al bands of blue (top), red (double width), and blue
with a white three-towered temple representing Angkor Wat outlined
in black in the center of the red band; only national flag to
incorporate a building in its design

Economy Cambodia

Economy - overview:
Cambodia's economy slowed dramatically in 1997 and 1998 due to the
regional economic crisis, civil violence, and political infighting,
and foreign investment and tourism decreased. In 1999, the first
full year of peace in 30 years, the government made progress on
economic reforms. Growth resumed and remained about 5% from 2000 to
2004. Economic growth has been largely driven by expansion in the
garment sector and tourism, but is expected to fall in 2005 as
growth in the garment sector stalls. Clothing exports were fostered
by a US-Cambodian Bilateral Textile Agreement signed in 1999 which
gave Cambodia a guaranteed quota of US textile imports and
established a bonus for improving working conditions and enforcing
Cambodian labor laws and international labor standards in the
industry. With the January 2005 expiration of a WTO Agreement on
Textiles and Clothing, Cambodia-based textile producers are in
direct competition with lower priced producing countries such as
China and India. Faced with the possibility that over the next five
years Cambodia may lose orders and some of the 250,000 well-paid
jobs the industry provides, Cambodia has committed itself to a
policy of continued support for high labor standards in an attempt
to maintain favor with buyers. Tourism growth remains strong, with
arrivals up 15% in 2004. The long-term development of the economy
after decades of war remains a daunting challenge. The population
lacks education and productive skills, particularly in the
poverty-ridden countryside, which suffers from an almost total lack
of basic infrastructure. Fully 75% of the population remains engaged
in subsistence farming. Fear of renewed political instability and a
dysfunctional legal system coupled with extensive government
corruption discourage foreign investment. The Cambodian government
continues to work with bilateral and multilateral donors to address
the country's many pressing needs. In December 2004, official donors
pledged $504 million in aid for 2005 on the condition that the
Cambodian government begins taking steps to address rampant
corruption. The next donor pledging s