Concepts underlying Cambodian Development

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The process of peace and national reconciliation set in motion by the Paris Accord of 23 September 1991 has fundamentally changed the overall situation of Cambodia. Assisted by international community, the free and democratic election held in May 1993 led to the adoption of the Constitution, the establishment of the National Assembly, and the formation of the Royal Government of Cambodia. Cambodia is now a full-fledged democratic society and it is operating a free market economic system.

After the genocidal regime and almost two decades of warfare, Cambodia urgently needs to rehabilitate and develop all sectors of its economy and society. As every sector and sphere is a as important as the others and as they are interlinked in a complex way, there is a need to develop a comprehensive strategy for economic and social development to assure self-sustainability, coherence, complementarity and sinergy among them. To ensure the development of the country and an improvement in the well-being of the people, the Royal Government has committed itself to a longterm undertaking, an undertaking that will fundamentally change our ways and require the mobilization of all the nation�s resources.

The Royal Government�s broad strategy is reflected in the National Programme to Rehabilitate and Develop Cambodia (NPRD), which was adopted by the Royal Government of Cambodia on 23 February 1994 and subsequently endorced by the 2nd International Committee on the Reconstruction of Cambodia (ICORC II) held in Tokyo on 10-11 March 1994. Strategies for the rehabilitation and development of Cambodia both for the medium tern (3 years) and the short term (18 months) were defined in this programme. The envisaged initiatives were the result of extensive consultations that involved over 110 Ministers and high-ranking officials of the Royal Government and national institutions, whit the participation of Cambodians from overseas and international technical assistance. It was also the fruit of work accomplished over recent years, and based on the political programme of the Royal Government as formalized by the First Prime Minister Samdech Krom Preah NORODOM RANARIDDH and the Second Prime Minister Samdech HUN SEN, which was presented to the National Assembly on 29 October 1993 by the First Prime Minister. The NPRD is thus built on studies, reports, and the extensive advice received, and it capitalizes on the successes of the past.

In implementing the National Programme to Rehabilitate and Develop Cambodia, the Royal Government intends to realize economic and social 'development through pursuing two basic principles.

First, with the Government performing the roles of 'Strategist' and '.'Manager" of Development. As the strategist, the Government establishes the broad, combined strategy for national rehabilitation and development based on the following: first, the wish and ambition to accommodate the needs o the country; second, the need to mobilize resources to realize national potential prudently; and third, a strong political will to accomplish what the strategy sets out to achieve.

As the manager of development, the Government leads, encourages, coordinates, facilitates and monitors through such indirect means as legislation, regulations, rules, and important instruments of macroeconomic management such as fiscal policy, credit policy, monetary policy, etc. The Government is not a competitor of the private sector but, instead, is striving to foster a strong and stable private sector through creating proper social, economic and physical infrastructure environments. The State needs a private sector with a solid, independent and dynamic structure to undertake the process of modernization and national economic development. All this requires massive and extensive reform of the State's structure and administration and a change in the motivation and behaviour of the entire population. The main objective is to make Cambodia a state respecting the rule of law.

The second principle is that of the Government being a partner of the private sector. As such, it should consult with the private sector in a frank and open manner. The Government thus wishes the private sector to be the driving force in achieving the Royal Government's objective of pushing Cambodia forwards towards progress year by year, through:

(i) establishing a society which enjoys equity and social justice, that is, to resolve and eradicate the problems of poverty, the Royal Government's main objective; and .

(ii) pursuing sustainable development policies, which requires:

(iii) sustainable economic growth;

(iv) sustainable human resource development, which is a major key to improving the well- being of the people and to guaranteeing social security, stability, and national integrity; and

(v) sustainable use of natural resources, which relates to the proper management and use of our ecosystem and biosystem so that our natural resources may be preserved and future generations may benefit.

The basic thinking lying behind the NPRD is underpinned by these two principles, and the strategy which NPRD presents may be thought of as consisting of six mutually-reinforcing and inter-dependent fields of -operation. Each of these represents a cluster of interlinked objectives which the Royal Government is utilizing all means at its disposal to achieve, and they are presented diagramatically in the "Schematic Overview of the National Programme to Rehabilitate and Develop Cambodia". In this, the six fields of operation are illustrated by five squares and one rectangle, and importantly, all within a circle representing an environment of security and political and social stability.

The first of these fields is to establish the Kingdom of Cambodia as a 'State of Law" in which the rule of law prevails. Thus, as the strategist and manager of development, at the core of the Royal Government's strategy to rehabilitate and develop Cambodia is the need to establish good governance, ie, to create a legal and institutional environment conducive to realizing this ideal and to fostering the emergence of a strong private sector. Thus, the Royal Government is striving to achieve:

(i) the reform of State institutions and the remodelling of the civil service so that it becomes politically neutral and so that its efficiency is improve, and the delivery of public services is improved and extended; and

(ii) the enactment and amending of laws and regulations to reflect the realities and needs of a liberal market economy, as well as to create an environment conducive to the progress of a democratic society, and particularly one which guarantees human rights and social justice, including private ownership, the sanctity of contracts, fairness and equity.

