C AMBODIA'S export income was $457 million last year - three quarters of it

coming from timber sales and black-market re-exports of gold and

cigarettes.

Total trade approached $1 billion, according to 1994 National

Bank figures.

Gold and cigarette re-exports - coming into Cambodia from

places such as Singapore, and then on to booming, though restrictive neighboring

markets - were worth $140 million.

Timber exports were worth $197

million. Total exports were up from $284 million in 1993.

Imports last

year were worth $643 million, up from $471 million in 1993, leaving Cambodia

with a balance of trade deficit of $186 million.

"The numbers are small,

but you would say it's pretty healthy, if you were to not look at what has gone

on before, or what will go on in the future," said Peter Parsons, the

statistical advisor to the International Monetary Fund, who directed the

report.

The study provides a snapshot of a tiny economy whose consumer

buying power is increasing with more and more cars, oil, electronic goods,

construction materials and other products being imported.

It also shows

an enormous amount of cigarettes and gold being brought in and shipped out

again.

The report says about one third of the imports were re-exported,

principally gold and cigarettes.

But potentially worrisome is that the

two largest sources of foreign exchange coming into the economy were $254

million in foreign aid, and the $197 million in timber, both of which are at

risk as future income sources.

The government announced a ban on log

exports in April in an effort to preserve the environment.

Finance

Ministry Under Secretary Chhea Peng Cheang said Sept 19 that the finance

ministry only expects to report $20 million in log exports for 1995.

He

said the intention is to replace these exports with value added products, such

as furniture.

"Two companies have been licensed for export," he

said.

He said officials are working with the Council for Development of

Cambodia (CDC) to develop furniture exports.

The foreign aid in the

balance of trade report is money actually spent, not what was pledged.

It

shows that aid flowing into Cambodia was lower in 1994 than in 1993 when it

totalled $334 million, but in 1993 aid was inflated by a special $55 million

debt-clearing donation.

Total aid for 1995 is still being spent and

hasn't been calculated yet, and 1996 budgets in most cases haven't been arrived

at yet, but the United States has already indicated that aid to Cambodia will be

cut due to the U.S. budget deficit.

"We are going to see cuts in aid in

Asia, possibly as much as 40 percent, USAID deputy representative Carol

Lancaster said this week.

She said the cuts in Cambodia may not be as

deep as in other countries.

The U.S. contributed $41 million this

year.

The aid figures in the balance of trade report do not include loans

from institutions such as the World Bank and Asian Development Bank, which have

been increasing their lending to Cambodia.

The report shows that $13.9

million in foreign aid was spent on salaries, mostly for foreigners, but also

for Cambodians on salary with NGOs.

The imports included $75 million in

construction materials for the aid projects, $38 million in motor vehicles and

$25 million in drinks, and $90 million in cigarettes and $70 million in gold,

most of which were re-exported.

The exports included besides the timber,

$25 million in rubber, and $227 million in re-exports - in other words about one

third of the imports were shipped out again as exports, making transshipping one

of Cambodia's biggest businesses.

Direct foreign investment in 1994 was

$69 million, of which about $59 million represented the capitalization of the

banking sector.

The money flowed into the National Bank at a rate of $5

million per bank when a flurry of banks was licensed in 1994.

The report

puts direct foreign investment at just $10 million. That doesn't include

investment by Cambodians.

The IMF did a balance of trade estimate a year

ago, but the numbers weren't as comprehensive.

The study is significant

for policy makers who need to have an idea of the volume and type of

international transactions occurring in order to establish policies on interest

rates, inflation and other fiscal measures.

Parsons said that the numbers

were in many cases estimates culled from a variety of ministries and

Customs.

The aid numbers come from the NGOs spending the money and the

government.

Because rubber, for example, is not taxed as an export, the

estimate of $25 million in rubber exports comes from the Ministry of

Agriculture.

The Ministry of Agriculture has said in the past that rubber

smuggling across the border to Vietnam is a major problem.

The trade

study provides no estimates for various goods that are widely said to be

exported on the black market out of Cambodia, such as rubies and

drugs.

However it estimates that about $140 million worth of gold and

cigarettes were re-exported.

Cheer Peg Cheering, a finance official, said

the government is aware there is a large amount of what he called "cross border"

trading.

"It's normal, but we have a policy not to encourage it," he

said.

"We don't encourage it because we know that the real economic

growth is in production, private investment," he said.

No one really

knows the extent of this trade, but the principle behind it is clear enough -

Cambodia has relatively low tariffs and foreign traders can get access to the

booming Vietnamese market, and avoid its stiff tariffs and trade restrictions,

by sending their goods via Cambodia.

Cheer Peg Cheering said Vietnam

sends merchandise into Cambodia as well.

The border trade has been going

on for years, say Phnom Penh businessmen, but there is no great impetus to stop

it because the traders aren't breaking Cambodian law.

"As Vietnam moves

towards reducing its trade barriers the problem will get reduced," said one

Phnom Penh businessman.