The Phnom Penh Post
WEDNESDAY, 15 DECEMBER 2010 20:06
MOM KUNTHEAR
A woman has filed a complaint to the Anticorruption Unit accusing Interior Ministry officials in Phnom Penh of extorting money from her after wrongfully arresting and detaining her son.
Teng Sokchea, 46, said yesterday that she filed a complaint to the ACU on Monday after her 22-year-old son and three of his friends had been arrested in Russey Keo district on Sunday, and accused of buying a motorbike with fake licence plates.
She said the four suspects were detained in a cell at the Ministry of Interior overnight, and were only released the following morning when family members arrived to pay fees of up to US$400 demanded by officials.
“They accused my son and his friends of buying a motorbike with fake number plates and they tried to force my son to admit the crime they accused him of,” she said.
“I gave $250 to the officer for the release of my son. At first I told them that I have only $200, but they asked me for $50 more,” she said, adding that she had had to borrow the extra $50.
She said her son had bought the motorbike in question from his uncle, and denied that it had fake number plates.
“I still wonder why the police arrested and detained my son that night,” she said. “He is a good person and he did not do anything wrong from the law.”
But Horm Kunthy, director of the Investigations Bureau at the Interior Ministry’s Criminal Police Department, said yesterday that the arrests were justified.
“We got information from the local police [that they] suspected that [the four accused] bought a motorbike from a thief to sell in the province, and then we went to arrest them in order to question them,” he said.
He said he had accepted money from Teng Sokchea in exchange for her son’s release, but claimed that Teng Sokchea had offered the money freely.
“Actually she agreed to give me $250 [in exchange] for taking her son back home,” he said, adding that officials had only agreed to accept the money and release Teng Sokchea’s son because they “felt pity for her”.
He said he was not concerned about the possibility of an ACU investigation.
“I don’t care or worry about her complaint to the ACU because it is her right to do that and I will prepare myself to appear to answer all the questions about her case if the ACU officers invite me for questioning,” he said, adding that he was not worried “because I am not wrong”.
ACU head Om Yentieng, and spokesman Keo Remy could not be reached for comment yesterday.
http://www.phnompenhpost.com/index.php/2010121545413/National-news/ministry-accused-of-graft.html
Thursday, December 16, 2010
Friday, December 3, 2010
Taxing problems remain for Kingdom’s government
Friday, 03 December 2010 15:02
The Phnom Penh Post
Steve Finch
THE latest budget disclosure this week by the government showed a 13.8 percent rise in tax revenues in the first three quarters of the year, compared to 2009, another sign the Kingdom is tackling one of its greatest budgeting headaches.
Generating some 3,462.35 billion riels, or US$834.3 million, in the first nine months of the year again represented the highest-ever tax revenue collection by the government, a promising sign given that Cambodia must significantly raise domestic revenues to offset donations by the international community.
Nevertheless, major tax collection problems exist that must be addressed, not least because the collection of taxes remains at the epicentre of Cambodia’s complex corruption challenges.
The new Anticorruption Unit is investigating road tax officials as one of its first cases, amid allegations motorists are being overcharged in Phnom Penh. But this case is unlikely to touch on the much wider problem associated with teams of policemen that levy informal fees on motorists.
Ask foreign investors about the negatives associated with doing business in Cambodia and usually top of the list are the charges levied as an informal tax within the system.
Cambodia’s taxation problems therefore represent under-enforcement of official taxes combined with over-zealous extraction of informal fees. In terms of enforcement, the country continues to enjoy successes and failures.
Law firm DFDL Mekong noted in its October update that authorities have stepped up tax enforcement in the case of international schools which are subject to the same taxes as private businesses.
However, a new property tax that was supposed to be set up this week has thus far failed to get off the ground amid reports the authorities are unprepared and questions over exactly how the Ministry of
Finance subcommittee responsible for evaluations is supposed to grade properties when there are few transactions to help define values.
Cambodia needs to make sure that taxation is fair otherwise enforcement becomes even more difficult.
Aside from these problems are the classic cases of disappearing taxes and a pervasive lack of transparency. The budget declaration for the first nine months by the Ministry of Economy and Finance does not list any revenues generated from airport tax. Yet anyone that has travelled through Phnom Penh and Siem Reap airports knows foreign adults are charged a hefty $25 to leave the Kingdom, while Cambodian adults pay $18.
Ministry of Tourism figures showed some 835,000 people arrived by air in the first eight months of this year.
If we assume they all left by air and for arguments sake 75 percent were over 12 years old, then in this category alone the government would have generated some $18.37 million, or roughly 2.5 percent of the total tax revenue that appeared on the budget balance sheet for the same period. Where is this money?
If the government is really intent on accounting for taxation revenue, which by its actions it seems to be, then accounting for these blatant omissions must surely become a priority.
http://www.phnompenhpost.com/index.php/2010120345140/Business/taxing-problems-remain-for-kingdoms-government.html
The Phnom Penh Post
Steve Finch
THE latest budget disclosure this week by the government showed a 13.8 percent rise in tax revenues in the first three quarters of the year, compared to 2009, another sign the Kingdom is tackling one of its greatest budgeting headaches.
Generating some 3,462.35 billion riels, or US$834.3 million, in the first nine months of the year again represented the highest-ever tax revenue collection by the government, a promising sign given that Cambodia must significantly raise domestic revenues to offset donations by the international community.
Nevertheless, major tax collection problems exist that must be addressed, not least because the collection of taxes remains at the epicentre of Cambodia’s complex corruption challenges.
The new Anticorruption Unit is investigating road tax officials as one of its first cases, amid allegations motorists are being overcharged in Phnom Penh. But this case is unlikely to touch on the much wider problem associated with teams of policemen that levy informal fees on motorists.
Ask foreign investors about the negatives associated with doing business in Cambodia and usually top of the list are the charges levied as an informal tax within the system.
Cambodia’s taxation problems therefore represent under-enforcement of official taxes combined with over-zealous extraction of informal fees. In terms of enforcement, the country continues to enjoy successes and failures.
Law firm DFDL Mekong noted in its October update that authorities have stepped up tax enforcement in the case of international schools which are subject to the same taxes as private businesses.
However, a new property tax that was supposed to be set up this week has thus far failed to get off the ground amid reports the authorities are unprepared and questions over exactly how the Ministry of
Finance subcommittee responsible for evaluations is supposed to grade properties when there are few transactions to help define values.
Cambodia needs to make sure that taxation is fair otherwise enforcement becomes even more difficult.
Aside from these problems are the classic cases of disappearing taxes and a pervasive lack of transparency. The budget declaration for the first nine months by the Ministry of Economy and Finance does not list any revenues generated from airport tax. Yet anyone that has travelled through Phnom Penh and Siem Reap airports knows foreign adults are charged a hefty $25 to leave the Kingdom, while Cambodian adults pay $18.
Ministry of Tourism figures showed some 835,000 people arrived by air in the first eight months of this year.
If we assume they all left by air and for arguments sake 75 percent were over 12 years old, then in this category alone the government would have generated some $18.37 million, or roughly 2.5 percent of the total tax revenue that appeared on the budget balance sheet for the same period. Where is this money?
If the government is really intent on accounting for taxation revenue, which by its actions it seems to be, then accounting for these blatant omissions must surely become a priority.
http://www.phnompenhpost.com/index.php/2010120345140/Business/taxing-problems-remain-for-kingdoms-government.html
Monday, November 15, 2010
APEC summit ends with drift toward trade war
World Socialist Web Site
By James Cogan
15 November 2010
Two days of talks in Yokohama, Japan by the leaders of the 21-member Asia-Pacific Economic Cooperation (APEC) ended yesterday with a clear divergence between the United States and China over the future of regional trade. Following the failure of last week’s G20 summit to resolve festering currency disputes, the APEC meeting further underscored the drift toward a breakdown of relations between the major powers in the Asia Pacific region.
The Obama administration, backed by the Japanese government of Prime Minister Naoto Kan, pushed over the weekend for APEC to commit to the establishment of a Free Trade Area of the Asia-Pacific (FTAAP). The perspective of a FTAAP, which would include the US and attempt to supplant various bilateral pacts operating in the region, is intimately bound up with Obama’s perspective of doubling US exports in five years. Such a transformation could be achieved only by American-based corporations seizing the markets of rivals the world over, and particularly from Chinese companies.
As he had at the G20 summit, Obama used the APEC meeting to attack China and other major exporting countries over their trade surpluses with the US. Addressing a business forum on Saturday, Obama declared: “One of the important lessons the economic crisis taught us is the limits of depending primarily on American consumers and Asian exports to drive economic growth. Going forward, no nation should assume that their path to prosperity is simply paved with exports to America.”
Obama’s repeated demands that countries reduce their trade imbalances with the US contain the implicit threat of trade sanctions if they fail to take measures to raise the value of their currencies and open their markets to American companies. US National Security Advisor Thomas Donilon announced to reporters that Obama had told Chinese President Hu Jintao that the US expected China to lift the value of its currency, the yuan, before a scheduled meeting between the two leaders next January.
To pursue an agenda of expanding US trade in the Asia-Pacific, Obama announced at APEC that the US had joined the little-known Trans Pacific Partnership (TPP), which until the weekend had formally consisted only of Brunei, Singapore, New Zealand and Chile. The TPP had the vague aim of removing all tariffs between its members by 2020. Australia, Malaysia, Vietnam and Peru announced that they too had been admitted to the group. Japan’s Kan declared “interest” in joining.
US Trade Representative Ron Kirk told Bloomberg: “TTP members aim to create the most forward-leaning, high standard trade agreement ever engaged in.” The Obama administration, he said, would keep its “foot to the pedal” throughout 2011 to finalise the terms of a pact by the time the US hosted the next APEC meeting in Hawaii next year. Kirk declared that the TPP would be the basis for the largest trade agreement entered into by the US since the 1994 NAFTA pact with Canada and Mexico.
The subtext of the APEC talks and final communiqué was the beginning of a free trade agreement on January 1 this year between China and the member-states of the Association of South East Asian Nations (ASEAN). China and six ASEAN countries—Brunei, Singapore, Thailand, Malaysia, Indonesia and the Philippines—have slashed tariffs on roughly 90 percent of trade items to zero. Over the coming years, the remaining ASEAN states—Vietnam, Cambodia, Laos and Burma—will follow suit.
Partly as a result of this free trade pact, two-way trade between China and ASEAN members has grown by more than 50 percent this year. China has also initiated a trade agreement with Taiwan and is moving to finalise one with South Korea. Across the Asia-Pacific, there are some 120 bilateral and regional free trade pacts now operating, few of which include the United States. A web of relations is emerging that places China at the centre of what is expected to emerge as the largest economic region in the world, with China surpassing the US as the world’s largest economy by 2020.
The US agenda spelt out at APEC follows intense diplomatic activity by both Obama and Secretary of State Hillary Clinton to reassert US interests in the Asia-Pacific. Obama’s visits to India, Indonesia, South Korea and Japan, and Clinton’s trips to Vietnam, Cambodia, Malaysia, Papua New Guinea, New Zealand and Australia were aimed at shoring up or forging economic and military alliances against China’s growing influence. (See: “US diplomatic offensive tightens strategic encirclement of China”)
While Hu Jintao signed the final APEC communiqué—which declared mutual support for the concept of a region-wide free trade agreement—he pointedly did not signal any intention to take part in the TPP talks. Few commentators expect anything concrete to come from them. Over recent years, the US has failed to make any progress toward bilateral trade pacts with South Korea, Thailand and Malaysia. In a significant blow to Obama, his attempts to renew talks with South Korea collapsed during the G20 summit.
Moreover, the Obama administration is increasingly advocating protectionist measures against its more competitive rivals. In the process, the US is provoking widespread opposition. At the G20 summit, numbers of countries condemned the US policy of pushing down the value of the dollar though “quantitative easing”—or massive bond purchases by the US Treasury.
The depth of international tensions was revealed at the G20 summit when the US received only scant support for its demand that China revalue its currency. Germany and Japan instead joined with China to oppose a proposal by US Treasury Secretary Timothy Geithner that countries limit their current account surpluses or deficits to 4 percent of gross domestic product.
