T here is another source of the swanky, new, top-of-the-line cars in Phnom Penh
other than good old-fashioned smuggling.
Licenses for importing duty-free
cars, given to Members of Parliament as one of the perks of office, are being
sold by some MPs to the highest bidder.
The licenses, which entitle the
120 MPs to import any car of their choice without paying import duties and
taxes, are being sold to those willing to pay the right price by MPs who either
don't need another or can't afford a new one.
"If you are planning to buy
a very expensive new car, it is useful to have an import duty exemption because
you will save thousands of dollars on import duty," says one MP who admitted
selling his license last month.
"But most of us can't afford expensive
cars anyway and have decent cars already," he said.
The question of
granting duty-free car licenses to MPs was debated during the first
parliamentary session in 1993 when MPs voted on their salaries.
decision to allow MPs to import duty-free cars was made, according to one MP,
"because it was the practice during the Sihanouk period."
In early 1994,
the Cabinet and later the Ministry of Finance - then headed by Sam Rainsy -
agreed to the proposal.
MPs who wanted to get a license were asked to
write to the Ministry of Finance for permits.
One MP said: "If we want to
get the permit, we write to the ministry saying: 'I am the Member of Parliament
from such and such a province and I would like to be permitted to import one car
"The Ministry writes 'approved' and stamps the same letter.
This is the import permit."
MPs began to sell their permits in 1994 for
"The people who bought the permits were rich and could afford to
import really expensive cars. They saved a lot on import duty so they did not
mind paying money for the license," one MP said.
For example, the
lowest-priced 'C' class Mercedes Benz costs $33,000, while the 'S' class costs
$60,000. The import duty on the cars is fifty percent - a saving of between
$16,000 to $30,000. Other more expensive models sell for up to $90,000.
Asked how a letter written in the name of an MP could be 'sold' and a
car imported in someone else's name, one MP said: "Normally when we sell the
permit we write another letter saying 'I, the Member of Parliament, authorize
so-and-so to import the car instead of me.' The person then imports the car.
"The letter is probably not legally valid, but because it is from an MP
no-one asks any questions."
Asked whether authorities knew about this
practice, he said: "Of course, everyone knew. Many important figures had already
done it themselves."
Meanwhile the going rate for the permit rose to
about $6,000 late last year, after which there was a change of guard at the
Ministry of Finance.
Soon after the Finance Minister Keat Chon assumed
office in late October, he wrote to MPs saying if they sold the permits, those
who bought them would have to pay import duty like every one else.
"There was lots of grumbling among MPs. The rate for the permit stayed
at around $6,000 because no one was sure about the value of the paper," said one
A senior official at the ministry said, however, that the letter was
only a "recommendation."
Less than a month later, Keat Chon wrote another
letter reversing the earlier position, saying they were free to do what they
wished with the permits.
"He probably realized that too many important
people had already sold their licenses, including some very senior figures in
the National Assembly," one MP said.
Explaining the reversal, the
ministry official said: "The Minister had to change his position because the
parliament did not agree with him. The MPs argued that once the permit was given
to them, it was their right to do whatever they wanted with it, even to sell
Since the reversal of policy, the price of the permits has risen
steadily. The MP who sold his permit last month got $8,000. But, he says,
another MP who sold it last week got $11,000. Another, according to him, simply
gave the permit to a dealer who gave him a good car in exchange. Some others are
holding on to their permits in the hope that prices will rise still further, MPs