Poverty Trap and Poverty Reduction Policy in Cambodia

It has been four years that I started my Bachelor Degree of International Relations Program at Royal University of Law and Economics since 2011. Every term we had many assignments which were offered by lecturers of each subjects. The last semester of my Bachelor Degree Dr. Raymond Leos, the lecturer of Development Theory who have been tough us for three years in row, provided us another opportunity to research on the Poverty issue and Poverty reduction policies in Cambodia. My friend and I had putted a strong commitment to make a good paper with skeptically analyze on this paper. Here it is!! I hope you enjoy reading it.

I would like to past my paper below. so you can enjoy reading it here or you can download the original file with this link.

Video interview with university student students and NGOs staffs:

Brief Contents

Preface

  1. Introduction
  2. Perspective on Cambodia Economy
  3. The Poverty Traps in Cambodia

3.1 Heritage of black history

3.2 Lack of poor administrativ and public services

3.3 Culture of corruption

3.4  Less supporting policy for SMEs

3.5 Less educated about general education, economy, and financial management

  1. Poverty Reduction Policy 2003 – 2008

4.1 Improving and diversifying agricultural sector

4.2 Fighting Corruption

4.3 Transport Infrastructure

4.4 Private sector strengthening

4.5 Quality Education

4.6 Health

  1. Group’s assessment

References

Preface

First of all we would like to express our deepest sincerely thank to Dr. Raymond Leos, who have been teaching us three years in row and provide us chance to conduct research about Poverty and Poverty Reduction for the fourth year (senior) and as well as the last semester of bachelor degree of International Relations program in Royal University of Law and Economics.

Been acknowledged that the subject is Development Theory. Dr. Raymond Leos might possibly want to enhance how much we have learnt insight from his class to address the research about public policies. Thus, we decide to emerge the researches in Poverty Reduction Policies. In addition, the scope of Poverty term and Poverty Reduction Policies seem like very widely to research. It might get up to thousand pages if we did it skeptically. Thus we try to minimize the scope of research to find out the Poverty in Cambodia and the Poverty Reduction Policies of the Royal Government of Cambodia from 2003 to 2008.

This paper will utilize the readers specifically focus on the cognition of impoverishment of Cambodia people, what measure tool to define the term of poverty and economy in one country, and how the  Royal Government of Cambodia address its agenda to deal thereof issues.

We have been conducted research with university students from different fields of studying, None-governmental Organization stuffs, and digital documents on internet and journals. We went to Cambodia government websites, World Bank statistics, and video interview with many people.

We expect that readers will find this paper as reliable source for their researches. This paper may gain readers more knowledge with a better and easier resource where many information are gathered in one document.

Piden HEM,

Vongvisak NYLA,

July, 2015

1.    Introduction

At the first glance, the term of poverty may seem widely to study. You might be doubting how to define someone is living in the situation of impoverishment, what tools are using to measure the poverty rate. On the other hand, you might also be doubting why some people are rich and some are poor when they were born the same poor and the same community. I would better say they were living in similar society or similar condition. Thus, you ought to read this paper carefully to find out about that.

Poverty has been defined in many ways and has many facts which were demonstrated based on the providers’ perspective. Defining the poverty term were enhancing about living in the situation of missing decent life, where they may face any suffering to survive, or they cannot meet the basic need of live, or been interfering their Human Rights which is clearly stated in the Art. 3 of UDHR, 1948 (Sothy, 2015). It is similar to the definition defined by European Anti Poverty Network that “lack [of] the basic necessities for survival.” On aspect of World Health Organization, Poverty is lacking of information and accessible to health care. The poor thus highly concerning of illness and disability.

IMG_0143
Figure 1: Mobile street food community in Phnom Penh, Cambodia.

The definition of poverty is still debatable topic. Poverty has been defined in two difference ways. One is the absolute poverty and another one is relative poverty. The Absolute poverty tend to classify people who lack the basic necessities for Survival. The shocking reality of human being, the poor in Haiti who manage to eat mug cookies as daily food and Rohingya who are stateless refugee from Burma are example. Whereas, relative poverty has been defined based on the comparison the way of life and income with the living standard in a specific area. It seems simply explainable with those who live with low-income such people who live in White House (White Building) in Phnom Penh, other homeless people and street kids are in relative poverty.World Bank is the international organization who is working on ending impoverishment around the world, has define the term of poverty as the situation when people live in hunger, lack of shelter and health care, less access to school, and not having a job. The governments themselves are the partner of World Bank to fight against impoverishment by developing policies to improve their livelihoods, to access social security and good job.

