Cambodia Behind in Investment Improvement [-Too much corruption and red tapes under Hun Xen's regime?]

Ros Sothea, VOA Khmer
Phnom Penh Thursday, 17 June 2010

“Cambodia is not progressing enough to compete with other countries,” the report said. “The most critical shortcoming is the infrastructure,” including poor port facilities, poor roads and poor customs.

Cambodia has made less improvement in its trade environment than other countries that are competing for investors in the global marketplace, a new report has found.

The World Economic Forum’s 2010 trade index report found that Cambodia slipped to No. 102 of 126 countries, down nine places from the year before.

The index measures overseas ease of doing business, including market access, border administration, transport and telecommunications and the general business environment.

The World Economic Forum, based in Switzerland, did find that Cambodia had made improvements in market access, but it said the country faces major challenges in other aspects, including corruption in border administration—one of the highest rates in the world—and poor infrastructure and transportation.

These caused longer export times at higher costs, making Cambodia less desirable to investors.

Adding to the nation’s woes is a climate that is not friendly to trade. There are low levels of domestic competition, weak property rights and limited openness to multilateral trade rules, the report said.

Poor physical security is another problem, where police service is unreliable and levels of crime and violence are rising, the report said.

“Cambodia is not progressing enough to compete with other countries,” the report said. “The most critical shortcoming is the infrastructure,” including poor port facilities, poor roads and poor customs.

“So when clearing customs, there is room for irregular payment, some sort of bribery, and it creates very low transparency and it creates huge delays and is very costly,” Thierry Geiger, an economist for the World Economic Forum, said in a phone interview.

Immediate, tough measures in combating corruption and improving infrastructure would improve the country’s trade environment in the next five or ten years, he added.

Cambodia is one of the world’s most corrupt countries, according to Transparency International, and loses an estimated $500 million a year to graft. Meanwhile, trade facilitation could help export competitiveness, attract foreign direct investment and boost economic growth.

Good trade facilitation has helped Singapore’s economy rank among the highest for years. Its border administration is one of the least corrupt in the world, and public servants provide fast, effective service, according to the report.

Vietnam has significantly improved its trade facilitation, while Thailand has become the best country in the region in implementing a Asean “single window” initiative, which supports free trade within the bloc.

Ros Khemara, an economist for the Cambodia Economic Association, said Cambodia can hardly operate the single window initiative.

“Operation within the administration in Cambodia always consist of informal fees, which occur at every [trading] process, especially regarding export and import,” he said. “If we want to reform to be better and faster, we have to eliminate some of the processes that will also reduce the chance for people who are used to receiving the informal fee. So it is hard to reform on this.”

In recent years, Cambodia has put many policies in place to help reduce the complexities of trade here, including improved registration and border administration. But the implementation of those policies is lagging.

“The policy framework and the legal framework in Cambodia is very strong to help encourage the development of the private sector,” said Joshua Morris, an emerging markets consultant. “Typically, what you find is enforcement and the implementation of those policies sometimes are not as well maintained as you would like with respect to the judicial and legal environments for business, key of business registration, transparency, taxation across all organizations, to further improvement in the processes in timing for import and export.”

Mao Thura, secretary of state with the Ministry of Commerce, said weak enforcement comes from a lack of tough measures to control implementation. But he said his ministry and the Ministry of Economy and Finance are organizing a workshop to find measures to bring the policies into practice.

Meanwhile, the International Financial Corporation will organize a workshop to train a group of arbitrators for the National Center for Commercial Arbitration. The independent center will be the country’s first dispute resolution mechanism and could attract more investors.

Countering the 'Nimby' syndrome

Wednesday January 02, 2008
BOONSONG KOSITCHOTETHANA
Bangkok Post

Be it a dam, a gas pipeline, a power plant or any industrial scheme, they invariably have to run the gauntlet of opponents, householders, self-styled activists or environmentalists.

The not-in-my-backyard ("Nimby") phenomenon is alive and kicking, not only in other parts of the world but right here in Thailand. The growing Nimby syndrome is threatening many vital projects such as infrastructure development, which have important ramifications for the Thai economy and national growth as well as security.

This rising trend is leading to severe consequences, not only for project sponsors but also for the nation as a whole. Project supporters are rarely as outspoken or effective as their professional, full-time counterparts who will stop at nothing to advance their cause. Opponents continue to expect cheap electricity 24 hours a day at the touch of a switch, but are against the construction of new power plants.

The growing opposition to infrastructure projects raises big questions about which is more important: the common good or individual rights?

That issue is debatable. But it may be worth pointing to the French example where the common good is held as sufficient reason to endure big development projects.

In a democratic society like ours, it is alright to hold protests against projects like gas pipelines or coal-fired power plants, but such acts should be based on a well-informed and logically sound background rather than on myth, misinformation and sheer emotion.

In many cases, opponents sometimes distorted facts in a campaign to increase public anxiety and generate fierce opposition.

Remember all the predicted "disasters" to the environment, society and safety which opponents vigorously hurled against the 260km Burmese gas pipeline in Kanchanaburi? It has been a decade now and the pipeline continues to deliver natural gas from the Yadana and Yetagun fields in Burma's Gulf of Martaban, to Thailand. The operation has been running smoothly.

The Thai-Burma pipeline provides 20% of all natural gas supplies which Thailand needs, especially for power generation. But it has not really contributed to higher electricity and gas bills as accused at the time.

The pipeline will continue to offer a sizeable amount of such vital fuel for Thailand for another two decades, providing secured energy supplies for the country.

The ongoing protest against the plan to build new coal-fired power plants in Thailand may illustrate another example of the lack of information and the negative perception of an alternative source of power supply for Thailand, which is too dependent on natural gas, at 70% of total generation.

Many opponents are still wary about the pollution risks caused by the lignite-fired Mae Moh power plant in Lampang 10 years ago, rejecting the fact that mitigation measures and clean coal technology that greatly minimises pollutants, are available.

Comprehensive air pollution mitigation measures - including the 7.1-billion-baht installation of flue gas desulphurisation units for the 10 generators at the 2,400-MW Mae Moh facility which can absorb more than 90% of sulphur dioxide (SO2) derived from the combustion before it goes into the air - have worked effectively.

That has resulted in the air around Mae Moh becoming much cleaner than Bangkok when measured with SO2 content - an annual average of 2 microgrammes/cubic metre at Mae Moh, compared to 5 in Bangkok.

The prolonged protests in Prachuap Khiri Khan which led to the demise of Union Power Development Co's 1,400 MW coal-fired scheme and Gulf Power Generation's 734-MW facility, also fuelled by imported coal, have kept the anti-coal momentum alive.

The Nimby sentiment is dangerously driving Thailand towards dependence on imported energy in the form of gas and power, from countries like Burma, Laos, Indonesia and even Cambodia. A greater sense of the common good, reason, understanding and acceptance are perhaps what some opponents need in order to allow schemes which serve the national interest to proceed.

More public education is one way for policy-makers to address the Nimby epidemic.

Boonsong Kositchotethana is Deputy Assignment Editor (Business), Bangkok Post.