Khmer Intelligence News - 25 March 2009

25 March 2009

King Sihamoni discreetly left Cambodia (2)

King Norodom Sihamoni very discreetly left Cambodia earlier this week for China and/or France.

Retired King Sihanouk not to testify before Khmer Rouge Tribunal (2)

A compelling reason for Retired King Norodom Sihanouk not to return from China to Cambodia is related to the fact that the Cambodian government doesn't want him to testify before the Khmer Rouge Tribunal in Phnom Penh. Many people want to see this embarrassing tribunal disbanded as soon as possible by creating as many (political, procedural, judicial, administrative, financial) problems as possible.

Reasons for looming instability (2)

Among the reasons for the London-based Economist Intelligence Unit to include Cambodia among the world's most politically risky countries in the face of the global economic crisis are: systemic land grabbing possibly leading to a land revolution in this predominantly agricultural country, unparalleled social injustices as reflected by the increasing gap between the privileged few and the vast majority of the population who live in dire poverty, unprecedented corruption destroying the nation's social fabric (Cambodia is also ranked among the world's most corrupt countries), government's unwillingness or inability to tackle the economic and financial crisis without undermining the very foundations of the regime.

Ke Kim Yan was rehabilitated thanks to Vietnam (2)

Leaders of the Vietnamese Communist Party have recently intervened in favor of disgraced former army chief Ke Kim Yan, who finally avoided prosecution for alleged involvement in illegal land deals and was appointed as Hun Sen's 10th deputy prime minister. Vietnam wants to secure political stability in Cambodia by preventing dangerous power struggle within the CPP leadership.

Foreign currency reserves evaporating (2)

The National Bank of Cambodia has seen its foreign currency reserves evaporate. NBC Governor Chea Chanto indicated at a recent Council of Ministers meeting that the country is seriously suffering from a rapidly deteriorating current account balance (sharp drop in exports and tourism) and capital outflows (reversal of foreign investment inflows). Taking also into account fiscal revenue shortfalls and subsequent budgetary problems, the government will be unable to meet its obligations in the next few months. See “Sharp drop in customs revenue” and “State budget for 2009 in jeopardy” (KI News, 11 March 2009).
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11 March 2009

Sharp drop in customs revenue (2)

In the 2008 state budget, the Customs Department accounted for over 60 percent of all tax revenue, which is a relatively high figure in the region. For 2009, it should collect US$585 million, a figure that now looks impossible to achieve given the ongoing economic slowdown.

For the first two months of 2009, customs revenue reached only US$64 million compared to US$86 million for the same period last year, which represents a 25 percent drop [adjusted for the collection of a US$7 million duty pertaining to 2008].

State budget for 2009 in jeopardy (2)

The government will soon be obliged to revise downward the state budget for 2009 that was adopted last December because it is unable to collect the projected revenue. See above news “Sharp drop in customs revenue” while knowing that the fall in revenue also holds for other sources of income. The projected 2009 budget amounts to US$1.75 billion compared to US$1.37 billion for the 2008 budget, representing a 28 percent increase. This 28 percent increase will likely evaporate and be replaced by a decrease instead. Cambodia is facing the world economic crisis with a collapsing budget, let alone a strong budget with an appropriate economic stimulus package.