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LCASEAN Cambodia Written Report-2

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Presented to the Department of

De La Salle University - Manila


Term 2, A.Y. 2021-2022

In partial fulfillment
of the course
In LCASEAN (Y13)

Cambodia Report

Submitted by:
Lee, Louis Matthew N.
Lim, Isabel Angela G.
Kwan, Samantha Krissel G.
Lee, Chelsea Nicole O.
Lim, Erin Patrice T.

Submitted to:
Mr. Allen Surla

May 16, 2022


Introduction

Cambodia is a country located on the Indochinese mainland of Southeast Asia. It is


entirely covered with land of plains and great rivers that routes along China, India and other
neighboring Southeast Asian countries. Cambodia is mainly influenced by Asian cultures.
According to Britannica (n.d.), the Cambodian civilization absorbed influences from India and
China, therefore, providing them closer access to asian religions, particularly Buddhism. The
given source also adds that most ethnic Khmer (Cambodians) are Theravada Buddhists. Until
1975, the Buddhism religion was officially recognized as the state religion of the country.
However, a minority of the population in Cambodia are no longer Theravada Buddhists, rather
some Khmer Loeu groups generally follow local religions(e.g. Muslim and Roman Catholic),
while Vietnamese and Chinese follow Mahayana Buddhism and Daoism. As for its cuisine, just
like the other Southeast Asian countries, Cambodia also shows recipes involving coconut milk or
gata, and traditional herbs and spices. Lastly, the economy of the country has steadily improved
throughout the years, and they are living by the words of a famous Cambodian proverb, “Fear
not the future, weep not for the past.” (Britannica, n.d.).

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Introduction to ASEAN Pillars and Political Security Pillar in Cambodia

The three ASEAN pillars are political-security, economic, and social and cultural
community. This is important since it is necessary and crucial for the progress and development
of the ASEAN members and the ASEAN as a whole. The ASEAN Community consists of
people with common interests and values who are committed to the common good of the region,
united by the values of democracy, human rights, and the rule of law.

The APSC encourages member countries to maintain political stability, democracy, and
good governance. To promote political growth, it also includes the promotion and preservation of
human rights and fundamental freedoms. Human rights are treated as a rules-based community
of shared values and standards under the rule of law. Under the APSC, ASEAN member nations
must take a number of specific actions to promote and safeguard human rights, including the
rights of immigrant workers, women and children, and other civil society organizations, as well
as human rights education and public awareness. Important human rights issues connected to
human trafficking and counterterrorism are another feature of a coherent, peaceful, and resilient
area with shared responsibility for overall security. The APSC Blueprint also recommends
enhancing criminal justice responses to human trafficking and boosting cooperation in the effort
against people smuggling.

The Political Security Pillar (PSP) was established on January 1, 2004, as a result of the
peace accord signed by the government of Cambodia and the Khmer Rouge that ended the
Cambodian civil war in July 1991. The Cambodian government has recently increased its
capacity to protect its citizens and maintain stability across the country. Key to this effort is the
installation of the first Permanent Security Structure (PSS) in the Kingdom of Cambodia.
Working closely together with the Royal Cambodian Armed Forces, the Political Security Pillar
has been able to prevent the loss of life and property, and integrate the Cambodian National
Police into the PSP, in the past year the Political Security Pillar has made great strides in building
the capacity of the RCAF to respond to natural disasters and other disasters, and in building the
capacity of the National Police to protect the public.

The ASEAN Political Security Architecture is the framework of agreements and


commitments that the ASEAN member states have made to maintain regional security in the face
of external aggression. It provides a platform for member states to cooperate and negotiate so
that they may jointly manage and prevent threats to the security of their region. They have the
potential to become one of the largest militaries in Southeast Asia if it continues to invest in its
defense since the country is pursuing a policy of neutrality in the South China Sea disputes. The
country’s primary military is the Royal Cambodian Armed Forces (RCAF), which ranks as the
smallest military in Southeast Asia and is a major regional power by virtue of its close security
relationship with the United States. The country is also the only nation to have a military that is
not a member of the United Nations. The ASEAN Political Security Pillar fulfills this objective
by maintaining peace and stability within the ASEAN community by supporting the
implementation of the ASEAN Charter and promoting the peaceful settlement of disputes and
disputes-related issues

