Mekong Memo Cambodia Weekly: Business, politics, finance, trade & legal news.
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PSA: Before we get to The Memo proper this week, the Phnom Penh Municipal Health Department has released a list of telephone numbers for 24-hour ambulance services which the Khmer Times has published here. If you’re in Phnom Penh, it might make sense to save the one or two in your phone.
We hope you have an excellent week ahead, here is your Mekong Memo Cambodia for October 30, 2023:
GDP and Income Levels on the Rise
Cambodia's GDP per capita is set to increase to $2,071 in 2024, up from $1,917 in 2023, driven by growth in garment exports, tourism, construction, and agriculture. The economy is expected to grow by 6.6% next year which would place it among the top 15 fastest-growing economies in 2024. Prime Minister Hun Manet aims for Cambodia to achieve upper middle-income status by 2030 and high-income status by 2050. The country has seen a significant reduction in poverty rates over the past decade and this progress is expected to continue on a similar trajectory in the coming few years.
New Out-of-Court Mediation Authority
Cambodia's Prime Minister Hun Manet has greenlit a draft Royal Decree to establish a National Authority for Out-of-Court Mediation. This new body aims to alleviate the backlog in the country's court system by offering an alternative, voluntary mechanism for resolving legal disputes, including civil and commercial cases. Headed by a Deputy Prime Minister, the authority will focus on delivering fast, equitable solutions, particularly benefiting smaller communities. The initiative has received high praise for its potential to enhance harmony and justice in society.
Virachey National Park at a Crossroads
⭐️ This is a must read article on one aspect of the balancing act that Cambodia is facing as a developing country. The nation’s Virachey National Park, often dubbed the "final frontier" of biodiversity, is at a crossroads. As Southeast Asia races to adopt renewable energy (frequently at the urging of western powers), Cambodia's government is eyeing this ecological treasure for hydropower development. But there's a twist: the park could be worth millions as a carbon credit forest. It's a high-stakes dilemma that pits the urgent business need for clean energy against the irreplaceable value of one of the last untouched natural sanctuaries in the Mekong Region.
Read more: Japan Times
Strategic Diplomacy in a Volatile Region
Another aspect of Cambodian development is actively navigating a complex geopolitical landscape, balancing relations with immediate neighbors and global powers. Amid regional tensions and U.S.-China rivalry, Cambodia works to maintain strategic autonomy and strengthen partnerships with Laos, Thailand, and Vietnam to increase trade and investment. Laos contributes significantly to Cambodia's energy security, while trade with Thailand is set to reach $15 billion by 2025. Vietnam's diverse investment in Cambodia exceeds $2.9 billion. These relationships are crucial for Cambodia's long-term goals, including becoming a key player in the Mekong region. Quoting from the article:
“Cambodia could better exercise its agency and be more resilient by fostering cooperation and collaboration with immediate neighbours. […]
The Mekong countries must uphold rules-based international order, promote open and inclusive regionalism, and ensure that diplomacy and dialogue prevail over conflict and confrontation”
Read more: Khmer Times
Riding the RCEP Wave to New Heights
Cambodia's exports to the Regional Comprehensive Economic Partnership (RCEP) countries soared to $5.8 billion in the first three quarters of 2023, a 23.59% increase from last year. Despite a trade deficit, the gap has narrowed compared to 2022. Key export destinations within RCEP include Vietnam, China, and Japan. The surge is attributed to Cambodia's enhanced production capacity, diversified markets, and benefits from the RCEP agreement such as preferential tariffs and technology transfers.
UN Warns on Money Laundering and Shadow Banking
The United Nations has sounded the alarm on the escalating use of Southeast Asia's burgeoning digital gambling industry for money laundering and shadow banking. Transnational criminal networks are exploiting the industry's shift to online platforms, making it increasingly difficult for authorities to trace illicit financial flows. The surge in online gambling has been fueled by China's crackdown on illegal activities and further accelerated by the COVID-19 pandemic. The UN warns that the problem is intensifying, with tens of billions of dollars laundered annually, calling for comprehensive regional responses to tackle the issue.
Read more: VOA News
2024 Budget: Focus on Social Development, Governance
Cambodia plans to allocate more than $9 billion for its 2024 fiscal year, with a focus on education, vocational training, health, and social work. The budget, which accounts for roughly 24% of the country's GDP, aims to navigate both domestic and international challenges (although details about what specific challenges these initiatives are designed to address are not specified), and emphasizes public administration reform, core governance, and people-centric initiatives. The government views 2024 as a pivotal year for optimizing budget utilization and achieving its objectives in an efficient manner.
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