The Chinese regime, on behalf of the emergent Chinese capitalist elite, is not responding passively to the US attempt to force it to pay for the crisis and decline of American capitalism. It is seeking to strengthen its existing trade and strategic partnerships that exclude the US. Even as APEC was meeting, the Chinese transport minister was finalising an agreement with ASEAN member-states in Brunei on opening up greater access to each other’s airports, ports and sea-lanes.
Talks also began yesterday in the Chinese city of Wuhan between the foreign ministers of China, Russia and India. A Russian foreign ministry spokesman told journalists that the talks would focus on “issues of forming a new, better security and cooperation architecture for the Asia-Pacific Region” and the role of the three countries “within the network of multilateral regional associations”. China is matching US overtures to India by urging New Delhi to play a greater role in the Shanghai Cooperation Organisation and stressing its interest in an eventual free trade agreement.
During the APEC meeting, China even made efforts to calm relations with Japan, with which Beijing is engaged in a bitter territorial dispute over islands in the East China Sea. Hu and Kan held brief talks, as did the two countries’ trade ministers. According to Japanese trade minister Akihiro Ohata, China gave an undertaking to step up its exports to Japan of rare earths—critical raw materials for high tech industries. Japan had accused China of slashing rare earth exports in retaliation for the island clashes.
A strategic battle has emerged in the Asia-Pacific for market share, profit and geo-political dominance, centring on the struggle between the US and China. The repeated failure of international talks, such as the G20 and APEC, to establish any new framework to regulate relations stems from the conflicting interests of rival capitalist cliques and the governments that serve them. What is developing is the prospect of antagonistic trade blocs and outright protectionism.
By James Cogan
15 November 2010
Two days of talks in Yokohama, Japan by the leaders of the 21-member Asia-Pacific Economic Cooperation (APEC) ended yesterday with a clear divergence between the United States and China over the future of regional trade. Following the failure of last week’s G20 summit to resolve festering currency disputes, the APEC meeting further underscored the drift toward a breakdown of relations between the major powers in the Asia Pacific region.
The Obama administration, backed by the Japanese government of Prime Minister Naoto Kan, pushed over the weekend for APEC to commit to the establishment of a Free Trade Area of the Asia-Pacific (FTAAP). The perspective of a FTAAP, which would include the US and attempt to supplant various bilateral pacts operating in the region, is intimately bound up with Obama’s perspective of doubling US exports in five years. Such a transformation could be achieved only by American-based corporations seizing the markets of rivals the world over, and particularly from Chinese companies.
As he had at the G20 summit, Obama used the APEC meeting to attack China and other major exporting countries over their trade surpluses with the US. Addressing a business forum on Saturday, Obama declared: “One of the important lessons the economic crisis taught us is the limits of depending primarily on American consumers and Asian exports to drive economic growth. Going forward, no nation should assume that their path to prosperity is simply paved with exports to America.”
Obama’s repeated demands that countries reduce their trade imbalances with the US contain the implicit threat of trade sanctions if they fail to take measures to raise the value of their currencies and open their markets to American companies. US National Security Advisor Thomas Donilon announced to reporters that Obama had told Chinese President Hu Jintao that the US expected China to lift the value of its currency, the yuan, before a scheduled meeting between the two leaders next January.
To pursue an agenda of expanding US trade in the Asia-Pacific, Obama announced at APEC that the US had joined the little-known Trans Pacific Partnership (TPP), which until the weekend had formally consisted only of Brunei, Singapore, New Zealand and Chile. The TPP had the vague aim of removing all tariffs between its members by 2020. Australia, Malaysia, Vietnam and Peru announced that they too had been admitted to the group. Japan’s Kan declared “interest” in joining.
US Trade Representative Ron Kirk told Bloomberg: “TTP members aim to create the most forward-leaning, high standard trade agreement ever engaged in.” The Obama administration, he said, would keep its “foot to the pedal” throughout 2011 to finalise the terms of a pact by the time the US hosted the next APEC meeting in Hawaii next year. Kirk declared that the TPP would be the basis for the largest trade agreement entered into by the US since the 1994 NAFTA pact with Canada and Mexico.
The subtext of the APEC talks and final communiqué was the beginning of a free trade agreement on January 1 this year between China and the member-states of the Association of South East Asian Nations (ASEAN). China and six ASEAN countries—Brunei, Singapore, Thailand, Malaysia, Indonesia and the Philippines—have slashed tariffs on roughly 90 percent of trade items to zero. Over the coming years, the remaining ASEAN states—Vietnam, Cambodia, Laos and Burma—will follow suit.
Partly as a result of this free trade pact, two-way trade between China and ASEAN members has grown by more than 50 percent this year. China has also initiated a trade agreement with Taiwan and is moving to finalise one with South Korea. Across the Asia-Pacific, there are some 120 bilateral and regional free trade pacts now operating, few of which include the United States. A web of relations is emerging that places China at the centre of what is expected to emerge as the largest economic region in the world, with China surpassing the US as the world’s largest economy by 2020.
The US agenda spelt out at APEC follows intense diplomatic activity by both Obama and Secretary of State Hillary Clinton to reassert US interests in the Asia-Pacific. Obama’s visits to India, Indonesia, South Korea and Japan, and Clinton’s trips to Vietnam, Cambodia, Malaysia, Papua New Guinea, New Zealand and Australia were aimed at shoring up or forging economic and military alliances against China’s growing influence. (See: “US diplomatic offensive tightens strategic encirclement of China”)
While Hu Jintao signed the final APEC communiqué—which declared mutual support for the concept of a region-wide free trade agreement—he pointedly did not signal any intention to take part in the TPP talks. Few commentators expect anything concrete to come from them. Over recent years, the US has failed to make any progress toward bilateral trade pacts with South Korea, Thailand and Malaysia. In a significant blow to Obama, his attempts to renew talks with South Korea collapsed during the G20 summit.
Moreover, the Obama administration is increasingly advocating protectionist measures against its more competitive rivals. In the process, the US is provoking widespread opposition. At the G20 summit, numbers of countries condemned the US policy of pushing down the value of the dollar though “quantitative easing”—or massive bond purchases by the US Treasury.
The depth of international tensions was revealed at the G20 summit when the US received only scant support for its demand that China revalue its currency. Germany and Japan instead joined with China to oppose a proposal by US Treasury Secretary Timothy Geithner that countries limit their current account surpluses or deficits to 4 percent of gross domestic product.
The Chinese regime, on behalf of the emergent Chinese capitalist elite, is not responding passively to the US attempt to force it to pay for the crisis and decline of American capitalism. It is seeking to strengthen its existing trade and strategic partnerships that exclude the US. Even as APEC was meeting, the Chinese transport minister was finalising an agreement with ASEAN member-states in Brunei on opening up greater access to each other’s airports, ports and sea-lanes.
Talks also began yesterday in the Chinese city of Wuhan between the foreign ministers of China, Russia and India. A Russian foreign ministry spokesman told journalists that the talks would focus on “issues of forming a new, better security and cooperation architecture for the Asia-Pacific Region” and the role of the three countries “within the network of multilateral regional associations”. China is matching US overtures to India by urging New Delhi to play a greater role in the Shanghai Cooperation Organisation and stressing its interest in an eventual free trade agreement.
During the APEC meeting, China even made efforts to calm relations with Japan, with which Beijing is engaged in a bitter territorial dispute over islands in the East China Sea. Hu and Kan held brief talks, as did the two countries’ trade ministers. According to Japanese trade minister Akihiro Ohata, China gave an undertaking to step up its exports to Japan of rare earths—critical raw materials for high tech industries. Japan had accused China of slashing rare earth exports in retaliation for the island clashes.
A strategic battle has emerged in the Asia-Pacific for market share, profit and geo-political dominance, centring on the struggle between the US and China. The repeated failure of international talks, such as the G20 and APEC, to establish any new framework to regulate relations stems from the conflicting interests of rival capitalist cliques and the governments that serve them. What is developing is the prospect of antagonistic trade blocs and outright protectionism.
Friday, October 1, 2010
Cambodia's Small Debt: When Will the U.S. Forgive?
Joe Yun
Deputy Assistant Secretary, Bureau of East Asian and Pacific Affairs
Statement before the Subcommittee on Asia, the Pacific, and the Global Environment House Foreign Affairs Committee
Washington, DC
September 30, 2010
Source: http://www.state.gov/p/eap/rls/rm/2010/09/148427.htm
Mr. Chairman, Ranking Member Manzullo, and Members of the Subcommittee, thank you for inviting me here today to testify about the growing U.S.- Cambodia bilateral relationship and, in particular, Cambodia’s outstanding bilateral debt to the United States.
Cambodia in Context
Given the many challenges that Cambodia faced as recent as a decade ago, the country has come a long way in recent years. It is enjoying increasing political stability and is slowly recovering from 30 years of war, including the atrocities of the Khmer Rouge era. Cambodia’s economy was the seventh fastest growing economy in the world over the past decade. While Cambodia experienced a recession in 2009, current predictions call for a return to strong growth in 2010 and 2011.
There has been meaningful progress on political and social issues as well. National elections in July 2008—while falling short of international standards on several counts—were peaceful and allowed the Cambodian people to express their preferences in an open and fair manner. The Cambodian government allowed significantly greater freedom to the political opposition during the 2008 elections than in previous elections and showed some willingness to engage on civil liberties and human rights issues. The government recently passed anti-corruption legislation and revised its massive penal code—significant steps in Cambodia’s fight against corruption. Cambodia has also made commendable progress in combating human trafficking, increasing prosecutions and convictions of traffickers, and launching a new National Committee to combat human trafficking, as well as establishing new national minimum standards on victim protection. According to an August 2009 public opinion poll, 79 percent of the Cambodian population believes that the country is headed in the right direction.
In regional and global arenas, Cambodia has sought a larger role in recent years, as illustrated by its participation in international peacekeeping efforts, its involvement in the Lower Mekong Initiative in partnership with the United States, and its campaign for a rotating seat on the UN Security Council. Cambodia’s main foreign policy challenge is, not surprisingly, managing relations with its larger neighbors. Cambodia-Thailand relations have been strained since 2008, in part related to border disputes, but bilateral dialogue has begun to diminish that tension. Relations with Vietnam are good, but final resolution of an ongoing Cambodia-Vietnam border demarcation process remains elusive. China is an increasingly important provider of assistance and foreign investment in recent years, a fact that encourages Cambodia to keep relations with China on a positive footing.
Despite a generally positive trend on most of Cambodia’s domestic matters, several economic and political issues continue to cause significant concern among local populations as well as the international community. Most Cambodians remain poor, with endemic corruption and impunity limiting efforts to improve their standard of living. Political expression is stifled, including by employing criminal defamation and disinformation laws to intimidate and prosecute politicians and journalists. The judiciary remains weak, politicized, and overwhelmed. Arbitrary arrests and extrajudicial killings remain a problem. Land disputes and forced evictions, sometimes accompanied by violence, persist. HIV/AIDS and maternal mortality as well as persistent gender based violence stand as critical areas for continued improvement. All of these issues must be successfully and fully addressed for Cambodia to achieve its full democratic and economic potential.
U.S.-Cambodia Bilateral Relations
U.S.-Cambodian relations have continued to improve over the past few years. The tempo of interaction has quickened, and there has been both a broadening and deepening of positive engagement in a number of key areas. We benefit from Cambodia’s cooperation on law enforcement issues, human trafficking, counterterrorism, demining, and efforts to account fully for Americans missing from the Indochina conflict. Our security cooperation with Cambodia is maturing, allowing us to focus even more on such areas as defense reform and professionalization, regional cooperation, international peacekeeping, border and maritime security, counterterrorism, and civil-military operations. The Global Peace Operations Initiative “Angkor Sentinel” exercise in 2010 was a milestone in our growing military-to-military cooperation and exemplifies Cambodia’s commitment to international peace and stability. With United States encouragement and support, Cambodia has taken increasingly responsible positions on the world stage, including sending de-mining teams to participate in UN missions to the Central African Republic, Chad, and the Sudan.
