Cambodia Globalization Essay

In the globalization trend of the world, many countries join in regional or international organization as EU, APEC, ASEAN, and especially, WTO, the largest global organization. When they join those organization, they hope to reform their own economies and seek for chances to access foreign markets. However, WTO, or globalization, is not a game that every player can win. There are not only winners but also losers in this game. Let us take a look at the case of Cambodia, which has just joined WTO for nearly a decade. Overview

Cambodia is a country in South East Asia, which has the border with Laos, Vietnam and Thailand. The total area of Cambodia is 181,400 sq. Km with the coastline 445km and the population is 14,607,992 as of 2010 (Key Data 1). During 20th century, Cambodia had gone through a fierce history: “Cambodia became a protectorate of France in 1863, and was made part of the French Indochina Union in the 1880s. Cambodia gained independence from France in 1953, and the country became the King- dom of Cambodia under King Sihanouk, who became prime minister in 1955 and head of state in 1960.

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Sihanouk had stable control of the country until the mid-1960s, but as the Vietnam War intensified after 1965, the political conditions in Cambodia became more complicated. By 1970, the Cambodian monarchy was abolished and the Southeast Asian country was proclaimed to be the Khmer Republic. Following a five-year struggle, Communist Khmer Rouge forces captured Phnom Penh in 1975 and ordered the evacuation of all cities and towns; over 1. million people died from execution, starvation, disease or enforced hardships. A 1978 Vietnamese invasion drove the Khmer Rouge into the countryside and touched off more than a decade of fighting. ” (Key Data 1) Until the Paris Peace Agreement was signed in 1991, Cambodia could back to the mainstream of the international economy with an election. However, there were still some conflicts about the recovery process so that until 1997, Cambodia could totally focus on its economic growth.

Foreign Policy. After stabilized all the domestic issues, Cambodia acted in such a very active way to keep pace with the globalization trend which was strongly growing all over the world: “With the formation of the coalition government in November 1998 and the establishment of relative peace and security, Cambodia’s relations with donor countries and international organizations began to improve. It has also made efforts to improve regional relations. In April 1999, Cambodia became a full member of the Association of Southeast Asian Nations (ASEANS).

Also in 1999, the government began to strengthen relations with neighboring Vietnam, Laos and Thailand, as well as with China. Cambodia has one of the most open economies in Asia, and it is willing to reduce tariffs further in line with its obligations under the ASEAN Free Trade Agreement. In 2003, the World Trade Organization (WTO) agreed to admit Cambodia, and in August 2004 the Cambodian parliament ratified entry into the WTO. ” (Economic Overview, 47). It was such an outstanding effort for joining WTO in 2004 while Cambodia’s neighbor, Vietnam, which was liberalized 30 years before must wait 3 years later than Cambodia to join WTO.

Simultaneously, Cambodia also sought for good relationships with neighbor countries in region. One of the most important things that caused the conflict in the region was borders issue. Therefore, Cambodia carried out many activities to remove those conflicts and strengthen the relationship with its neighbors. •In February 2000, Cambodia and Laos agreed to continue discussions to demarcate their unclear border. •In June 2000, Cambodia and Thailand opened talks in Phnom Penh in an effort to resolve their long- lasting border conflict. In August 2002 Cambodian Co-Defense Ministers Tea Banh and Prince Sisawat Sirirat met with their Vietnamese counterpart Defense Minister Tran Van Tra in Phnom Penh to continue discussions began in 2000 over cooperation in security matters. (Foreign Relations, 56) Those continuous activities proved the determination of Cambodia wanted to tighten its relationship with the countries in the region and eliminate the conflicts with them in the past. Although later, Cambodia had clashes with Thailand to fight for the possession of the Preah Vihear temple.

Now, Cambodia is also getting trouble with Vietnam in the plan to build dam system on Mekong River, which is the main water and alluvium supply for Mekong Delta, the biggest agriculture area of Vietnam. Is Cambodia Winner or Loser in The Globalization? With the determination to play an active role from the beginning, Cambodia has reaped the benefits. Its economic growth is very impressive: “The economy grew very rapidly over the period 1999–2007, at about 9 per cent per annum, the fastest among Asia’s low-income economies and one of the fastest in the world, albeit from a very low base.