In 2005, World Bank had set a new international poverty line for people who are living at or under 1.25 USD which is the minimum level of income deemed adequate in average of every nationals’ poverty line (World Bank Report, 2015). Limitation the poverty threshold is based on the total cost of all the essential resources that an average human adult consumes in a years (Ravallion). Based on the statistic of 2008 World Bank development indication on Purchasing Power Parity stated that more than 20% the world population which was equal around 1.4 billion people were living at or under the international poverty line.

Figure 2: The statistic from World Bank demonstrated that more than 20% of the world population were living at or under 1.25USD.
Figure 2: The statistic from World Bank demonstrated that more than 20% of the world population were living at or under 1.25USD.

The worlds were left Cambodia unknown for years. Once Cambodian people were asked about poverty in their country, they mostly mention about war as a main factor. Cambodia who had spent more than three decades in war and internal political instability which was just left her population free of shelter, illiterates, unemployment, bad governor, poor education standard, less access to toilet, healthy food, poor social security system and etc. This country has been governed for 30 years and going on by a ruler who is well-known as Strong Man Cambodia, prime minister Hun Sen, is putting on Cambodia a bad reputation at international arena. It is possibly to assume one country is authoritarian state once it has been ruling for decades by one person either political party. This point has sort Cambodia into tinier trade block, discriminated by foreign investors. The inflation of either imported or domestic products are extremely high comparing to the other ASEAN countries based on their income.

This globalization era bring Cambodia both advantages and disadvantages, since SME in Cambodia need more improvement to adopt the stand of foreign product, and the demanding in Cambodia seems like very low. Thus, it seems a bite hard condition for Cambodia to join this competency era.

You may find the ways to explain about Cambodia poverty situation next session. This paper would also study the current Cambodia economy in perspective of Youth, NGO stuffs, and Government. Let’s see what do they want to share?

2.    Perspective on Cambodia Economy

The studies have shown debatable skeptical view about Cambodia’s Economy in Youths/scholars, NGOs, and government perspective. In addition, their answer seem likely to protect the institution where they are working. It is important to aware that whatever institution they are from, whatever political party they are, we focus on the economic only. One they put off their uniform, they become one Cambodian citizens. The study was randomly made in difference places in order to find out more divers views about poverty issues in Cambodia.

The question was asked that “How Good is Cambodia’s Economy to its population?”

From the skeptical views of Youths mostly university students had shown their perspective more neutrally by providing exactly faces. We would consider youths or university students as scholars since they have pursued higher education and do some researches as well.

Cambodia’s economy is still moving slowly which is required more reformation in various sectors such as commercial, corruption, education, health service and industrial skills. They raised this with some acceptable reasons that most of Cambodia population are living in rural areas which are hardly to access to school and health center. In addition, they find out farmers who grow cassava, corn, rice and as well as every kind of agriculture have difficulty with the nature during plantation and difficulty with the market during harvesting. The unemployment issues should be set as priority in the reformation agenda of the government development plan. “Every years there are thousands of student graduate and not many of them would able to find a job” said by a sophomore student at Institute of Foreign Languages. A bit more detail from a law student at Royal University of Law and Economics, on development strategies that the royal government of Cambodia should consider about partnership with non-governmental organizations to eradicate the poverty, since the war made Cambodian people less educated about sanitation or hygiene food which is highly risk for them to get illness and sickness. He added, “Many poor people getting poorer and poorer … they face injustice, and corruption” the points above mentioned about the weakness of government on corruption issues, and the bad court system (Sarakphun, 2015). Some developments are made with the tear of civilian people noticeably in such a case of land grabbing. To sum up, the Cambodia economy need much more development, reformation for good change in aspect of good governor, and maintain good cooperation with non-governmental organizations to address education, and health issues.

Reflecting on this question, the perspective of non-governmental organizations shown more pessimistic on the economics of Cambodia. It is seem like non scene, but true, to say that nature of NGOs in Cambodia seem to be opposite to the government, which is a bite difference from the real mission of NGOs which are obligated to fill the missing points of government’s works. Once we asked them something, they always draw attention to the weakness points of government, and political site.