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Cambodia and The ASEAN Economic Community Pillar

The Economic Community Pillar strives for the formation of a harmonious, resilient and
people-centered ASEAN economy, characterized by (1) a single market and production base,
(2) a high degree of global competitiveness, (3) equitable economic development, and (4) a deep
integration into the global economy (ASEAN Economic Community Blueprint, 2008). It
proposes a free flow of goods, goods, services, investments, and capital within the ASEAN
community, alongside a blend of foreign policies that promote consumer and property rights,
infrastructure development, foreign investment, improved supply chains and a stronger network
for external economic partnerships. Given these objectives, Cambodia continues to contribute to
the ASEAN Economic Community Pillar through an active participation in three major
undertakings: (1) the ASEAN-China Free Trade Area (ACFTA), (2) the ASEAN Trade in Goods
Agreement (ATIGA), and (3) the ASEAN Framework Agreement on Services (AFAS).

ASEAN-China Free Trade Area (ACFTA)

Cambodia shows active participation in the ASEAN-China Free Trade Area (ACFTA), a
trade agreement that aims to improve the economic cooperation between China and ASEAN
member states through increased foreign investments and a liberalization of trade in goods
starting 2002 (ASEAN-China Free Trade Area, 2002). With respect to Cambodia, the results of
the ACFTA agreement are evident, as shown by its trading profile and economic activity.

As illustrated in Table 1 and Graph 1, China has been an enthusiastic trade partner to
Cambodia since 2014, most notably being Cambodia's top source of imports for the years of
2019 and 2020. Over the years of 2014 to 2020, the imports of Cambodia from China primarily
include textiles, machinery, precious metals, and mineral products (Observatory of Economic
Complexity (OEC), 2020a). With regard to exports, China also remains a strong trade partner to
Cambodia, particularly contributing to an average of 4.88% of Cambodia’s exports in terms of
trade value from 2014 to 2020, as shown in Table 2 and Graph 2. Over the years of 2014 to 2020,
the exports of Cambodia to China primarily include textiles, precious metals, and vegetable
products (OEC, 2020a).

Through a progressive reduction and elimination of trade tariffs and non-tariff barriers in
the ACFTA, Cambodia continues to work towards the ASEAN Economic Community Pillar.
More specifically, Cambodia contributes to the ASEAN economy’s participation and
competitiveness in global supply networks by maintaining a strong trading commitment to
supporting China’s leading economy.

Although a major fraction of Cambodia’s exports to and imports from China already do
not incur any tariffs through the ACFTA, Cambodia has also recently ratified the implementation
of the Cambodia-China Free Trade Area (CCFTA). The CCFTA is an exclusive bilateral trade
agreement between Cambodia and China that extends the zero-tariff trade to a wider variety of
products, alongside additional initiatives for greater investment cooperations between nations
(Cambodia-China Free Trade Area, 2021). While the implications of the CCFTA mainly affect
Cambodia and China as cooperative parties, this undertaking indirectly contributes to the
ASEAN Economic Community Pillar by further improving Cambodia’s economic complexity

4
and capabilities. For example, the CCFTA has already paved the way for China’s investment in
Cambodia’s Phnom Penh-Sihanoukville Expressway, which is expected to be a key trading route
that will reduce the transportation costs between Cambodia’s national capital of Phnom Penh and
a trading port located in the province of Preah Sihanouk (The Business Times, 2021). The
outcome of the CCFTA is in line with the ASEAN Economic Community Pillar’s goal of
equitable economic development, where China’s stronger trading commitment to Cambodia is
expected to accelerate the latter country's economic growth and ultimately propel Cambodia’s
economy closer to that of leading ASEAN countries, such as Singapore and Brunei.

