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
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
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.
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.
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.
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".
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.
$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.
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
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.