We have actively supported the Khmer Rouge Tribunal’s efforts to bring perpetrators of that era’s atrocities to justice, and commended the tribunal’s handling of the Kaing Guek Eav, aka “Duch,” case. We paid close attention to previous allegations of mismanagement and corruption within the court administration, and successfully pushed for the appointment of an Independent Counselor function in August, 2009. Since then, the Independent Counselor has developed as a credible oversight and preventive mechanism. We and other donors are satisfied with its work. On March 31 of this year, Ambassador-at-Large for War Crimes Stephen J. Rapp announced a U.S. contribution of $5 million in FY2010 Economic Support Funds to the court, and we will seek ways to continue our support. Former Ambassador-at-Large for War Crimes Clint Williamson was recently appointed by the UN as Special Expert to the court in order to provide legal and administrative expertise as it continues its work.
Unfortunately, Cambodia’s December 2009 forced removal to China of 20 Uighur asylum seekers, in contravention of its international obligations and long-standing cooperation with the UN High Commissioner for Refugees, has complicated our efforts to further deepen the bilateral relationship. We have called on the government publicly and privately to uphold its international obligations to asylum seekers and refugees in the future, and seek assurances that cooperation on these issues in the future will be the norm.
We also continue to push the Cambodian government on human rights and rule of law. We have targeted our foreign assistance to support programs that strengthen civil society’s ability to address legal and judicial reform, land rights, anti-corruption, the rights of women and children, prevention of human trafficking, and improving the quality of and access to education. We have also supported reform-minded institutions and individuals, sought to build capacity of public and private institutions, and encouraged expanded political participation by youth and women in elections and political processes. Our foreign assistance is also directed at a broad array of other important issues, including HIV/AIDS, maternal health, demining, professionalization of the military, and promoting economic development. Cambodia’s identification as a “focus country” under the Administration’s “Feed the Future” Initiative allows us to consider ways to expand our assistance into agriculture, food security, and resilience to climate change. The Peace Corps has been active in Cambodia since 2007 and is so popular that the Deputy Prime Minister spoke at the swearing-in ceremony of the most recent group of volunteers. In all, we are aiding Cambodia’s development in FY2010 with more than $72 million, which makes it the fourth largest recipient of Department of State and USAID assistance in the East Asia and Pacific region.
Economy and Trade with the United States:
In 2004 Cambodia joined the World Trade Organization. Between 2004 and 2008, Cambodia was the seventh fastest-growing economy in the world. This rapid development was driven largely by expansion in the garment, tourism, and construction sectors. The global economic crisis had a particularly painful impact on Cambodian economic growth. Because of a slowdown in external demand and foreign investment, Cambodia’s growth dropped from 10.2 percent in 2007 to negative 2.5 percent in 2009. However, there is a positive sign for recovery: International Monetary Fund (IMF) growth predictions for the Cambodian economy currently range from 4 to 7 percent in 2010 and 2011.
The United States has been Cambodia’s top trading partner since 1998, with exports to the United States accounting for approximately 17 percent of Cambodia’s GDP last year. Garments dominate Cambodia’s exports—especially to the United States—and accounted for over $2.6 billion, or 70 percent, of the country’s overall exports between 2007 and 2009. The garment industry employs roughly 350,000 workers, mostly women. Cambodia has developed a relatively good labor record in the garment sector, built through close cooperation with the International Labor Organization and the United States under the Better Work Program. Since the expiration of the World Trade Organization’s (WTO) Multi-Fiber Agreement in 2004, Cambodian garment exports have grown by nearly 20 percent, due in part to safeguards placed on imports of certain apparel from China permitted under China’s WTO accession agreement. These safeguards expired at the end of 2008. Due in large part to poor external demand, merchandise exports contracted by 8.6 percent in 2009, the first annual contraction since the mid-1990s. The Cambodian government, the garment industry, and labor unions are strong supporters of legislation that would allow duty-free access for garments from Cambodia and other less developed countries.
Cambodia’s liberal investment regime has led to increased investment from Asian countries, particularly South Korea and China. American investors have lagged behind this trend, but a U.S. commercial presence is starting to expand rapidly. A weak business environment, poor infrastructure, inadequate enforcement of labor laws, and the highest energy costs in the region pose significant challenges to private sector-led growth. The government needs a more comprehensive, coordinated response to improve the competitiveness of Cambodia’s economy. Moreover, irregular adherence to rule of law, endemic corruption, an incomplete regulatory framework, and underdeveloped human resources prevent Cambodia from becoming more economically competitive and hinder its full development potential. For all its growth over the past decade, Cambodia remains one of the poorest countries in Asia, relying on close to $1 billion per year in foreign assistance.
Under the United States-Cambodia Trade and Investment Framework Agreement (TIFA) and the Economic Growth Bilateral Assistance Agreement, the United States is seeking to deepen and expand bilateral trade and investment ties. We support Cambodia’s efforts to implement its WTO commitments and other domestic economic reforms, and seek ways to assist Cambodian authorities in areas such as Intellectual Property Rights enforcement, transparency, anti-corruption, and effectiveness of the banking and financial sectors.
U.S. Policy on Restructuring Official Foreign Debts
Debt relief can be an important means of achieving U.S. goals of promoting economic growth, well-functioning financial markets, and economic reform abroad. Longstanding United States policy is to coordinate sovereign debt restructuring internationally, primarily through the Paris Club group of official creditors. This multilateral approach is a good value for the U.S. taxpayer because it increases recoveries from countries that are not paying their debts to the United States while maximizing benefits of debt relief for heavily-indebted, low-income countries that are unable to meet their payment obligations.
The United States provides debt cancellation only in limited circumstances, the majority of which are through the Enhanced Heavily Indebted Poor Countries (HIPC) Initiative. This approach provides U.S. resources to pay for the budgetary cost of debt relief for countries that are facing an unsustainable debt burden. To be eligible, HIPC countries must face a debt-to-export ratio greater than 150 percent and a debt-to-revenue ratio above 250 percent, among other factors. In the first stage, debtor countries commit to implementing economic reforms aimed at reducing poverty and avoiding a new build-up of unsustainable debt. Upon successful completion of the first stage, the United States and other Paris Club members jointly evaluate requests for debt cancellation and then reach individual implementation agreements with the debtor country. Throughout the process, State and Treasury officials rely heavily on International Monetary Fund (IMF) and World Bank assessments of a debtor country’s financial need for debt relief and willingness to undertake reforms. Congress has reinforced this need-based approach to debt relief by enacting statutes such as the Special Debt for the Poorest authorization (enacted this year as Section 7033 of Division F, Department of State, Foreign Operations and Related Program, of the Consolidated Appropriations Act, 2010, P.L. 111-117) and the Enhanced Heavily Indebted Poor Countries Initiative (Title V of Appendix E of H.R. 3425, as enacted into law by Section 1000(a)(5) of P.L. 106-113, as amended). These statutes authorize the Executive Branch, under specific circumstances and criteria, to reduce sovereign debts.
Cambodia’s External Debt
Cambodia’s public debt is almost entirely external. In 2009, Cambodia’s debt outstanding to foreign creditors was nearly $3.2 billion, over one-quarter of which is owed to the United States and Russia. At the end of 2008, Cambodia’s external public debt was 25 percent of its GDP. According to the most recent assessment by the IMF, Cambodia is at a moderate risk of debt distress, with rising contingent liabilities warranting increased vigilance. IMF data indicate that in 2008, Cambodia’s debt-to-exports ratio was 37 percent and its debt-to-government revenues ratio was 167 percent (net present value terms). Cambodia, therefore, does not qualify for HIPC status. In 2005, HIPC was supplemented by the Multilateral Debt Relief Initiative (MDRI), under which the IMF and the World Bank grant full debt forgiveness to any country that has completed its HIPC program. Cambodia, however, was granted an exception to the usual eligibility criteria for MDRI and benefited from $82 million in IMF debt relief in January 2006.
Cambodia’s Debt to the United States
Cambodia’s bilateral debt to the U.S. government remains an irritant to the relationship. A satisfactory resolution of Cambodia’s debt would accelerate the development of an already improving bilateral relationship and enhance Cambodia’s own economic development by improving its creditworthiness and access to international capital markets.
Cambodia’s debt stems from shipments of U.S. agricultural commodities, such as cotton, rice, and wheat flour, financed with low interest-rate loans by the U.S. Department of Agriculture (USDA) under Title I of the Agricultural Trade Development and Assistance Act of 1954, or P.L. 480 (now entitled the Food for Peace Act). The United States and Cambodia signed three P.L. 480 Title I agreements in 1972, 1973, and 1974, during the Vietnam War and Cambodia’s turbulent Lon Nol era. The United States accepted significant payments in local currency under a “Currency Use Payment” provision commonly included in such agreements; the remainder of the debt was to be paid in dollars. The Lon Nol regime never consolidated its hold on the country and in 1975 Cambodia fell to the Khmer Rouge, which ceased servicing this debt. Arrears and late interest have accumulated since that time. By the end of 2009, Cambodia’s total debt to the United States totaled approximately $445 million. About $405 million of that amount is in arrears and would be due immediately upon the implementation of any agreement to pay the debt.
In 1995, the Paris Club group of creditor nations and Cambodia reached an agreement to restructure Cambodia’s debt on Naples terms – then the most generous treatment in the Paris Club’s “toolkit.” At the time, the United States was by far Cambodia’s largest Paris Club creditor. Cambodia benefited from a 67 percent reduction of certain non-concessional debts and a long-term rescheduling of certain concessional debts. Since all of Cambodia’s debt to the United States was contracted on concessional terms at below-market interest rates, the Paris Club agreement called on the United States to consolidate arrears and future payments scheduled between January 1, 1995 and June 30, 1997 into a new loan payable over 40 years following a 16-year grace period. Debt service falling due on or after July 1, 1997 was to be paid according to the original schedule. Cambodia eventually signed debt agreements with France, Germany, Italy, and Japan to implement the 1995 Paris Club agreement and began paying those countries accordingly. The United States and Cambodia never concluded a bilateral implementing agreement, in part because the Cambodian government refused to accept responsibility for debts incurred by the Lon Nol regime and also because of a disagreement at the time over the amount of debt owed.
After several years of deadlock, debt negotiations resumed over the 2001-2005 period, with the active involvement of the U.S. Departments of State, Treasury, and Agriculture, and U.S. Embassy in Phnom Penh. After carefully examining the available legal authorities, the U.S. negotiating team's offer to the Cambodian government showed significant flexibility on the amount of debt owed, offering concessions of nearly $100 million from USDA.
In February 2006, the Cambodian Minister of Finance indicated that Cambodia agreed with the United States, in principle, that the amount of principal it owed was $162 million. He also agreed to move forward in drafting a Bilateral Agreement implementing the 1995 Paris Club Agreed Minute. Based on this understanding, the United States drafted a bilateral agreement that retroactively implemented the 1995 Paris Club agreement, including USDA’s concessions, and presented it to the Cambodian government in the summer of 2006. The proposed U.S.-Cambodia bilateral debt agreement would reschedule the consolidated P.L. 480 debt at the original interest rate of 3 percent – a highly-concessional rate given the interest rate environment of the early 1970s.
To date, the Cambodian government has been unwilling to sign the draft bilateral agreement and now seeks additional concessions. Specifically, it seeks a lower interest rate and/or a debt swap arrangement. Longstanding U.S. debt policy, in keeping with Paris Club principles and U.S. budget rules, is to retain the same interest rate of the original loans in any rescheduling of those loans. Offering a lower interest rate would be an unauthorized form of debt reduction.
Cambodian officials have also indicated that domestic political obstacles still make the government reluctant to accept responsibility for debts incurred by the Lon Nol regime. Although some Cambodian observers may argue that this debt is illegitimate, the United States has on its side the international law principle that governments are generally responsible for the obligations of their predecessors. The government of Iraq accepted the debts incurred by Saddam Hussein. The civilian government of Nigeria accepted responsibility for debts accumulated by military governments that ruled the country in the 1980s and 1990s. Similarly, Afghanistan accepted the heavy debt burden left by decades of foreign occupation and civil war. There are many other examples.