Table 1. China’s Composition of Yearly Imports to Cambodia


Year Percentage Composition Rank Composition

2020 31% #1

2019 27.7% #1

2018 21.8% #2

2017 24% #2

2016 23.4% #2

2015 19.8% #2

2014 17.4% #3
Observatory of Economic Complexity (2020a). Cambodia Trade Profile. [Data file]. Available from
https://oec.world/en/profile/country/khm

Table 2. China’s Composition of Yearly Exports from Cambodia


Year Percentage Composition Rank Composition

2020 5.08% #5

2019 5.14% #6

2018 6.08% #5

2017 5.34% #8

2016 4.47% #9

2015 4.29% #8

2014 3.76% #9
Observatory of Economic Complexity (2020a). Cambodia Trade Profile. [Data file]. Available from
https://oec.world/en/profile/country/khm

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Observatory of Economic Complexity (2020a). Cambodia Trade Profile. [Data file]. Available from
https://oec.world/en/profile/country/khm
Graph 1. China’s Composition of Yearly Imports to Cambodia Relative to Other Countries

Observatory of Economic Complexity (2020a). Cambodia Trade Profile. [Data file]. Available from
https://oec.world/en/profile/country/khm
Graph 2. China’s Composition of Yearly Exports from Cambodia Relative to Other Countries

6
ASEAN Trade in Goods Agreement (ATIGA)

In addition to the ACFTA, Cambodia also shows active participation in the ASEAN
Trade in Goods Agreement (ATIGA), an intra-ASEAN trade agreement with objectives and
policies that are generally similar to the ACFTA. Although there have been proposals to amend
the ATIGA over the recent years, this intra-ASEAN trade agreement holds true to its objective of
collectively improving the state of ASEAN member economies through reduced trade barriers
and stronger economic partnerships between ASEAN nations (2009, ASEAN Trade in Goods
Agreement). Table 3 illustrates a sample selection of Cambodia’s tariff reduction commitments
in line with the ATIGA. With respect to Cambodia, the results of the ATIGA partnership are
evident, as shown by its trading profile and economic activity.

Table 3. Sample Selection of Cambodia’s Tariff Reduction Commitments


Description of Goods Tariff Reduction Target by 2015 (%)

Gold (including gold plated with platinum) unwrought or in semi- manufactured forms, or in
powder form.

Powder 0

In lumps, ingots or cast bars 0

Other 0

Other semi-manufactured forms 0-5

Monetary 0
ASEAN. (2009, February). Tariffs Under The Asean Trade in Goods Agreement Cambodia. [Data file].
Available from http://investasean.asean.org/files/upload/02-2%20Annex%202-Cambodia.pdf

As illustrated in Graph 1, Singapore, Thailand and Vietnam also play key roles in
supporting Cambodia’s economy, notably being the most active trading partners of Cambodia
after China in terms of import trade value across 2014 to 2020, as shown in Graph 2. From 2014
to 2020, Cambodia primarily imported precious metals and mineral products from Singapore;
mineral products, machines, precious metals, and sugar products from Thailand; and metals,
textiles, and mineral products from Vietnam (OEC, 2020a). The selection of imported products
can be explained by Cambodia’s specialization in tanned furskins, cassava, and a range of textile
products, as shown in Graph 3. Evidently, Cambodia lacks (1) the manufacturing capabilities to
produce essential machinery and (2) an adequate supply of mineral products such as petroleum
and coal.

7
From “Cambodia Trade Profile” by Observatory of Economic Complexity, 2020a,
https://oec.world/en/profile/country/khm
Graph 3. Specialized Products of Cambodia from 1995-2020

With regards to exports, Singapore, Thailand and Vietnam also remain strong trading
partners as shown in Graph 2 — however, the monetary value of these exports are not as large as
Cambodia’s imports from the respective countries. From 2014 to 2020, Cambodia primarily
exported precious metals and textiles to Singapore; precious metals, vegetable products, and
machines to Thailand; and vegetable products, plastics and rubbers to Vietnam (OEC, 2020a).
Evidently, Cambodia’s exports mainly consist of raw materials and agricultural products, which
can be explained by the country’s relatively low economic complexity. As of 2020, Cambodia
ranks 102 of 127 countries in terms of economic complexity, indicating that Cambodia shows
little capacity to manufacture sophisticated goods (OEC, 2020a).

The large trading volume between Cambodia and other ASEAN countries is aligned with
the ASEAN Economic Community Pillar’s goal of having a single production and market base,
where a free flow of goods encourages the tight economic integration of ASEAN member
economies. For example, Singapore’s extravagant importation of gold from Cambodia supports
Singapore’s thriving gold market (OEC, 2020b). As of 2020, Singapore is globally recognized as
the 11th largest distributor of gold with the United States, Thailand, the United Kingdom, China,
and Malaysia as its most active trading partners (OEC, 2020b). On the other hand, Cambodia’s
large exportation of vegetable products to Thailand and Vietnam supports Cambodia’s
agricultural industry, which employs approximately 3 million people, and accounts for 22.4% of
the country’s GDP as of 2020 (The World Bank, 2020a; U.S. Mission Cambodia, 2020).

