UNASSEMBLED traffic lights and street lamps lay in haphazard piles in a conference

room at Phnom Penh municipality headquarters. Outside in the courtyard, more than

100 steel light posts lay waiting to be erected at the city's major intersections.

Across town, bulldozers and earth-movers continue to tear up the riverfront as the

dust settles around Psar Thmei's newly repaved round-about.

The capital is undeniably under construction, but where is the money coming from

to pay for it? Economists warn that Cambodia is slowly feeling the effects of a regional

economic downturn and a budget crisis is looming. They say the July coup scared off

some investors and donors, and many don't plan to return until the nation sorts itself

out after elections.

Phnom Penh First Deputy Governor Chea Sophara shrugged when asked about the unlikely

timing of a sweeping renovation of the capital. Both the municipality's public works

department and construction companies have a lot of time on their hands as Southeast

Asia slows into recession, so the two sides got together and found a way to keep

themselves busy, he said.

"Now investment doesn't come," Chea Sophara explained at his office. "[Contractors]

are free... so they ask me, 'Can I do this job for you, municipality?' And I say,

'If you can give it to me, yes, because I also have free time now'."

Formerly financially autonomous, the capital lost its taxing powers after the Royal

Government was formed in 1993 and the Finance Ministry took control over all tax

collection and revenue disbursements. Municipal sources said financial centralization

initially helped donors and the government keep better track of incoming revenue

and fight ingrained corruption, but an adverse side effect was that the City often

received only half of the funds it requested.

Keeping Phnom Penh running for the past four years has been hard enough, sources

said, but repairing the damage done by decades of neglect has proved impossible as

the government concentrates its spending on the Interior Ministry and the military

rather than urban development.

An additional roadblock had been partisan bickering between officials from Funcinpec,

which carried Phnom Penh in the 1993 election and won the governorship, and the CPP,

which has been effectively running the city since 1979.

"There were some difficulties before July," one municipal adviser said.

"There is a political problem, but they don't talk about it."

Funcinpec deputy governor Chap Nalyvudh, a relative of Prince Norodom Ranariddh,

was originally put in charge of public works but could not muster enough support

to get much done, sources agreed. But Nalyvudh and Phnom Penh Governor Chhim Seak

Leng fled the capital in July along with Nhek Bun Chhay's army, leaving Chea Sophara

in control.

After six months of stroking - and some say pressuring - his many contacts in business

circles, Chea Sophara has developed informal taxing schemes he calls "contributions"

from the private sector.

"This is idea money, not budget money," Chea Sophara said.

"Now the government has no money, no funds. The municipality is the same, so

we do it this way."

Among the many examples cited by the First Deputy Governor is the renovation of Psar

Thmei's moto lots and the repavement of the surrounding round-about. Advertising

billboards on the roof of the new moto lot will bring in $20,000 a year to help pay

for the work, Sophara said.

But the bulk of the payment for Psar Thmei's minor facelift will come from an excise

tax on stalls at all of Phnom Penh's markets that the deputy governor says brings

in $700,000 a year.

Municipal sources revealed that contractors, wanting assurances that they will be

paid on time, have been given collecting rights to a portion of the excise tax for

a fixed number of years, a fact Sophara does not dispute.

"The payment, I don't care now because I know the municipality and the government

have no money. If you can do, please do," he said of his negotiations with contractors.

"When I have the money, in perhaps two or three more years, I will bring it

to you. Now I work with your contributions to make Phnom Penh beautiful."

But one attempt to raise money for the city failed in a minor scandal when hotel

owners, hit hard by the July fighting, refused to pay a 2% sales tax. The Tourism

Ministry sided with the hotels and the tax became optional.

Sophara's aides said the city halted collection of the hotel tax after three months

and plans to give the revenue back to struggling hotels.

"There were some questions about legality," one municipal adviser said.

"[Sophara] stopped collecting the 'contributions', as he calls them."

Finance Minister Keat Chhon did not take issue with the First Deputy Governor's efforts

to collect his own taxes, also referring to them as "contributions from the

private sector".

"I think Chea Sophara is doing his utmost to rehabilitate the splendor of Phnom

Penh," Keat Chhon said. "I approve of his efforts, but I do not know all

of his programs."

The construction that has engulfed the riverfront between Chatomuk Theater and Wat

Onalom is another example of creative income generation. Most of the riverbank will

simply be upgraded into a park with the addition of permanent stalls for street-side

vendors, but the key to the job is a 120-space public parking lot behind the Renakse

Hotel.

Parking along the street will soon be forbidden, and with the car park charging 500

riel a space to service the throngs of people that gather near the Royal Palace during

weekends, Sophara said the lot will pay for itself and the surrounding park in five

years.

The city's main roads are also being repaved and lined with white and yellow paint.

"We do the roads, but not yet pay," Sophara said, hinting at yet another

develop-now, pay-later scheme.

Overhead traffic lights are another new addition on main streets, with a total of

144 lights planned at 36 major intersections. At $1,000 a pop, the city will pay

for the lights in two years by placing advertisements on both sides of the poles

at a charge of $250 a year.

A major incentive for jump-starting urban development now instead of after July's

elections is a $30 million Asian Development Bank (ADB) grant the city hopes to win

before 1999 to overhaul its water-supply and drainage systems. The city believes

the current work will convince the ADB it is serious about development.

Regardless of the ADB's assessment of urban development in the capital, Sophara's

work has already won him the praise of Second Prime Minister Hun Sen, who often referred

to the First Deputy Governor's authority in speeches made in the aftermath of July's

fighting.

"We have worked with him since 1979, so he knows me and my name," he said

of Hun Sen.

The son of a farmer in Kompong Cham province, Chea Sophara first moved to Phnom Penh

in 1979 shortly after the Khmer Rouge were expelled from the capital. He became a

deputy district chief six months later and steadily rose through the municipality's

ranks until 1988 when he became a deputy governor.

Asked if he is eyeing a position in the national administration should the CPP maintain

control of the government after July, Chea Sophara stated he is still very happy

at the municipality.

After a slight pause he grinned and added: "But if the government appoints me

to any position I will go there."