Selected Comments at the Roundtable Discussion on Cambodia in Siemreap City 16 February 09

Cambodia’s Economic Performances

… It is indeed not a political question and I am sure the economists and economic think tank would have the faith to raise this issue up. What I wanted to share though is that aiming for political power one could use all sorts of pretext so that they could gain ground in attacking the Royal Government … It is not the case in point in Cambodia alone but it is also obvious in other countries as well. Take for example before the elections or to improve rate of popularity, political opponents to the Government always make problems … the group that is still good in that sense is the economists with whom a frank discussion could be conducted and their input could be positive for the country’s development. Just now the question was about the impact of the financial crisis … I have mentioned some in relations to its impacts in many of my previous speeches …



Take for example the country’s two digit growth of 10% has gone down to 7% in 2008 – and this is the overall impact for Cambodia. However, Cambodia did not have any impacts in form of stock exchange or it has no concern of being going bad in stock market … You may take it as a football match in the region or in the world. Cambodia did not feel a thing of who wins or loses because we do not have our team of the play. We have planned to set up a stock market of our own though and because of the world crisis we have come to a point of reconsidering if we should go ahead as planned in 2009 or should we prolong it …



The Royal Government and its working groups are conducting serious studies and if we were to give its birth just to see it dies later, I think we should not let it take place at this time. This is just my preliminary evaluation … but we have another front that might feel the impact though … Cambodia depends heavily on exports so some initial impacts have been brought to bear in exports of garments or other textile [products … A certain number of factories concerned have been impacted … That is where our concern lie … if the United States or the European Union were not slashing down imports Cambodia would be quite fine … That is why we have reoriented our efforts to markets in Japan and Canada … and recently the Philippines came telling us Cambodia could export to the Philippines for o% tax.



Another point of concern is relating to the eroding price of agro-products, which for me I see it as a two edge sword. As the price of fuel has gone sky high, many countries resorted to using crops for producing bio-fuel making the price for food crops going up. I told the people of Cambodia that we have gold on land because we have a large land for cultivation (of rice). Why did I say it is a two edge sword? It is because when the price of food crops going high about 80% of the Cambodian population are happy because they are farmers but another 20% of the population are going crazy because they are consumers … Impacts on agro-products from the world crisis are felt by producers for market supply scale but not for subsistent farmers …



The price of rubber which was before close to 3000 USD per ton has now come down to about 1000 USD. The cassava, which our farmers have enlarged the cultivation on about 10,000 hectares, has faced a serious price crisis and many farmers decide to leave them in the ground instead of harvesting them because of the low price and the high cost of doing so.



These are impacts on our farmers and people as a whole and it is the Royal Government grave concern. We are in the process of suggesting scenarios and/or policy framework aimed at supporting agriculture and I have just told Mr. Chan Ni of ACLEDA Bank to focus more on promoting agriculture and he said his bank has placed a big amount already … I also urge him to think more in terms of purchase of products, processing for export as agriculture in Cambodia to be frank has got a large potential. Comparing with Vietnam, it is easily seen that Vietnam has exhausted their soil by producing between two and three times per annum at the yield between four and five tons per hectare. Cambodia produces only once a year at the yield of 2.6 tons per hectare. If Cambodia increases its production frequency to twice a year for only half of the current land of production at the yield of three tons per hectare – we could say that we still have more room for that.

The third impact for Cambodia is indeed the tourist sector. As you may have learned that clothing exported to the United States or in some other countries have gone down because of reduced orders … People who before go for expensive brand cloths are now going for those at lesser prices and the number of cloths to be purchased are also in less number … In tourism, because of less incomes, people change their plan to tour in close by countries to their natives and/or local destinations … That is why the projected growth in tourist sector of 12% has been achieved at 6% only though it is still a positive growth … We have projected to head for an increase of about half a million tourists but only 300,000 is noted …



