Cambodians must pay nearly 30 percent more for gasoline than Thais,
Vietnamese and Americans. Why?
Gasoline prices continue to rise in Cambodia, and a liter of regular grade in Phnom
Penh now costs a full dollar - 4,100 riel - at petrol stations owned by Caltex, Shell,
Total and Tela.
But if you buy that liter from a roadside seller near the Vietnamese border it costs
3,200 riel, and in Thailand it sells for 28.99 baht - 3,160 riel. That's about the
same as the 77 cents it cost in the United States this week.
In Phnom Penh it may cost a little less than $1 - but not much - from a roadside
seller. Sam Enh, 35, has sold gasoline on the same street corner since 1995, when
he bought petrol for 1,000 riel and sold it for 1,100 riel. Last week he was buying
his petrol from a Sokimex station near Monivong bridge, paying 3,900 riel per liter
and selling it for 4,000 riel. This week Sokimex is charging 4,000 riel.
Chou Touch, 47, has been selling gasoline for a year close to the Olympic Stadium.
She used to buy smuggled gasoline and sold it for 2,300 riel per liter, but now she
has to buy from the gasoline stations. Last year she sold ten 30-liter cans of petrol
a day but now she is losing customers who say they can buy it cheaper elsewhere,
and she sells only two cans a day. By early June she was buying gasoline at 3,750
riel per liter and selling it for 3,800 riel. She is afraid she won't have rice to
eat because of how little money she is able to make.
"If the gasoline price keeps going higher, people will change to bicycles,"
Touch said. "In other countries the gasoline price is lower. Why not Cambodia?"
'Because of the taxes'
Sam Rainsy Party (SRP) National Assembly member Son Chhay said he knows why gasoline
is more expensive in Cambodia.
"The reason the price of gasoline in Cambodia is nearly double that of neighboring
countries is because of the taxes," Chhay said.
Sok Hach, director at the Economic Institute of Cambodia (EIC), said the government
tax on each liter of gasoline is 940 riel - which raises the retail price of regular
by 29.7 percent from 3,160 riel (what it sells for in Thailand) to 4,100 riel.
But the SRP's Chhay says only 20 to 25 percent of the gasoline in Cambodia is taxed
because the rest is smuggled or owned by government officials. He said the SRP is
trying to persuade the government to lower the tax on gasoline to 10 to 15 percent,
which would make petrol prices more comparable to Vietnam and Thailand - and that
would reduce smuggling.
Keo Sok Kheang, Director of Anti-Smuggling and Investigations, also pointed to the
disparate pricing as a motivation for smuggling.
"In Cambodia the price of gasoline is high and other countries near Cambodia
have a low price, so there is smuggling," Sok Kheang said. "We can't stop
smuggling, but we can reduce it."
According to the April 2006 report of the Cambodia Development Resource Institute
(CDRI), gasoline prices were 20 percent higher in March 2006 - at 3,750 riel per
liter - than March 2005.
A Ministry of Commerce official who refused to be named attributed the high price
of gasoline to the higher prices in the international market influenced by the crisis
in Iraq. He said the Cambodian government has charged the same tax on gasoline since
1993 - $343.96 tax per ton of imported gasoline and $140.47 per ton of imported diesel,
but it has always been a higher tax than in Thailand or Vietnam.
"The price of gasoline in Vietnam and Thailand has been cheap for a long time,"
he said. "They tax gasoline less than us. And it is still cheaper even though
they raise the price of gasoline. When the government is taxing gasoline more than
neighboring countries, it causes a lot of gasoline smuggling."
He said the increase in gasoline prices in Thailand and Vietnam had reduced the differential
with the higher price in Cambodia, and smuggling had declined.
In previous years about 5,000 tons of gasoline was smuggled into Cambodia from Vietnam
and 5,000 tons from Thailand every month. That had now dropped to 3,000 a month from
"Gasoline smuggling into Cambodia is decreasing because the price of gasoline
in Vietnam and Thailand is higher, the border police are making more arrests, and
some smugglers are getting lazy in their illegal work," he said.
The Ministry of Commerce official said he himself had smuggled gasoline into Cambodia
from Thailand and Vietnam as part of a study he was doing.
"Smuggling gasoline from Vietnam, we carried [30-liter] cans of gasoline by
hand," he said. "And smuggling gasoline from Thailand, we used vehicles.
In smuggling gasoline, smugglers have their leader give a sign. When the leaders
see Vietnamese police, they raise a red flag; and when they do not see Vietnamese
police, they raise a blue flag."
Tax 'not the reason'
However, Se So Khorn, an official for the Customs House of the Ministry of Economy
and Finance, said tax was not the reason for Cambodia's high gasoline prices.
He said the government is actually subsidizing the gasoline prices in Cambodia and
that they could be much higher. He said in other countries taxes are based on the
market price but in Cambodia the government bases its tax on the lowest customs value
"Customs value $309 per ton; the market price may be double but the government
maintains this price," Khorn said. "Usually customs price is based on the
He attributed Cambodia's high fuel prices to a longer purchase chain.
"We import from Vietnam and Thailand so the price is higher. Vietnam imports
from producing countries but Cambodia imports from Vietnam. How can we sell as cheap
as other countries?"
He also said Cambodia did not have enough money to buy forward stocks of petroleum,
but had to buy day to day, paying a higher price.
"If we need 10 tons we cannot reserve 20 or 30 tons," Khorn said. "The
companies in Cambodia don't have enough money like in other countries."
Sothea, 30, has been a tuk-tuk driver in Phnom Penh for a year. Every day he spends
$3 to rent a tuk-tuk; he usually spends at least $2 on gasoline, and $1 for two meals.
He earns between $5 and $10 per day, the most profit he could make is $4. This is
the only money he has to support his wife, three small children and his mother-in-law
who live together 15 km outside of Phnom Penh. He also tries to help his mother and
sister who live in Prey Veng, 75 km from Phnom Penh.
Last year when he started his business he spent 3,600 riel per liter of gasoline
but now he has to spend 4,100 riel per liter.
"It's difficult this year because we pay for gasoline and it's expensive,"
Sothea said. "We get the same price from the customer so sometimes we explain
to them [about the higher petrol price] but they don't understand."
He has talked to other moto-taxi and tuk-tuk drivers about the higher price of gasoline.
"They say different things; sometimes they say its Iraq...I can't tell you more
because I live in my country, I don't want to get problems," Sothea said. "All
the people want to complain to the government but they are scared."
It is not only transportation that has been affected by the high cost of fuel. Industries
large and small are facing problems.
Heang Sophal, an ice producer in Kampong Chhnang, said he will stop his business
if the price of diesel keeps going higher. He started producing ice in 1993 when
diesel was around $200 a ton; now he has to pay $880 for one ton of diesel, which
he buys from Sokimex.
"The price of fuel is getting higher, and it affects my business a lot,"
Sophal said. "Now it is very hard to make a profit. At least two ice enterprises
in Kampong Chhnang province have closed their business and another two closed in
Pursat province because they could not afford fuel."
In 1993, Sophal's ice cost 3,000 riel but now it costs between 5,500 to 6,000 riel.
He says the higher price of fuel has forced him to raise the price of his ice.
"If I put my price too high, there would be no buyers," he said. "But
if I put my price too low, I will lose."
Sophal said some businesses were looking for other forms of fuel.
"Because of the rising price of fuel, now some entrepreneurs have started using
biomass such as burning wood, or rice husks mixed with fuel to make power. But their
businesses still do not go well because they do not have enough of such resources-wood
and rice husks."