About  |   Contact  |  Mongabay on Facebook  |  Mongabay on Twitter  |  Subscribe
Rainforests | Tropical fish | Environmental news | For kids | Madagascar | Photos

Cambodia-The Wartime Economy, 1970-75

Mongabay.com seeks to raise interest in and appreciation of wild lands and wildlife, while examining the impact of emerging trends in climate, technology, economics, and finance on conservation and development (more)


Cambodia Index

The war that engulfed the rest of Indochina spread to Cambodia in April 1970, shortly after the coup that deposed Prince Sihanouk. Wartime conditions had a major impact on the country's economy, especially on the export sector. Production and export of virtually all commodities dropped sharply, as insecurity spread throughout the countryside. Intense combat in the nation's most densely populated farming areas caused a large segment of the peasant population to flee to cities and to towns. By 1975 the population of Phnom Penh had swollen to 2 million, from just 50,000 in 1955. Moreover, the war seriously dislocated the economic system. Food shortages arose as insurgents interrupted the transportation of crops from the countryside to the main marketing centers. Increasing budgetary expenditures, skyrocketing inflation, shrinking export earnings, and a rising balance-of-payments deficit plagued the war-torn economy.

The war's most damaging effect was on rice production. In 1972 Cambodia needed to import rice (from Japan and from Thailand) for the first time since independence. Fighting reduced the amount of land under rice cultivation to fewer than 800,000 hectares in 1972, far less than the approximately 3 million hectares that had been under cultivation in 1969. The 1972 rice harvest amounted to only 26.8 percent of the 1969 harvest. Exports of natural rubber, the country's second leading foreign-exchange earner, ceased shortly after hostilities began in 1970. The war destroyed extensive rubber plantations and damaged rubber-processing facilities.

In late 1970, Lon Nol, who succeeded Sihanouk, continued to liberalize the economy in an effort to save the country from economic disaster. This endeavor was a continuation of the policies he had enacted as head of the government of "national salvation" in August 1969. Under Lon Nol's direction, Phnom Penh limited the control and the authority of the state export-import agency (Société nationale d'exportation et d'importation--SONEXIM), which had been established in 1964 to administer foreign trade, to denationalize banks and industries, to encourage private foreign investments, and to allow greater private participation in the economy. The new economic policies of the Khmer Republic gradually reversed the pattern of state socialism that had formed the keystone of Sihanouk's domestic policies.

On October 29, 1971, the government implemented a comprehensive program of reforms to stabilize the economy. These reforms included increased import taxes on all nonessential commodities; increased interest rates on bank deposits and on commercial loans; elimination of credit to state enterprises and to public utilities; introduction of a flexible currency exchange system; and simplification of the import system to facilitate the movement of goods. The emphasis of the program was to restore monetary stability in the face of rising inflation, financial speculation, black markets, and other economic problems caused by the war. In a change of policy, the government also moved toward greater involvement with international and with regional organizations and sought support from the World Bank (see Glossary), the International Monetary Fund (see Glossary), and the Asian Development Bank.

As the war progressed, Lon Nol's government aimed major economic measures mainly at improving the overall food supply situation and at maintaining public confidence in the continued availability of essential consumer items. To ensure adequate domestic supplies, in November 1971 Phnom Penh suspended grants of export licenses for major export commodities, such as rice, corn, and cattle. Although the move helped maintain stocks of essential commodities in the capital and in provincial centers, supplies were small relative to demand.

The Lon Nol government had earlier declared in principle that it maintained a policy of "strict neutrality" and would accept foreign assistance from "all countries which love peace and justice." As early as April 20, 1970, Cambodia formally requested military and economic aid from Washington to help cope with growing war expenditures and with an increasing budgetary deficit. As military activity in the country intensified, the United States became Cambodia's largest donor and supplier. Moscow, however, sent medical equipment and, in October 1971, the Soviets renewed a financial agreement with the republican regime. The Economic Support Fund, to which the United Nations (UN), the United States, Britain, Japan, New Zealand, Thailand, and Malaysia pledged their contributions, provided US$21 million in auxiliary relief. Other nations, including Italy, Israel, West Germany, and Switzerland, provided funds mostly to assist war victims. France earmarked its aid for the maintenance of French educational programs and cultural institutions. Nevertheless, these palliative measures fell far short of what was needed. By 1975 the economy had collapsed, and the country was surviving mainly on imported food financed by the United States government.