Growth was generally also higher than its three Mekong neighbors, although Cambodia was noticeably more severely affected by the 2008–09 Global Financial Crisis. Income per capita more than doubled from 1998 to 2007. The government has announced its objective of a further doubling of per capita incomes by 2020. ” (Hill, 135) The rate of poverty also impressive declined. Poverty is estimated to have fallen from 45–50 per cent in 1993–94 to 30 per cent in 2007 based on the national poverty line. It was also estimated to be fallen 25. 8 per cent in 2010. Hill, 135) However, behind those impressive numbers in growth, Cambodia has also face some issues from its open policy. First, it is the dollarization. Dollars are used everywhere in Cambodia, the domestic currency even disappears. It is such a dangerous situation for Cambodia: “The economy is highly dollarized, and so the ability to conduct a discretionary counter- cyclical monetary policy or exchange rate adjustment is not available as instruments. ” (Hill, 136) That means the Cambodia government has lost its control on the domestic currency and cannot do monetary policy to adjust the economy.

Secondly, it is the gap between rich and poor. According to a research the richest 20 percent outspent the poorest 20 percent by nearly eight times, one of the highest ratios in Asia. There is also the unbalance between urban and rural: the Plateau/Mountain and Tonle? Sap zones having the highest poverty headcounts at 36. 6 per cent and 30. 8 per cent, respectively, while the central plains area recorded a much lower rate of 21. 3 per cent. (Hill, 136) Natural Resources Management in Cambodia Natural Resources in Cambodia are forests, coastal, and rivers system with the biodiversity.

As any other developing countries, Cambodia has to face with threats on Natural Resources. They are over-fishing, illegal fishing practices, increasing use of hazardous pesticides, and conversion of flooded forests, as well as swamp drainage for agriculture. (web. worldbank. org) There are also many foreign investment plans that can harm the forest in Cambodia. For example, from a leaked government document to press, Green Elite, a China company is found to exploit 300,000 hectares forest, far more than its previous plan (Reynold, 39).

Therefore, due to the possible harms on natural resources, World Bank has carried out many programs to help Cambodia in natural resources preservations in land, forest, and biodiversity such as Forest Concession Management and Control Pilot Project, Forest Concession Management and Control Pilot Project, and Biodiversity and Protected Area Project. (web. worldbank. org) Cambodia and China With the tremendous growing over last decade, China has increased its influence all over the world. As any other small countries, Cambodia also has to look with a guard against China.

With China, Cambodia is such a potential market that Chinese exporter untapped while the total market share is just 1%. (Beijing Relation but At What Cost, 6) China can take advantage on the low rate of import tax and trade barriers in Cambodia to push their products to the Cambodia’s market and easily dominate it. Beside that, Cambodia is a country has large natural resources that attracted companies like Green Elite, as mention above, to exploit. In China’s thirsty of natural resources for the growing economy, Cambodia may become an aim in its exploitation policy.

Cambodia and Global Financial Crisis 2008 Cambodia got significantly hurt from the Global Financial Crisis 2008. The GDP in 2008 was 6. 7 percent, put an end to a decade of two digits growth. The demand of the world decline make the garment, one of the most important patterns of Cambodia economy, fell down. IDB and IMF both estimate a negative growth for Cambodia in 2009 and 2010. However, in 2010 GDP of Cambodia recovered to 4. 1% and the estimate for 2011 is 5%. (Menon, 103) It is because some foreign market of Cambodia has recovered and the demand started to increase.

Beside that, the oil price reduce has taken out the pressure on inflation that appeared since 2008. In short, the crisis in Cambodia has been over. The Future As a transforming nation, Cambodia has got impressive success in growth through nearly one decade. The Global Financial Crisis has made GDP decline to negative but now it is over. A bright future is waiting for Cambodia: “Cambodia’s traditional lack of self-confidence about being in the shadow of the bordering economic powerhouses of China, Vietnam, and Thailand has begun to dissipate.

Merchandise exports have boomed, led by a highly competitive apparel sector. Pay remains low in the garment factories, but wealth is being created, and it shows on the streets. Services have thrived, and tourism is taking off; transportation and travel revenues have almost tripled since 2000. Foreign banks are either establishing local outposts or showing an interest in doing so, reversing the tendency before Cambodia’s WTO accession to withdraw from the country. And the real estate market has taken off on the back of a healthy construction sector. (Sutherland, 127) Conclusion Overall, Cambodia is a nation with the transformationalist perpective that has been quite successful with an impressive growth during last decade. They actively join regional, global organization and also focus on building good relationship with their neighbors. However, they still have many difficulties with dollarization, natural resources management and the Beijing Consensus.

If they can go through all that, a bright future is waiting for their kingdom.

Work Cited

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