The Cambodia economy has been slightly increased, but not every individual population can get benefit from this growth. In globalization world, those who made a better goods or service they will deserve more costumers. There is no barrier to prevent foreign products not to challenge with domestic products. In addition, the quality of domestic products are required more update. Cambodian people seem less support to local goods. Most of goods such as things for nail up to hair are imported from oversea. It indirectly shows the dependency on foreign economic where those who have more money will have more chance to gain profit for their business (Shah, 2007). This track will create a big gap of income as well. Once the international financial crisis happen, it also effect to Cambodia’s economic. “The country for sell” is a phrase raised by environment activist, the founder of Mother of Nature association Mr. Alejandro Gonzalez-Davidson from Spain described his sadness when Cambodian government try to develop its country by deteriorated exploit the natural resources such as sand, and forest behind the land concession for development. Hence, it has shown 7% of Cambodia economic is not a good growth. Another view relatively to economic, the government fail to maintain more job capacity. Millions of Cambodia young people leave their home country to serve as force labor in the other country noticeably Thailand, and Malaysia. Some of them are subjects of human trafficking, and human rights violations at their working place.

Despite of concerning for the nearly future of Cambodia’s economy by Youths as well as NGOs/ CSOs, the government seem intensity proud with this trend. A new area began, the brighter age has started since 1999 when Cambodia join ASEAN, and 2004 once Cambodia become the member of WTO. Drawing attention on fairly stable macroeconomic conditions, 100% share holding for private sectors are frequently raised up by H.E. Sun Chanthol, the current minister of commerce to attract FDI (Chanthol, 2015). Cambodia had a great achievement on addressing millennium development goals in recent year. The remaining 7% of annual economic growth for about a decade which is slightly pulling down the number of poverty rate at 17.7% in 2012 (About Cambodia, 2015). The EU Delegation to Cambodia, Mr. Jean-Francois Cautain said Cambodia is a good student in Class. We usually heard optimist speech of prime minister Hun Sen on recent economic evolving to dress up Cambodia to become a lower middle-income country in the next few years. Moreover, the government have a visionary to transform Cambodia to be upper-middle income country in 2030.

3.    The Poverty Traps in Cambodia

The study on the poverty traps as well as the root causes of impoverishment are partly main objective of this paper. Since it is the only way to find resolution yet, we need to understand the flow why it leads the Cambodian citizen to live this poor for so long. We have listed down the main causes which are preventing them to move out of poverty as following.

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Figure 3: Unexploited bomb dropped by US since 1970s.
  1. Heritage of black history
  2. Lake of public services and poor administrative
  3. Culture of corruption led unfair challenge for those who have less opportunity (poor)
  4. Less supporting policy for SMEs in Globalization era
  5. Less educated about general education, economy, and financial management

3.1 Heritage of black history

Once we talk about poverty in Cambodia, most of the people will strongly feel sad to mention about something called black history, WAR. We accept it has blocked Cambodia’s development opportunity to grow in some situations for years. The rich soil potential for agriculture, plus nearly 70% of population are farmers. It is so sad to say some lands are unoccupied. We have rivers but not many fisherman are dare to do fishing. Why​! It is the heritage of many decades of war have left us million tones mines and bombs which are still exploded hidden under the surface of land, river and forest. The number of bomb exploded cases had killed many Cambodia people. Some cases just left them disability, some left the children to be orphanage, and/ or single parent and so on. During Pol Pot regime, thousands of educated and well-known persons were prosecuted with irrational reason. These wars made investors fear to live in Cambodia, and moved their business to another countries.

3.2 Lack of public services and poor administrative

The government officers who were recruited with the concept “Educated teach less educated, less educated teach uneducated” seem a great policy initially. However, they fact another challenges now, since most of them are technology and foreign language illiterate. It has been leading to poor public services such as in education, health, public administrative and other sector. It make Cambodian people unsatisfying with those services. The weakness in education sector seem seriously affect to Cambodia’s long term development. We have been noticed most of the teachers in primary and secondary schools are not able to teach foreign language. It will be seriously affect to students’ future, be more competency in ASEAN integration. Parents decide to send the children to private school which cost much high. This thing creates another unfair opportunity for the poor. This scenario also happen in another technical fields such as health care and policy making. Cambodia people were unaware of first aids rescuing, were tried the old practice in treading patience which are very harmful for their life. Recently, almost 300 people in Rokar village has got HIV disease when the health officer inject them the same pin. This is caused by lacking knowledge and material.

