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Marketing the economy

Marketing the economy

Cambodia's growing market economy was discussed at a one-day seminar held by the

Khmer International Relations Institute, officially known as the Preah Sihanouk

Raj Academy.

The Jan. 13 seminar involved a panel of Cambodian and

international economic experts. Speakers included Finance Minister Sam Rainsy,

National Bank consultant Michael Brown and Japanese Embassy First Secretary Toru

Imamura, in charge of Cambodian rehabilitation issues at the embassy.

Toru Imamura said the international community was helping Cambodia

because it could trust the government's "healthy and ambitious performance" in

areas such as political guide-lines, the new national budget and new financial

law.

He compared the radical changes under way in Cambodia to those in

Japan during the Meiji reconstruction and the reconstruction after World War

Two. Cambodians, he said, should expect several years of transition.

"In

facing such drastic change of society, my country needed several years of

preparation," he said. "However, the Royal Government can not wait much for this

preparation. There are many immediate rehabilitation needs everywhere and,

still, large financial shortages are expected."

Imamura offered Knmers

three pieces of advice. He said a medium-term strategy should be established in

collaboration with the donor community as soon as possible.

The National

Committee for Rehabilitation and Development of Cambodia should be strengthened,

the government should speak with one voice.

And, he stressed the need

for institutional building not only for foreign investment but also for national

investment. "No one wants to invest where domestic entrepreneurs are reluctant

to invest," he said.

Finance Minister Sam Rainsy focused on the Cambodian

budget and said it was the first budget written in twenty years in accordance

with international standards. It was drawn up with the help of the International

Monetary Fund and the World Bank.

"The main objective of the budget is to

strengthen national unity - one budget for the entire country," Rainsy said.

Previously, different provinces had had different budgets but this could not

happen any longer as it would jeopardize national unity.

"All state

revenues," he said, "should be sent to the national treasury directly and

immediately. Provincial authorities cannot sign contracts and sell Cambodia bit

by bit to foreigners."

Another aim was to keep the country moving. The

minister said government workers must be paid and the fight against inflation

had to continue as it was related to social stability and democracy.

"The budget must further social justice, by being redistributive, taxing

the rich more in order to alleviate the suffering of the poorest of Cambodians,"

said Rainsy. Corruption and all forms of irregularity should be avoided to stop

arbitrary decision-making and "certain kinds of investors".

The minister

detailed his plans for taxation, based on GDP. He said in 1993, Cambodia's GDP

was 6,000 billion riel or $2.4 billion at current exchange rates. With an

assumed population of around nine million it worked out to about $250 a head,

compared to $25,000 in the United States and Japan.

He said the

government's budget was $350 million which was 15% of the GDP, but by

international standards the GDP should provide 30-40%. However, the current

archaic, primitive tax system led to little direct tax. "So far the accounting

system and the legal framework is insufficient. We will introduce an accounting

system this year in order to levy a direct tax," said Rainsy.

Of the

$350 million in revenue necessary for the budget, $184 million would be

generated within the country and $172 million would come as donor aid. Current

expenses included wages, fuel, medicine, electricity and the cost of daily

operations. Capital expenditures would be US $231 million.

The seminar

was moderated by Dr Thach Bunroeun, the acting director of the International

Relations Institute. He said Cambodia should be aware of the economic policy of

import substitution and the country's infant industries should be

protected.

He asked foreign investors to invest long term and warned

against those who come to exploit. "We have international standards, we have

international recognition, we are receiving many delegations every day who wish

to learn more about opportunities in Cambodia," he said.

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