EIU revises Cambodian economic growth forecast

September 05, 2009
Fibre2fashion News Desk - India

The Economist Intelligence Unit (EIU) has revised the growth forecast of 2009 from a negative growth of 3 percent to a lower negative 1.5 percent growth rate for Cambodia.

The reasons put forward by EIU for doing so, is that the worldwide recession is expected to be less severe than expected, mainly due to the effects of stimulus packages declared by a majority of governments.

It also revised growth projection rates for 2010 from 2.2 percent to 3.3 percent.

Hun Sen on EIU instability report in Cambodia: Deny! Deny! Deny!

PM again refutes UK report purporting instability of Cambodia

PHNOM PENH, April 7 (Xinhua) -- Cambodian Prime Minister Hun Sen has once again dismissed a UK report claiming that the kingdom is among the top five countries at high risk of political instability amid the current global economic climate, the official Agence Kampuchea Presse (AKP) said on Tuesday.

With its report, British think tank the Economist Intelligence Unit (EIU) possibly aimed to interrupt the foreign investment in Cambodia, the AKP quoted the premier as telling the 5th Asia Economic Forum here on Monday.

Fortunately, all the projects in Cambodia were now going ahead, and didn't retreat, he added.

The premier also revealed that the EIU had invited him to visit England in September and he still hesitated whether to accept it or not.

The recently issued EIU report classified the risk of social upheaval and political unrest as high or very high in 95 countries, as a result of the current global financial crisis. Cambodia was ranked fourth in terms of such threat.

In late March, Hun Sen had already rejected the report, saying that "we have political stability and live in peace now."

"We know that their assessment had other purposes inside," he added.

Hun Sen: report released by “The Economist” aims at repelling investors

07-04-2009
By Ros Dina
Ka-set

Cambodian prime Minister Hun Sen once again reacted strongly to the alarmist conclusions released in a report by the Economist Intelligence Unit (EIU) , a branch of the British group The Economist, according to which Cambodia is amongst countries at high risk of political instability due to the global economic crisis.

Released at the end of March, the report ranks Cambodia fourth among countries where risks of social insurrection and political instability are at their highest after Zimbabwe, Chad and the Democratic Republic of the Congo, at the same level as Sudan but before Iraq, Haiti, Pakistan and Afghanistan.

The government already denounced the “political orientation” of the report, and Hun Sen quoted that very argument in his opening speech for the Fifth Asia Economic Forum (AEF) on Monday April 6th in Phnom Penh. “[This report] is a political attempt to stop flows on investments [in Cambodia], since here, we still manage to attract foreign investors”, he denounced.

According to the prime Minister, “no project” was withdrawn by investors. And he gave as evidence the “current” building of hydroelectric power plants which is “gaining pace” with the cooperation of China. Hun Sen also said he recently met a delegation of American investors working in countries which are part of the ASEAN, who allegedly said they were “ready to come and do business in Cambodia”.

For the head of government, Cambodia is not at risk of suffering a political crisis because of famine, as feared by economists at the EIU. If those experts mean this, it is because they “were wearing glasses with a prescription too strong for their eyes”, he said ironically. The risk of scarcity is small, the prime Minister added, since , on the contrary, the country is faced with crisis in rice exports as important stocks have not been sold abroad yet.

Hun Sen then urged the Cambodian population to rally and evade pessimistic predictions made by the economists. The head of Government prided himself on the fact that “In 2005, we forecast a growth rate for the economy situated between 1.6% and 2.4% in Cambodia. But we managed to climb all the way up to 13.3% and for five consecutive years, the country’s rate for economic growth reached an average of 10.4%”.

Predictions released by the main regional and international institutions for 2009 were recently revised downwards; especially those published by the International Monetary Fund (IMF) which now fears recession might befall Cambodia. The IMF bet on a -0.5% negative growth rate. At the Asian Development Bank (ADB), experts reckon for their part that the growth rate of the Cambodian GDP will be around 2.5%.

Besides, the Prime Minister also stressed that the Council of Ministers adopted on Friday April 3 a bill for the rectification of the 2009 Budget Law, intended for the support of agriculture along three lines: short-term loans to buy producers some rice at a reasonable price and ensure food security and the stability of prices; medium-term loans for companies in charge of transforming rice, in order to reinforce capacity for storage and drying; finally, medium and long-term loans with a view to support investments relating to the transformation of agricultural produce, to fulfill local needs and exports.

In a mission conclusion released in early March, the IMF advised the Cambodian government to allow budget deficit to rise around 4.75% and inject some 500 million US dollars in support of national economy. Opposition leader Sam Rainsy also put forward the idea of a stimulus plan, as several dozens of garment manufacturing factories closed down in the country and more than 50,000 workers were left jobless.

Sacrava's Political Cartoon: Baby Hor

Cartoon by Sacrava (on the web at http://sacrava.blogspot.com)

Baby Hor says EIU report on instability is 'perverse'

Children sleep outdoors in Phnom Penh. A recent report says economic hard times may lead to instability. (Photo by: AFP)

Ambassador to Britain says EIU report on instability is 'perverse'

Thursday, 26 March 2009
Written by Michael Fox
The Phnom Penh Post

Dismisses claims as based on ‘sketchy and unconvincing' evidence.