Senior U.S. government officials have repeatedly encouraged Cambodia to live up to the 1995 Paris Club agreement it signed with the United States and other creditors, and urged it to sign the pending U.S.-Cambodia bilateral agreement without further delay. However, Cambodia may be reluctant to accept the current proposal to settle the bilateral debt issue if it believes there are good prospects of converting a significant amount of the debt service it would otherwise pay to the United States into a form of increased U.S. assistance.
In past years Cambodia has expressed interest in a debt-for-assistance swap. The only general debt swap program that the United States currently offers is through the Tropical Forest Conservation Act, for which Cambodia is not eligible because of its arrears. Cambodia, however, has focused on the swap arrangement that the United States established with Vietnam in 2000, and is seeking a similar statutory program. Observers often compare Vietnam and Cambodia for geographic and historical reasons, but several distinctions about the treatment of the debts these countries contracted with the United States are worth highlighting. In 1993, Paris Club creditors provided Vietnam a debt rescheduling on terms similar to Cambodia’s 1995 Paris Club debt agreement. Vietnam signed a bilateral implementing agreement with the United States in 1997, resumed making scheduled payments, and was in good financial standing when Congress created the Vietnam Education Foundation several years later. This program directs about 40 percent of Vietnam’s total debt payments to the Foundation for joint education initiatives. Because Cambodia is not making scheduled payments, such an individualized debt-swap program is not a possibility.
The Administration is concerned that creating a special statutory debt reduction program for a country that is unwilling, rather than unable, to pay its debts sets a poor precedent for other counties in similar circumstances and sends the wrong message about prudent debt management. Cambodia has accumulated arrears to the United States while paying other creditors on time, and in at least one case, early. Every year, both within and outside of the Paris Club context, the United States reviews and declines similar requests for debt-for-assistance swap arrangements from debtor countries that are current on their debt service and may owe billions of dollars of debt.
The Administration has therefore urged the Cambodian government to sign the pending bilateral debt agreement and re-establish a track record of timely repayments under that agreement. We have told the Cambodian government that if it makes scheduled payments for at least one year, the U.S. government would communicate to the IMF that efforts are underway to resolve official arrears. This action could pave the way, should Cambodia then obtain an IMF program and a future Paris Club debt treatment, for a rescheduling of the accumulated arrears. Unfortunately, the Cambodian government has not responded to this overture and continues to accumulate arrears on debts owed to the United States.
Congress has also expressed its view on the importance of maintaining orderly creditor-debtor relations in a number of statutes, including Section 620(q) of the Foreign Assistance Act of 1961 and the Brooke Amendment (enacted this year as Section 7012 of Division F, Department of State, Foreign Operations and related Programs, Consolidated Appropriations Act, 2010, P.L. 111-117). These statutes provide for an automatic cutoff of U.S. economic assistance to a country that is in default on certain loans for certain periods of time. Although Cambodia’s USDA debts are not subject to these default sanctions, these statutes reflect Congress's expectation that countries repay their debts to the United States in a timely manner.
Another concern about funding foreign assistance programs through the principal and interest payments of debtor counties is that it circumvents normal budget rules. Congress passed the Federal Credit Reform Act of 1990 requiring U.S. creditor agencies to make realistic estimates about recoveries when calculating the true cost of lending programs. This approach saves U.S. taxpayers money by creating transparent incentives for agencies to manage credit programs efficiently and effectively. Accordingly, the Administration requests, and Congress annually appropriate, funds to be used to pay the U.S. budget cost of cancelling a country’s debt obligation or providing a debt swap. The Cambodian proposal would circumvent this congressional budget oversight mechanism.
In sum, Cambodia’s prompt agreement to resolve U.S. debt claims by drafting a Bilateral Agreement implementing the 1995 Paris Club Agreed Minute, as Cambodian officials proposed in 2006, would eliminate this long-standing dispute in a scenario of otherwise improving bilateral relations. A Cambodian agreement would also enhance the country’s creditworthiness and its ability to access international capital markets. Other countries following this path have benefited enormously.
Mr. Chairman, I appreciate this opportunity to appear before you today and welcome any questions you may have. Thank you.
Deputy Assistant Secretary, Bureau of East Asian and Pacific Affairs
Statement before the Subcommittee on Asia, the Pacific, and the Global Environment House Foreign Affairs Committee
Washington, DC
September 30, 2010
Source: http://www.state.gov/p/eap/rls/rm/2010/09/148427.htm
Mr. Chairman, Ranking Member Manzullo, and Members of the Subcommittee, thank you for inviting me here today to testify about the growing U.S.- Cambodia bilateral relationship and, in particular, Cambodia’s outstanding bilateral debt to the United States.
Cambodia in Context
Given the many challenges that Cambodia faced as recent as a decade ago, the country has come a long way in recent years. It is enjoying increasing political stability and is slowly recovering from 30 years of war, including the atrocities of the Khmer Rouge era. Cambodia’s economy was the seventh fastest growing economy in the world over the past decade. While Cambodia experienced a recession in 2009, current predictions call for a return to strong growth in 2010 and 2011.
There has been meaningful progress on political and social issues as well. National elections in July 2008—while falling short of international standards on several counts—were peaceful and allowed the Cambodian people to express their preferences in an open and fair manner. The Cambodian government allowed significantly greater freedom to the political opposition during the 2008 elections than in previous elections and showed some willingness to engage on civil liberties and human rights issues. The government recently passed anti-corruption legislation and revised its massive penal code—significant steps in Cambodia’s fight against corruption. Cambodia has also made commendable progress in combating human trafficking, increasing prosecutions and convictions of traffickers, and launching a new National Committee to combat human trafficking, as well as establishing new national minimum standards on victim protection. According to an August 2009 public opinion poll, 79 percent of the Cambodian population believes that the country is headed in the right direction.
In regional and global arenas, Cambodia has sought a larger role in recent years, as illustrated by its participation in international peacekeeping efforts, its involvement in the Lower Mekong Initiative in partnership with the United States, and its campaign for a rotating seat on the UN Security Council. Cambodia’s main foreign policy challenge is, not surprisingly, managing relations with its larger neighbors. Cambodia-Thailand relations have been strained since 2008, in part related to border disputes, but bilateral dialogue has begun to diminish that tension. Relations with Vietnam are good, but final resolution of an ongoing Cambodia-Vietnam border demarcation process remains elusive. China is an increasingly important provider of assistance and foreign investment in recent years, a fact that encourages Cambodia to keep relations with China on a positive footing.
Despite a generally positive trend on most of Cambodia’s domestic matters, several economic and political issues continue to cause significant concern among local populations as well as the international community. Most Cambodians remain poor, with endemic corruption and impunity limiting efforts to improve their standard of living. Political expression is stifled, including by employing criminal defamation and disinformation laws to intimidate and prosecute politicians and journalists. The judiciary remains weak, politicized, and overwhelmed. Arbitrary arrests and extrajudicial killings remain a problem. Land disputes and forced evictions, sometimes accompanied by violence, persist. HIV/AIDS and maternal mortality as well as persistent gender based violence stand as critical areas for continued improvement. All of these issues must be successfully and fully addressed for Cambodia to achieve its full democratic and economic potential.
U.S.-Cambodia Bilateral Relations
U.S.-Cambodian relations have continued to improve over the past few years. The tempo of interaction has quickened, and there has been both a broadening and deepening of positive engagement in a number of key areas. We benefit from Cambodia’s cooperation on law enforcement issues, human trafficking, counterterrorism, demining, and efforts to account fully for Americans missing from the Indochina conflict. Our security cooperation with Cambodia is maturing, allowing us to focus even more on such areas as defense reform and professionalization, regional cooperation, international peacekeeping, border and maritime security, counterterrorism, and civil-military operations. The Global Peace Operations Initiative “Angkor Sentinel” exercise in 2010 was a milestone in our growing military-to-military cooperation and exemplifies Cambodia’s commitment to international peace and stability. With United States encouragement and support, Cambodia has taken increasingly responsible positions on the world stage, including sending de-mining teams to participate in UN missions to the Central African Republic, Chad, and the Sudan.
We have actively supported the Khmer Rouge Tribunal’s efforts to bring perpetrators of that era’s atrocities to justice, and commended the tribunal’s handling of the Kaing Guek Eav, aka “Duch,” case. We paid close attention to previous allegations of mismanagement and corruption within the court administration, and successfully pushed for the appointment of an Independent Counselor function in August, 2009. Since then, the Independent Counselor has developed as a credible oversight and preventive mechanism. We and other donors are satisfied with its work. On March 31 of this year, Ambassador-at-Large for War Crimes Stephen J. Rapp announced a U.S. contribution of $5 million in FY2010 Economic Support Funds to the court, and we will seek ways to continue our support. Former Ambassador-at-Large for War Crimes Clint Williamson was recently appointed by the UN as Special Expert to the court in order to provide legal and administrative expertise as it continues its work.
Unfortunately, Cambodia’s December 2009 forced removal to China of 20 Uighur asylum seekers, in contravention of its international obligations and long-standing cooperation with the UN High Commissioner for Refugees, has complicated our efforts to further deepen the bilateral relationship. We have called on the government publicly and privately to uphold its international obligations to asylum seekers and refugees in the future, and seek assurances that cooperation on these issues in the future will be the norm.
We also continue to push the Cambodian government on human rights and rule of law. We have targeted our foreign assistance to support programs that strengthen civil society’s ability to address legal and judicial reform, land rights, anti-corruption, the rights of women and children, prevention of human trafficking, and improving the quality of and access to education. We have also supported reform-minded institutions and individuals, sought to build capacity of public and private institutions, and encouraged expanded political participation by youth and women in elections and political processes. Our foreign assistance is also directed at a broad array of other important issues, including HIV/AIDS, maternal health, demining, professionalization of the military, and promoting economic development. Cambodia’s identification as a “focus country” under the Administration’s “Feed the Future” Initiative allows us to consider ways to expand our assistance into agriculture, food security, and resilience to climate change. The Peace Corps has been active in Cambodia since 2007 and is so popular that the Deputy Prime Minister spoke at the swearing-in ceremony of the most recent group of volunteers. In all, we are aiding Cambodia’s development in FY2010 with more than $72 million, which makes it the fourth largest recipient of Department of State and USAID assistance in the East Asia and Pacific region.
Economy and Trade with the United States:
In 2004 Cambodia joined the World Trade Organization. Between 2004 and 2008, Cambodia was the seventh fastest-growing economy in the world. This rapid development was driven largely by expansion in the garment, tourism, and construction sectors. The global economic crisis had a particularly painful impact on Cambodian economic growth. Because of a slowdown in external demand and foreign investment, Cambodia’s growth dropped from 10.2 percent in 2007 to negative 2.5 percent in 2009. However, there is a positive sign for recovery: International Monetary Fund (IMF) growth predictions for the Cambodian economy currently range from 4 to 7 percent in 2010 and 2011.
The United States has been Cambodia’s top trading partner since 1998, with exports to the United States accounting for approximately 17 percent of Cambodia’s GDP last year. Garments dominate Cambodia’s exports—especially to the United States—and accounted for over $2.6 billion, or 70 percent, of the country’s overall exports between 2007 and 2009. The garment industry employs roughly 350,000 workers, mostly women. Cambodia has developed a relatively good labor record in the garment sector, built through close cooperation with the International Labor Organization and the United States under the Better Work Program. Since the expiration of the World Trade Organization’s (WTO) Multi-Fiber Agreement in 2004, Cambodian garment exports have grown by nearly 20 percent, due in part to safeguards placed on imports of certain apparel from China permitted under China’s WTO accession agreement. These safeguards expired at the end of 2008. Due in large part to poor external demand, merchandise exports contracted by 8.6 percent in 2009, the first annual contraction since the mid-1990s. The Cambodian government, the garment industry, and labor unions are strong supporters of legislation that would allow duty-free access for garments from Cambodia and other less developed countries.
