CAMBODIA'S national treasury has missed out on tens of millions of dollars in state
revenues because of mismanagement of the country's State controlled rubber industry,
according to KNP leader Sam Rainsy
The opposition chief says his party researchers have calculated that the granting
of tax free export licenses and illegal exports of rubber cost the country close
to $12.5 million in 1996.
In addition, according to Rainsy, the sale of undervalued contracts for the felling
of "old" rubber trees may have denied the state hundreds of millions of
dollars and reduced Cambodia's rubber producing capacity.
Cambodia's rubber industry - centered in Kompong Cham province, the political and
economic heartland of the Cambodian People's Party (CPP) - is potentially the country's
second biggest export earner after timber.
Before 1970, one third of State revenues came from the sale of rubber.
Official Custom's figures put the export of rubber last year at between 36,000 and
37,000 tonnes, most of which was shipped to Singapore where buyers paid a market
price of $1,200 a tonne.
An estimated 5,000 tonnes was also illegally exported to Vietnam.
"The government has awarded an export monopoly to the Mong Rithy company, but
sells rubber to the company at just $900 per tonne. It has also exempted the company
from the normal ten percent export tax," Rainsy said.
"Look at the national budget - zero dollars comes from the production of rubber
even though we exported 36,000 tonnes last year," he added.
"Mong Rithy gets these concessions because he builds schools for Hun Sen."
Agriculture Minister Tao Seng Huor said he did not know why the Mong Rithy group
had been awarded export concessions.
"I have never seen the documents regarding this...," he said. "If
you have the documents please bring them to my office."
When asked to comment on the assertion that revenue from the sale of rubber went
directly to the CPP, he laughed.
"I do not know," he said.
Finance Minister Keat Chhon remained unavailable for comment at press time, but recently
launched a blistering attack on the state's lack of "fiscal discipline".
Speaking at the National Assembly before presenting the 1997 budget, Chhon said Cambodia's
recovery was dependent on a "profound adjustment" to the way the government
managed the country's assets.
"... in drafting the 1997 Budget we... encountered a lack of seriousness and
discipline in the governance of State, both financially and administratively."
"Non-tax revenues are not collected... when they are, they are spent outside
the treasury circuit," Chhon said.
Rainsy added that contracts to log rubber trees - around 12, 000 of Cambodia's 43,000
hectares of plantation have been signed over to loggers - were severely under priced.
The contracts - awarded without competitive bidding to the Pheapimex and Shipping
Company by both Prime Ministers and signed in June 1995 - allowed for the sale of
11,700 hectares of "old" rubber trees at $1,900 per hectare. Both Prime
Ministers approved the deal on condition that proceeds would not go into the State
However, according to Rainsy, Pheapimex later sold its logging rights to other companies
for $2,300 per hectare. These companies later resold the contracts for $2,700 per
"These companies have started cutting and this year they will accelerate - they
are going to cut like mad," he said, adding that most of the so called "old
trees" were still capable of profitable latex production.
"The Japanese have developed a technique which vastly improves the value of
rubber tree wood which is used to make furniture," he said.
Rainsy said the market price for rubber timber is about $150 a cubic meter and that,
on average, each hectare produced about 300 cubic meters of timber worth around $45,000.
"Even if the companies paid $2,700 per hectare, that is an enormous profit margin,
and a great loss of potential revenue," Rainsy said.
Meanwhile, the French government has decided not to extend an aid program providing
technical expertise in rubber production - despite a personal request from the King
to the project's head technical advisor that he lobby for continued assistance.
The $5 million program was initiated in 1991 and finished on Dec 31 last year.
Speculation within political circles has it that the program was abandoned because
of the Royal Government's reluctance to reform the industry and collect revenues.
But a French embassy spokesman said the $5 million project had simply run its course.
When pressed as to why the program would not be extended the spokesman said: "The
project ran it's term, that's all I can tell you for the moment."
The second Prime Minister has reportedly indicated that he wanted Cambodia's existing
rubber plantations to remain under state control and has urged foreign investors
to set up new plantations.
However, investors of new plantations must wait at least 15 years for rubber trees
to produce profitable quantities of latex.