PRIME Minister Hun Sen surprised participants at a Dec 21 Government-Private

Investment Sector Forum by decrying the corrosive effect of official corruption

on efforts to expand the Kingdom's foreign investment base.

"Some

investors have been turned into beggars ... by ministries that demand $1,000,

$2,000 and sometimes $10,000 to approve investments," the Prime Minister

complained during a two-hour speech. "The real enemy [of increasing foreign

investment] is corruption."

The Forum, held at the Intercontinental Hotel

and attended by approximately 200 government and private sector representatives,

was a follow-up to the Kingdom's first conference on investment organized by the

Cambodian Institute for Cooperation and Peace on Dec 2-3.

Hun Sen singled

out Customs and Camcontrol officials at Sihanoukville Port and Pochentong

Airport for instituting arbitrary and illegal charges for export

clearance.

"Customs officials routinely start work at 3:00 pm and finish

at 5:00 pm, and in some places [investors] spend $2,000-$4,000 for [clearance to

ship] a container," he said. Customs and Camcontrol officials "no longer have

the right to be 'King of Pochentong' and 'King of Sihanoukville'."

Hun

Sen further promised to reduce red tape and opportunities for bribery by

eliminating Economic Police approval for export clearance and by threatening to

fire Customs and Camcontrol officials unable or unwilling to approve export

shipments in one workday.

Pointing to Ministry of Finance statistics

indicating that only $2.5 billion out of a promised $8 billion of foreign

investment between 1994 and 1999 had been realized, Hun Sen called for a "new

relationship" between government and foreign investors.

A key component

of that "new relationship" was Hun Sen's announcement of a new "one-stop" policy

for foreign investment into the Kingdom, giving the Council for the Development

of Cambodia (CDC) sole responsibility for approving foreign investment

applications.

In addition, the Prime Minister promised that foreign

investment applications would be processed and approved by CDC within a maximum

of 28 days, a far cry from what Hun Sen described as the current "45 days,

sometimes multiplied by five" experienced by foreign investors.

In the

"new relationship" between the private sector and the Royal Government, Hun Sen

warned of a zero-tolerance policy against corruption by both government

officials and foreign investors.

"If somebody wants to squeeze you for

money, I can find them, just tell me," Hun Sen told the assembled crowd, which

burst into spontaneous applause twice during his speech. "But don't give

[government officials] any bribes because those who give or receive bribes are

all guilty."

The Prime Minister concluded his two-hour speech by calling

for biennial meetings between himself and representatives of the private sector

similar to the quarterly meetings between the government and international

foreign donors.

"Now I consider investors as my boss," he joked. "Before

you were the beggars, but not anymore ... you are the boss and CDC is your

servant."

Although allotted time for feedback from private sector

representatives was limited, the response of the Chairman of the Garment Factory

Association reflected the mood of the participants.

"You've already

answered 90% of my concerns," he enthused.

Meanwhile, in an effort to

counter the Prime Minister's speech to foreign investors on Dec 21, opposition

leader Sam Rainsy delivered his own critique of the government's economic

performance in a speech entitled "Real Measures to Alleviate Poverty in

Cambodia" at the Royal Phnom Penh Hotel on Dec 22.

Rainsy attempted to

convene at the Senate building but was prevented from doing so. Senate Second

Vice President Nhek Bun Chhay refused the request to use the Senate saying that

the application had not been submitted early enough.

Rainsy spoke for

about two hours to a crowd of diplomats and journalists on Cambodia's "economic

mismanagement" by corrupt officials who serve to pervert the state's "natural

function."

Drawing comparisons with neighboring Thailand, Rainsy

described Cambodia's $260 GDP per capita as "ten times less than the Thai

[figure] ... Thirty years ago Thailand and Cambodia [had] about the same

[economic indicators]," he added.

Rainsy labeled recent government fiscal

stimulus initiatives, including the provision of tax incentives for foreign

businesses and the country's new value added tax (VAT), as "cosmetic",

ill-conceived revenue raisers that did little to illuminate the economic

horizons of unemployed Cambodians.

Hun Sen's "New Deal"

1. A promised crackdown on corrupt Customs and Camcontrol

   officials

2. The immediate introduction of a "One-Stop" process for

   foreign investment applications and visa applications for foreign

   investors.

3. Investment approval within a guaranteed 28-day

   period.

4. One-day export approval by Customs/Camcontrol

   officials

5. Elimination of Economic Police approval from export

   approval process.

6. Application of Art. 27 and Art 28 of the Immigration Law

   permitting investors to acquire resident visas and/or naturalized Cambodian

   citizen status.