Image makeover bid to aid development

The Cambodian government vows to repair the damage done to its image by media coverage of alleged corruption, a key cabinet member said.

"We have an overall strategy to build governance - good governance," said Keat Chhon, senior minister of the Cambodian Economy and Finance Ministry. "Good governance is at the center of our strategy."

The efforts to improve governance are aimed at helping combat poverty and achieve the well being of the Cambodian people, Keat emphasized.

He said the fact that the strategy works is proved by steady improvement in governance and annual revenue increase.

"We are now undertaking a package of reforms in the finance sector, aimed at developing a public finance system of international standard by the year 2015."

The reforms involve four stages - credible budget, financial accountability, budget linked to policy and accountability of the result.

"We have already enjoyed some success in the first stage - to build a credible budget, that is, we collect more revenue," he said, adding that his government is succeeding in combating smuggling and tax evasion.

Since the authorities began public finance reform in 2005, Cambodia has achieved an annual 20 percent increase in revenue, he noted.

"The success in the first stage has helped restore respect and confidence in our officials and has meanwhile laid a solid foundation for reforms in the following stages," Keat said.

"Now we are preparing a plan for the second stage, that is, financial accountability," he continued.

"We will have all line ministries accountable for revenue collection and expenditure."

All four stages are linked to the accountability of the results, he further noted.

Reforms

The senior minister said that he is now in charge of four programs - public financial management, private sector development, in particular business and investment environment improvement, and private sector participation in infrastructure, financial sector development and harmonization of official development assistance (ODA).

Keat said that many overseas organizations, such as the World Bank, the Asian Development Bank, the International Monetary Fund, KfW of Germany and France's AFD have supplied his nation with valuable inputs to help improve the country's private and public finance.

The aid programs not only bring capital injection but also expertise and technology that the country needs, he said.

"We abide by the rules laid out by these bodies to divert fiduciary risk," he said.

As for criticism about misconduct in processing World Bank aid, Keat said: "We have already addressed this issue and formulated our government action plan, so our partnership with the World Bank is now once again at a normal level."

At the same time, to spur private investment, the authorities have adopted a series of new laws.

For instance, they have adopted a law to allow private sector access to the infrastructure market, in a bid to encourage private investment in this field and meanwhile bring this part of business activities under government regulation.

The authorities have also adopted laws on securities, and corporate accounting and auditing.

Keat said that Cambodia has a small financial market, with five insurance companies and a sixth player to soon join their ranks.

In addition, the authorities are currently strengthening the country's banking system. "We watch every bank very closely," Keat noted.

The Economy and Finance Minister's ambition is to establish a capital market by 2009. "The year 2009 is tomorrow for us. We have to rush," he said.

Attractions

Minister Keat spoke of Cambodia as "an fully open market economy."

"There is no difference between foreigners and nationals, except for land ownership," he said, adding that the Cambodian government is now working on allowing foreign investors to own land.

Keat cited dialogue between the private sector and the government as strong evidence of the government's efforts towards building an investor-friendly environment.

The Government Private Sector Forum, chaired by Prime Minister Hun Sen, takes place every six months.

"It is actually an extended cabinet meeting, since all the cabinet members attend the meeting," Keat said. "The decision made at the forum is a cabinet decision."

The authorities are stepping up efforts to streamline administrative procedures in a bid to help reduce operational cost for investors.

"We are reforming our customs and excise department to eventually establish 'a single window'," Keat said.

But simplifying the procedures is not that easy, because as a member of ASEAN, Cambodia has to match its conception of a single window with ASEAN's definition, he said.

Surrounded by Thailand, Laos and Vietnam, Cambodia stands a better position of entering the markets of neighboring countries, which is also an appeal for overseas investors.

"Our geographic location helps us move forward with our neighbors," Keat said.

"In the context of globalization, there is competition and cooperation, and we provide both."

(China Daily 04/10/2008 page25)