SECOND Prime Minister Hun Sen has lashed out at Finance Minister Keat Chhon, apparently
putting him on notice that his job could be on the line if he does not move to ally
importers' concerns about difficulties in doing business in Cambodia.
Sen delivered a stern public rebuke of Chhon during a Jan 7 speech opening the Samdech
Hun Sen Park in Phnom Penh, which was funded by businessmen including several of
Cambodia's biggest import-export firms.
Sen said his image was being affected by businessmen's complaints about delays in
transferring shipments out of Sihanoukville and Phnom Penh ports.
He blamed the delays on over-zealous import inspections by the government-contracted
Swiss firm Societe Generale de Surveillance (SGS).
He gave Keat Chhon three weeks to sort out the "mess" or else he would
scrap the SGS contract which was signed by the government in October.
"The ball is now at His Excellency Keat Chhon's feet. You kick it or not, you
already know me very well," Hun Sen said, turning toward Keat Chhon.
"Because it concerns my image. I am the leader of the Cambodian People's Party,
a partner in the coalition government assigning you to handle that matter, so you
must do it."
Hun Sen said SGS approval was required to move any imports out of the ports.
But he said SGS' contract did not give it the right to inspect "humanitarian
goods" or taxable or non-taxable goods which were for "investment packages."
But he went further and, in an apparent warning to SGS not to inspect anything at
ports said: "When SGS is seen going to the ports - I don't want to speak too
harshly - arrest and detain them."
Hun Sen blamed the Ministry of Finance, headed by Chhon (of Hun Sen's CPP), for giving
too much power to SGS.
The Swiss company's job was to assess the quality of imports, and determine the tax
rate on them, but it was up to Cambodian customs officials to enforce the tax regulations,
"Goods are getting stuck because of the Ministry of Finance. This is the mistake
of the implementing party [Ministry of Finance], but not the contract. There is nothing
wrong with SGS," he said.
Hun Sen spoke of one Ministry official, who he did not name, he believed was responsible
for the "difficulty".
The official should be sacked, he said.
He told Chhon that "we can talk about it after three weeks" if investors
still complained about the problem, or if he found out that there was some "conspiracy
or disturbance" by ministry officials over the issue.
Several large importers have complained about SGS since it began operations, funded
by a one percent service charge on imports, inspecting imported goods to ensure tax
regulations are met.
While some government officials have said SGS' work is helping to reduce illegal
smuggling, others have voiced traders' concerns about the one percent duty and the
inconvenience of inspections.
The issue arose during the National Assembly's debate on the 1996 national budget
on Dec 28, when Ay Sin Son Thai, MP for Koh Kong province, proposed annulling the
However, Chanthol Sun, Secretary of State of the Ministry of Finance, later assured
a press conference that the contract would remain, citing an increase in tax collection
because of SGS.
Hun Sen, in his speech, said he preferred SGS to stay in Cambodia but the government
wouldn't mind paying $400,000 in compensation to have the contract annulled if necessary.
"So, all investors stay calm. I will help settle this, but I do not have reason
to want to cancel the SGS contract either. But, if difficulty remains after three
weeks, I'll ask for its cancellation.
"Because there was no SGS during the State of Cambodia, nor was there a few
months ago, and [the government] survived."
While Hun Sen said he was not criticizing but reminding the Finance Minister to sort
it out, several Cambodian and foreign officials were stunned at his public attack
on Keat Chhon.
"He was tough," said a diplomat who witnessed Sen's speech.
"Keat Chhon is a cabinet member and he [Hun Sen] could have discussed the matter
with him at the Council of Ministers," said a member of parliament.
Hun Sen appeared to make a point in his speech of defending the Minister of Commerce,
Cham Prasidh, by putting the responsibility for SGS solely on Keat Chhon's shoulders.
Hun Sen acknowledged that it was the Ministry of Commerce which signed the SGS contract,
but said it was the Ministry of Finance's job to implement it.
He said he had worked "a lot" with Cham Prasidh to try to resolve the problem
and worked "a little bit" with Keat Chhon.
Last May, Hun Sen was moved to issue a public statement denying newspaper speculation
that Cham Prasidh would be replacing Keat Chhon as Finance Minister in a Cabinet
"Contrarily, we are in a process to encourage the two figures to implement their
task," his statement said.