Sokimex: Gov't Cannot Help Fuel PricesBy Heng Reaksmey, VOA Khmer
Original report from Phnom Penh
10 December 2007
Cambodia has seen increasingly high prices for fuel, including gasoline, in recent months. The high prices are cutting deep into the already precarious budgets of Cambodia's poor. But Sok Kong, the president of one of Cambodia's most influential fuel companies, Sokimex, said Saturday there was little the government could do. He spoke to VOA Khmer to explain why.
Q: Some political parties as well as civil society organizations officials say the oil price in Cambodia is much higher than in neighboring countries. So, what can you say about this?
A: Regarding this problem, I would like to put it this way. So far, the fact that the oil price in Cambodia is soaring is because the oil price in the international market is also increasing. So we just follow the international market. And the reason the neighboring countries' oil prices are still low is that their governments are able to subsidize to make up the loss so that they can keep the price low. But the Cambodian government is so poor that it is not able to subsidize to make up the loss and keep the prices low. If our government does this, how can our civil servants be paid? The civil servants' salaries depend on tax income, and if the government spends the budget from taxes to make up the loss, there is nothing left. It doesn't mean that the government ignores the problem.
Q: How does the price of fuel in Cambodia compare to that in neighboring countries?
A: Our oil price is the highest, higher than Vietnam, higher than Thailand. Why? Because Vietnam has the budget to subsidize to make up the loss, and they use money from their oil reserves and other things to make up the loss. And for us, we are so poor that we don't have that. We might be able to reduce the oil price in 2010 or 2020 when we can extract our crude oil.
Q: Can some major fuel companies in Cambodia reduce their fuel price if there are requests from the government?
A: Nowadays, we have already suffered from the loss as the oil price increases. I mean when the oil price was low, we made only a few cents, and when the price was increasing, we still sold it at that price. We could not increase it further because we did it according to the international price range.
Q: So far, there is criticism from some political parties as well as civic organizations that fuel companies pay too many taxes. Some of this does not go to the government's tax department, in the process of importing fuel into Cambodia. So could you explain how your company imports fuel into Cambodia?
A: The government has hired one private foreign company to check our fuel in Singapore and issue a certificate, and when the fuel arrives in the port of Sihanoukville, there are [customs] officials and tax department officials at the port to continue doing their jobs. And [these groups] just accuse us of doing this or that thing. We cannot do that, as we are a big company, not a small one. They just accuse us of doing all those things. It's hard to say because they are in politics; they just say whatever they want, and it affects the image of a big company and our business as a whole.
Q: Have any oil companies tried to evade tax payment so far or do they comply with the government's regulations?
A: I don't know about small companies, I don't know what they do, but big companies cannot do that. So far, as I have explained, we have reached a size that in 2009 or 2010 we are going to sell our stock. So, we cannot do anything like that, or it will be ruined. And we do not run the business by ourselves: we hire staff to manage. We could evade tax payment as long as our staff didn't know, but if they knew, we could not do that. [Groups] just accuse us with whatever they want, because they don't run a fuel business. If they did, they would know what it is like.
Q: Does your company have any strategies to lower the fuel price?
A: We have already reduced the price of our fuel. And why would we do that? Foreign companies sell their oil at 100 riel above our cost. We have already reduced the price. We are a private company, so we don't know what to do to lower it. If we do [more], we will suffer a great loss. How can we feed our staff?