CAMBODIA'S ambassador to Britain, Hor Nambora, added to official outrage over a report that labelled the nation as potentially one of the world's least stable due to the economic crisis.

The report by the Economist Intelligence Unit (EIU) ranks Cambodia behind Zimbabwe, Chad and DR Congo, and equal to Sudan in the potential risk of social unrest if measures to stimulate the global economy fail.

In a letter to the EIU, Hor Nambora said the report was "insulting", "perverse", and misleading.

"Your scaremongering allegations are highly dangerous, as they could be construed as actively inciting unrest," said Hor Nambora, who is the son of Foreign Minister Hor Namhong. "They also happen to be a gross distortion and misrepresentation of Cambodia's true position, and there can be no justification for these claims."

Hor Nambora said the EIU had ignored solid evidence including recent sustained economic growth due to political stability and improved macro-economic management.

He said it "arrogantly dismissed" Prime Minister Hun Sen's declaration that Cambodia would seek to maintain its economic growth this year.

And he complained that the country's oil and gas reserves and growing reputation as a tourist destination and "centre of enterprise and investment" were disregarded: "You seem to have ignored this reassurance from the highest possible level, preferring to rely on your own evidence, which would appear to be both sketchy and unconvincing," he wrote.

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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ARCHIVES

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.

Sacrava's Political Cartoon: Viva me!

Cartoon by Sacrava (on the web at http://sacrava.blogspot.com)

Baby Hor comes to the defense of the regime of Papa Hor’s boss

Hor 5 Bora (aka Baby Hor)

Diplomatic reaction to the EIU report

24 March 2009
By Ung Chamroeun Cambodge Soir Hebdo Translated from French by Luc Sâr Click here to read the article in French

The conclusions of the Economist Intelligence Unit (EIU) report, which was published by a UK study and reprinted in The Cambodia Daily on 23 March, received the ire of Prime minister Hun Sen. Hor Nambora, the Cambodian ambassador to the UK, sent in a protest communiqué.

According to the conclusions by the EIU report, Cambodia is classified as the number 4 most unstable country in the world. Cambodia would be threatened by serious social troubles due to the current financial economic crisis. This statement, which was not welcomed by both Hun Sen and members of the civil society, was also sharply criticized by Hor Nambora.

According to Hor Nambora, these “alarmist allegations are dangerous” for Cambodia and the report ignores the situation in neighboring countries wracked with political problems, such as Burma, Thailand, and Sri Lanka which is embroiled in a [civil] war. To Hor Nambora, the claims made by the report are too “vague and they are not convincing” and that it is even “insulting to place Cambodia as being more politically instable than countries which are confronting war, such as Afghanistan and Iraq.”

Finally, Hor Nambora, recalled the economic and social progress in the kingdom during the last decade, and he called on the report authors to reconsider their studies and retract their initial conclusions.

Politiktoons No. 72: Popular Anger

Click on the cartoon to zoom in

Cartoon by Sacrava (on the web at http://politiktoons.blogspot.com
and also at http://sacrava.blogspot.com)

Research Firm Warns of Political Instability

By Kong Sothanarith, VOA Khmer
Original rpoert from Phnom Penh
23 March 2009

Prime Minister Hun Sen on Monday lashed out at a report warning of political instability in the country in the wake of the current economic crisis.

Hun Sen called a report released Friday by the Economist Intelligence Unit, a UK-based research firm, politically motivated.

The Intelligence Unit said Cambodia was one of five countries globally most at risk for political unrest, as the worldwide economic crisis drags on: worse off than Iraq and Afghanistan but in better shape than Zimbabwe, Chad and the Democratic Republic of Congo, local media reported Monday.

“Why didn’t they talk about the [Lon Nol] and Pol Pot regimes,” Hun Sen said by way of criticism, speaking at an annual conference for the Ministry of Health. “It is clear that they have a political objective.”

He did not elaborate, but Hun Sen said he was indifferent to the report’s findings.

“Let them talk,” he told the assembled, in remarks broadcast nationwide.

Opposition lawmaker and Sam Rainsy Party spokesman Yim Sovann said the report’s findings were plausible, especially considering Cambodia’s widespread corruption, violence against civilians, job losses in the garment sector and dearth of markets for farmers.

“We are worried about what will happen in the future,” he said. “If the government does not undertake reform on time, the situation will be trouble and will affect political stability.”

Cambodia’s stability risk comes from an Intelligence Unit comparison of income inequality, date of independence, corruption, ethnic fragmentation, trust in public institutions, discrimination against minorities, history of instability, risk of labor unrest, infant mortality rate, geographical position, regime type, factionalism, GDP growth, unemployment rate and per capita income, the Cambodia Daily reported Monday.

