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Sihanoukville Port set for June tariff cuts

Sihanoukville Port set for June tariff cuts

The head of the country's deepwater seaport has said it will likely cut tariffs

in June this year. Sihanoukville Port's director-general, Lou Kim Chhun, said

that was in part down to increased competition in the region.

"We need to

compare the tariff to the other ports near here," he said.

The private

sector has long complained that high port charges act as a significant brake on

the Kingdom's competitiveness. Private sector groups have held regular meetings

with government over the past year to push for cuts.

Even without the

'unofficial fees' charged by its staff, Sihanoukville is the most expensive port

in the region.

For example, it is four times more costly than similar

'feeder' ports such as Songkhla in Bangkok. In 2000, the Cambodian port

collected an average $5.28 per ton of cargo handled compared with just $1.81 at

Songkhla.

For that reason, say industry figures, the official costs

attached to Sihanoukville also need to be tackled. Preben Hartvig Andersen works

for shipping company MCC, and is also a board member of the International

Business Club. He said reform was vital for the country to become competitive

and attract foreign investment.

"The margins in shipping are wafer thin.

Eighty percent of a shipping line's port cost is in the handling of cargo - that

is in the crane lifts," he said.

"Cambodia's port is one of the most

expensive around when you compare it to Vietnam, China, Malaysia, Thailand, and

so on. The government's focus has been on reducing any 'no receipt' money, which

is very important, but at the same time it is hard to trace, find and reduce.

The official tariff is too high, so it would be another place to make fast cost

reductions."

Kim Chhun said the number of ships docking at Sihanoukville

had dropped from 825 to 817 last year, but said that was offset by a higher

number of containers handled. Although he accepted tariffs were high, he felt

the quality of service had improved dramatically.

The port operation has

long caught the eye of the opposition Sam Rainsy Party (SRP), whose transport

spokesman, Son Chhay, is critical of the lack of transparency.

"The

budget documents are very unclear on the port revenue," Chhay said. "We expect

that the auditor-general will conduct some investigation into the

port."

The fact remains that the state-run enterprise is highly

profitable. In 2000 it generated 33 billion riel ($8.5 million) in revenue. Half

of that was retained as pre-tax income.

A competitiveness study conducted

by the Ministry of Commerce, the World Bank and other agencies last year stated

that such a high figure suggested "the government is extracting a very high rate

of return, given the port's position as the main international port in the

country".

Son Chhay said he suspects that the money raised will be used

to fund the election campaign of the ruling Cambodian People's Party (CPP), a

claim sharply rejected by Kim Chhun.

"I also saw this on Khmer

Intelligence [an email service distributing unsourced political information],"

he said. "We give nothing to the CPP. We cannot because all our income appears

on the receipts. We have the proof."

The email service, whose news runs

from official comment to unsourced rumor, alleged the port authorities "help the

CPP buy votes by distributing 'Donations from the Port' in the form of food and

money to villagers in the three districts and 22 communes of Sihanoukville

municipality".

"Yes I'm a member of the CPP, but that is my right," Kim

Chhun said, "but I work for the port and the nation".

The need for

improvement, though, has been recognized by government for years. At a private

sector forum in December 1999, Prime Minister Hun Sen singled out the port for

reform.

"Customs officials routinely start work at 3:00 pm and finish at

5:00 pm, and in some places [investors] spend $2,000-$4,000 for [clearance to

ship] a container," the PM said, adding that customs and Camcontrol officials

"no longer have the right to be 'King of Pochentong [Airport]' and 'King of

Sihanoukville'."

But reform has been slow. The high level of 'hidden

costs' at the port again drew criticism at the March 2002 private sector

forum.

At the forum Hun Sen promised a working group would examine the

costs. While the private sector has continued to lobby for change, critics say

the management structure has prevented reform.

The port's board of

directors is headed by Kim Chhun, which Son Chhay said would not boost

accountability as it mixes the executive with the oversight body.

Kim

Chhun rejected that, saying the structure was not only common in other

countries, but had proven more efficient here.

"It is usual

internationally for the [chief executive officer] to be chairman of the board,"

he said.

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