After the fall of Pol Pot and the establishment of the People's Republic of Kampuchea in January 1979, the Kampuchean (or Khmer) People's Revolutionary Party (KPRP), led by General Secretary Heng Samrin, set Cambodia's economic development policies. Party congresses adopted these policies at meetings in January 1979, May 1981, and October 1985. A new Constitution, which the National Assembly approved in June 1981, defined Cambodia's new socialist direction and the role of the state in economic affairs. Then, after six more years of struggling with an economy of survival and subsistence, KPRP leaders presented their First Plan, which represented a systematic and rational party effort at centrally planning and improving the economy.

New Economic Policy and System

In contrast to Pol Pot's radical, doctrinaire approach to economic development, Heng Samrin and the leaders of the Kampuchean (or Khmer) National United Front for National Salvation (KNUFNS), the umbrella group of anti-Pol Pot forces sponsored by Hanoi, sought to rally public support by formulating a policy that would be pragmatic, realistic, and flexible. In an eleven-point program promulgated shortly before the Vietnamese invasion of Cambodia, the front articulated the economic guidelines that would mark its tenure in power. These guidelines advocated a gradual transformation to socialism; a "planned economy with markets"; the restoration of banks, of currency, and of trade; the abolition of forced labor; the introduction of an eight-hour workday; and pay based on work performed.

The KPRP socialist economy accepted the private sector. At a May 1980 agriculture conference, Samrin reviewed the effectiveness of the solidarity groups (krom samaki), production units of seven to fifteen families, united in a common endeavor to raise food or to produce goods. These production units had been organized in line with the policy of moving toward socialism. He affirmed that each member of these groups would receive at least one hectare of land to cultivate for communal purposes, plus a private plot not exceeding a quarter of a hectare on which to grow vegetables or to graze livestock. Also, a July 1980 planning conference called for a policy of "simultaneous development of family (private) economy and national (socialized) economy." The conference also decided that the state should buy agricultural products from the peasants and should sell them manufactured goods at free-market prices.

The KPRP further clarified its economic policy at its Fourth Party Congress (its first since taking power in Phnom Penh) from May 26 to May 29, 1981. It declared that the nation's economic system had three main parts--the state economy, the collective economy, and the family economy, and that each of these parts "had its own significant role."

The state economy covered large-scale agricultural production, all industrial production, the communications and transportation networks, finance, and domestic and foreign trade. To facilitate economic transactions nationwide, the state restored the banking system in November 1979, and it reintroduced currency in March 1980. The KPRP acknowledged that the state economy was small and said that it should be expanded. The party leaders, however, aware of the pitfalls of central planning, warned against "over-expansion and disregard for real needs, production conditions, management ability, and economic capability."

The collective economy--the largest of the three elements--was assigned an important role in agricultural rehabilitation and development. It consisted of solidarity groups in agriculture, fishing, forestry, and handicrafts. These groups also assumed the task of collective purchase and sale.

The family-run economy included the home economies of the peasants, most retail businesses, individual artisans, handicrafts, repair shops, and small trade. Although the 1981 Constitution stated that the land and other natural resources were state property, it gave the citizens usufruct rights to land allotted for a house and garden by the state. In some cases, agricultural workers were also allowed to borrow an extra plot of land from the state, to produce food on it, and to keep the harvest for their own consumption.

Private enterprise also made a modest beginning under Cambodia's hybrid economic system. Citizens were allowed to buy and to sell agricultural produce and handicrafts. The law guaranteed workers the right to keep their wages, their other income and their property. Encouraged and protected by the state, hundreds of small shops and factories, each employing a few workers, opened for business in Phnom Penh and in other urban areas.

This inchoate private sector played such an important role in the national economic recovery that party leaders urged its official recognition, at the Fifth Congress in October 1985, as a means of mitigating the weaknesses of the state-run economy. Thus, the government added a fourth component--private economy--to the economic system and legitimized it with a constitutional amendment in February 1986.

First Plan, 1986-90

The First Five-Year Program of Socioeconomic Restoration and Development (1986-90), or First Plan, originated in February 1984, when the heads of the state planning commissions of Vietnam, Laos, and Cambodia met in Ho Chi Minh City (formerly Saigon) and agreed to coordinate their 1986 to 1990 economic plans. Heng Samrin formally announced Cambodia's plan in his political report to the congress.

The plan was intended to open a new phase of the Cambodian revolution; it gave highest priority to agricultural production, calling it "the first front line," and focused on the four sectors of food, rubber, fishing, and timber. It set production targets for each sector. During the plan period, food production was to increase 7 percent a year to keep up with a targeted 2.8 percent annual population growth rate, which did not seem to have been reached by 1987. The plan projected that by 1990, rubber farming would expand to 50,000 hectares in order to produce 50,000 tons of latex; timber production would reach 200,000 cubic meters; jute production would increase to 15,000 tons; and fish production would amount to 130,000 tons. As in the past, the plan labeled agriculture and forestry as the real force of the national economy.

The plan was less specific for the industrial sector. It did not set industrial production targets, except that for electrical output, which was projected to reach 300 million kilowatt hours per year in 1990. The plan called attention to the need for selective restoration of existing industrial production capabilities and for proposed progressive construction of a small to medium industrial base, which would be more appropriate to the country's situation.

The plan placed increased emphasis on the distribution of goods. Trade organizations were to be perfected at all levels, and socialist trading networks were to be expanded in all localities. In particular, the trade relationship between the state and the peasantry was to be improved and consolidated in accordance with the motto, "For the peasantry, selling rice and agricultural products to the state is patriotism; for the state, selling goods and delivering them directly to the people is being responsible to the people."

The plan also required that investment be directed toward the improvement of the infrastructure, particularly toward the reconstruction of communication lines and waterworks. Road, inland waterways, and railroad networks had to be restored to serve the national economy and defense.

Last, but not least, the plan cited "export and thrift" (without elaboration), as the two primary policies to be followed in order to solve the national budget deficit. The plan implied that, into the 1990s, exports would have to consist principally of agricultural and forestry products, to which some value might be added by low-technology processing. "Thrift," although undefined, could, in the future, include some kind of government savings plan, with incentives for small depositors, to absorb surplus riels generated by Cambodia's considerable free-market and black-market sectors.

Heng Samrin, like his predecessors, Sihanouk and Pol Pot, urged Cambodians to undertake the task of economic restoration "in the spirit of mainly relying on one's own forces." Unlike Sihanouk and Pol Pot, however, the KPRP leader stressed economic and technical cooperation with Vietnam. He believed such cooperation would be "an indispensable factor" in the development of agriculture and of forestry in Cambodia. Heng Samrin also advocated better economic cooperation with the Soviet Union and with other socialist countries.

Custom Search

Source: U.S. Library of Congress