Data as of December 1987

BackgroundMost Cambodians consider themselves to be Khmers, descendants of the Angkor Empire that extended over much of Southeast Asia and reached its zenith between the 10th and 13th centuries. Attacks by the Thai and Cham (from present-day Vietnam) weakened the empire, ushering in a long period of decline. The king placed the country under French protection in 1863 and it became part of French Indochina in 1887. Following Japanese occupation in World War II, Cambodia gained full independence from France in 1953. In April 1975, after a five-year struggle, Communist Khmer Rouge forces captured Phnom Penh and evacuated all cities and towns. At least 1.5 million Cambodians died from execution, forced hardships, or starvation during the Khmer Rouge regime under POL POT. A December 1978 Vietnamese invasion drove the Khmer Rouge into the countryside, began a 10-year Vietnamese occupation, and touched off almost 13 years of civil war. The 1991 Paris Peace Accords mandated democratic elections and a ceasefire, which was not fully respected by the Khmer Rouge. UN-sponsored elections in 1993 helped restore some semblance of normalcy under a coalition government. Factional fighting in 1997 ended the first coalition government, but a second round of national elections in 1998 led to the formation of another coalition government and renewed political stability. The remaining elements of the Khmer Rouge surrendered in early 1999. Some of the surviving Khmer Rouge leaders are awaiting trial by a UN-sponsored tribunal for crimes against humanity. Elections in July 2003 were relatively peaceful, but it took one year of negotiations between contending political parties before a coalition government was formed. In October 2004, King Norodom SIHANOUK abdicated the throne and his son, Prince Norodom SIHAMONI, was selected to succeed him. Local elections were held in Cambodia in April 2007, and there was little in the way of pre-election violence that preceded prior elections. National elections in July 2008 were relatively peaceful.
LocationSoutheastern Asia, bordering the Gulf of Thailand, between Thailand, Vietnam, and Laos
Area(sq km)total: 181,035 sq km
land: 176,515 sq km
water: 4,520 sq km
Geographic coordinates13 00 N, 105 00 E
Land boundaries(km)total: 2,572 km
border countries: Laos 541 km, Thailand 803 km, Vietnam 1,228 km

Coastline(km)443 km

Climatetropical; rainy, monsoon season (May to November); dry season (December to April); little seasonal temperature variation

Elevation extremes(m)lowest point: Gulf of Thailand 0 m
highest point: Phnum Aoral 1,810 m
Natural resourcesoil and gas, timber, gemstones, iron ore, manganese, phosphates, hydropower potential
Land use(%)arable land: 20.44%
permanent crops: 0.59%
other: 78.97% (2005)

Irrigated land(sq km)2,700 sq km (2003)
Total renewable water resources(cu km)476.1 cu km (1999)
Freshwater withdrawal (domestic/industrial/agricultural)total: 4.08 cu km/yr (1%/0%/98%)
per capita: 290 cu m/yr (2000)
Natural hazardsmonsoonal rains (June to November); flooding; occasional droughts
Environment - current issuesillegal logging activities throughout the country and strip mining for gems in the western region along the border with Thailand have resulted in habitat loss and declining biodiversity (in particular, destruction of mangrove swamps threatens natural fisheries); soil erosion; in rural areas, most of the population does not have access to potable water; declining fish stocks because of illegal fishing and overfishing
Environment - international agreementsparty to: Biodiversity, Climate Change, Climate Change-Kyoto Protocol, Desertification, Endangered Species, Hazardous Wastes, Marine Life Conservation, Ozone Layer Protection, Ship Pollution, Tropical Timber 94, Wetlands, Whaling
signed, but not ratified: Law of the Sea
Geography - notea land of paddies and forests dominated by the Mekong River and Tonle Sap
note: estimates for this country take into account the effects of excess mortality due to AIDS; this can result in lower life expectancy, higher infant mortality, higher death rates, lower population growth rates, and changes in the distribution of population by age and sex than would otherwise be expected (July 2009 est.)
Age structure(%)0-14 years: 32.6% (male 2,388,922/female 2,336,439)
15-64 years: 63.8% (male 4,498,568/female 4,743,677)
65 years and over: 3.6% (male 197,649/female 329,038) (2009 est.)
Median age(years)total: 22.1 years
male: 21.4 years
female: 22.8 years (2009 est.)
Population growth rate(%)1.765% (2009 est.)
Birth rate(births/1,000 population)25.73 births/1,000 population (2009 est.)
Death rate(deaths/1,000 population)8.08 deaths/1,000 population (July 2009 est.)

