Paris, 23 January 2007
To the Editor of
Cambodge Soir
26 CD, Road No. 302
Phnom Penh
Dear Sir,
In an article titled "Hun Sen authorized gasoline import from neighboring countries," published in Cambodge Soir on 23 January 2007, you wrote that the government had decided to allow both national and foreign private companies to import gasoline from neighboring countries "in order to lower gasoline price and to fight against illegal import from Vietnam."
I welcome the good intentions displayed by the government but I also suggest to the government to correctly formulate the problems in order to define the link between the abnormally high retail price in Cambodia and the colossal gasoline smuggling here. Once this link is clarified, then can one provide a satisfactory solution to these problems.
In an article titled "Members of Parliament are reviewing a proposed law against the use of alcohol while driving," published in Cambodge Soir on 18 December 2006, you mentioned that "in 10 years the number of cars have increased twenty-fivefold, and the number of motorcycles tenfold." Over the same period of time, the amount of gasoline legally imported, according to statistics from the Customs department, has remained almost the same: around 150,000 tons per year. This gives an idea of the order of magnitude of smuggling.
A smuggling of such proportions cannot be perpetrated by amateurs, individuals, or small firms. Who are the major players in the gasoline distribution industry? Two Cambodian-owned companies close to the ruling party, dominate the market: Sokimex and Tela who between themselves form a cartel.
Foreign companies, with Total in the lead, which pay the State the total amount of custom duties and special taxes on gasoline, can only follow with difficulty, the unfair competition imposed by the Cambodian cartel.
The current retail price of 3,700 riels per liter, includes more than 1,000 riels in taxes. Only foreign companies which strictly abide by the law completely fulfill their role as tax collectors, by paying back to the State the taxes they collect from consumers. Other companies who are involved in smuggling are also collecting the same taxes from the public, but they pocket the proceeds for themselves. Therefore, it is in their interest that the government maintains these taxes as high as possible. This is actually the case in Cambodia until now, as opposed to neighboring countries.
Therefore, the most effective means to fight against smuggling, and at the same time increasing the government income and reducing retail gasoline price, would be to lower taxes to bring them to par with those in neighboring countries.
I recommend that the gasoline taxes be lowered to 500 riels per liter, which would allow the lowering of retail price to 3,200 riels per liter (in Cambodia's neighboring countries, the price is currently about 2,800 riels per liter). Taking into account transport cost and other ancillary costs, people will no longer be interested in smuggling following such a tax reduction. All the oil companies will then legally import gasoline which they will sell through their existing retail network. Indeed, they will pay only 500 riels in tax per liter of gasoline, i.e. half of the previous tax rate, but they all will pay, i.e. all importers will pay the taxes on a volume which will be at least ten times as high compared to the current level. The government income will then be increased by at least a factor of five.
Such a measure would provide a remedy to both problems related to economic efficiency and social fairness. It would allow a reduction of corruption which plagues the country, lighten the burden borne by consumers, and encourage foreign investors who are providing jobs by promoting the rule of law.
Sam Rainsy,
Member of Parliament,
Former Minister of Economy and Finance
In an article titled "Hun Sen authorized gasoline import from neighboring countries," published in Cambodge Soir on 23 January 2007, you wrote that the government had decided to allow both national and foreign private companies to import gasoline from neighboring countries "in order to lower gasoline price and to fight against illegal import from Vietnam."
I welcome the good intentions displayed by the government but I also suggest to the government to correctly formulate the problems in order to define the link between the abnormally high retail price in Cambodia and the colossal gasoline smuggling here. Once this link is clarified, then can one provide a satisfactory solution to these problems.
In an article titled "Members of Parliament are reviewing a proposed law against the use of alcohol while driving," published in Cambodge Soir on 18 December 2006, you mentioned that "in 10 years the number of cars have increased twenty-fivefold, and the number of motorcycles tenfold." Over the same period of time, the amount of gasoline legally imported, according to statistics from the Customs department, has remained almost the same: around 150,000 tons per year. This gives an idea of the order of magnitude of smuggling.
A smuggling of such proportions cannot be perpetrated by amateurs, individuals, or small firms. Who are the major players in the gasoline distribution industry? Two Cambodian-owned companies close to the ruling party, dominate the market: Sokimex and Tela who between themselves form a cartel.