3.3 Culture of corruption

Corruption, the systematic corruption, the practice of corruption has become the popular culture in Cambodia society (Theara, 2013). It has been practicing almost everywhere, all fields, and in all levels . Been understood this culture help their economic because the salary is low, help their work faster when they pay bribe or when they have more effluent. However, not everyone can afford corruption, not everyone happy with corruption. Hence, it is violated human rights of other, it is dishonor competition. It wear everyone many bad cultures such as laziness, disrespect, invaluable a good work of other. The corruption in education, and health service are effecting directly to the poor. Some students who not able to pay for extra class decide to drop school when they fail the exam, while teacher teach more detail in the extra class. Degree certificate is less value and less recognize when officers acept bride without clear inspection, or when the education institution miss requirement, when student pay for certificate without being in class. The corruption in infrastructure sector made lower quality roads, building, irrigation system which required more protection, reconstruction. It is a waste of Cambodia budget which shall be use in other sectors. These issues have seriously ruined Cambodia reputation as one of the worse country with corruption in the world.

3.4  Less supporting policy for SMEs

Small and Medium Enterprises are less encouraged for their business improvement in globalization era. In addition SMEs face many challenging with both market challenges and production challenges. Taxation system, administrative procedure and more legal requirements seem maintain more competency with foreign productions. It offers chances for government officers to commit corruption with that administrative works, otherwise the production progress will be slowdown. “Now we try to cut down the procedure where government officers meet directly with investor in order to cut down corruption,” a speech of H.E. Sun Chanthol during series workshops on MoC reformation (Chanthol, 2015). Due to that complicate administrative works, some entrepreneurs fail to start-up their business. In 2008, CTM Investment co. ltd is company import oil via land port which would be cost less than oil imported from seaport was not able to get envoy of accreditation. What’s more, that situation make the cost of production or supplying go so high comparing to the population income. For instant, according to NCR, the minimum wage of the Philippines are 466 PHP/day which is around 10.23 USD while the gasoline just cost 35.65PHP ~ 0.78USD. Whereas, the gasoline cost in Cambodia cost around 1.25USD with 4.26 USD minimum wage. Another aspect, most of SMEs in Cambodia are handy-craft and agriculture productions. Due to careless of its people on supporting domestic products, but cheaper foreign products, some productions go bankrupt. For agriculture productions, it is very vulnerable with natural disaster and climate change. So far, agriculture in Cambodia are still rely on natural rain, water resource from nearly sources such as rivers. It is important to aware that this kind of production will not worth trying with very low productivity event they use fertilizers. Beside this, agriculture products seem hardly to find reasonable prize in the market. Every rice harvesting season we notice there are middle-mans collect paddy from farmers with very cheap cost. It is the only choice for them to sell immediately, otherwise those wet paddy may lose quality.

3.5 Less educated about general education, economy, and financial management

Some Cambodian people at the grassroots are less educated in general knowledge as well as awareness about micro finance, financial management, human trafficking and so on. The poor are subjected to take grant as always. In theory, The bank or micro finance institutes are created to provide substitute investment opportunity. In contrast, bad policy of some financial substitutes required very high interest rate which will hurt borrowers’economy thereafter. Meanwhile, grassroots people may unacknowledged about that, plus sometime they are convinced by bank’s staff. In result, many families had lost their land and/ or house once they are not able to refund the dept to those financial institutes. The income has just tiny increased in recent year, but we noticed people start to raise up their living standard with materialism, modernism. Every harvesting season, the prize of motor cycle has gone up due to the demand up so high. Few months later, the farmers force to sell it back when they do not have money to buy fertilizer for their farm. Another example for unacknowledged about financial management, most of Cambodian people never audit and evaluate their family income and expenditure. Thus, they might not know how much should they spend for food per day or how much is the breakdown of income. Shall they reduce the expend or not? Another issues about weakness of their intelligence. Cambodia people are hard workers to employ in many force labor fields. Despite working this hard for other, they seem careless on their own resources. Sometime, they have a big empty land with small house, or they have a big land full of uneatable grass. Being a victim of Human Trafficking unnoticeable are partly root cause of their poverty. Some people serve as force labor with low salary, no stable holiday and over working time, but reasonable sleeping place, food provided. They may not aware that if one day they become weaker or sick after many years of employment, they will not able to feed themselves with the rest of that small salary.