Net migration rate(migrant(s)/1,000 population)NA
Urbanization(%)urban population: 22% of total population (2008)
rate of urbanization: 4.6% annual rate of change (2005-10 est.)
Sex ratio(male(s)/female)at birth: 1.04 male(s)/female
under 15 years: 1.02 male(s)/female
15-64 years: 0.95 male(s)/female
65 years and over: 0.6 male(s)/female
total population: 0.96 male(s)/female (2009 est.)
Infant mortality rate(deaths/1,000 live births)total: 54.79 deaths/1,000 live births
male: 61.84 deaths/1,000 live births
female: 47.42 deaths/1,000 live births (2009 est.)

Life expectancy at birth(years)total population: 62.1 years
male: 60.03 years
female: 64.27 years (2009 est.)

Total fertility rate(children born/woman)3.04 children born/woman (2009 est.)
Nationalitynoun: Cambodian(s)
adjective: Cambodian
Ethnic groups(%)Khmer 90%, Vietnamese 5%, Chinese 1%, other 4%

Religions(%)Buddhist 96.4%, Muslim 2.1%, other 1.3%, unspecified 0.2% (1998 census)
Languages(%)Khmer (official) 95%, French, English

Country nameconventional long form: Kingdom of Cambodia
conventional short form: Cambodia
local long form: Preahreacheanachakr Kampuchea (phonetic pronunciation)
local short form: Kampuchea
former: Khmer Republic, Democratic Kampuchea, People's Republic of Kampuchea, State of Cambodia
Government typemultiparty democracy under a constitutional monarchy
Capitalname: Phnom Penh
geographic coordinates: 11 33 N, 104 55 E
time difference: UTC+7 (12 hours ahead of Washington, DC during Standard Time)
Administrative divisions23 provinces (khett, singular and plural) and 1 municipality (krong, singular and plural)
provinces: Banteay Mean Cheay, Batdambang, Kampong Cham, Kampong Chhnang, Kampong Spoe, Kampong Thum, Kampot, Kandal, Kaoh Kong, Keb, Krachen, Mondol Kiri, Otdar Mean Cheay, Pailin, Pouthisat, Preah Seihanu (Sihanoukville), Preah Vihear, Prey Veng, Rotanah Kiri, Siem Reab, Stoeng Treng, Svay Rieng, Takev
municipalities: Phnum Penh (Phnom Penh)
Constitutionpromulgated 21 September 1993

Legal systemprimarily a civil law mixture of French-influenced codes from the United Nations Transitional Authority in Cambodia (UNTAC) period, royal decrees, and acts of the legislature, with influences of customary law and remnants of communist legal theory; increasing influence of common law; accepts compulsory ICJ jurisdiction with reservations

Suffrage18 years of age; universal
Executive branchchief of state: King Norodom SIHAMONI (since 29 October 2004)
head of government: Prime Minister HUN SEN (since 14 January 1985) [co-prime minister from 1993 to 1997]; Permanent Deputy Prime Minister MEN SAM AN (since 25 September 2008); Deputy Prime Ministers SAR KHENG (since 3 February 1992); SOK AN, TEA BANH, HOR NAMHONG, NHEK BUNCHHAY (since 16 July 2004); BIN CHHIN (since 5 September 2007); KEAT CHHON, YIM CHHAI LY (since 24 September 2008); KE KIMYAN (since 12 March 2009)
cabinet: Council of Ministers named by the prime minister and appointed by the monarch
elections: the king is chosen by a Royal Throne Council from among all eligible males of royal descent; following legislative elections, a member of the majority party or majority coalition is named prime minister by the Chairman of the National Assembly and appointed by the king

Legislative branchbicameral, consists of the Senate (61 seats; 2 members appointed by the monarch, 2 elected by the National Assembly, and 57 elected by parliamentarians and commune councils; members serve five-year terms) and the National Assembly (123 seats; members elected by popular vote to serve five-year terms)
elections: Senate - last held 22 January 2006 (next to be held in January 2011); National Assembly - last held 27 July 2008 (next to be held in July 2013)
election results: Senate - percent of vote by party - CPP 69%, FUNCINPEC 21%, SRP 10%; seats by party - CPP 45, FUNCINPEC 10, SRP 2; National Assembly - percent of vote by party - CPP 58%, SRP 22%, HRP 7%; NRP 6%; FUNCINPEC 5%; others 2%; seats by party - CPP 90, SRP 26, HRP 3, FUNCINPEC 2, NRP 2

Judicial branchSupreme Council of the Magistracy (provided for in the constitution and formed in December 1997); Supreme Court (and lower courts) exercises judicial authority

Political pressure groups and leadersCambodian Freedom Fighters or CFF; Partnership for Transparency Fund or PTF (anti-corruption organization); Students Movement for Democracy; The Committee for Free and Fair Elections or Comfrel
other: human rights organizations; vendors
Flag descriptionthree horizontal bands of blue (top), red (double width), and blue with a white three-towered temple representing Angkor Wat outlined in black in the center of the red band
note: only national flag to incorporate an actual building in its design

