Introduction

Cambodia, sandwiched between Thailand, Laos and Vietnam, is about the size of Victoria. About 70 per cent of its population of 14 million is under the age of 35. Despite rapid development in the past 20 years, Cambodia remains an aid-dependent least-developed country, with around a quarter of its people living in poverty.

Once a source of armed conflict and regional instability, Cambodia now enjoys a secure environment in which it can concentrate on economic development. Cambodia today has an open, free-market economy based on agriculture, rapidly growing tourism, garment manufacture and construction. There are some signs of movement into other forms of assembly and manufacture. Cambodia’s macro-economic management has been sound, although economists are watching growing public debt and a narrow revenue base as possible future sources of instability.

Government, business and people-to-people links

Australia was one of Cambodia’s first diplomatic partners, having established relations ahead of Cambodia’s independence in 1953. Australia opened an embassy in Phnom Penh in 1957, but was obliged to close it in March 1975 due to the impending victory of the Khmer Rouge in the long-running civil war.

Australia was subsequently instrumental in the negotiation and conclusion of the Paris Peace Accords in 1991, which brought fighting between the various factions in Cambodia to a formal end. Australia led the military component of the United Nations Transitional Authority in Cambodia, the mission of which was to disarm and canton the four factions, and oversee free and fair democratic elections. In 1991, Australia re‑established diplomatic representation in Phnom Penh.

Australia’s leading role in the Cambodian peace process and subsequent recovery established warm personal ties between individual Cambodians and Australians that endure to this day. Bilateral relations have grown since then, based on Australia’s development assistance to Cambodia and a range of shared national interests. Today Australia is the second largest international donor to the Extraordinary Chambers in the Courts of Cambodia, which are trying the most senior surviving members of the Khmer Rouge for genocide, crimes against humanity, war crimes and other crimes.

Cambodians first started migrating to Australia in the 1970s and greater numbers of refugees arrived as a result of the protracted civil war. According to the 2011 Census, the Cambodian community consisted of over 28,000 Cambodia-born people and their families. Smaller numbers of Australians live in Cambodia (between 2,000 and 3,000), but the number of Australian tourists to Cambodia is growing, with 105,000 Australian arrivals in Cambodia recorded in 2011.

Australia continues to support good governance, and equitable and sustainable economic growth in Cambodia. This philosophy underpins Australia’s substantial development cooperation program with Cambodia (which is expected to increase to $95 million in 2012–13). Australia is Cambodia’s third-largest bilateral aid donor, and Cambodia is the tenth-largest recipient of Australia aid.

Australian assistance has focussed on four core sectors: health, agriculture, infrastructure, and law and justice. Australian aid helped to cut infant mortality rates by 20 per cent between 2005 and 2010, and to more than double average rice yields over the past 30 years. Australian aid supports transport and rural electrification infrastructure, with a particular focus on regional connectivity. It has helped to improve the human rights of Cambodian prisoners, reduce violence against women and train Cambodian law enforcement officials.

Australia has also been a major supporter of efforts to de-mine Cambodia, which have saved more than 200 lives per year and released 4,400 hectares of land for economic use. Australia is working with UNESCO and the Cambodian Government to develop management policies to protect Cambodia’s priceless cultural heritage in the Angkor Archaeological Park, and to ensure local people share in the benefits of tourism.

Each year, the Australian Government supports around 150 Australian volunteers working in diverse fields, recently including physiotherapy, legal capacity-building, budgeting and strategic planning, museum conservation, and midwifery training. These volunteers aim to transfer skills to the Cambodian staff with whom they are working. The government program is complemented by a large number of Australian groups and individuals who carry out private charitable work in Cambodia.

Australia has expanded its scholarship program for Cambodian masters and PhD students. More than 50 scholars commence courses in Australia each year. A small but growing number of Cambodians (currently around 160) fund their own study in Australia. The Australian Alumni Association of Cambodia has around 500 members. Many senior Cambodians have studied in Australia, including government ministers, high-ranking officials, parliamentarians, civil society representatives and business people.

Australia’s economic links with Cambodia are modest. Australia’s main exports to Cambodia are wheat and cereal preparations, and imports are mainly clothing, textile and footwear products. The largest foreign investors in Cambodia come from China, Vietnam, Japan, Thailand, Malaysia and the Republic of Korea (South Korea). Australian businesses in Cambodia operate in the finance, mining, tourism, infrastructure and education sectors. The Australian business community is represented by the Australian Business Association of Cambodia. Australian firms are also prominent members of the Cambodian Association for Mining and Exploration Companies.

Australia and Cambodia are cooperating to address common security challenges. Our law enforcement, border protection, intelligence and defence agencies have formed strong cooperative links. Joint operations have disrupted people trafficking and people smuggling operations, resulted in the arrest and conviction of paedophiles and drug traffickers, and confiscated or destroyed illicit drugs or their precursors. Joint training has also focused on fighting transnational terrorism.

Cambodia joined ASEAN in 1999 and has served as chair twice, in 2002 and again in 2012. As chair, Cambodia plays a central role in shaping the agenda and outcomes, including for the ASEAN Regional Forum and the East Asia Summit. Cambodia stands to benefit economically from greater integration with its neighbours. Australia is co-financing a project to rehabilitate the Cambodian railway, one of the key links in promoting intra-ASEAN connectivity. The ASEAN–Australia–New Zealand Free Trade Agreement will benefit Australian and Cambodian businesses.

Cambodia – a beneficiary of UN peacekeeping operations in the 1990s – now dispatches peacekeepers to assist others, with an emphasis on de‑mining capabilities. Cambodia has also been a prominent supporter of international de-mining efforts through its membership of the Ottawa Convention (which bans landmines), chairing the 11th meeting of state parties to the Convention in 2011. Australia has provided English language training to Cambodian peacekeepers, and Cambodian military personnel have participated in regional training exercises run by Australia.

Towards 2025

Cambodia will remain an important partner for Australia as a member of ASEAN, a development cooperation partner and a neighbour with national interests in common. Cambodia has a small GDP of around US$33.5 billion (PPP terms). However, as it integrates more closely with the larger ASEAN market, and if it maintains sound economic management and its anti-corruption drive, Cambodia can be a growing market for Australian food products; mining expertise; and legal, financial and educational services. As the Cambodian economy diversifies, demand for financial services and products will increase. Australia has already been a leader in the Cambodian financial services sector, introducing ATMs and mobile phone banking. There is a thirst for both vocational and higher education in all fields.

The possibility that economic growth and poverty reduction will be disrupted due to external economic shocks or domestic political instability cannot be dismissed. Weak institutions, corruption and social unrest could also slow or halt growth in the medium to long term. This could deter foreign investors, require more costly Australian and other support, and complicate cooperation in fighting transnational crime.

An optimistic scenario would see Cambodia less reliant on aid flows as its economy diversifies and integrates with ASEAN, and as poverty reduction continues. Australia will work with Cambodia and other ASEAN partners to implement ASEAN’s connectivity agenda, focussing on infrastructure, organisational ties and people to people links. Private sector growth should boost government revenue, which would allow better funding for government workers and services, and remove the incentive for corruption. The focus of the bilateral relationship would gradually shift from development cooperation to business facilitation. A more efficient and highly trained Cambodian public sector, and a truly independent judicial system, would provide opportunities to strengthen further bilateral and regional cooperation.