The second field is the stabilization and structural adjustment of the economy, with the goal of doubling GDP by 2004. This involves such macroeconomic stabilization policies as inflation control, fiscal policy, credit policy and monetary policy, as well as the reduction of unemployment, the modification of the tax and price systems, and the underpinning of real GDP growth rates of 7-8 per cent annually.

The third field involves two main thrusts, with each being both a means and an end:

(i) the development of the human resource base through such means as capacity-building, training and the transfer of know-how, technical and professional education, all with a view to improving the well-being of the people and strengthening the private sector; and

(ii) addressing education and health needs and thus to improve the human resource base so as to allow it to become a productive input into the growth process.

The fourth field is directed at the rehabilitation and the building up of physical infrastructure and public facilities: irrigation, energy, transportation, communications and water supply, in order to provide direct support to the development of agriculture, industry, tourism, commerce and private investment. As Cambodia currently has insufficient resources to undertake the required investment in these areas, it will rely for the time being on the support of the international community .

The fifth field relates to the reintegration of the Cambodian economy into the regional and world economies, which involves opening the country to international trade and private foreign investment. Moreover, as Cambodia is moving towards becoming a member of ASEAN, there is much that needs to be done in this entire field before its membership eventuates.

However, the implementation of the above would not be successful if we do not have in p@ a sixth field of operation: namely, rural development and the sustainable management of natural resources and the environment. In an important way, this is the key to the success of the Royal Government's entire development strategy, as well as its foundation, because the first five fields of operation are necessary but not sufficient conditions for raising the welfare of the entire population. Development must be spread widely. Hence, the development of the rural areas is the only way to alleviate and eventually eradicate poverty nationally, and eliminate the current disparities between the rural and urban areas. With success will come a broader-based increase in the well-being of the population, better security, and strengthened national unity and cohesion.

In the context of developing the rural areas of the country, the Royal Government is attaching priority to several objectives: an increase in agricultural output through, among others, the rehabilitation of irrigation and drainage systems; the reconstruction of the transport and communications networks to facilitate the flow of goods from rural and remote areas to the marketplace and the port of Sihanoukville, the creation of an efficient credit system to foster private initiatives and the flowering of rural enterprises; the provision of universal access to primary education and basic health care, including demining, to ensure the development of the human resource base; and the management of sustainable resource use. Special outreach programmes must be extended to develop the rural economy, and the private sector must be encouraged to engage in this process. Already, the Royal Government is cooperating with the World Bank to create a Social Fund, and has established a Rural Credit Committee, the Council For Agricultural Rehabilitation and Rural Development (chaired by the Second Prime Minister), and the Council for the Development of Cambodia (chaired by the First Prime Minister), to bring renewed vitality to the rural development thrust.

Moreover, the implementation of the NPRD as a whole can succeed only in a climate of personal security, political stability and social cohesion. There can be no development if there is no security or political stability and social cohesion, and there can be no security, political stability and social cohesion if there is no development or improvement in the standard Of living of the people. Even if the situation is still fragile, we have an acceptable level of political stability. Thus, in the short term, the Royal Government needs to strengthen security and social equity to achieve its development objectives while, in the long term, it needs development to guarantee continuing security, political stability and social cohesion. In the meantime, the Royal Government's military actions to address security problems are merely a temporary solution to the issue.

In summary, therefore, it bears repeating that all the above fields of operations are mutually- reinforcing and inter-dependent. They are themselves both objectives and the means to achieve those objectives. Thus, trying to attract foreign investment through promotion campaigns will be of no avail if there is no macroeconomic stability, insufficiently qualified human resources, inadequate physical infrastructure, inefficient public administration, and a deficient legal system.

There are also two necessary conditions for the successful implementation of NPRD: the need to motivate and to change the behaviour patterns, attitudes and mentalities of the people, including those of government officials and civil servants; and the need to involve the private sector in the rehabilitation and development of the country as a full-fledged partner of the Government.

The Royal Government considers 1995-1996 to be a critical stage in the implementation of its rehabilitation efforts and, with the assistance of the international community, in consolidating and strengthening its past achievements. These two years set the stage and represent the foundation for future sustainable growth. This is the time for the Royal Government to assess and take stock of the past year, identify both its strong and its weak points, and learn from its experience. In 1995-96, the Royal Government is preparing to move from a phase of rehabilitation to one of sustainable development -with equity and social justice. This is the purpose of the present document. The Royal Government is building a liberal democracy and a liberal market economy . The object is to improve the well-being of the population, and to create a society where the rule of law prevails, where human rights are respected, and where the private sector is the engine of growth. The ICORC III Meeting provides the opportunity to lay a sound foundation for Cambodia's and development.