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ASEAN Framework Agreement on Services (AFAS)

Aside from Cambodia’s commitment to the free trade in goods within the ASEAN, the
country also pursues foreign policies that promote the free flow of services between ASEAN
member states through the ASEAN Framework Agreement on Services (AFAS). Although the
AFAS has undergone amendments since its establishment in 1995, this intra-ASEAN trade
agreement holds true to its objective of improving the efficiency and competitiveness of the
ASEAN service sector by enhancing the economic cooperation between ASEAN member states,
and eliminating trade restrictions to the importation and exportation of labor (ASEAN
Framework Agreement on Services, 1995).

Through Cambodia’s active participation in the AFAS from 1995 to 2019, the country
experienced an increased trade in services, alongside a significant growth in its service industry,
as shown in Graph 4, 5, and 6. In fact, as of 2019, Cambodia’s service industry accounted for
34.6% of the country’s annual GDP, equivalent to 9.37 billion USD. Correspondingly, Cambodia
exported and imported services worth 6.09 billion USD and 3.27 billion USD in 2019,
respectively. From 2014 to 2019, the forms of services primarily exported by Cambodia include
travel and merchanting (OEC, 2020a). Meanwhile, from 2014 to 2019, the forms of services
primarily imported by Cambodia include transportation, travel, and construction. The high
exchange in travel-related services may be explained by Cambodia’s dominant tourism industry,
which significantly supported the country’s economic growth between 1995 to 2019 (The World
Bank, 2022).

Generally, the free trade in services through the AFAS enables ASEAN nations to exploit
the specializations of other member countries with fewer deterrents. More specifically, through
the liberalization of trade in services, Cambodia may take advantage of the skilled workforce of
highly developed ASEAN nations, such as Singapore and Brunei — countries which show a
specialization in the financial and petroleum sector, respectively. On the other hand, ASEAN
countries may also take advantage of Cambodia’s labor specialization in the tourism and
agricultural industry. In this manner, the AFAS encourages efficiency and diversification in the
production and distribution of services within the ASEAN economy. Cambodia’s involvement in
the AFAS promotes the ASEAN Economic Community Pillar’s goals of having a single market
and production base, and improving the ASEAN economy’s competitiveness in the global
market.

9
From “Service Imports - Cambodia” by The World Bank, 2020b,
https://data.worldbank.org/indicator/BM.GSR.NFSV.CD?end=2019&locations=KH&start=1993
Graph 4. Service Imports of Cambodia from 1995 to 2019 in USD Billions

From “Service Exports - Cambodia” by The World Bank, 2020c,


https://data.worldbank.org/indicator/BX.GSR.NFSV.CD?end=2019&locations=KH&start=1993
Graph 5. Service Exports of Cambodia from 1995 to 2019 in USD Billions

10
From “Trade in Service (% GDP) - Cambodia” by The World Bank, 2020d,
https://data.worldbank.org/indicator/BG.GSR.NFSV.GD.ZS?end=2019&locations=KH&start=1993
Graph 6. Percent GDP Contribution of Cambodia Service Industry from 1995 to 2019

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Cambodia and The ASEAN Socio-Cultural Community Pillar

The ASEAN socio-cultural community pillar was established with the purpose of
creating a community that is proud of its identity, culture, and traditions. It intends to build a
society where social development is nurtured, and equitable access to opportunities are
prioritized. During one of their meetings in 2021, Cambodia identified four priority areas on
which they will focus: promoting ASEAN identity through education, youth, sport and culture,
promoting human resource development and the role of women for long-term economic
development, enhancing the ASEAN people’s health, wellbeing and social protection in building
the ASEAN community, and Strengthening the ASCC’s institutional capacity and effectiveness
(Moeys to spearhead the 'ASEAN Socio-Cultural Community' pillar 2021).

