THE Kingdom's much touted "one stop" investment center - the Council for

the Development of Cambodia (CDC) - is in tatters, and about to lose one of its key

chiefs.

Street lawlessness in Phnom Penh and the widening split between the ruling coalition

has also scared off many, particularly Western, investors, analysts say. If the political

squabbles don't stop, the likelihood of ASEAN investment drying up too could be crippling

to Cambodia.

In addition, Hun Sen - wary that the CDC was seen as dominated by Funcinpec - has

pushed CPP into the forefront of the CDC's decision-making process. This too has

created major headaches for investors, and for Cambodia's investment image.

Ith Vichit, head of CDC's investment arm, the Cambodian Investment Board (CIB), is

understood to have resigned, while experts spoken to by the Post describe CDC as

"a joke."

It is understood that Vichit - who helped begin the CDC and months later drafted

one of the world's most liberal investment laws - gave his letter of resignation

in February to Ranariddh.

Vichit, who has spent much of his time recently at the Royal Air Cambodge HQ where

he is chairman, declined to comment to the Post.

Some sources say that Vichit found himself bound up in the politics now engulfing

the CDC. They say that neither Vichit nor CDC secretary-general Chanthol Sun enjoy

Hun Sen's favor.

Set up in April 1994, CDC quickly launched a world-wide advertizing campaign aimed

at investors under the banner "Cambodia - Open for Business." Around $2.5

billion worth of investment was attracted here by a law offering eight-year tax holidays,

duty exemptions and full repatriation of profits. The CDC guaranteed 45-day decisions,

and help in getting permits, visas and registrations.

That regime has since fallen apart, sources say, because of political manoeverings,

and jealousy and corruption in ministries and provincial authorities.

CDC's "45-day" claim of having the "speediest response in the region"

was now "tantamount to lying," said one source.

Ranariddh, Hun Sen, Finance Minister Keat Chhon, Chanthol and Vichit must individually

approve each deal. The busiest investors appear to be those spending time "fast-tracking"

their applications from one of the five signatories to the other.

"Efficiency is the wrong word for describing the CDC," said one Phnom Penh-based

international lawyer. "Rather, it is notorious for its inefficiency.

"CDC is a by-word for governmental obstructionism. I recently accidently received

a fax from a foreign investor addressed to the two Prime Ministers, complaining that

the CIB had kept it waiting for seven months.

"The CDC is not a 'one-stop shop', it's a full-stop," he said.

Within the CDC offices, Hun Sen has set up a "one stop committee" that

many say wrecks the point of having what should have been an apolitical CDC.

The new committee includes representatives of all ministries. Ministries have long

been seen as jealous of the CDC's sole power of investment approval.

Investors and consultants say this will only worsen an already bad situation: approvals

are likely to take even longer, and corruption is likely to become even more prevalent

as ministerial officials get early knowledge of where, what and how much companies

wish to invest.

"The other [Asian] tiger economies manage to insulate certain technocrats from

politics," said one source, "but not here."

Publicly, the biggest investors such as Malaysia, Singapore, Hong Kong, Thailand

and Taiwan are bullishly optimistic about Cambodia, even if noting politely that

there is a "big backlog" of applications sitting at the CIB, and that the

five decision-makers are "very busy."

One investment consultant in Bangkok however said he could not honestly tell investors

that their money would be safe in Cambodia for ten or 20 years.

Privately, there are anecdotes of investors "in tears" complaining that

even after waiting months for approval their projects are "hijacked" at

the implementation stage by ministries.

Cambodia's public sector generally distrusted the CDC as a "monster" from

its inception, worried that they would lose their power of approval and income from

graft, said the Western lawyer.

One source within the CDC said: "We succeeded in the first year, but [the CDC]

hasn't worked. [Ministries] have done everything to sabotage us."

"Ministries should set standards for hotels, factories, labor and so on. Their

job should not be to grant [investment] approvals," he said.

Others say that while the CDC was set up to maximize the Kingdom's assets, circumstances

within and outside the CDC have instead resulted in those assets being "discounted,"

another source said. "We are mortgaging our future," he said.

Cambodia's worsening political crisis "carries risks which could have serious

implications for foreign investments," said one Western analyst.

"The past month has definitely been the most unstable period for investors since

the elections," he said.

He said that investors would rather see Hun Sen firmly in control, adding that they

did not see a real threat from Funcinpec to Hun Sen's power base.

At least two Western firms have told him they are holding off investing till the

political situation calms - and by "calm" they consider one party will

be in power.

ASEAN nations generally seem to have accepted high-level assurances that the ruling

coalition will remain in some form or another, and regardless of form will continue

to encourage investments.

ASEAN sources say the law and order situation in Phnom Penh is more damaging to investors

than the political stand-off.

Cambodia's preferential trading status with Europe and, very soon, America could

be worth billions of dollars - "if the CDC [and the government] can get itself

into gear," said one Asian consultant.

"[The Cambodians] don't understand that the size of the pie is not fixed. They

could all get rich if they'd just stop bickering amongst themselves," said one

source.

KNP leader and former Finance Minister Sam Rainsy said "whoever controls CDC

controls the entrance for foreign investors. When you're fighting each other [Funcinpec

and CPP], you have to make sure your adversary doesn't get too much funding.

"This is normal. Hun Sen wants to keep an eye on CDC. It's the source of serious

income for Ranariddh. Ranariddh should have done this ages ago in areas were the

CPP has big sources of income, like the land titling office and the rubber industry."