Cambodia’s liberal investment regime has led to increased investment from Asian countries, particularly South Korea and China. American investors have lagged behind this trend, but a U.S. commercial presence is starting to expand rapidly. A weak business environment, poor infrastructure, inadequate enforcement of labor laws, and the highest energy costs in the region pose significant challenges to private sector-led growth. The government needs a more comprehensive, coordinated response to improve the competitiveness of Cambodia’s economy. Moreover, irregular adherence to rule of law, endemic corruption, an incomplete regulatory framework, and underdeveloped human resources prevent Cambodia from becoming more economically competitive and hinder its full development potential. For all its growth over the past decade, Cambodia remains one of the poorest countries in Asia, relying on close to $1 billion per year in foreign assistance.
Under the United States-Cambodia Trade and Investment Framework Agreement (TIFA) and the Economic Growth Bilateral Assistance Agreement, the United States is seeking to deepen and expand bilateral trade and investment ties. We support Cambodia’s efforts to implement its WTO commitments and other domestic economic reforms, and seek ways to assist Cambodian authorities in areas such as Intellectual Property Rights enforcement, transparency, anti-corruption, and effectiveness of the banking and financial sectors.
U.S. Policy on Restructuring Official Foreign Debts
Debt relief can be an important means of achieving U.S. goals of promoting economic growth, well-functioning financial markets, and economic reform abroad. Longstanding United States policy is to coordinate sovereign debt restructuring internationally, primarily through the Paris Club group of official creditors. This multilateral approach is a good value for the U.S. taxpayer because it increases recoveries from countries that are not paying their debts to the United States while maximizing benefits of debt relief for heavily-indebted, low-income countries that are unable to meet their payment obligations.
The United States provides debt cancellation only in limited circumstances, the majority of which are through the Enhanced Heavily Indebted Poor Countries (HIPC) Initiative. This approach provides U.S. resources to pay for the budgetary cost of debt relief for countries that are facing an unsustainable debt burden. To be eligible, HIPC countries must face a debt-to-export ratio greater than 150 percent and a debt-to-revenue ratio above 250 percent, among other factors. In the first stage, debtor countries commit to implementing economic reforms aimed at reducing poverty and avoiding a new build-up of unsustainable debt. Upon successful completion of the first stage, the United States and other Paris Club members jointly evaluate requests for debt cancellation and then reach individual implementation agreements with the debtor country. Throughout the process, State and Treasury officials rely heavily on International Monetary Fund (IMF) and World Bank assessments of a debtor country’s financial need for debt relief and willingness to undertake reforms. Congress has reinforced this need-based approach to debt relief by enacting statutes such as the Special Debt for the Poorest authorization (enacted this year as Section 7033 of Division F, Department of State, Foreign Operations and Related Program, of the Consolidated Appropriations Act, 2010, P.L. 111-117) and the Enhanced Heavily Indebted Poor Countries Initiative (Title V of Appendix E of H.R. 3425, as enacted into law by Section 1000(a)(5) of P.L. 106-113, as amended). These statutes authorize the Executive Branch, under specific circumstances and criteria, to reduce sovereign debts.
Cambodia’s External Debt
Cambodia’s public debt is almost entirely external. In 2009, Cambodia’s debt outstanding to foreign creditors was nearly $3.2 billion, over one-quarter of which is owed to the United States and Russia. At the end of 2008, Cambodia’s external public debt was 25 percent of its GDP. According to the most recent assessment by the IMF, Cambodia is at a moderate risk of debt distress, with rising contingent liabilities warranting increased vigilance. IMF data indicate that in 2008, Cambodia’s debt-to-exports ratio was 37 percent and its debt-to-government revenues ratio was 167 percent (net present value terms). Cambodia, therefore, does not qualify for HIPC status. In 2005, HIPC was supplemented by the Multilateral Debt Relief Initiative (MDRI), under which the IMF and the World Bank grant full debt forgiveness to any country that has completed its HIPC program. Cambodia, however, was granted an exception to the usual eligibility criteria for MDRI and benefited from $82 million in IMF debt relief in January 2006.
Cambodia’s Debt to the United States
Cambodia’s bilateral debt to the U.S. government remains an irritant to the relationship. A satisfactory resolution of Cambodia’s debt would accelerate the development of an already improving bilateral relationship and enhance Cambodia’s own economic development by improving its creditworthiness and access to international capital markets.
Cambodia’s debt stems from shipments of U.S. agricultural commodities, such as cotton, rice, and wheat flour, financed with low interest-rate loans by the U.S. Department of Agriculture (USDA) under Title I of the Agricultural Trade Development and Assistance Act of 1954, or P.L. 480 (now entitled the Food for Peace Act). The United States and Cambodia signed three P.L. 480 Title I agreements in 1972, 1973, and 1974, during the Vietnam War and Cambodia’s turbulent Lon Nol era. The United States accepted significant payments in local currency under a “Currency Use Payment” provision commonly included in such agreements; the remainder of the debt was to be paid in dollars. The Lon Nol regime never consolidated its hold on the country and in 1975 Cambodia fell to the Khmer Rouge, which ceased servicing this debt. Arrears and late interest have accumulated since that time. By the end of 2009, Cambodia’s total debt to the United States totaled approximately $445 million. About $405 million of that amount is in arrears and would be due immediately upon the implementation of any agreement to pay the debt.
In 1995, the Paris Club group of creditor nations and Cambodia reached an agreement to restructure Cambodia’s debt on Naples terms – then the most generous treatment in the Paris Club’s “toolkit.” At the time, the United States was by far Cambodia’s largest Paris Club creditor. Cambodia benefited from a 67 percent reduction of certain non-concessional debts and a long-term rescheduling of certain concessional debts. Since all of Cambodia’s debt to the United States was contracted on concessional terms at below-market interest rates, the Paris Club agreement called on the United States to consolidate arrears and future payments scheduled between January 1, 1995 and June 30, 1997 into a new loan payable over 40 years following a 16-year grace period. Debt service falling due on or after July 1, 1997 was to be paid according to the original schedule. Cambodia eventually signed debt agreements with France, Germany, Italy, and Japan to implement the 1995 Paris Club agreement and began paying those countries accordingly. The United States and Cambodia never concluded a bilateral implementing agreement, in part because the Cambodian government refused to accept responsibility for debts incurred by the Lon Nol regime and also because of a disagreement at the time over the amount of debt owed.
After several years of deadlock, debt negotiations resumed over the 2001-2005 period, with the active involvement of the U.S. Departments of State, Treasury, and Agriculture, and U.S. Embassy in Phnom Penh. After carefully examining the available legal authorities, the U.S. negotiating team's offer to the Cambodian government showed significant flexibility on the amount of debt owed, offering concessions of nearly $100 million from USDA.
In February 2006, the Cambodian Minister of Finance indicated that Cambodia agreed with the United States, in principle, that the amount of principal it owed was $162 million. He also agreed to move forward in drafting a Bilateral Agreement implementing the 1995 Paris Club Agreed Minute. Based on this understanding, the United States drafted a bilateral agreement that retroactively implemented the 1995 Paris Club agreement, including USDA’s concessions, and presented it to the Cambodian government in the summer of 2006. The proposed U.S.-Cambodia bilateral debt agreement would reschedule the consolidated P.L. 480 debt at the original interest rate of 3 percent – a highly-concessional rate given the interest rate environment of the early 1970s.
To date, the Cambodian government has been unwilling to sign the draft bilateral agreement and now seeks additional concessions. Specifically, it seeks a lower interest rate and/or a debt swap arrangement. Longstanding U.S. debt policy, in keeping with Paris Club principles and U.S. budget rules, is to retain the same interest rate of the original loans in any rescheduling of those loans. Offering a lower interest rate would be an unauthorized form of debt reduction.
Cambodian officials have also indicated that domestic political obstacles still make the government reluctant to accept responsibility for debts incurred by the Lon Nol regime. Although some Cambodian observers may argue that this debt is illegitimate, the United States has on its side the international law principle that governments are generally responsible for the obligations of their predecessors. The government of Iraq accepted the debts incurred by Saddam Hussein. The civilian government of Nigeria accepted responsibility for debts accumulated by military governments that ruled the country in the 1980s and 1990s. Similarly, Afghanistan accepted the heavy debt burden left by decades of foreign occupation and civil war. There are many other examples.
Senior U.S. government officials have repeatedly encouraged Cambodia to live up to the 1995 Paris Club agreement it signed with the United States and other creditors, and urged it to sign the pending U.S.-Cambodia bilateral agreement without further delay. However, Cambodia may be reluctant to accept the current proposal to settle the bilateral debt issue if it believes there are good prospects of converting a significant amount of the debt service it would otherwise pay to the United States into a form of increased U.S. assistance.
In past years Cambodia has expressed interest in a debt-for-assistance swap. The only general debt swap program that the United States currently offers is through the Tropical Forest Conservation Act, for which Cambodia is not eligible because of its arrears. Cambodia, however, has focused on the swap arrangement that the United States established with Vietnam in 2000, and is seeking a similar statutory program. Observers often compare Vietnam and Cambodia for geographic and historical reasons, but several distinctions about the treatment of the debts these countries contracted with the United States are worth highlighting. In 1993, Paris Club creditors provided Vietnam a debt rescheduling on terms similar to Cambodia’s 1995 Paris Club debt agreement. Vietnam signed a bilateral implementing agreement with the United States in 1997, resumed making scheduled payments, and was in good financial standing when Congress created the Vietnam Education Foundation several years later. This program directs about 40 percent of Vietnam’s total debt payments to the Foundation for joint education initiatives. Because Cambodia is not making scheduled payments, such an individualized debt-swap program is not a possibility.
The Administration is concerned that creating a special statutory debt reduction program for a country that is unwilling, rather than unable, to pay its debts sets a poor precedent for other counties in similar circumstances and sends the wrong message about prudent debt management. Cambodia has accumulated arrears to the United States while paying other creditors on time, and in at least one case, early. Every year, both within and outside of the Paris Club context, the United States reviews and declines similar requests for debt-for-assistance swap arrangements from debtor countries that are current on their debt service and may owe billions of dollars of debt.
The Administration has therefore urged the Cambodian government to sign the pending bilateral debt agreement and re-establish a track record of timely repayments under that agreement. We have told the Cambodian government that if it makes scheduled payments for at least one year, the U.S. government would communicate to the IMF that efforts are underway to resolve official arrears. This action could pave the way, should Cambodia then obtain an IMF program and a future Paris Club debt treatment, for a rescheduling of the accumulated arrears. Unfortunately, the Cambodian government has not responded to this overture and continues to accumulate arrears on debts owed to the United States.
Congress has also expressed its view on the importance of maintaining orderly creditor-debtor relations in a number of statutes, including Section 620(q) of the Foreign Assistance Act of 1961 and the Brooke Amendment (enacted this year as Section 7012 of Division F, Department of State, Foreign Operations and related Programs, Consolidated Appropriations Act, 2010, P.L. 111-117). These statutes provide for an automatic cutoff of U.S. economic assistance to a country that is in default on certain loans for certain periods of time. Although Cambodia’s USDA debts are not subject to these default sanctions, these statutes reflect Congress's expectation that countries repay their debts to the United States in a timely manner.
Another concern about funding foreign assistance programs through the principal and interest payments of debtor counties is that it circumvents normal budget rules. Congress passed the Federal Credit Reform Act of 1990 requiring U.S. creditor agencies to make realistic estimates about recoveries when calculating the true cost of lending programs. This approach saves U.S. taxpayers money by creating transparent incentives for agencies to manage credit programs efficiently and effectively. Accordingly, the Administration requests, and Congress annually appropriate, funds to be used to pay the U.S. budget cost of cancelling a country’s debt obligation or providing a debt swap. The Cambodian proposal would circumvent this congressional budget oversight mechanism.
In sum, Cambodia’s prompt agreement to resolve U.S. debt claims by drafting a Bilateral Agreement implementing the 1995 Paris Club Agreed Minute, as Cambodian officials proposed in 2006, would eliminate this long-standing dispute in a scenario of otherwise improving bilateral relations. A Cambodian agreement would also enhance the country’s creditworthiness and its ability to access international capital markets. Other countries following this path have benefited enormously.
Mr. Chairman, I appreciate this opportunity to appear before you today and welcome any questions you may have. Thank you.
Thursday, September 30, 2010
What do we mean when we talk about an emerging middle class?
