FACULTY OF EDUCATION AND HUMANITIES

BAFB2113

INTERMEDIATE MACROECONOMICS

“THE SOCIAL ECONOMICS OF CAMBODIA & IMPACT OF LOWERING CORPORATE TAX”

SECTION :2

SEMESTER : OCTOBER 2017

SUBMISSION DATE:
WEEKS 11

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Table of Content
CONTENT PAGE
Introduction 2
Poverty in Cambodia 3
Education in Cambodia 5
Economics in Cambodia 7
Recommendation 8
Conclusion 9
The impact of lowering corporate tax 10
References 12

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Introduction

Cambodia is a country in mainland Southest Asia. With the difficulty and unstabilize of
political issue before, Cambodia had become a last country who joined Association of Southest
Asian Nation (ASEAN) on 30 April 1999. Cambodia has a land area of 181,035 square
kilometers in the southwestern part of the Indochina peninsula and the capital of Cambodia is
Phnom Penh. The dominant features of the Cambodian landscape are the large, almost generally
located, Tonle Sap (Great Lake) and the Bassac River Systems and the Mekong River, which
crosses the country from North to South. Cambodia is a geographical contact country
administratively composed of 20 provinces, three of which have relatively short maritime
boundaries, 2 municipalities, 172 districts, and 1,547 communes.

In Cambodia, there is a king, King Sihamoni, the son of His Majesty Norodom Sihanouk
and Her Majesty Queen Norodom Monineath Sihanouk of Cambodia. King Sihamoni's
selection was endorsed by Prime Minister Hun Sen and National Assembly Speaker Prince
Norodom Ranariddh (the new king's brother), both members of the throne council. However,
the King in Cambodia is selected by the throne council. Sihamoni remains a bachelor and has
no children, which means he does not have a direct successor if one were to be required.

The official religion in Cambodia is Thearavada buddhism which practised by 95

percent of population. Christian and Islam were another religion that practised by certain
population there. The Cambodian language is Khmer which influenced by spoken and witten
Thai. The population in Cambodia today is about 10 millions. Around 90-95 percent of
population is Khmer ethnic while the remaining is Chinese-Khmer, Khmer Islamor Chams and
ethnic hill-tribe, known as Khmer Loeu and Vietnamese. he ethnic groups that constitute
Cambodian society possess a number of economic and demographic commonalties. The Khmer
Loeu are found namely in the northeastern provinces of Rattanakiri, Stung Treng, Mondulkiri
and Crate. The Cham people in Cambodia descend from refugees of the Kingdom of Champa.
The Chinese in Cambodia formed the country •es largest ethnic minority. The Vietnamese
community is scattered throughout southeastern and central Cambodia. They were concentrated
in Phnom Penh, and in Kandal, Prey Veng, and Kampong Cham provinces.

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Poverty in Cambodia

Cambodia is country to be devoloped. When one country become developed country,

people the society or in country will not meet poverty or any difficulties. Although Cambodia
has many natural resource, Cambodia still the poor county in the world. According to
the UNDP, Human Development Index Report in 2009; Cambodia ranks 137th out of 182
countries over the world. According to World Bank data, around 20.5% of cambodians live
below the national poverty line, implying that at least one in five Cambodian live in destituition.
In 2004, 35% were poor and 20% were food poor. This show that Cambodia still meet some
problem to develop itself to be the develop county. Poverty in Cambodia is characterized by
low income and consumption, poor nutritional status, low educational attainment, less access
to public services including school and health services. There are many causes why the poverty
happen in Cambodia.

