In many ways Cambodia's prospects ought to be good. Together with the collapse of the Khmer Rouge as a political and military force, the formation in November 1998 of Prime Minister Hun Sen's coalition government has ushered in a new era of stability, along with renewed, albeit less than spectacular, economic growth. Inflation is nonexistent, and the exchange rate of Cambodia's currency, the riel, is stable at around 3,880 to the U.S. dollar. But problems are myriad. While the government, under pressure from foreign donors, has stepped up economic reforms and improved revenue collection, it still spends almost half its budget on security and defence, at the expense of health, education and rural development.
People are still unwilling to invest long term, largely because of a lack of law.
You have no independent judiciary, so if you have a problem with a contract you have no real recourse. Others are more blunt. Government officials maintain that efforts are being made to address the problems. Prime Minister Hun Sen has held two forums for private investors. The government's Council for Development for Cambodia is meanwhile targeting interest among small and medium-sized enterprises in such areas as light industry, construction, tourism and agriculture, in the hope that interest among multinationals will follow.