Cambodia’s strong economy, weak society duality

Khmer Circle: 

Well, there aren't any "national institutions" now or likely ones in the foreseeable future under this single-party regime which is strictly speaking, a strongman dictatorship. Except, of course, organs and governing mechanisms/institutions designed to perpetuate the status quo. In fact, economic growth in such authoritarian settings - as in Communist China and neighbouring Vietnam - have invariably been accompanied not by liberalisation or liberal reforms in social spheres but rather tighter, more repressive state institutional presence. 

^^^ 

 

Published: 10 February 2025

Mark Vong

EAF 

 

 

In Brief

Cambodia’s strong economic growth in 2024 — driven by robust exports and tourism recovery — stands in stark contrast to a weakening political and civil society, characterised by continued repression. This duality presents a unique opportunity for the ruling Cambodian People’s Party (CPP) to implement institutional reforms designed to sustain economic growth and improve governance. As Cambodia looks towards graduating from Least Developed Country (LDC) status in 2029, the urgency for economic resilience grows, offering the CPP a crucial moment to bolster and solidify national institutions.

2024 marked Cambodian Prime Minister Hun Manet’s first full year in office. The economy performed well while political freedoms continued to be constrained. But a strong economy and weak society may open the door for institutional reforms critical for sustained development and the Cambodian People’s Party’s (CPP) popularity. Such reforms could foster further growth and offer a glimpse of hope for political liberalisation, although this remains highly unlikely in the foreseeable future.

Cambodia’s economy is projected to have grown by more than 5 per cent in 2024, driven by robust exports to traditional markets and emerging ones under the Regional Comprehensive Economic Partnership.

Cambodia’s economic base has been gradually diversifying from the dominant garment industry, with the value of non-garment exports rising more than five-fold relative to 2016. The number of international tourists has recovered and surpassed pre-pandemic levels, with the country receiving more than 6 million visitors in 2024.

Years of solid economic growth and social development have enabled Cambodia to meet the criteria to graduate from the status of Least Developed Country (LDC) for the second time in 2024, after doing so already in 2021. Having reached this milestone twice, the UN General Assembly adopted a resolution that Cambodia will cease to be an LDC by the end of 2029.

But resilient economic development unfolded against the backdrop of a weakening civil and political society. According to the human rights group LICADHO, many opposition officials and supporters, labour unionists, land and environmental activists and journalists were detained or sentenced in 2024. Incitement to cause social unrest — often expressed on social media — was one of the most common charges laid by the court.

Others faced defamation lawsuits. The president of the Candlelight Party was ordered to pay US$1.5 million to the government for criticising the state of democracy in Cambodia in an interview with Nikkei Asia.

This duality can have important implications for the prospects of political liberalisation in Cambodia. The country’s impending exit from LDC status will bring tremendous economic challenges, including the loss of access to trade preferences and concessional financing, making exports and borrowing more expensive.

The United Nations Development Program’s modelling shows that exports could drop by 2.4 per cent in 2030, leading to a GDP contraction of 2 per cent and the loss of 168,000 jobs. To avert this dip, the organisation recommends, among others, measures to enhance Cambodia’s competitiveness including anti-corruption, civil service and judicial reforms.

A sluggish economic performance would dent the CPP’s right to rule. Unlike the economic downturn during COVID-19, the government would not be able to blame external factors. With five years of preparation for an orderly transition, the government’s capacity to navigate the new trade environment would be sharply questioned if robust economic growth came to a halt.

With claims of liberation and electoral legitimacy increasingly lacking, performance legitimacy based on capable governance and economic development is the new anchor for the CPP’s popularity. Hun Manet has to demonstrate that ‘the CPP deserves to run the state — not because it built it, but because it can run it better than other parties’. Faced with this legitimacy threat, the government can be expected to take administrative reforms with heightened urgency.

If more effective institutions are to emerge from serious political commitments, Cambodia would take on a cyclical development path — weak institutions would first be harnessed to drive economic development which would later create new problems that propel the government to build stronger institutions, supporting further economic growth.

From the CPP’s perspective, a weak political opposition provides a rare window of opportunity for institutional strengthening. Without a viable challenger in the electoral arena, the CPP can afford to focus less on cutthroat electioneering and more on bureaucratic rationalisation to improve the state’s extractive and administrative capacities.

If attained, development-driven reforms can give Cambodia a capable state and even a relatively functioning and predictable legal system, both conducive to business competitiveness. But it would not necessarily foster democratic accountability. This configuration of a relatively effective state without accountability characterises some moderately developed authoritarian states like Vietnam. Relative to a failed state or a dysfunctional democracy, this outcome could be more desirable for many.

The CPP leadership viewed the Western-imposed democratic transition in the early 1990s as inevitable due to extreme aid dependency at that time. But if future political liberalisation occurs, it will likely happen on Cambodia’s own terms, meaning the CPP would decide when and how to liberalise.

According to the democracy through strength theory, democratic elections could be sanctioned under two conditions — when threats force the ruling elites to see elections as a new legitimation formula for their survival, and when strong developmental track records bolster their confidence in winning those elections.

Cambodia is in the process of building such developmental track records and its success will require effective institutions. How Hun Manet reshapes the party-state in the next five years will be pivotal for economic development and by extension, political liberalisation in Cambodia.

Mun (Mark) Vong is Research Fellow in the Democratizing the Developmental State Hub at the Nelson Mandela School of Public Governance, University of Cape Town.

This article is part of an EAF special feature series on 2024 in review and the year ahead.