Another impact is in the field of property and construction as we all should note that recent property development had been a great and helped the Royal Government’s with the problem of housing … The private investment has played a major role in this sector… In Phnom Penh, as we can see it ten of thousands of houses have been built … In Siemreap, before we have only two old hotels but now we have more than 100 hotels in operation … a prove of development in the field of construction that no one could deny … This sector has now come to standstill and the purchasing poser has been stuck … The purchasing power in Cambodia in the past one year had been tremendous as companies importing motorcycles could not respond in a timely manner to demand …



However, the purchasing power has gone down and sensing by the last Chinese New Year, it has gone down a great in term of how much people spend for their seasonal greeting. It is not an isolated problems to be encountered by Cambodia alone but the world as a whole … It is still not to heavy that we cannot weather it … It is simple to understand because we are in lower height position so to fall from that height would not break us apart … What we are precautious of all is food security because according to our experiences food security could be a serious cause as we used to encountered at the time when the country was liberated in 1979 …. To go without fuel we would not die, to go without cars we would not die but to go without rice, death is certain.



Broad-Based Economy

… In relations to different growth monitoring and evaluation … Cambodia sets its growth target 6% whereas economists of the Asian Development Bank, World Bank and concerned institutions predict growth to be lower and some has gone this far with a pessimistic prediction of over 1% … I could let you understand it in a not-too optimistic way that with the experiences gathered from 2004 at the time when Cambodia ended what was called the quota system with the United States of America, the World Bank and IMF predicted Cambodia’s growth at 1.6% and then 2.4% for 2005 because their analysis was based on the fact that with less export to the US and other countries Cambodia’s economy would face a free fall situation. In the end, Cambodia achieved the growth of 13.3% … the pillars of Cambodian economy are not exports of garments only …



I mentioned frequently that the Cambodian economy is narrowly based on exports of garments and tourists dependence … I made that clear five years ago and we have then diverted our economy to the direction of expanding growth though investment in agricultural sector as this sector interacts directly to poverty reduction for the people and guarantees food security and economic growth for the country as well...



It is true that impacts from the world financial crisis on the country’s economic growth has to be carefully evaluated and more so in reform of public financial management I could say that the Royal Government of Cambodia will be very careful in this sector and in my position as the Prime Minister I have used the term that everything has to function in accordance with the mechanism of one chief of staff in the field of public financial reform, in which foremost concern is to guarantee macro-economic stability i.e. no spending will allowed to exceed our income … This is a point of success as in the past years we tried to generate growth until we transformed this country from cash deficit to surplus, a sum of which has been used in infrastructural development like roads and irrigation, etc.



Every country in the world is making effort to bail and stimulate economy and this means Cambodia is not alone and I am sure because we are making efforts altogether we will be complementing each other … The US is true to be the locomotive of economic growth and if the US economy is not doing fine, bad impact is also brought to other economy as well … I just hope that the US, the EU, India, China, Japan, South Korea are doing better so that Cambodia and other countries could adapt to their betterment …



Management and Use of Other Resources

… First of all I would stress that Cambodia has got many more potentials that are available and they are our hope in the long-term future of Cambodia. Aside from natural resources and land which we are good for agriculture, we still have more valuable resources that are not being tapped yet. Generations of Cambodian from us will benefit from them and if we could speed up the exploitation deal in the near future, we in this generation could also benefit and contribute in our country investment for development too … Mineral resources in Cambodia is by far limited to just oil and gas. I could mention more to you like bauxite of nearly one million hectares in Ratanakiri province which is under exploration by a company from Australia, ores of iron, gold, precious stone, etc. that is yet being tapped …



Talking about management and some fools have even predicted about corruption from oil while all the money is still under the sea bed. Could anyone believe that corruption could happen when the money is no where to be seen? Is it a destructive political maneuver or a constructive suggestion? That is why I say only the economists could say something of serious concern while those ill-intent people are hard to believe...



