition from an agricultural to a market economy. The Asian Development Bank (ADB) reported that the industrial sector grew at 11.7% last year. Industry was the biggest overall contributor to GDP in what ADB is calling an emerging ‘tiger economy’: strong economic growth is projected to continue in 2017.

Furthermore, tourism – one of the bedrocks of the economy – is going from strength to strength, with tourist arrivals rising by 6.1% in 2015. Siem Reap, home to the sacred ruins of Angkor Wat, is currently undergoing a construction boom, proliferating with hotels, restaurants and nightclubs. The bustling and ever-expanding city of Sihanoukville is also getting good press as an up-and-coming beach destination. However, more needs to be done to manage and diversify this modernising economy.

Despite uncertainties ahead of the next general election, in Cambodia there is much to be optimistic about. Notwithstanding isolated incidents of political violence, it is important not to let Cambodia’s turbulent history cloud current perceptions. This point particularly pertains to obsessions over the personal grudges between Hun Sen and Sam Rainsy. Of greater importance is Cambodia’s ability – like other Southeast Asian states – to adapt to and mould itself around the new political generation. Only if it is unable to accommodate these new social forces, should investors begin to worry.

Under the Radar uncovers political risk events around the world overlooked by mainstream media. By detecting hidden risks, we keep you ahead of the pack and ready for new opportunities.

This Under the Radar piece was written by Alexander Macleod.

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