Foreign companies, with Total in the lead, which pay the State the total amount of custom duties and special taxes on gasoline, can only follow with difficulty, the unfair competition imposed by the Cambodian cartel.
The current retail price of 3,700 riels per liter, includes more than 1,000 riels in taxes. Only foreign companies which strictly abide by the law completely fulfill their role as tax collectors, by paying back to the State the taxes they collect from consumers. Other companies who are involved in smuggling are also collecting the same taxes from the public, but they pocket the proceeds for themselves. Therefore, it is in their interest that the government maintains these taxes as high as possible. This is actually the case in Cambodia until now, as opposed to neighboring countries.
Therefore, the most effective means to fight against smuggling, and at the same time increasing the government income and reducing retail gasoline price, would be to lower taxes to bring them to par with those in neighboring countries.
I recommend that the gasoline taxes be lowered to 500 riels per liter, which would allow the lowering of retail price to 3,200 riels per liter (in Cambodia's neighboring countries, the price is currently about 2,800 riels per liter). Taking into account transport cost and other ancillary costs, people will no longer be interested in smuggling following such a tax reduction. All the oil companies will then legally import gasoline which they will sell through their existing retail network. Indeed, they will pay only 500 riels in tax per liter of gasoline, i.e. half of the previous tax rate, but they all will pay, i.e. all importers will pay the taxes on a volume which will be at least ten times as high compared to the current level. The government income will then be increased by at least a factor of five.
Such a measure would provide a remedy to both problems related to economic efficiency and social fairness. It would allow a reduction of corruption which plagues the country, lighten the burden borne by consumers, and encourage foreign investors who are providing jobs by promoting the rule of law.
Sam Rainsy,
Member of Parliament,
Former Minister of Economy and Finance
9 comments:
Thank God. At last the opposition hits on one of the ruling party's major weaknesses.
SiS
Wow, Sam Rainsy proposed to
lowering tax. I must be dreaming.
let me pinch myself, "ouch!". I
guess not. That is a miracle.
Thank you your excellency.
Now it's time to see if Hun Sen is really love people or love his clans to keep corruption.
Bravo Sam Rainsy!!! this is what a representative has to do! at least gasoline price drops a bit.
How about my 73-CPP representatives? are you sleeping??? or have you eaten too much??? Why don't I hear a bit voice from you on the corruption and land grabbing??? Are you representatives or political bussineesmen????
I think those 73-CPP and representatives are mute as most of their clans are land grabbers and corruption involved!! Ha teo vea slak kcheak teo vea sleng, sdork teo vea teo leu khloun eng!!! See Yu Oiy, Keat Kalaney.....
How about my 26-Funcinpec representatives??? are you still in frightening and in hiding??? Or are you fed by some kind of corruption as well?
The Sam Rainsey Govenrment should run the country! His and his party's brain are the one Cambodia needs right now. No one else!
Nope, he can't run the country
because he is anti-communist, and
we got communists all around us.
We are not going to turn our
country into Iraq, get it?
Only, PM Hun Sen can walk a fine
line between the two, and so far,
he has done an outstanding job.
And we want to lead until he
drop dead. Got the idea?
AH SVA ME SEK KMEAN VONG!
STOP YOUR STUPIDITIES AND YOU ARE A CRAZY RACIST... AND HOMOSAPIEN
GO BACK TO YOUR WORLD OF IDIOCIES AND MEDIOCRITIES... !
POUK KMENG WAT KNONG SROK WILL FOLLOW YOUR SHADOW OF BEAST FOR EVER UNLESS YOU DECIDE TO DIE FOR EVER...
I URGE KI-MEDIA READERS TO BAN THIS AH ME SVA POUK SEK KMEAN VONG FOR EVER
As long as Cambodia still has the Oppostition groups, is OK.
Life is too cheap in Cambodia.
Without the Vietnamese causing troubles, Cambodia still has to face Thailand. The Vietnamese caused troubles too much to Cambodia. They are the parasites which cannot be stopped unless the Tsunami or mother nature or natural disaster wipe them off.
Those are not vietnameses. Those
are khmer krom extremists who
impersonated Vietnameses in order
to boost hatred in Cambodia.
Post a Comment