Cambodia wishes to be wide open for NGO, the press not only inside but also from outside of Cambodia and would be glad for them to contribute to the betterment of good governance … But they made statements here and there which downgraded essence of their contributions because the language they used … What corruption could it be while oil and gas are still under the sea bed? Bauxites and iron ore are still underground. I have responded to some partners who seemed to have expressed concerns in similar trends that this point in time it is not appropriate to talk about that but to talk about trying to make money and not to just keep concerning on how to spend it … It would be great, I told delegates from the World Bank, the ADB and IMF, if they could help us get the most profitable contracts with foreign oil companies … They can, for example Chevron and the US Embassy are here too, help by paying a big royalty … but according to the report from HE Sok An that does not seem to be the matter of interest … I do not specifically mention about Chevron …



Aside from expert, I am waiting to hear from diplomat who would convey their advice as to how to make more money and I would ask him to reduce tax for companies from his/her country … I have been working in this country for over 30 years now and there has not been a single time, country or company that approaches me and suggest to raise the platform above what had been agreed upon, only to ask for lowering it … I would be thankful if they approach me and suggest more money for Cambodia and not for less … Global Witness the other day criticizes us of being corruption on oil, which is still under the sea bed … I actually brought a can of crude oil from Kuwait and displayed it at home …

Having said so does not mean we do not have management measures but on the contrary we have placed serious thought on that … and an important political decision has been made to include in fiscal policy taxes on oil and gas exploitations other than keeping them as a separate bill … it is because of good intention that taxes on oil and gas as well as on other mineral exploitations have bee bound as one fiscal policy … It is indeed our effort to exercise financial management for Cambodia … If we were not to mention of the millennium development goals, we also have the national development plans of ten, five and rolling three years and budget has been divided in percentage to different ones …

I would urge those people with ill remarks to review and assess their comments while refrain from using world financial crisis for own votes and political gain at all as doing so would indeed devalue oneself. I would affirm to you that in Cambodia NGOs and civil society groups have attained major rights because they have been requested to join in debate and discuss some bills – and in some cases our partners also have enjoyed this as well. The private sector involves also in drafting national policy whereas the press takes it to another level showing us setbacks in our implementation … Some civil society and press groups though have used harsh means in doing their duties, which normally invited negligence from us.



Cambodia is indeed the haven of civil society, because here only five people a civil society could be established and registered its license at the Ministry of Interior. Over two thousand non-governmental organizations have been registered in a country of over ten million peoples ... And when we declare preparing organic law on that matter they have overreacted to our position … Does this means that they do not want to be placed under law? What do they want to do with this status? How do we go about holding NGOS accountable for their actions if such a law does not exist? Despite the fact that they do not want such a law to be enforced, this time around we will get the law going … I may ask another question, how could they talk about transparency when they are afraid of one?



Facing a situation that terrorism is growing everywhere, local and foreign-based NGOs - some registered at the Ministry of Foreign Affairs, some at the Ministry of Interior and some at the Council of Ministers – have created a state of referential difficulties as if an incident happens like – the possibility of attacking the US and UK Embassies in 2002-2003 in Phnom Penh, what sort of situation we could find ourselves in? Who will take the responsibility? That is why I am talking about there is a need to get the organic law going …



Cambodian-Thai

Investment & Trade Relations

Tension rose from the Thai-Cambodian border conflict to armed clash on October 15 but I do not foresee major war between Cambodia and Thailand at all. The incident of October 15 should be seen to happen no more. The previous Governments of Thailand – counting from Samak’s to Samchai’s – and now the current Government of HE Abhisit Vijajiva always assure their determinations to resolve the matter bilaterally with Cambodia … I would say that we should not let conflict in a tiny part of our country to infect the whole border of Cambodia and Thailand … or to expand the conflict at this level to and in this area to another level or in other areas like culture, trade or investment at all …



As of the moment of speaking border situation between the two countries – at the point of Preah Vihear is concerned or along the whole Cambodian-Thailand border – has been noted with good relations … What has remained now is to demarcate the border … The history of 100 years – since the convention of 1907 has left the two countries a situation that neither side could actually conduct border demarcation … This requires the two sides to exercise patience and seek for coordination in accordance with the Memorandum of Understanding in the year 2000 …



We had the visits of the Foreign Minister, the Minister of National Defense and commanders of all forces – navy, air and infantry – to Cambodia and I had the chance to see them myself as they are in the process of fulfilling the tasks entrusted by both Governments … I have raised it straight to the Minister of National Defense and all commanders that they should not refrain from fighting but forging their roles as diplomats along the border … I even suggest they play chess with each other as Cambodia and Thailand have similar rule on chess board … In 2008, the year that Cambodia and Thailand had a problematic relation, trade between the two countries reached 1,8 billion US dollars whereas tourism had been affected to a certain extent …