The ASEAN identity is a diverse body of culture, history, and national identities of the
ASEAN member states. One of the projects that Cambodia has partaken is the ASEAN Cultural
Heritage Digital Archive website, in which various ASEAN member states have uploaded or
digitalized significant documents and items which highlight their identity in order to preserve
their culture heritage and raise awareness among other ASEAN member states (Monykanchna,
2021).

Meanwhile, Cambodia's chairmanship theme for the year 2022 is "ASEAN A.C.T. :
Addressing Challenges Together.”. Events relating to the Year of Youth 2022 are various projects
that conform to the socio-community pillar which is composed of 4 flagship activities including
the “1st ASEAN Youth Dialogue, the 6th ASEAN Youth Video Contest, the ASEAN Youth Photo
Competition, and the ASEAN Youth Debate 2022. These are done to provide avenues for growth
and interaction among ASEAN member states, and to showcase their knowledge and talents
which are vital elements in facing obstacles especially in the current situation (Association of
Southeast Asian Nations, 2022).

In terms of promoting the role of women in economic development, the Cambodian


government is committed to increasing women's status and role in society by promoting women
leadership, as evidenced by the inclusion of gender mainstreaming as a prerequisite in some of
the most important government policies. (Phon, 2022). The Cambodian Ministry of Women's
Neary Rattanak 5-year strategy plan, for example, intends to promote gender equality for
women, particularly in political engagement. Women's economic empowerment is one of the key
successes gained in the past, with women's participation in vulnerable job environments falling
to 54.8 percent in 2017 from 70 percent in 2012, thanks to the availability of safer and more
respectable work options. Following the execution of a Ministry of Civil Service directive to
boost women's employment from 20% to 50%, there are 41% female civil servants at the
national and subnational level (Ministry of Women’s Affairs of Cambodia, 2020). Through
active participation of women in high-level positions, actual issues faced by women are
represented and voiced out by those who experience it and those who can relate to it.

The Cambodian government also started projects to improve the health and wellbeing of
its citizens. In 2017, only 56% of rural residents have access to improved sanitation while 41%
still practice open defecation which ultimately risks the quality of water and food that they have
since it’s in direct contact with the soil. This can also cause diarrhea and other health concerns if
the problem is not addressed (Asian Development Bank, 2019). To tackle this, an investment

12
project and reform program financed by the Asian Development Bank known as Third Rural
Water Supply and Sanitation Services Sector Development Program was established that aims to
assist the Cambodian government in achieving its national goal of providing universal access to
rural water supply in the country by 2025. This also is in line with the sustainable development
goal 6 which is to ensure the availability and sustainable management of water and sanitation for
all (Cambodia: Third Rural Water Supply and Sanitation Services Sector Development Program
2021).

Overall, the government of Cambodia has clearly given importance to the ASEAN
Socio-cultural Community Pillars through their various projects that intend to strengthen the
relationship between Cambodia and other ASEAN member states. Although most Cambodian
government programs focus on their internal improvements, it is undeniable that these still
contribute to the improvement of the ASEAN identity by ensuring basic needs, providing equal
access to opportunities regardless of genders, and preserving culture. The continuous actions
taken to address the issue led to a productive change in the society.

13
Cambodia and the ASEAN Way

The Association of Southeast Asian Nations (ASEAN), as a regional power in the


Southeast Asian area, has its own conflict resolution method known as the "ASEAN Way." Many
scholars believe that regional organizations such as the European Union (EU), Organizations of
African Unity (OAU), and others play an important role in resolving internal conflicts Hazmi
(2020). ASEAN has endeavored to handle its members' different demands through a method
known as 'the ASEAN way.' According to the article of PwC, it strives for agreement on
problems and adheres to the concept of non-interference in the internal matters of members from
outside or inside the country Keen (n.d.).

Based on the article of Council for the Development of Cambodia (2019), Cambodia is on
the path to long-term growth in the twenty-first century. It achieved excellent market stability as
well as major improvements in living conditions.

Cambodia's Robust Economic and International Ties

Cambodia can benefit from its Association of Southeast Asian Nations participation
(ASEAN). Tariffs on the majority of Cambodian trade balance to and from ASEAN member
nations were decreased to zero to five percent by 2010 and would be eliminated by 2018. It has
signed bilateral investment treaties to provide investors with reciprocal fair and equitable
treatment, prevent dispossession, and ensure investment return.

