THE Prime Ministers have awarded a private company a monopoly on importing millions
of dollars of medical supplies for the government, scrapping a competitive bidding
The deal, which appears to violate Ministry of Finance regulations, is to supply
all medical drugs and equipment needed by the Ministry of Health for hospitals, clinics
and the military around Cambodia.
The Doung Chivv Import-Export Tourism and Transport Co, whose imports include Otard
cognac, has won a three-year monopoly to provide the goods.
There is 12 billion riel ($4.8 million) in this year's national Budget for medical
purchases, according to the Ministry of Health. It is unknown how much will be allocated
for the next two years.
Previously, the supply of medical materials was - in line with regulations introduced
last year on government purchasing - open to international bidding by various importers
or manufacturers. The government evaluated bids before awarding individual contracts.
The Prime Ministers have agreed in principle to Doung Chivv's medical monopoly but
the details, including how the company will be paid, are unclear.
It is also unknown whether the way will be opened for similar exclusive arrangements
for other government ministries' supplies.
Some health professionals fear the Doung Chivv deal may see Cambodia paying more,
and getting less, for medical goods.
Financial experts say the government's action is not only anti-competitive but directly
cuts across efforts to make state purchasing, and the civil service generally, more
open and accountable.
Officials acknowledge that the international bidding process has been the subject
of chronic delays - taking as long as 40-60 weeks to get tenders approved and goods
But they say the Prime Ministers' decision to abolish the system was not requested
by the Ministry of Health.
The monopoly was requested by Doung Chivv, and approved first by Hun Sen and then
his co-Prime Minister Prince Norodom Ranariddh.
The Ministers of Health and of Finance were informed in a July 19 letter from the
Prime Ministers' Council of Ministers cabinet chiefs that the "Royal Government
of Cambodia has accepted in principle" the proposal of Doung Chivv.
The company would be given the right to supply all pharmaceuticals, medical materials
and equipment, without bidding, for 1996 to 1998.
The decision was made "in order to maintain the stability of drug supply",
the letter said in apparent reference to delays in the bidding system.
The company must discuss the "quality, type of drug, the quantity and price"
with the Health and Finance ministries.
Doung Chivv is an importer-exporter - particularly of alcoholic beverages - also
involved in construction and other fields. The company would not comment, but critics
say it has no experience with health supplies.
Its monopoly conflicts with a July 1995 sub-decree signed by the Prime Ministers
and a November 1995 circular issued by the Finance Ministry.
They specified that all government purchases worth more than 20 million riel ($8,000)
must be open to competitive bidding, by foreign or domestic suppliers.
The rules were established to promote transparency and deter corruption, limiting
officials' ability to directly order goods from whomever they wanted.
"Where is our credibility? You make a decree and a few months later you scrap
your decree," said one critic who would not be named. "If government regulations
are nothing, then the government is nothing."
Nouv Kanun, a Secretary of State and chief of Ranariddh's cabinet at the Council
of Ministers, said it was the "Prime Ministers' prerogative" to "over-rule"
the Finance Ministry regulations.
He was not certain of the Prime Ministers' reasons, saying: "I think the Prime
Ministers would understand clearly why they would decide this... I think you don't
need to ask anything more."
But he noted "bad experiences" with the international bidding system, such
as companies offering very low bids and providing correspondingly poor quality goods.
Officials at the offices of both Prime Ministers either said they did not know about
the deal or referred inquiries to the Ministry of Health.
Dr Nuth Sokhom, Under-secretary of State for Health, said there had been long delays
in obtaining much-needed drugs and equipment through the slow bidding process.
The ministry had been working to speed up the system and it was the Prime Ministers'
decision - not the ministry's request - to abolish tendering.
However, if Doung Chivv was able to provide medical goods of high quality and fair
price in a more timely way, "we will be very happy".
Sokhom said the ministry would work with Doung Chivv to ensure only high-quality
and reasonably-priced goods were imported.
The ministry had lists of international prices for pharmaceuticals, he said, but
"we have less information [about the cost of] medical equipment. That is a problem."
"I think the company itself has to be responsible and we will have to assist
the company technically."
Other sources suggested that the ministry would have little bargaining power with
Doung Chivv - as the only authorized importer - if the company charged too much for
One questioned why the company was chosen, saying: "You cannot buy drugs as
you buy cognac."
No officials contacted by the Post were able to explain how Doung Chivv would be
paid: whether it would get a set fee or charge the ministry a mark-up on suppliers'
Doung Chivv representative Sath Navy, responsible for managing the deal, declined
to comment because details had yet to be finalized with the government.
Minister of Finance Keat Chhon was overseas at the Post's press time and could not
be contacted for comment.
He is believed to have discussed the matter with the Asian Development Bank in Manila
during a visit there, but ADB representatives in Phnom Penh said they were not authorized
The ADB, along with other multi-lateral agencies, has been a key advocate of greater
transparency in government purchasing. The bank funds a Ministry of Finance procurement
unit, through which all state purchases have to be approved.
Unit chief Chhay Vuth said he had sent a letter to his Minister on the issue and
was awaiting instructions on how to handle the purchase of health supplies.
Several sources acknowledged ponderous bureaucracy within the bidding system, particularly
at the Ministry of Finance, where files are said to sit for months without action.
Bribery, some people say, appears to be one way of getting bids approved more quickly.
Financial experts said there was nothing wrong with involving the private sector
in government procurement - providing that it was done in a competitive, transparent
They questioned why other importers and medical firms were not given a chance to
vie for the monopoly awarded to Doung Chivv.
"The benefits of the private sector are that they bring specialist knowledge
and have a competitive edge," said one.
"The problem with this is that the company doesn't have specialized knowledge
and this contract was given without competition for it."
Dr Georg Petersen, representative of the World Health Organization (WHO), which had
been working with the government to try to streamline the bidding process, said he
did not know how the new system would work.
"Our main concern is that the country is able to get quality drugs at an internationally-accepted
good price. It's a political decision what mechanism they use.
"If this mechanism does that, no-one will have a concern with it."