Economy - overviewFrom 2004 to 2007, the economy grew about 10% per year, driven largely by an expansion in the garment sector, construction, agriculture, and tourism. Growth dropped to below 7% in 2008 as a result of the global economic slowdown. With the January 2005 expiration of a WTO Agreement on Textiles and Clothing, Cambodian textile producers were forced to compete directly with lower-priced countries such as China, India, Vietnam, and Bangladesh. The garment industry currently employs more than 320,000 people and contributes more than 85% of Cambodia's exports. In 2005, exploitable oil deposits were found beneath Cambodia's territorial waters, representing a new revenue stream for the government if commercial extraction begins. Mining also is attracting significant investor interest, particularly in the northern parts of the country. The government has said opportunities exist for mining bauxite, gold, iron and gems. In 2006, a US-Cambodia bilateral Trade and Investment Framework Agreement (TIFA) was signed, and several rounds of discussions have been held since 2007. The tourism industry has continued to grow rapidly, with foreign arrivals exceeding 2 million per year in 2007-08, however, economic troubles abroad will dampen growth in 2009. Rubber exports declined more than 15% in 2008 due to falling world market prices. The global financial crisis is weakening demand for Cambodian exports, and construction is declining due to a shortage of credit. The long-term development of the economy remains a daunting challenge. The Cambodian government is working with bilateral and multilateral donors, including the World Bank and IMF, to address the country's many pressing needs. The major economic challenge for Cambodia over the next decade will be fashioning an economic environment in which the private sector can create enough jobs to handle Cambodia's demographic imbalance. More than 50% of the population is less than 21 years old. The population lacks education and productive skills, particularly in the poverty-ridden countryside, which suffers from an almost total lack of basic infrastructure.
GDP (purchasing power parity)$28.01 billion (2008 est.)
$26.67 billion (2007 est.)
$24.2 billion (2006 est.)
note: data are in 2008 US dollars
GDP (official exchange rate)$11.25 billion (2008 est.)
GDP - real growth rate(%)5% (2008 est.)
10.2% (2007 est.)
10.8% (2006 est.)
GDP - per capita (PPP)$2,000 (2008 est.)
$1,900 (2007 est.)
$1,800 (2006 est.)
note: data are in 2008 US dollars
GDP - composition by sector(%)agriculture: 29%
industry: 30%
services: 41% (2007 est.)
Labor force8.6 million (2008 est.)

Labor force - by occupation(%)agriculture: 75%
industry: NA%
services: NA% (2004 est.)
Unemployment rate(%)3.5% (2007 est.)
2.5% (2000 est.)
Population below poverty line(%)35% (2004)
Household income or consumption by percentage share(%)lowest 10%: 3%
highest 10%: 34.2% (2007)
Distribution of family income - Gini index43 (2007 est.)
40 (2004 est.)
Investment (gross fixed)(% of GDP)22.4% of GDP (2008 est.)
Budgetrevenues: $1.274 billion
expenditures: $1.592 billion (2008 est.)
Inflation rate (consumer prices)(%)25% (2008 est.)
5.9% (2007 est.)

Stock of money$591.7 million (31 December 2008)
$513.6 million (31 December 2007)
Stock of quasi money$2.328 billion (31 December 2008)
$2.309 billion (31 December 2007)
Stock of domestic credit$1.67 billion (31 December 2008)
$1.131 billion (31 December 2007)
Market value of publicly traded shares$NA
Economic aid - recipient$698.2 million pledged in grants and concession loans for 2007 by international donors (2007)

Agriculture - productsrice, rubber, corn, vegetables, cashews, tapioca, silk
Industriestourism, garments, construction, rice milling, fishing, wood and wood products, rubber, cement, gem mining, textiles

Industrial production growth rate(%)8% (2008 est.)

Current account balance-$1.06 billion (2008 est.)
-$506.3 million (2007 est.)
Exports$4.708 billion (2008 est.)
$4.089 billion (2007 est.)

Exports - commodities(%)clothing, timber, rubber, rice, fish, tobacco, footwear
Exports - partners(%)US 54.4%, Germany 7.7%, Canada 5.9%, UK 5.5%, Vietnam 4.5% (2008)
Imports$6.534 billion (2008 est.)
$5.424 billion (2007 est.)