Cambodia’s Financial Industry System are being Reinforced

Following the conclusion of bank restructuring programs in 1999, advancements in the


banking industry have been generally outstanding during the previous decade. Banking and
financial stability, increasing financial services, and institutional and legislative reforms under
the financial sector design all contributed to this.

Investment incentives in Cambodia's Special Economic Zone

Cambodia's investment legislation provides up to nine years of tax exemption, a 0% VAT


rate, and full import taxes shall be exempt on raw materials, machinery, and equipment.
Furthermore, it ensures the free return of profits earned by investors.

Cambodia’s Inflation is Still Under Control

Despite increasing gasoline prices, the Cambodian government has been able to keep
inflation under control. This stability has been aided by strict fiscal measures and the rising
impact of monetary policy in limiting money supply expansion.

The most important immediate problem to ASEAN has been the violent war in Cambodia
since early July, which has forced the country's admission to the organization to be postponed.
Since mid-July, ASEAN has attempted to mediate the conflict, but has been met with opposition
from Cambodia's now-dominant leader Hun Sen Frost (1998). ASEAN is now emphasizing the
importance of holding this same scheduled 1998 election results in a fair and reasonable manner,
but the exertion to admit the nation as ASEAN's tenth member remains dormant.

14
The Conflict of 5-6 July 1997 and ASEAN's Response

The actual origins of the crisis that erupted within the Cambodian administration in early
July are still uncertain. The dispute appears to have arisen primarily as a result of increased
rivalry between the two main governing parties, the Cambodian People's Party (CPP) led by Hun
Sen and the royalist National United Front for an Independent, Neutral, Peaceful, and
Cooperative Cambodia (FUNCINPEC) led by Prince Norodom Ranariddh.

Based on the news article released by CNN (1997a), On Saturday of July 6, after a day of
occasional combat between soldiers loyal to the country's opposing co-premiers, rocket bursts
shocked the Cambodian capital Saturday afternoon. At least four people had been killed and 29
others were injured in the battle, according to doctors at Phnom Penh's Calmette Hospital and Ta
Chang Hospital. The fighting among Cambodian opponents heats up.

On Sunday of July 6, Cambodia's capital city remained a battlefield as residents and


non-residents alike fled violence between soldiers loyal to the country's two opposing premiers.
The army of Second Prime Minister Hun Sen reinforced their hold on Phnom Penh on Sunday.
Roads were closed, essentially isolating the city. The airport in Phnom Penh was also blocked, as
were landlines, while tv networks broadcast a tape of Hun Sen blaming his co-premier of
planning for war CNN (1997b). The forces of Cambodia's second prime strengthen their hold on
the city.

The fate of ASEAN's peace negotiations remained unclear. Much will likely rely on the type
of electoral campaign held in Cambodia, the quantity of participation permitted, and the manner
in which the elections are conducted. Meanwhile, ASEAN's ambition of representing all 10
Southeast Asian countries is on hold.

15
Conclusion

Cambodia is a small country that consists of widespread plains and great rivers. Yet, they
are members of the ASEAN community that also constitutes three ASEAN pillars
(political-security, economic, and socio-cultural society). Hence, the APCS encourages member
countries to maintain these ASEAN pillars to create harmonious political stability, democracy,
and good governance. However, to efficiently promote political growth, Cambodia must include
promotion and preservation of human rights and fundamental freedoms. Human rights are treated
as a rules-based community of shared values and standards under the rule of law. An example of
this would be freedom of speech and press. It is important to exercise human rights particularly
in the field of media because it can help Cambodians gain information about the current issues of
their country and other international sectors. Furthermore, the Economic Community Pillar also
strives for the formation of a harmonious, resilient and people-centered ASEAN economy,
characterized by a single market and production base, a high degree of global competitiveness,
and a deep integration into the global economy. Based on the data given on the previous parts of
this paper, Cambodia’s large exportation of vegetable products to Thailand and Vietnam supports
Cambodia’s agricultural industry, which employs approximately 3 million people, and accounts
for 22.4% of the country’s GDP as of 2020. Aside from that, Cambodia primarily imported
precious metals and mineral products, machines, precious metals, and sugar products from their
neighboring countries, such as Singapore and Vietnam. In conclusion, Cambodia may have its
social issues that need to be settled, however, the country, alone, is effectively stabled as a
representative of the ASEAN community.

16
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