The Phnom Penh Post
Thursday, 30 September 2010 15:01 Michael Hansen
Dear Editor,
Noeleen Heyzer’s article about the Millennium Development Goals (“People key to MDG success”, September 23)was thought-provoking, but to assert that every country needs a new middle class surely needs some qualification.
In all states of the developed world, and in many of the developing world too, there are a considerable number families with prosperity rooted in entrepreneurship, the professions or the management of public and private organisations.
The fruits of their affluence are generally invested in property, improved healthcare, educational provision, leisure pursuits and pension funds.
However, I am not sure if these are the people Ms Heyzer refers to when she writes about the “new middle class” in Asia.
Last year, The Economist, the influential London-based magazine, promulgated the idea that the term middle class could be applied to a growing number of people taking the first steps out of poverty and able to spend about a third of their income in a discretionary way.
This definition may be the one that Ms Heyzer was using when writing about the new middle class. We might look at this idea in the context of the present dispute in the garment industry.
I would say, by any standard applied in the West, that most workers in the garment industry are poor.
Let us imagine the demand for US$93 a month, an increase of about a third in the agreed basic wage, is granted. Given the present minimum rate is set at virtually subsistence level, would this increase really project many thousands of workers into a middle class? I don’t think so.
The garment workers would still be relatively poor and accumulating the wealth, qualifications and property of most Western middle-class people, or even those of a similar status in Cambodia, would not be something they could reasonably achieve in a whole lifetime of work. Most are unlikely to become globally connected either, or internet savvy.
It would, perhaps, be better if organisations involved in trying to achieve the MDGs were more precise in their definition of what middle class actually means when they use it and make this clear in their published documents.
To use the term middle class as defined by The Economist may lead those unaware of the nuances of the terminology to assume greater positive changes are under way than is actually the case.
The growth of regional “traditional” middle classes will not necessarily expedite achievement of the MDGs.
History seems to show that an emerging middle class does not always have great sympathy with those lower down the social hierarchy.
In early 19th century Britain, for example, a new middle class, using wealth created by the British industrial revolution, began to flex its political muscle as it steadily increased its purchasing power and accumulated property.
Throughout the 1820s, agitation grew for a fairer electoral system that resulted in the Reform Act of 1832. Immediately afterwards, however, middle-class pressure for further change virtually evaporated. Working-class movements, like the Chartists of the Hungry Forties were not successful in extending the franchise, which only came slowly, later in the century.
The great danger of the way things are developing in Asia is that the middle classes cast in a traditional mould will see themselves increasingly set apart from those not so fortunate. They will be quite happy to benefit from, but largely indifferent to, a large and growing pool of inexpensive labour, and when pressure for fair treatment grows they will tend to support strong government against organisations, such as trade unions, perceived as a threat to the status quo.
In this sense the term middle class may become rather misleading in another way, as it assumes a three-class system when there are, in effect, only two: the haves and have-nots. Isn’t this part of the problem in Thailand?
It is fair to say that a growth in consumer demand from the traditional middle class might increase job opportunities, but it is also true that an increasing desire for expensive imports may lead to a flight of capital and the worsening of a trade balance.
Large new property developments may add a modern patina to the suburbs of an established city, but if constructed on land taken from rightful owners by nefarious means and built by cheap labour with little regard to the personal safety of workers who lack any kind of job security, is it likely this situation will contribute to real social progress, which after all is what the MDGs are all about?
What every country actually needs is a traditional middle class in which both the entrepreneurial spirit and a sense of public service is fostered and properly paid for. However, it is important that consciousness of privilege is cultivated too, and this should manifest itself in a willingness to support opportunities for the sons and daughters of those lower down the economic ladder.
Education is the key to progress in this respect, with well-funded scholarships for the brightest children from poor families.
When these young people, boys and girls, seek to enter the job market, they may need to be supported in order to feel their background is no barrier to interview success.
One way to help in this, in the Cambodian context, is for nongovernment organisations working in the development field to review the wording of their job advertisements in the English language press, ensuring that members of the lowest socio-economic groups are always encouraged to apply.
A poor boy from a village in Stung Treng or a girl who knew the dismal conditions at Stung Meanchey may well have struggled long and hard to get to the position from which they could make an application, but be nervous about doing so.
In my view, purely because of their class background, they are worthy of specific encouragement. The stairway leading upwards to the traditional middle class needs to be well-constructed, well-maintained and always in place.
Michael Hansen
Phnom Penh
Send letters to: newsroom@phnompenhpost.comThis e-mail address is being protected from spambots. You need JavaScript enabled to view it or PO?Box 146, Phnom Penh, Cambodia. The Post reserves the right to edit letters to a shorter length. The views expressed above are solely the authors’ and do not reflect any positions taken by The Phnom Penh Post.
Thursday, 30 September 2010 15:01 Michael Hansen
Dear Editor,
Noeleen Heyzer’s article about the Millennium Development Goals (“People key to MDG success”, September 23)was thought-provoking, but to assert that every country needs a new middle class surely needs some qualification.
In all states of the developed world, and in many of the developing world too, there are a considerable number families with prosperity rooted in entrepreneurship, the professions or the management of public and private organisations.
The fruits of their affluence are generally invested in property, improved healthcare, educational provision, leisure pursuits and pension funds.
However, I am not sure if these are the people Ms Heyzer refers to when she writes about the “new middle class” in Asia.
Last year, The Economist, the influential London-based magazine, promulgated the idea that the term middle class could be applied to a growing number of people taking the first steps out of poverty and able to spend about a third of their income in a discretionary way.
This definition may be the one that Ms Heyzer was using when writing about the new middle class. We might look at this idea in the context of the present dispute in the garment industry.
I would say, by any standard applied in the West, that most workers in the garment industry are poor.
Let us imagine the demand for US$93 a month, an increase of about a third in the agreed basic wage, is granted. Given the present minimum rate is set at virtually subsistence level, would this increase really project many thousands of workers into a middle class? I don’t think so.
The garment workers would still be relatively poor and accumulating the wealth, qualifications and property of most Western middle-class people, or even those of a similar status in Cambodia, would not be something they could reasonably achieve in a whole lifetime of work. Most are unlikely to become globally connected either, or internet savvy.
It would, perhaps, be better if organisations involved in trying to achieve the MDGs were more precise in their definition of what middle class actually means when they use it and make this clear in their published documents.
To use the term middle class as defined by The Economist may lead those unaware of the nuances of the terminology to assume greater positive changes are under way than is actually the case.
The growth of regional “traditional” middle classes will not necessarily expedite achievement of the MDGs.
History seems to show that an emerging middle class does not always have great sympathy with those lower down the social hierarchy.
In early 19th century Britain, for example, a new middle class, using wealth created by the British industrial revolution, began to flex its political muscle as it steadily increased its purchasing power and accumulated property.
Throughout the 1820s, agitation grew for a fairer electoral system that resulted in the Reform Act of 1832. Immediately afterwards, however, middle-class pressure for further change virtually evaporated. Working-class movements, like the Chartists of the Hungry Forties were not successful in extending the franchise, which only came slowly, later in the century.
The great danger of the way things are developing in Asia is that the middle classes cast in a traditional mould will see themselves increasingly set apart from those not so fortunate. They will be quite happy to benefit from, but largely indifferent to, a large and growing pool of inexpensive labour, and when pressure for fair treatment grows they will tend to support strong government against organisations, such as trade unions, perceived as a threat to the status quo.
In this sense the term middle class may become rather misleading in another way, as it assumes a three-class system when there are, in effect, only two: the haves and have-nots. Isn’t this part of the problem in Thailand?
It is fair to say that a growth in consumer demand from the traditional middle class might increase job opportunities, but it is also true that an increasing desire for expensive imports may lead to a flight of capital and the worsening of a trade balance.
Large new property developments may add a modern patina to the suburbs of an established city, but if constructed on land taken from rightful owners by nefarious means and built by cheap labour with little regard to the personal safety of workers who lack any kind of job security, is it likely this situation will contribute to real social progress, which after all is what the MDGs are all about?
What every country actually needs is a traditional middle class in which both the entrepreneurial spirit and a sense of public service is fostered and properly paid for. However, it is important that consciousness of privilege is cultivated too, and this should manifest itself in a willingness to support opportunities for the sons and daughters of those lower down the economic ladder.
Education is the key to progress in this respect, with well-funded scholarships for the brightest children from poor families.
When these young people, boys and girls, seek to enter the job market, they may need to be supported in order to feel their background is no barrier to interview success.
One way to help in this, in the Cambodian context, is for nongovernment organisations working in the development field to review the wording of their job advertisements in the English language press, ensuring that members of the lowest socio-economic groups are always encouraged to apply.
A poor boy from a village in Stung Treng or a girl who knew the dismal conditions at Stung Meanchey may well have struggled long and hard to get to the position from which they could make an application, but be nervous about doing so.
In my view, purely because of their class background, they are worthy of specific encouragement. The stairway leading upwards to the traditional middle class needs to be well-constructed, well-maintained and always in place.
Michael Hansen
Phnom Penh
Send letters to: newsroom@phnompenhpost.comThis e-mail address is being protected from spambots. You need JavaScript enabled to view it or PO?Box 146, Phnom Penh, Cambodia. The Post reserves the right to edit letters to a shorter length. The views expressed above are solely the authors’ and do not reflect any positions taken by The Phnom Penh Post.
Friday, September 10, 2010
Kingdom ranks 109th for business climate
Friday, 10 September 2010 15:01
The Phnom Penh
Catherine James
CAMBODIA’S business environment competitiveness has marginally improved, according to the World Economic Forum’s ranking of 139 countries, but the Kingdom continues to lag far behind its regional neighbours.
The forum’s annual competitiveness study scores 110 factors across 12 areas affecting an economy’s business climate: institutions, infrastructure, macroeconomic environment, health, education, goods and labour market efficiency, financial market development, technological readiness, market size, business sophistication, and innovation.
Cambodia, which was ranked 109th, was the worst performer of the 10 countries in the Association of Southeast Asian Nations, excluding Laos and Myanmar which were not included in the survey.
This year’s rank is one better than last year’s 110th position.
Singapore was ranked third in the world, behind only Switzerland and Sweden – first and second respectively. The United States fell from its second place in 2009, to fourth place. Japan was the only other Asian nation to make the top 10.
Malaysia, Brunei, Thailand and Indonesia – in order of rank – made it into the top 50, all maintaining a fairly steady grade from last year. Vietnam, however, noticeably improved its position to 59 from 75. The Philippines was the second-worst ASEAN performer, coming in at 85, up from 87.
Of the 111 factors assessed, Cambodia’s standout strengths were ranking 12th in the world for inflation, 15th for total tax rate in the goods market, 33rd for female participation in the workforce, 35th for pay and productivity, and 37th for business impact of rules on foreign direct investment.
Cambodia’s competitiveness continues to be strangled by corruption and inefficient bureaucracy and infrastructure, the study said.
Of 139 countries, the Kingdom ranked 124th for irregular payments and bribes, 125th for transparency in government policy-making and 132nd for time required to start a business.
Its worst grade among the 111 factors was “fixed telephone lines”, for which it ranked the fifth-worst in the world at 135.
In an opinion survey on the most problematic factors for doing business in their country, found corruption topped the list in Cambodia, closely by inefficient government bureaucracy, inadequately educated workforce and inadequate infrastructure.
The Phnom Penh
Catherine James
CAMBODIA’S business environment competitiveness has marginally improved, according to the World Economic Forum’s ranking of 139 countries, but the Kingdom continues to lag far behind its regional neighbours.
The forum’s annual competitiveness study scores 110 factors across 12 areas affecting an economy’s business climate: institutions, infrastructure, macroeconomic environment, health, education, goods and labour market efficiency, financial market development, technological readiness, market size, business sophistication, and innovation.
Cambodia, which was ranked 109th, was the worst performer of the 10 countries in the Association of Southeast Asian Nations, excluding Laos and Myanmar which were not included in the survey.
This year’s rank is one better than last year’s 110th position.
Singapore was ranked third in the world, behind only Switzerland and Sweden – first and second respectively. The United States fell from its second place in 2009, to fourth place. Japan was the only other Asian nation to make the top 10.