Financial crisis puts country at high risk of unrest: EIU

Workers protest outside a Phnom Penh garment factory. Lack of trust in the government and a history of instability are among Cambodia’s weaknesses as it faces the fallout from the global financial crisis. (Photo by: Sovann Philong)

Monday, 23 March 2009
Written by Michael Fox
The Phnom Penh Post

A new report by the Economist Group says Cambodia is in among top five countries most at risk of instability from the worsening economic downturn

CAMBODIA is among the countries most at risk of suffering serious social unrest as the financial crisis threatens stability across the globe, a report has warned.

The report by the Economist Intelligence Unit (EIU) states that the economic upheaval and a "global pandemic of unrest" is set to disrupt economies and topple governments over the next two years.

The risk is classified as high or very high in 95 countries.

Cambodia was ranked fourth in terms of the threat posed, equal with Sudan and ahead of only Zimbabwe, Chad and the Democratic Republic of Congo.

It was ranked worse than war-torn Iraq and Afghanistan.

According to the report titled "Manning the Barricades", as people lose confidence in the ability of governments to restore stability, protests will become increasingly likely.

"A spate of incidents [across the globe] in recent months shows that the global economic downturn is already having political repercussions. This is being seen as a harbinger of worse to come."

The governments of Latvia and Iceland have already succumbed to the political fallout from the crisis.

The report's Political Instability Index was formulated using two indices: Underlying Vulnerability which took into account inequality, state strength and public trust in political institutions, while Economic Distress included levels of development, growth and unemployment.

Cambodia scored 7.9 out of 10 in Underlying Vulnerability and eight in Economic Distress, up from a total risk of six last year.

However, Cambodian economist Kang Chandararot said he was not as pessimistic about Cambodia's future as the EIU was, but acknowledged there would be an impact.

"They may engage in something illegal [due to] the increase in insecurity in our country, but not in the form of revolution or mass strikes.... I don't think that will happen," he said.

Kang Chandararot said the EIU did not know enough about the Cambodian economy. Unemployed people could return to the land if they are unable to find jobs in the main urban centres.

"Agriculture is the last resort of unemployed people ... we still have a lot of land for subsistence and agriculture," he said.

Public investment from foreign aid would help weather the crisis, provided the aid continued.

"The ... economic downturn is already having political repercussions."

Kang Chandararot said observations of the Cambodian Institute for Development Study over the last four years showed that a dollar in public investment would lead to two dollars in private investment, contributing to continued growth.

He could not put a figure on the number of Cambodian's who might lose their jobs as a result of the crisis.

However, the report said the figure could be as high as 50 million globally.
The Cambodian garment industry has already shed tens of thousands of jobs in the past six months.

In spite of Kang Chandararot's confidence, the report said the social impact of the crisis was too serious to ignore.

"[T]he threat of unrest is grave and the risk of complacency far outweighs any risk of exaggerating the dangers," it said.

Cambodian PM rejects UK report of political unrest

PHNOM PENH, March 23 (Xinhua) -- Cambodian Prime Minister Hun Sen here on Monday rejected a UK report that the kingdom is among the top 5 countries at high risk of political instability amid the global economic climate.

"We have political stability and live in peace now, but they still labeled us negatively," he told the opening ceremony of the annual work-review meeting of the Health Ministry, while mentioning the report issued by the Economist Intelligence Unit (EIU), a British think tank.

"We know that their assessment had other purposes inside," he said, adding that EIU was just afraid of assessing other neighboring countries in turmoil now.

Due to the current global financial crisis, the EIU report classified the risk of social upheaval and political unrest as high or very high in 95 countries, and ranked Cambodia the fourth in terms of such threat.

Cambodia: Top-list of countries with "grave threat" of social unrest in response to the global recession over the next two years

World sitting on powder-keg

London, March 22, 2009
Hindustan Times (India)

A leading British thinktank has warned of the "grave threat" of social unrest in response to the global recession over the next two years.

The Economist Intelligence Unit (EIU), in a paper published Friday, rated the risk of upheaval that could “disrupt economies and topple governments” as “high or very high” in 95 countries. “Popular anger around the world is growing as a result of rising unemployment, pay cuts and freezes, bail-outs for banks, and falls in house prices and the value of savings and pension funds," said the EIU paper, entitled Manning the Barricades.

“As people lose confidence in the ability of governments to restore stability, protests look increasingly likely.” A spate of incidents in recent months had shown that the global economic downturn was having political repercussions.

“This is being seen as a harbinger of worse to come. There is growing concern about a possible global pandemic of unrest,” said the paper. Top of the list of high-risk countries were Zimbabwe, Chad, the Democratic Republic of Congo, Cambodia and Sudan.

However, three of the European Union's neighbours — Ukraine, Moldova and Bosnia-Herguegovina — were rated as being at “very high risk” of social upheaval. The paper pointed out that two European governments —in Iceland and in Latvia — had already fallen as a result of crisis.

In Europe, Britain was “not immune” from the danger of serious social unrest and “more likely” to suffer from it than Germany and the Netherlands, but “less likely” than France and the US. A lot depended on how United States President Barack Obama responded to pressure to “defend American jobs and companies against foreign imports,” said the paper.

“As the downturn worsens, far more intense and long-lasting events can be expected, such as armed rebellions, military coups, civil conflicts and perhaps even wars between states,” it said.