Thursday, June 25, 2009

Cambodia: Reality Off the Rails in Phnom Penh

PHNOM PENH - Science fiction author Philip K Dick once explained reality as "that which, when you stop believing in it, doesn't go away". As sensible as this may sound, it is a definition unlikely to take hold in Cambodia, where recent events have shown the government's tendency to obstinately dismiss anything but the most convenient information.

The denials have come from the highest ranks of government to the lowest rungs of social entertainment and conscripted the judicial system to fend off criticism. Experts and economists say the government backlash risks driving away the vital foreign investment and international aid the country now desperately needs to keep the economy afloat.

The World Bank and the International Monetary Fund have both predicted a 0.5% contraction in Cambodia's 2009 gross domestic product (GDP), while the independent Economist Intelligence Unit (EIU) estimated an even sharper 3% drop. The government sees things differently and announced last month a beaming 6% GDP growth projection, down only slightly from its 7% projection in April.

That optimistic spin, economists and experts say, is totally out of whack with Cambodia's on-the-ground economic realities, as well as regional and global trends. The crucial garment industry, usually the country's main export engine, saw exports plummet 25% year-on-year in the first quarter of 2009. The foreign revenue-generating tourism sector is equally troubled, with air arrivals in the first four months of 2009 down 16% over the same period last year.

The kingdom's rapid economic growth - GDP increases were measured in double digits for several years - seems to have made officials reluctant to concede that the downturn is having serious effects in Cambodia. Indeed, Prime Minister Hun Sen's economic lieutenants have been slow to acknowledge the impact of the global crisis on Cambodia's until recently rising fortunes, opting instead to discredit or clamp down on critical news and assessments.

Hun Sen has responded to downcast projections with a characteristic sharp tongue. When the EIU this year rated Cambodia among global countries at high risk of political instability due to the economic crisis, the strongman leader questioned the report's "political orientation" and said the experts that compiled it wore "glasses with prescriptions too strong for their eyes".

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