Malaysia, Brunei, Thailand and Indonesia – in order of rank – made it into the top 50, all maintaining a fairly steady grade from last year. Vietnam, however, noticeably improved its position to 59 from 75. The Philippines was the second-worst ASEAN performer, coming in at 85, up from 87.
Of the 111 factors assessed, Cambodia’s standout strengths were ranking 12th in the world for inflation, 15th for total tax rate in the goods market, 33rd for female participation in the workforce, 35th for pay and productivity, and 37th for business impact of rules on foreign direct investment.
Cambodia’s competitiveness continues to be strangled by corruption and inefficient bureaucracy and infrastructure, the study said.
Of 139 countries, the Kingdom ranked 124th for irregular payments and bribes, 125th for transparency in government policy-making and 132nd for time required to start a business.
Its worst grade among the 111 factors was “fixed telephone lines”, for which it ranked the fifth-worst in the world at 135.
In an opinion survey on the most problematic factors for doing business in their country, found corruption topped the list in Cambodia, closely by inefficient government bureaucracy, inadequately educated workforce and inadequate infrastructure.
Tuesday, August 24, 2010
1,757 got jobs via 'amakudari' from '07 to '09
Tuesday, Aug. 24, 2010
Kyodo News
Between 2007 and 2009, 1,757 active and former ranking bureaucrats found employment at organizations and companies that in fiscal 2008 received subsidies or business contracts from the government, the internal affairs ministry said Monday.
Ministries and other agencies will be required to examine whether those subsidies and contract awards, worth a combined ¥7.2 trillion, were used to fund the employment of the former bureaucrats or wasted on unnecessary projects, officials said.
A total of 1,676 officials landed jobs between 2007 and 2009 at entities administered by their former ministry or agency in the practice known as "amakudari," according to a probe conducted by the Internal Affairs and Communications Ministry starting in March.
The Democratic Party of Japan suspects ministries and agencies award contracts to businesses and other entities on condition that they give jobs to retired bureaucrats.
Government offices are due to inspect organizations that have hired former officials or received government funding totaling ¥5 million or more to find out whether they got business contracts in money-for-favor deals and wasted taxpayer money as a result. Their findings, to be reported to the internal affairs ministry, are to be taken into account in drawing up the fiscal 2011 budget.
Meanwhile, another internal affairs ministry survey points to yet more evidence of cozy amakudari ties between ex-bureaucrats and firms offering them lucrative positions.
Some 1,528 senior positions at government-linked organizations are being occupied by former government officials for at least the third successive time from the same ministry or agency, according to the ministry survey, which covered up to April 1.
Of the officials working at such government-affiliated organizations or other entities, whose work is subsidized by or carried out on behalf of the government, 4,916 were former government officials aged 65 or older.
The government intends to ban in principle the hiring of retired civil servants as senior officials of government-affiliated agencies and open up recruitment to the public.
Bodies that receive at least ¥5 million in taxpayer money annually will be called on not to fill their senior positions with ex-bureaucrats coming from the same ministries or agencies three times in succession.
The DPJ-led government is trying to eradicate amakudari, but experts say the party's efforts to ban job replacements won't get anywhere without fundamental changes in the civil servant system, in which only a limited number of top positions are available and officials who fail to advance have no choice but to take early retirement.
http://search.japantimes.co.jp/cgi-bin/nn20100824a5.html
Kyodo News
Between 2007 and 2009, 1,757 active and former ranking bureaucrats found employment at organizations and companies that in fiscal 2008 received subsidies or business contracts from the government, the internal affairs ministry said Monday.
Ministries and other agencies will be required to examine whether those subsidies and contract awards, worth a combined ¥7.2 trillion, were used to fund the employment of the former bureaucrats or wasted on unnecessary projects, officials said.
A total of 1,676 officials landed jobs between 2007 and 2009 at entities administered by their former ministry or agency in the practice known as "amakudari," according to a probe conducted by the Internal Affairs and Communications Ministry starting in March.
The Democratic Party of Japan suspects ministries and agencies award contracts to businesses and other entities on condition that they give jobs to retired bureaucrats.
Government offices are due to inspect organizations that have hired former officials or received government funding totaling ¥5 million or more to find out whether they got business contracts in money-for-favor deals and wasted taxpayer money as a result. Their findings, to be reported to the internal affairs ministry, are to be taken into account in drawing up the fiscal 2011 budget.
Meanwhile, another internal affairs ministry survey points to yet more evidence of cozy amakudari ties between ex-bureaucrats and firms offering them lucrative positions.
Some 1,528 senior positions at government-linked organizations are being occupied by former government officials for at least the third successive time from the same ministry or agency, according to the ministry survey, which covered up to April 1.
Of the officials working at such government-affiliated organizations or other entities, whose work is subsidized by or carried out on behalf of the government, 4,916 were former government officials aged 65 or older.
The government intends to ban in principle the hiring of retired civil servants as senior officials of government-affiliated agencies and open up recruitment to the public.
Bodies that receive at least ¥5 million in taxpayer money annually will be called on not to fill their senior positions with ex-bureaucrats coming from the same ministries or agencies three times in succession.
The DPJ-led government is trying to eradicate amakudari, but experts say the party's efforts to ban job replacements won't get anywhere without fundamental changes in the civil servant system, in which only a limited number of top positions are available and officials who fail to advance have no choice but to take early retirement.
http://search.japantimes.co.jp/cgi-bin/nn20100824a5.html
Thursday, August 12, 2010
Having faith in Cambodia’s youths
The Phnom Penh Post
Thursday, 12 August 2010 15:01 Richard Bridle
Analysis
Richard Bridle
Today marks our celebration of both the annual International Youth Day and the launch of the International Year of Youth, under the theme “Dialogue and Mutual Understanding”.
The United Nations in Cambodia recognises the importance of Cambodia’s young people to the future of this country, and we welcome this spotlight on the needs and aspirations of one-third of Cambodia’s people.
It is our duty to listen to those voices and engage in that dialogue, to include Cambodia’s young people in the development process and in the future of their country.
The UN General Assembly defines youths as individuals aged between 15 and 24 years, and young people between 10 and 24 years of age. The Ministry of Education, Youth and Sport, however, takes a broader view and defines youth as those between the ages of 14 and 30 years of age.
Cambodia’s population iof young people, proportionately one of the largest in Southeast Asia, presents significant opportunities, but it also presents tremendous challenges.
Despite recent rapid economic growth, there are simply not enough jobs for youths.
Unemployment among youths is higher than for any other age group. At the current pace of job creation, Cambodia will not have the capacity to place the increasing numbers of young people who are entering the workforce each year.
Currently estimated at 250,000-300,000 new entrants to the labour market each year, this number is expected to rise to 400,000 in the coming years.
The significant numbers of young people who find themselves unemployed or underemployed are all vulnerable to trafficking, entry into illegal sectors and use.
Rural poor who migrate to cities for work are more likely than others to be homeless and unemployed, and are more likely to turn to criminal behaviour or to migrate in search of employment as unskilled labourers.
We know that education is one of the best options to link youths with decent employment opportunities, but access to education at all levels in Cambodia continues to be unevenly distributed between urban and rural areas, as well as between rich and poor.
Additionally, poverty and economic shocks force many young people to leave school without acquiring the basic skills they need for work and for life. Only half of young people complete primary school, and only a quarter proceed to lower secondary school.
And it is important to note that school attendance alone is not a panacea. The quality and substance of their education is what will allow the young people of Cambodia to take their place in an increasingly competitive region.
Education will also enable the youth of Cambodia to make valuable contributions to their country’s development. Soon today’s youth will be Cambodia’s leaders, educators, businesspeople and farmers. If youths are to become an engine of growth for this country, much more needs to be done to ensure their meaningful participation in education, employment, development and governance.
The United Nations system in Cambodia works with youths to ensure that their voices are heard and that their needs and concerns are addressed in our work. The issues and concerns affecting youths are integrated into each area of the UN Development Assistance Framework 2011-2015, and this will continue to inform the work we undertake.
For example, in education, the UN in Cambodia is supporting government to: strengthen and implement policies and strategies for technical and vocational education and training; increase the quality of training programmes through developing skills standards, testing, accreditation and certification procedures; and increasing the evidence base for monitoring equitable access to quality basic education.
The UN Youth Advisory Panel, the first of its kind in the world, gives youths an opportunity to become more informed about development, the United Nations, and our ongoing commitment to the issues that affect young people. And it also serves to remind us of the importance of youths to development.
The Situation Analysis of Youth in Cambodia, published by the UN in Cambodia in October 2009, laid the groundwork for future work in this area, and the findings of this study contributed to the Ministry of Education, Youth and Sport’s crucial work on the National Youth Policy.
Cambodia’s youths are the most affected sector of society in terms of coping with rapid economic growth and social change, but they are also the most resilient and adaptable segment of the population.
The UN in Cambodia will continue to work with young people as they strive to create a better future for themselves, for their families and for their country.
Richard Bridle is acting UN resident coordinator for Camboadia.
Thursday, 12 August 2010 15:01 Richard Bridle
Analysis
Richard Bridle
Today marks our celebration of both the annual International Youth Day and the launch of the International Year of Youth, under the theme “Dialogue and Mutual Understanding”.
The United Nations in Cambodia recognises the importance of Cambodia’s young people to the future of this country, and we welcome this spotlight on the needs and aspirations of one-third of Cambodia’s people.
It is our duty to listen to those voices and engage in that dialogue, to include Cambodia’s young people in the development process and in the future of their country.
The UN General Assembly defines youths as individuals aged between 15 and 24 years, and young people between 10 and 24 years of age. The Ministry of Education, Youth and Sport, however, takes a broader view and defines youth as those between the ages of 14 and 30 years of age.
Cambodia’s population iof young people, proportionately one of the largest in Southeast Asia, presents significant opportunities, but it also presents tremendous challenges.
Despite recent rapid economic growth, there are simply not enough jobs for youths.
Unemployment among youths is higher than for any other age group. At the current pace of job creation, Cambodia will not have the capacity to place the increasing numbers of young people who are entering the workforce each year.
Currently estimated at 250,000-300,000 new entrants to the labour market each year, this number is expected to rise to 400,000 in the coming years.
The significant numbers of young people who find themselves unemployed or underemployed are all vulnerable to trafficking, entry into illegal sectors and use.
Rural poor who migrate to cities for work are more likely than others to be homeless and unemployed, and are more likely to turn to criminal behaviour or to migrate in search of employment as unskilled labourers.
We know that education is one of the best options to link youths with decent employment opportunities, but access to education at all levels in Cambodia continues to be unevenly distributed between urban and rural areas, as well as between rich and poor.
Additionally, poverty and economic shocks force many young people to leave school without acquiring the basic skills they need for work and for life. Only half of young people complete primary school, and only a quarter proceed to lower secondary school.
And it is important to note that school attendance alone is not a panacea. The quality and substance of their education is what will allow the young people of Cambodia to take their place in an increasingly competitive region.
Education will also enable the youth of Cambodia to make valuable contributions to their country’s development. Soon today’s youth will be Cambodia’s leaders, educators, businesspeople and farmers. If youths are to become an engine of growth for this country, much more needs to be done to ensure their meaningful participation in education, employment, development and governance.
The United Nations system in Cambodia works with youths to ensure that their voices are heard and that their needs and concerns are addressed in our work. The issues and concerns affecting youths are integrated into each area of the UN Development Assistance Framework 2011-2015, and this will continue to inform the work we undertake.
For example, in education, the UN in Cambodia is supporting government to: strengthen and implement policies and strategies for technical and vocational education and training; increase the quality of training programmes through developing skills standards, testing, accreditation and certification procedures; and increasing the evidence base for monitoring equitable access to quality basic education.
The UN Youth Advisory Panel, the first of its kind in the world, gives youths an opportunity to become more informed about development, the United Nations, and our ongoing commitment to the issues that affect young people. And it also serves to remind us of the importance of youths to development.
The Situation Analysis of Youth in Cambodia, published by the UN in Cambodia in October 2009, laid the groundwork for future work in this area, and the findings of this study contributed to the Ministry of Education, Youth and Sport’s crucial work on the National Youth Policy.
