One of Cambodia's largest foreign investors continues to pump money into the Kingdom's ailing infrastructure amid corruption concerns
THE government has signed a loan agreement worth US$60 million with South Korea for road renovation and drainage projects, the Ministry of Public Works and Transport said this week.
Some $30 million will go towards upgrading national roads 31, 33 and 117 in Kampot province, said Kem Borey, head of the ministry's Road and Infrastructure Department.
The remaining $30 million will go towards new water-purification and drainage systems in Siem Reap, he added.
"We worked together with our partners on a preliminary study over the last four months before reaching the deal. We expect to receive the concession loan in December," he said.
He said the South Korean government would start public bidding on the projects after a second detailed study is completed.
"South Korea has given us several loans for development projects," Kem Borey said, adding that the loan can be paid back over a 40-year period at 0.01 percent interest.
Sam Rainsy Party lawmaker Son Chhay warned against graft-prone development projects that are funded with foreign money, saying that the government needed to verify construction fees to prevent skimming.
"Sometimes donors' staff cooperate with officials to cheat projects out of funding, which causes infrastructure quality to drop," he said.
He added that many infrastructure projects in Cambodia have not been completed in accordance with proper quality standards and that large sums of project money are unaccounted for by donors or lenders.
"We have to think carefully about foreign borrowing, which has been used ineffectively in the past," Son Chhay told the Post.
"The government should re-evaluate these private loan agreements and make sure that they are accepting them under strict controls and with a clear management plan," he added.
We have the ability to repay our foreign debt because our
economy is growing.
Cambodia owes foreign debts of about $3 billion as of the end of 2007 - excluding what is owed the former Soviet Union, which amounts to an additional $2 billion or more, according to Son Chhay.
But Vong Seyvisoth, deputy secretary general at the Ministry of Finance, said that Cambodia's debt levels are manageable.
"We have the ability to repay our foreign debt because our economy is growing and the country is developing more every year," he said.
"Our country can borrow some $200 million per year for national development," he said.
"In addition, there are many countries lending us more than this amount, but we must not get more than this because we could risk impacting our macroeconomic climate," Vong Seyvisoth added.