Imports - commodities(%)petroleum products, cigarettes, gold, construction materials, machinery, motor vehicles, pharmaceutical products
Imports - partners(%)Thailand 26.8%, Vietnam 19%, China 14.5%, Hong Kong 8.1%, Singapore 6.9% (2008)

Reserves of foreign exchange and gold$2.641 billion (31 December 2008 est.)
$2.143 billion (31 December 2007 est.)
Debt - external$4.127 billion (31 December 2008 est.)
$3.89 billion (31 December 2007 est.)

Exchange ratesriels (KHR) per US dollar - 4,070.94 (2008 est.), 4,006 (2007), 4,103 (2006), 4,092.5 (2005), 4,016.25 (2004)

Currency (code)riel (KHR)

Telephones - main lines in use45,100 (2008)
Telephones - mobile cellular4.237 million (2008)
Telephone systemgeneral assessment: mobile-phone systems are widely used in urban areas to bypass deficiencies in the fixed-line network; fixed-line connections stand at well less than 1 per 100 persons; mobile-cellular usage, aided by increasing competition among service providers, is increasing and stands at 30 per 100 persons
domestic: adequate landline and/or cellular service in Phnom Penh and other provincial cities; mobile-phone coverage is rapidly expanding in rural areas
international: country code - 855; adequate but expensive landline and cellular service available to all countries from Phnom Penh and major provincial cities; satellite earth station - 1 Intersputnik (Indian Ocean region) (2008)
Internet country code.kh
Internet users74,000 (2008)
Airports17 (2009)
Roadways(km)total: 38,093 km
paved: 2,977 km
unpaved: 35,116 km (2007)

Ports and terminalsPhnom Penh, Kampong Saom (Sihanoukville)
Military branchesRoyal Cambodian Armed Forces: Royal Cambodian Army, Royal Khmer Navy, Royal Cambodian Air Force (2009)
Military service age and obligation(years of age)conscription law of October 2006 requires all males between 18-30 to register for military service; 18-month service obligation (2006)
Manpower available for military servicemales age 16-49: 3,759,034
females age 16-49: 3,784,333 (2008 est.)
Manpower fit for military servicemales age 16-49: 2,673,383
females age 16-49: 2,763,256 (2009 est.)
Manpower reaching militarily significant age annuallymale: 177,881
female: 175,332 (2009 est.)
Military expenditures(% of GDP)3% of GDP (2005 est.)
Disputes - internationalCambodia and Thailand dispute sections of boundary with missing boundary markers and claims of Thai encroachments into Cambodian territory; maritime boundary with Vietnam is hampered by unresolved dispute over sovereignty of offshore islands; Thailand accuses Cambodia of obstructing inclusion of Thai areas near Preah Vihear temple ruins, awarded to Cambodia by ICJ decision in 1962, as part of a planned UN World Heritage site

Electricity - production(kWh)1.273 billion kWh (2007 est.)
Electricity - production by source(%)fossil fuel: 65%
hydro: 35%
nuclear: 0%
other: 0% (2001)
Electricity - consumption(kWh)1.272 billion kWh (2007 est.)
Electricity - exports(kWh)0 kWh (2008 est.)
Electricity - imports(kWh)167 million kWh (2007 est.)
Oil - production(bbl/day)0 bbl/day (2008 est.)
Oil - consumption(bbl/day)4,000 bbl/day (2008 est.)
Oil - exports(bbl/day)0 bbl/day (2007 est.)
Oil - imports(bbl/day)30,970 bbl/day (2007 est.)
Oil - proved reserves(bbl)0 bbl (1 January 2009 est.)
Natural gas - production(cu m)0 cu m (2008 est.)
Natural gas - consumption(cu m)0 cu m (2008 est.)
Natural gas - exports(cu m)0 cu m (2008)
Natural gas - proved reserves(cu m)0 cu m (1 January 2009 est.)
HIV/AIDS - adult prevalence rate(%)0.8% (2007 est.)
HIV/AIDS - people living with HIV/AIDS75,000 (2007 est.)
HIV/AIDS - deaths6,900 (2007 est.)
Major infectious diseasesdegree of risk: very high
food or waterborne diseases: bacterial and protozoal diarrhea, hepatitis A, and typhoid fever
vectorborne diseases: dengue fever, Japanese encephalitis, and malaria
note: highly pathogenic H5N1 avian influenza has been identified in this country; it poses a negligible risk with extremely rare cases possible among US citizens who have close contact with birds (2009)
Literacy(%)definition: age 15 and over can read and write
total population: 73.6%
male: 84.7%
female: 64.1% (2004 est.)

School life expectancy (primary to tertiary education)(years)total: 10 years
male: 10 years
female: 9 years (2006)
Education expenditures(% of GDP)1.7% of GDP (2004)

Copyright mongabay 2000-2013