4.    Poverty Reduction Policy 2003 – 2008

Poverty is passed from one generation to the next. There are so many different ways in which we can fight against poverty in our country. In Cambodia the Government’s strategic motto is on poverty reduction “Poverty reduction through high economic growth over the long-term by ensuring environmental sustainability and social equity”. Here is the strategy for poverty reduction in Cambodia.

4.1 Improving and diversifying agricultural sector:

This sector embraces crops predominantly rice, plantations, livestock and poultry. It is well-recognized that, with immense for boosting GDP and for uplifting the poor especially in the rural areas, quickest and high returns are possible at fairly low costs, especially in crops and more particularly in rice production and by diversification into cash and other crops. The priority goals in this sector are enhancement of: food security, productivity and diversification; and, market access for agricultural products

4.2 Fighting Corruption:

Corruption is debilitating and inimical to orderly growth. It makes the playing field for economic factors and actors unpredictable and uneven and deters much-needed domestic and foreign investment. It increases costs, renders Cambodia less competitive and makes the country lose important opportunities for growth. A variety of actions, in many areas including reforms and behavioral changes, are needed to combat corruption and instill a “culture of service” whereby public administration acts truly as an instrument of efficient, effective, speedy and impartial service to all Cambodians.

4.3 Transport Infrastructure:

Transportation networks and facilities that connect all corners of the country are the arteries that transform the country into an integrated economy and are vitally critical for distributed economic growth. By facilitating trade, movement of goods and services, by fostering integration of domestic markets as well as enabling integration with the region and the world, they play a pivotal role in contributing to poverty reduction.

4.4 Private sector strengthening

The private sector is considered the prime mover of economic growth, while the government plays its role as the strategist, guide and manager of the development process, and the facilitator in creating a wholesome climate conducive to private investment and enterprise.

4.5 Quality Education:

Education is universally accepted as a basic human right. It is also a major contributing factor in poverty reduction. The long-term objective is to ensure that all Cambodian children and youth have equal opportunity to quality education regardless of social status, geography, ethnicity, religion, language, gender or disabilities. Education will also engender a sense of national and civic pride, high standards of morals and ethics and optimism, as well as being responsible for the country and the citizens. The role of education is to enhance learners to become productive and live in harmony in a globalized society.

4.6 Health:

Improving the health status of the people is a top priority. Improving nutritional status as well as reproductive health, maternal and child health, removing causes of diseases and illnesses, taking preventative measures and providing medical care where needed are crucial to improving health status of people at large, especially the vulnerable with no means to access such care. There are many cross sector and other factors that impinge on health status of the population. To mention a few, these are: poverty as a cause and consequence of poor health; financial constraints of the poor preventing their easy access to public sector health care services; improvements in water and sanitation; better education and higher literacy levels as well as better access to information and awareness; gender equity; social safety nets for the poor and disadvantaged; better nutrition through appropriate interventions; and so on.

5.    Group’s assessment

This is the end of this research paper. We have researched about the term of poverty which is define in many ways based on the providers’ perspective. We have learnt and being understood the perspective of youths, NGOs/CSOs, and the Royal Government of Cambodia on the current Cambodia’s Economy and its impact to the population. This research has raise up five mains specific issues which are preventing Cambodia citizens to move out of impoverishment. The last study has conducted focus on the government policy in dealing with poverty issue and how do they apply her visionary to transform Cambodia to be upper-middle income country. This session, we would like to share our (researchers) perspective along with poverty issues, and possible path for Cambodia’s development.

Poverty is possibly existed in every societies, and it could be happened to every individual people. The United States of America is one of the most developed country with highest Growth Domestic Product (GDP) for around 30 years in row and second for Purchasing Power Parity (PPP) stand after china in 2015, but they still have lots of homeless people (World GDP ranking, 2015). For instance, according to Forbes economic news agent, the poverty rate is statically 4.5% which is largely proof that poverty is happen almost every part of the world (US poverty rate is 4.5%, 2015). Even those, they do not have dirt poverty, but Cambodia do. We have so many people are living in dirt poverty who are living a long roadside, pick up dirty foods, trust pick up. We should do something to help them.