I would also share with you all a piece of news that during the visit of the Foreign Minister of Thailand, there was a suggestion for renegotiation of join exploitation in the overlapped area between Thai-Cambodia in the gulf of Thailand. Discussion has been prolonged because of the political development in Thailand which frequented changes of Government … but Cambodia has HE Deputy Prime Minister Sok An ready for resumption of negotiation with Thailand as what has remained to discuss is the share for each holder or the block to divided among us for exploitation …



This has clearly show you that our policy toward neighboring countries would not allow a spread because of small border conflict to enraging to other areas or next level … we also do not incorporate this into conflicts of trade, tourism, investment, culture, etc. You may take the lighter side of this relation that when we had tension at the border, we also had a Thai golfer to compete in Siemreap … and he won the first prize … So I assure all of you that the conflict would not be escalated to hinder investment and I am sure this is what the two countries, armies and Governments believe in …



Cambodia never has intention to wage a big war with any country but instead what we want is investment and especially infrastructural development in roads, water canals and border area development as I said before I wish to change fighting zones along the border into development zones and not to develop modern army and armed them for border fight with Thailand at all … As you see that I have increased investment in those areas but what remains for the country there is better infrastructure which could in the end be there for border people to benefit … they may take it as their share of economic wealth distribution …



Combating Corruption & Speeding Anti-Corruption Law

… It is indeed a good question as it concerns good governance which is the core of rectangular strategy … In the square of good governance of the Rectangular Strategy – Phase II, the first angle is referring to combating against corruption, the second angle is to exercise legal and judiciary reforms, the third angel is to bring about public administration reform and the fourth angel is the reform of the armed forces … As you can see the four areas of reform, not only in the first angle, all other angels of legal and judicial, public administration and armed forces reforms – all contain element of fighting corruption in there …



Fighting corruption exists not only during election campaign but it stays with us up to now …. There has been questions relating to law on corruption and some “Prime Ministers in example” or the candidate for the post of Prime Minister in the electoral campaign promised that between one and three months after getting elected they will get rid of corruption … The Constitution of Cambodia defined that the first session of the elected national assembly will meet 60 days at the latest after the elections … How could they make such a promise …



Anti-Corruption Law has indeed been sleeping on the table and I would clarify to you as to why it has not been adopted yet … Some people may ask me when the Anti-corruption Law is ready? My answer would be it is ready when the Criminal Code is ready because the two laws need to have mutual compatibility … Pol Pot destroyed everything in this country and we restarted all laws line after line and Japan has provided us help in putting together the Civil Code for Cambodia whereas France helps us with the Criminal Code and its Procedure … The Criminal Code has now passed inter-ministerial approval and will soon send to the National Assembly … And thereafter the Anti-Corruption Law … it is just a question of time …



However, I would suggest that the Law itself is not a magic pill that will eventually eliminate corruption and itself cannot fight against corruption … but one thing important in this fight is the effort to shrink down area of action that brings about corruption … Take for instance the establishment of one-window service which has so far scaled down corruption in relation to investment procedure which helps investor to gain more time and save resources …



The proclamation of moratorium on logging has been placed, perhaps for a long time, aimed at preserving the forest but also to exercise anti-corruption module as in between 1993 and 1998, corruption in this sector had been devastating … more than that money raised from logging would not be affordable to destruction of newly built roads for their transportation... Land grabbing is another sources of corruption but because of the crisis, the property market has come to a halt … We will take serious measure against illegal land confiscation …



I have warned many times if one commit mistake, I would not hesitate to remove him/her from position, no matter the person is a four star general or higher … I would seek understanding from all provincial heads, officials, armed forces and Government officials … Actions have been and will be taken … To be frank with you what I wish to see in this term of office is efficiency of public service and I have a strong belief that if the public service is functioning well, corruption will eventually be reduced …/.





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