In 2016 Cambodia crossed the middle-income threshold, marking the transformation from a largely agrarian economy to the latest Asian Tiger. At the same time, Cambodia recorded one of the world’s most impressive declines in poverty over the past decade.

Cambodia today is synonymous with progress. A prolonged period of political and social stability since the Paris Peace Accords of 1991 has provided the basis for rapid economic development. Since the early 2000s, Cambodia’s average economic growth rate has been among the highest in the world; the success of its garment industry, its attractiveness to tourists and the growth in construction have driven a transformation of the economy. Poverty has fallen dramatically as a result, accompanied by a decline in inequality. In 2016, Cambodia graduated to become a lower middle-income economy.

Since 2000, Cambodia has posted one of the strongest and most sustained periods of economic growth in the world. Between 2000 and 2015, annual growth in its gross domestic product (GDP) averaged 7.8%, raising GDP per capita to USD 1 225 and reducing poverty rates from over 60% to 13.5%. The national poverty gap, which indicates the severity of poverty, fell from 21.8% in 2004 to 2.2% in 2014.

Heir to the ancient Khmer Empire, the Kingdom of Cambodia is a parliamentary constitutional monarchy located in Southeast Asia and bordering the Gulf of Thailand, between Thailand, Viet Nam, and Lao PDR. Its population of about 16 million is among the youngest in Southeast Asia, with half the population aged under 25. The population is predominantly Khmer. Other ethnic groups represent less than 10% of the population and are composed mostly of Vietnamese and Chinese. Cambodia is also among the poorest economies in Southeast Asia, with a gross domestic product (GDP) per capita of USD 1 225 in 2015.

This chapter provides a forward-looking assessment of risk and vulnerability in Cambodia. While monetary poverty has fallen rapidly since the early 2000s and inequality has also declined, a large population is vulnerable to falling back into poverty. The analysis demonstrated that deprivation levels have not declined as quickly as monetary poverty. Climate change, large-scale internal and international migration, rapid urbanisation and changes to the age structure of the population are likely to determine demand for social protection over the longer term. The extent to which Cambodia is able to diversify its economy will also be a critical factor.

This chapter examines the adequacy of social protection in Cambodia in light of the risks and vulnerabilities identified in . Social protection in Cambodia is well established in legal and policy frameworks, including the Social Protection Policy Framework approved in 2017. While Cambodia has a variety of social assistance, social health protection, social insurance and labour market programmes in place, coverage is low and provision is highly fragmented. The current capacity of social protection to reduce poverty and vulnerability is therefore limited.Health Equity Funds are emerging as an exception to this situation. These provide relatively high levels of coverage among the poor population and are growing rapidly, thus providing a potential avenue towards universal health coverage.

This chapter focuses on the impact of existing social protection programmes on poverty and inequality. It finds that social assistance in Cambodia is well targeted through the IDPoor system but has little impact on poverty and inequality because of low levels of coverage and low benefit levels. Health Equity Funds, however, do ease the burden of health spending for a significant number of poor households. Pension benefits for retired civil servants and military veterans dominate social protection spending and are unsustainable. Social protection spending in Cambodia is low by regional standards. The tax system is progressive but increases poverty, an impact that public transfers are too small to offset.

This chapter proposes a scaling-up of social assistance and a consolidation of social insurance arrangements in line with Cambodia’s 2017 Social Protection Policy Framework (SPPF). While domestic resource mobilisation policies are proving highly successful, the sustainable implementation of the SPPF will require a financing strategy. Finally, this chapter recommends measures to improve coherence across the social protection system and the expansion of tools for implementing, monitoring and evaluating social protection provision.