First, the reason why poverty happen in Cambodia is high population growth. In 2016,
the total population in Cambodia was estimated around 15.8 million people while in the year of
1960, Cambodia had population of 5.7 million people. There is huge gap in increasing of
population. The population grow much faster than those of developed. The increasing of
population will need more food, health care and more. So the goverment need to spend more
on it for example, the government had to spend on immunization of children to increase the
child survival rate. According to IFAD, 2007 shown that “The pressures of a fast-growing
population contribute to poverty because of a lack of education and skills training, people have
inadequate employment opportunities and low capabilities. They are insecure, excluded and
vulnerable. They have limited access to natural resources. Poor health, lack of education, poor
infrastructure and low productivity lead to deeper poverty. The cycle of poverty, ill health and
high health care expenditure cripples poor Cambodian families economically”.

Next, the political stability is one of reason of poverty happen. This problem always
happen with no schdedule and cause very harmful to the country. As we know, political stability
causes many difficulty to Cambodia poverty. Political instability discourages foreign
investment and encourages the flight of domestic capital. Similarly, less investment means less
economic activities and economic growth. The World Bank provides data for Cambodia from
1996 to 2015. The average value for Cambodia during that period was -0.51 points with
a minumum of -1.3 points in 1998 and a maximum of -0.03 points in 2014. (Political stability
index (-2.5 weak; 2.5 strong)

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 Then, the reason why poverty happen in Cambodia is natural disaster. We know the
history of Cambodia that they had civil war before. There is a lot of mines and many Cambodian
have suffered of mine injuries. According The Cambodian Mine Action Center (CMAC)
estimates there may have around four to six millions mines and unexploded ordinance in
Cambodia and it may take as many asa 100 years to clear all the mine in Cambodia. Apart of
land mine,other natural disaster like flood also can make Cambodian lost their family and
shelther. Every natural disaster happened, much of money must to pay out from government to
support people’s life. For example, Rainstorms hit Battambong Province in 11th of May 2012
announced that an estimated 116 families in 7 villages were reported affected by rainstorm in
Preytralach commune. Among all the destroyed 20 houses were fully destroy and a few people
were killed.

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Education in Cambodia

French system was used during Khmer Rouge Regime for education in Cambodia.
Today, it is six years of primary school (grades 1-6), three years of lower secondary school
(grades 7-9), and three years of upper secondary school (grades 10-12), following more of a
westernised educational model. After Khmer Rouge Regime, there are many type of school.
For exapmle, Buddhist education, private education and primary and secondary education or
school. There are many Cambodian cannot read. Around 65 percent for adult literacy rate. Why
it is happen?

There are many reason why Cambodian didnt give attention for education. First, In the
early 2000s, UNICEF estimated that 65 to 70 percent of all Cambodian children started school,
but many repeated first grade two or three times or dropped out by the second grade. Most of
the drop outs were girls. Most of student drop out from the school because of safety and money.

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They want to find money to help household of their family income. Also, parent also support
their son or daughter to work rather than study. They think with money only the ways to help
the family. Usually, the school is very far away from their house. They need to walk around 2
hour to arrive to school. Also, they will back when the sun started set. Its very dangerous for
student. Thats also one of the reason why the most drop out are girl.

Next, why education didnt given attention because of the government. The school were
lacked of facilities. The student need to occupied a living room size of classroom with student
80 student. Education is poorly funded. The government budget mostly goes to the military and
security. Also the amount of money for education keep falling.

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Economy in Cambodia
Between 2004 and 2007, the Cambodian economy grew at rate of 10 percent. This is
from driven by industries such as garment, tourism construction and agricultures. The main
export are clothing, timber, rubber, rice, fish, tobacco and footwear while petroleum, cigarettes,
gold, machiner, motor vehicles and pharmaceuticals are the main import. We divided Cambodia
economy in three part.

First, agriculture is of econmy in Cambodia. This is the primary industry of the country
with 59 percent of the Cambodian population engaged in agriculture. Rice is the principal food
crop while rubber is the principal commercial crop in Cambodia. Next, tourism sector. Tourism
has been the second largest source of foreign exchange in Cambodia after
textile. However, the number of visitors increase to 1055000. The major tourist destinations
in the country are Siem Reap, Phnom Penh, Sihanoukville, Kampot and Kep. Then, economy
in Cambodia is garment. Cambodia had to shut down over 30 garment factories due to recession
and lay off more than 30000 labor in the garment industry. The garment industry currently
employs more than 280000 people which 5 percent of the work force and contributes more than
70 percent of Cambodia’s exports.