Lets’stop blame to the black history. Let’s learn from Singapore, Israel, Dubai, South Korea and China. Those countries are developed in just one generation. We can do it too.

Ending poverty in Cambodia is not a difficult task. It is still possible to transform Cambodia to higher income country by the year of 2050. Cambodia still have so many empty land. Some are own by civilians, but some are government’s property. Despite, employing the surface of land, we still have under land and under water natural resources. Let’s make a good use of them. Land title policy should not end this way. Government should evaluate and make sure people at the grassroots use it in the right way. Land concession, and dam energy policy should postpone to keep balance with sustainable environment. Yet solar and wind energy are encouraged.

Smiling stones (dedicate to ancient temple) will stay with Cambodia up to next thousand years. let’s train more tour guides, and enhance more convenience tip for tourists. The government should consider about franchising some more foods and beverage that would  be attract more tourists.

We have  very potential demography, around 60% of the population are youth between 15 – 30 years old who are youthful. That is great that million of Cambodian youths leave their country to serve as force labor in developed countries. We also feel so glade that thousand of Cambodian students go to study abroad. It is a chance, not a problem. The government plan to focus on industrialization, but they concern about lacking of skill labor. Hence, our youth are learning those skill in another countries now. So there is no more concern. Thing to consider, Cambodia should request Japan and China to accept a number of skill labor each year. Then in next ten years we will have enough skill labor for high industrial labor market.

To conclude, the poverty in Cambodia has been slowly eradicated year by year with stable economic growth which are good sites. However, Cambodia should maintain a fair share culture to minimize the gap between the riches and the poor. Corruption, the represent of monopoly is the main sensitive point to attract FDI which is still remain high. It should be abandoned. We hope in the nearly future Cambodia would claim the title of upper middle-income country with high prosperity and economic development.

References

(2015, April). Retrieved 26 June, 2015, from The World Bank: http://www.worldbank.org/en/country/cambodia/overview#1

About Cambodia. (2015). Retrieved July 25, 2015, from UNDP in Cambodia: http://www.kh.undp.org/content/cambodia/en/home/countryinfo.html

Art.3 of HDHR. (1948). Universal Declaration of Human Rights. United Nations.

Chanthol, S. (2015). Serie Workshop of MoC Reformation. Serie Workshop of MoC Reformation. Phnom Penh: MoC.

EAPN. (n.d.). What is Poverty? Retrieved June 2015, from European Anti Poverty Network: http://www.eapn.eu/en/what-is-poverty/poverty-what-is-it

Poverty Reduction Strategy in Cambodia. (n.d.). Retrieved July 27, 2015, from Cambodia Rehabitation and Developement Board: http://www.cdc-crdb.gov.kh/cdc/ngo_statement/poverty_reduction.htm

Ravallion, M. (n.d.). Poverty line. In The New Palgrave Dictionary of Economics (2nd ed.). Palgrave, London.

Rural Poverty in Cambodia. (n.d.). Retrieved July 27, 2015, from Rural Poverty Portal: http://www.ruralpovertyportal.org/country/home/tags/cambodia

Sarakphun, P. (2015, June). Perspective on Cambodia’s economy. (H. Piden, Interviewer)

Shah, A. (2007, July 02). The WTO and Free Trad. Retrieved from Global Issues: http://www.globalissues.org/article/42/the-wto-and-free-trade

Sothy, L. (2015, June). Poverty Defining. (H. Piden, Interviewer)

The True US Poverty Rate is 4.5%…. (2015, March 15). Retrieved July 23, 2015, from Forbes: http://www.forbes.com/sites/timworstall/2015/03/15/the-true-us-poverty-rate-is-4-5-not-14-5/

Theara, K. (2013, December 04). Cambodia Ranked Most Corrupt Country in the Region. Retrieved from VOACambodia: http://www.voacambodia.com/content/cambodia-ranked-most-corrupt-country-in-the-region/1802720.html

World GDP Ranking 2015 | Data and Charts. (2015, April). Retrieved July 23, 2015, from Knoema: http://knoema.com/nwnfkne/world-gdp-ranking-2015-data-and-charts

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