The Ministry of Economy and Finance (MEF) has written to Cambodia's other ministries

informing them to put all new procurement out to competitive tender in 2003.

The new regime follows a prakas issued on September 13 by the Council of Ministers

(CoM). That was followed shortly afterwards by another prakas from the MEF.

"The system was changed because the government wants to strengthen the implementation

of the procurement sub-decree and carry out the law in a proper way," said the

MEF's procurement director, who did not want to be named.

He said that between "ten and 20" companies would have their exclusive

supplier rights canceled on the order of the CoM. The MEF has informed every ministry

to "repeal all exclusive rights to the supply where the company has first paid

the capital and subsequent payments will be made".

In 2001 the government budgeted $119 million for all tenders, and awarded tenders

totaling $114 million. In the first ten months of 2002 the government awarded $121

million worth of contracts.

The prakas modifies a 1995 sub-decree developed by the Asian Development Bank. Speaking

from Pakistan, country head Urooj Malik said the new prakas did two things: first,

it would ensure procurement procedures were more transparent, and second, no ministry

would be exempt.

Donors have championed the cause for some time. At the Tokyo Consultative Group donors

meeting in June 2001, the adoption of clear procurement rules by the end of that

year was set as one of ten conditions for the government to fulfill. In the event,

that did not happen.

"The government has agreed with the IMF and other donors to implement procurement

guidelines which require competitive bidding," Robert Hagemann, the resident

representative of the International Monetary Fund told the Post by email. "This

is a significant move toward greater transparency and efficiency of government operations.

"It is our understanding that infrastructure (roads, bridges, etc.) remain exempted

from this requirement, however, and we hope that the guidelines will be applied to

all activities as soon as is feasible," Hagemann said.

The awarding of millions of dollars in contracts to well-connected companies has

long been a controversial issue.

In 1996, not long after the original procurement sub-decree, the two co-prime ministers

- Hun Sen and Prince Norodom Ranariddh - directly awarded a $5 million contract to

supply drugs to the health ministry to cognac importer Doung Chivv Import-Export

Tourism and Transport Co. The company had no experience with drug supplies.

The decision overrode the MoH's own guidelines. The contract was later transferred

to Sokimex and only recently returned to competitive tender. With an election looming,

the opposition Sam Rainsy Party will be eyeing spending by the CPP electoral campaign.

Commenting on the high spending ways of the ruling CPP during the 2002 commune elections,

opposition leader Sam Rainsy claimed that over-inflated procurement contracts for

rice, uniforms and construction were regularly awarded to CPP-affiliated companies.

He alleged that the companies then returned commission directly to the CPP election

fund.

The MEF official rejected that claim.

"They are wrong," he said. "I accept that there are some little problems,

but in the scheme there is no mistake and we can guarantee transparency and save

the budget for the state."

Rainsy was particularly critical of the MEF's control over the state budget.

"Look how [the CPP] have diverted huge funds from the 2001 state budget,"

he said at the time. "Instead of allocating funds to different ministries responsible

for various sectors, finance ministry has handled all the money."

The MEF official said his ministry's control of procurement was set to continue for

most procurement projects.

"If the amount of the contract is less than 20 million riel [$5,000], then the

responsible ministry will award the contract by itself, but if it is more, then the

[MEF] will oversee the process," he said.