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Recommendation

The recommedation for poverty in Cambodia is improving rural livelihoods. The

National Poverty Reduction Strategy (NPRS) sets out the existing constraints and policy agenda
in a series of key areas, with the overall objective of increasing incomes of Cambodians living
in rural areas: land, water, agriculture, forestry and fisheries and transport. Improvements in
these areas will contribute to improvements in other aspects of poverty, through better access
to basic services. Next, expand the job opportunities to the society. The Royal Government’s
policies are intended to improve work opportunities specifically through:

• facilitating private sector development

• expanding exports and

• expanding tourism.

The extent to which these policies will be effective is closely related to success in improving
the capabilities (education, skills and health) of the Cambodian people, as well as efforts to
improve governance and transparency.

Recommendation for education in Cambodia, the government should gave more budget
for education. Also, improve the school facilities and building. Apart of it, the government
should build more school in rural area in order to prevent the issue of education in Cambodia.
The government should compulsory for primary education which content of 3R. For economics,
the government should expand this industry to increase the output. Rice production growth has
decelerated since 2012 and given the land area constraint, its recovery will depend from now
on more on increases in rice productivity and quality than on area expansion. In addition,
improving rice milling and logistics costs will help Cambodia get closer to its one million rice
milled export target. They need to improve road transportation, together with greater
coordination of efforts between central and local governments, the private sector and local
communities, would help promote diversification of tourist destinations beyond the Angkor
Archaeological Park to include beach areas and ecotourism. Also, the government can enhance
the factory to take more labor in order to reduce unemployments. The government should find
more opportunities to export their industry.

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Conclusion

From the observation in Cambodia, we know that the Cambodia one of the developing
country. There are many problem there that need to solve it in order to be a developed country.
The government should concern all about the problem and find the strategy to solve it. The
poverty of Cambodian at the highest rate while the education in lowest rate. To decrease the
poverty rate, the government should enhance Cambodian to concentrate in education. Also, the
government should give more attention on economics sector to ingrease GDP of country.

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The Impact of Lowering the Corporate Tax Rate

Corporate tax is the tax imposed on the net income of the company. After operating earning is
calculated by deducting expenses including the cost of good sold and depreciation from
revenues, enacted tax rate are applied to generate a legal obligationthe business owes the
government. There are many impact of lowering the carporate tax rate in a good market.

When the carporate tax rate is lowering, the revenue will increase. It is because of

 Lower corporation tax will encourage more multinationals to invest in that country

 Lower tax rates enable firms to invest more – this leads to higher growth and therefore,
higher tax revenues.

 Lower tax rates reduce the incentive for firms to use tax avoidance schemes.

So the aggregate demand will shift to the right because of taxation decrease.

While the agregate supply also shift to the right. When the taxation decrease,the productivity
will increase.

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References

1. Cambodia Geography - About Cambodia | Tourism Cambodia | Tourism Cambodia.

(2017). Retrieved from http://www.tourismcambodia.com/about-

cambodia/geography.htm

2. Cambodia Political stability - data, chart | TheGlobalEconomy.com. (n.d.). Retrieved

from http://www.theglobaleconomy.com/Cambodia/wb_political_stability/

3. Does cutting corporate tax rates increase revenue? - Economics Help. (n.d.).

Retrieved from https://www.economicshelp.org/blog/21345/economics/does-cutting-

corporate-tax-rates-increase-revenue/

4. Poverty in Cambodia. (2013, January 12). Retrieved from

https://cambodia24.wordpress.com/2013/01/12/poverty-in-cambodia/

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