Cambodia’s Unstable Political Situation will have Limited Economic Implications, ASEAN-focused Risk Consultancy Reports

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Despite increased risk of political and social instability, Access Asia Consulting Co Ltd sees limited implications for business and foreign investment in the short term.

The recent dissolution of Cambodia’s only credible opposition party has heightened the risk of political and social instability in the Southeast Asian nation in the run-up to next year’s general elections, but will likely have limited economic implications over the short term, according to an assessment by risk consultancy Access Asia Consulting Co Ltd.

“We view Cambodia’s political situation as unstable, yet the economic implications as slight,” the Hong Kong registered company wrote in the assessment, cautioning however that “the political situation in Cambodia is fluid and events are changing daily. The likelihood of an intensification of the ruling party's crackdown on members of the now defunct CNRP, civil society and the media is high.”

The assessment – “The Dissolution of the CNRP and Implications for Foreign Investment” – is based on research conducted inside Cambodia and abroad during, preceding and following the week of the dissolution of the Cambodia National Rescue Party on 16 November.

Key informants from the now disbanded CNRP and the ruling Cambodian People’s Party (CPP) were interviewed for the assessment, as well as regional security experts, diplomats, academics and executives. Moreover, Access Asia regularly conducts assessments, investigations, due diligence and field research in the Kingdom.

Although an intensification of the crackdown could trigger a backlash, anti-government protests are likely to be small-scale and uncoordinated due to the CPP's firm control over the police and military, the assessment concluded.

The ASEAN-focused consulting firm identified the major threat to Cambodia’s economy to be a possible exclusion from the European Union’s Everything but Arms initiative, which allows preferential access to the market for Cambodian exports. This threat, however, would not be immediate because the process of excluding a country from the EBA can take three years and is preceded by a review and dialogue process.

The assessment also notes an increase in geopolitical interference in Cambodian politics, one sign of which is anti-American rhetoric. “This rhetoric indicates that geopolitical interference in Cambodian politics is on an upswing, with rivals of Western democracies sensing weakness as Washington withdraws from its preeminent role in the region and China displays its rising assertiveness,” the assessment notes, pointing to China’s investments along Cambodia’s coastline as strategic moves for greater influence in maritime routes.

Nelson Rand, co-founder and Director of Research and Investigations of Access Asia, said the company has expanded its research network in Cambodia to meet increased demand for independent and detailed research tailored to the specific needs of its regional and global clients. “What we are seeing in ASEAN in general is an uptick in demand for risk-related research from corporates,” he explained, adding that ASEAN’s smaller economies have been under closer scrutiny since the advent of the AEAN Economic Community. “The opportunities in the region, including Cambodia, are immense. Risk assessment is vital to effective decision making that maximizes opportunities and avoiding losses,” Rand said.

About Access Asia Consulting Co Ltd:

Access Asia Consulting Company is a boutique risk management firm specializing in corporate investigations, due diligence, and security-related services across Southeast Asia. We maintain extensive local networks that enable us to gain access, insight and client-oriented information to help foreign investors and other clients navigate the complex business, political and security landscape of the region.

In Ho Chi Minh City contact: (nelson.rand(at)accessasiaconsulting(dot)com)
In Bangkok contact (chandler.v(at)accessasiaconsulting(dot)com)

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Nelson Rand
Access Asia Consulting Co Ltd
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