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Much is made of the fact that Cambodia is a highly aid dependent country. With approximately half of the total government budget made up of foreign contributions, much government accountability is aimed at satisfying donor conditionality despite the perception of many Cambodian officials that the Cambodian Government is mature enough to take responsibility for the country's own affairs. A great deal of debate has occurred in recent days as to the appropriateness of donor conditionality and benchmarks on aid funds in such areas as poverty alleviation, and anti-corruption reforms in public administration and the judiciary. In contrast to aid negotiations held in March, which saw donor country members of the Consultative Group, pledge US$583 million per year (up from US$504 million from the last round, despite many key conditions from the last meeting remaining unmet), China's recent pledge of US$600 million in unconditional aid has been hailed by Cambodian leaders, while downplayed by critics as an irresponsible ploy by China to ensure favourable treatment and lax monitoring of Chinese companies operating in Cambodia. Whatever the outcome of this debate, Cambodia's aid dependency looks set to continue for the foreseeable future.
Since the first UN peacekeepers arrived in Cambodia in March 1992, donor countries have maintained a steady presence in Cambodia and, while the peacekeeping forces have long since departed, an army of foreign consultants and development experts continue to inhabit government offices and administrative posts. After 14 years it is more than appropriate to ask, what has been delivered? However, any response to this question probably has much more to do with the address of the respondent than it has an actual bearing on the truth of what has changed. Depending on where you live, development and progress in Cambodia has either been at break-neck speed or painstakingly slow, and as time wears on what has emerged is an increasingly uneven landscape of development and underdevelopment. While a visible construction boom is evident in Phnom Penh and the tourist capital of Siem Reap, for the majority of Cambodians living in the countryside, high-level aid negotiations, conditional or not, seem to amount to little.
Despite high profile donor funding in the area of agricultural development and national economic growth rates of between 5 to 7 per cent, the country still does not have a coherent agricultural policy designed to assist the estimated 80 per cent of the population still engaged in agriculture as their primary source of income. Despite the CPP election platform of being "The Irrigation Party", the majority of Cambodians continue to grow one crop a year of rain-fed rice yielding barely more than 1 tonne per hectare. And while the landscape is dotted with a small number of highly visible large-scale dams and canals under construction (invariably locally dubbed as 'Hun Sen's canal' or 'Hun Sen's dam'), such efforts are unlikely to fulfil the needs of the millions not living in close proximity to government irrigation works. Meanwhile, donor funded projects, such as the Northwest Irrigation project underway in Battambang - historically the country's richest agricultural region and commonly known as the 'rice bowl of Cambodia', Pursat, Siem Reap and Banteay Meanchey Provinces, are aimed primarily at rehabilitating existing irrigation channels. While the typical donor approach of 'picking low-hanging fruit' is aimed at ensuring maximum success and value for money, such approaches do little to reduce or alleviate the very real challenges of agricultural production, poverty alleviation and uneven development in marginal areas. In addition, donors' tendencies to base their headquarters and highly paid staff in Phnom Penh and Siem Reap further exacerbate the increasing rural/urban divide.
Symptomatic of this uneven development is the continued consolidation and concentration of power and wealth in the hands of local officials looking to benefit from the influx of foreign (often Asian) companies looking to invest. Headlines about land grabbing by local officials in marginal areas appear almost daily in national newspapers, while a steady stream of land grabbing victims join the long term protestors who no longer camp outside the Royal Palace awaiting justice, but instead outside the office of the National Assembly or at the Independence Monument near Hun Sen's house holding pictures of the Prime Minister and his wife.
WATCHPOINT: Unbridled economic growth at the expense of the more vulnerable in the population and high levels of uneven development will continue. This will be exacerbated by international aid - both conditional and unconditional - rather than be mitigated by it.
About our company:
AFG Venture Group is an Asia and Australia based corporate advisory and consulting firm with over 20 years experience in creating alliances, relationships and transactions in Australia, South East Asia and India; including a 15 year history of corporate and equities advisory in Australia, undertaking merger, acquisition, divestment, fund raising and consulting for private and public companies.
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