Cambodia’s youths are the most affected sector of society in terms of coping with rapid economic growth and social change, but they are also the most resilient and adaptable segment of the population.
The UN in Cambodia will continue to work with young people as they strive to create a better future for themselves, for their families and for their country.
Richard Bridle is acting UN resident coordinator for Camboadia.
Wednesday, August 11, 2010
Older civil servants facing pay cut
Wednesday, Aug. 11, 2010
Kyodo News
The National Personnel Authority on Tuesday proposed cutting the salaries and annual bonuses of national civil servants for the second year in a row.
The personnel board proposed that the reductions focus on workers in their late 50s while keeping intact wages of young employees to forestall declines in their morale and in interest in public-sector jobs among new recruits.
In its recommendation to the Cabinet and the Diet, the board proposed an average cut of 1.5 percent, or ¥94,000, in the annual salaries of public servants for the year to next March 31, bringing them in line with the private sector.
The authority recommended that annual bonuses be cut to 3.95 months worth of salary from 4.15 months, the first time in 47 years that the amount would fall below the four-month level, as the private sector reduced bonuses last winter amid the economic slump.
If the proposals are adopted, the annual income of a 40-year-old section chief who is married with two children would come to ¥5.13 million and that of a vice minister, the top bureaucrat in a ministry, to ¥22.77 million.
The government will decide on the recommendations at a meeting of related Cabinet members and seek a legal revision during this autumn's extraordinary Diet session to put the approved proposals into practice.
But the Democratic Party of Japan may call for larger pay cuts than recommended. It has pledged to reduce central government personnel expenditures by 20 percent.
According to the authority, the monthly salaries of public servants are ¥757, or 0.19 percent, higher on average than those in the private sector because of an increase in older, highly paid bureaucrats. Many of them have stayed in the government sector longer as a result of efforts to curb arranging postretirement positions for them in the private sector.
The authority proposed maintaining the salaries of public servants in their 30s and younger because they are lower than those of their private-sector counterparts.
In contrast, it proposed cutting the salaries of officials aged 40 and older by an average of 0.1 percent and imposing an additional cut of 1.5 percent in principle on the salaries of those who will be 56 or older in fiscal 2010.
The personnel authority makes recommendations on salary and bonuses for government-sector workers to bring them in line with those offered in the private sector. Such recommendations are made because government workers are denied the right to strike and have limited basic labor rights.
http://search.japantimes.co.jp/cgi-bin/nb20100811a3.html
Kyodo News
The National Personnel Authority on Tuesday proposed cutting the salaries and annual bonuses of national civil servants for the second year in a row.
The personnel board proposed that the reductions focus on workers in their late 50s while keeping intact wages of young employees to forestall declines in their morale and in interest in public-sector jobs among new recruits.
In its recommendation to the Cabinet and the Diet, the board proposed an average cut of 1.5 percent, or ¥94,000, in the annual salaries of public servants for the year to next March 31, bringing them in line with the private sector.
The authority recommended that annual bonuses be cut to 3.95 months worth of salary from 4.15 months, the first time in 47 years that the amount would fall below the four-month level, as the private sector reduced bonuses last winter amid the economic slump.
If the proposals are adopted, the annual income of a 40-year-old section chief who is married with two children would come to ¥5.13 million and that of a vice minister, the top bureaucrat in a ministry, to ¥22.77 million.
The government will decide on the recommendations at a meeting of related Cabinet members and seek a legal revision during this autumn's extraordinary Diet session to put the approved proposals into practice.
But the Democratic Party of Japan may call for larger pay cuts than recommended. It has pledged to reduce central government personnel expenditures by 20 percent.
According to the authority, the monthly salaries of public servants are ¥757, or 0.19 percent, higher on average than those in the private sector because of an increase in older, highly paid bureaucrats. Many of them have stayed in the government sector longer as a result of efforts to curb arranging postretirement positions for them in the private sector.
The authority proposed maintaining the salaries of public servants in their 30s and younger because they are lower than those of their private-sector counterparts.
In contrast, it proposed cutting the salaries of officials aged 40 and older by an average of 0.1 percent and imposing an additional cut of 1.5 percent in principle on the salaries of those who will be 56 or older in fiscal 2010.
The personnel authority makes recommendations on salary and bonuses for government-sector workers to bring them in line with those offered in the private sector. Such recommendations are made because government workers are denied the right to strike and have limited basic labor rights.
http://search.japantimes.co.jp/cgi-bin/nb20100811a3.html
Thursday, August 5, 2010
Cambodia seeks investors to boost milled rice exports
PHNOM PENH/BANGKOK, Aug 4 (Reuters) - Cambodia is looking for foreign investors to boost its fledgling rice milling sector so that it can reap higher dividends from its grain crop, much of which is currently sent to Vietnam to be milled and re-exported.
Its short-term goals are modest: it has exported 15,000 tonnes of milled rice this year and is aiming for 20,000, said Commerce Secretary of State Mao Thura.
That is an increase on last year, he said. "This is because we have more decent-standard rice millers. Before we had none."
But the government knows it must find foreign investors to have any hope of getting into the same league as neighbours Thailand and Vietnam, respectively the world's biggest and second-biggest rice exporters.
Thailand aims to export at least 8.5 million tonnes of rice this year and Vietnam is targeting 6.1 million.
"We have good rice but we don't have the quality millers or warehouses to produce milled rice for exports" Cambodian Prime Minister Hun Sen told students in Phnom Penh on Wednesday.
Indeed, it has plenty of rice, ranking as the world's 15th biggest producer with around 7 million tonnes of paddy each year. Of that, around 3 million tonnes is for domestic consumption and the rest for export, according to the United Nation's Food and Agriculture Organisation (FAO).
After decades of political turbulence, including civil war and the deadly Khmer Rouge years, its economy was in tatters by the end of the 1980s. In some years it has had to import low-quality rice from Thailand.
With renewed stability, it has made great strides in the past decade and exported 500,000 tonnes of unmilled rice under its own brand in 2009, according to United States Department of Agriculture data.
But the bulk of its crop transits via Vietnam.
"Nowaday, there are only a few good-quality millers in the capital," said a Thai commercial diplomat in Phnom Penh. "That's why we always see Vietnamese rice traders come to buy rice directly from the fields in Cambodia to be milled, packed and re-exported in Vietnamese sacks."
MARKETS
Exporters hope to find more buyers in the European Union as the European market has been duty-free for Cambodian rice since last September under the EU's "Everything But Arms" initiative aimed at supporting exports from poor countries.
"Since our equipment is getting more modern, more people are coming and we're exporting to places like Russia, Europe and the United States," said Phou Puy, president of the Cambodian Rice Millers Association
But Cambodia needs money to invest in milling and irrigation systems to help boost production and rice quality, said premier Hun Sen, adding he had discussed this recently with Malaysian Prime Minister Najib Razak.
He said he also planned to talk to new Philippine President Benigno Aquino. The Philippines is the world's top rice importer.
A panic over food scarcity that pushed up the price of rice and other commodities in 2007/08 has already encouraged investors from Gulf countries to invest in rice fields and irrigation systems in Cambodia, in the interests food security.
Its short-term goals are modest: it has exported 15,000 tonnes of milled rice this year and is aiming for 20,000, said Commerce Secretary of State Mao Thura.
That is an increase on last year, he said. "This is because we have more decent-standard rice millers. Before we had none."
But the government knows it must find foreign investors to have any hope of getting into the same league as neighbours Thailand and Vietnam, respectively the world's biggest and second-biggest rice exporters.
Thailand aims to export at least 8.5 million tonnes of rice this year and Vietnam is targeting 6.1 million.
"We have good rice but we don't have the quality millers or warehouses to produce milled rice for exports" Cambodian Prime Minister Hun Sen told students in Phnom Penh on Wednesday.
Indeed, it has plenty of rice, ranking as the world's 15th biggest producer with around 7 million tonnes of paddy each year. Of that, around 3 million tonnes is for domestic consumption and the rest for export, according to the United Nation's Food and Agriculture Organisation (FAO).
After decades of political turbulence, including civil war and the deadly Khmer Rouge years, its economy was in tatters by the end of the 1980s. In some years it has had to import low-quality rice from Thailand.
With renewed stability, it has made great strides in the past decade and exported 500,000 tonnes of unmilled rice under its own brand in 2009, according to United States Department of Agriculture data.
But the bulk of its crop transits via Vietnam.
"Nowaday, there are only a few good-quality millers in the capital," said a Thai commercial diplomat in Phnom Penh. "That's why we always see Vietnamese rice traders come to buy rice directly from the fields in Cambodia to be milled, packed and re-exported in Vietnamese sacks."
MARKETS
Exporters hope to find more buyers in the European Union as the European market has been duty-free for Cambodian rice since last September under the EU's "Everything But Arms" initiative aimed at supporting exports from poor countries.
"Since our equipment is getting more modern, more people are coming and we're exporting to places like Russia, Europe and the United States," said Phou Puy, president of the Cambodian Rice Millers Association
But Cambodia needs money to invest in milling and irrigation systems to help boost production and rice quality, said premier Hun Sen, adding he had discussed this recently with Malaysian Prime Minister Najib Razak.
He said he also planned to talk to new Philippine President Benigno Aquino. The Philippines is the world's top rice importer.
A panic over food scarcity that pushed up the price of rice and other commodities in 2007/08 has already encouraged investors from Gulf countries to invest in rice fields and irrigation systems in Cambodia, in the interests food security.
Tuesday, August 3, 2010
Cambodia’s Struggle With Globalization
The Jakarta Blobe
August 02, 2010
Hal Hill, Jayant Menon & Chan Sopha
The charming riverside capital of Phnom Penh, home to about 1.5 million inhabitants, has seen a lot in its turbulent history. But arguably nothing is on the scale of its first skyscraper, the 42-floor Gold Tower now nearing completion, not to mention the university and bank complexes mushrooming throughout this ancient city.
This changing physical landscape reflects broader developments across the country, which has been experiencing rapid economic growth — the sixth fastest in the world in the decade to 2007 — for the first time in its history.
More than two million tourists now visit this country of 14 million, a 20-fold increase over the figure in the early 1990s.
The Cambodian people have better nutrition and access to education and health services than ever before.
Since the cessation of internal hostilities almost two decades ago, life expectancy has risen by almost a decade and infant mortality has fallen significantly.
The macroeconomy is stable, with inflation under control, underpinned by very high levels of dollarization, currently about 90 per cent.
Debt service is almost negligible and public debt has fallen sharply, to about one-quarter of GDP.
The economy is highly open, with exports plus imports equivalent to more than 120 per cent of GDP. The investment climate is welcoming, with generous tax incentives and low tariffs.
Aid flows are very large, currently almost $1.1 billion in a $10 billion economy. The country’s openness meant that growth dried up in 2009 as the global financial crisis hit, but the economy is now rebounding.
So much for the good news. Cambodia, however, also faces many daunting problems.
The country ranks 166th and 135th respectively out of 181 countries surveyed in the Transparency International corruption perception index and the World Bank’s Doing Business indicators.
Deforestation and what is referred to locally as “land grabbing” have also been rampant.
The local dailies abound with reports of land being awarded to the politically powerful for nominal amounts, and a startling detailed account is presented in the 2008 study by Global Witness entitled “Country for Sale.”
In addition, the land price boom has often made some of the most vulnerable worse off, as they have been evicted or forced off their land. The periodic household expenditure surveys report a significant increase in inequality.
The country will also miss some of its Millennium Development Goal targets.
These problems are illustrative of the challenges faced by poor transitional economies in the process of opening up without the institutions to manage the complex process of globalization.
In this environment, the recent discovery of oil and gas could complicate things, as articulated in the resource curse thesis put forth by Richard Auty.
The central challenge is to achieve growth that is durable, equitable and environmentally sustainable. This in turn requires the development of institutions which, while they may be rudimentary, are effective, trusted and clean.
Where to start? Consider the following, for example:
• Cambodia has no shortage of laws, especially after its accession to the World Trade Organization in 2004. But businesses view the courts as the most expensive last resort when all else fails. Legal judgements are routinely for sale.
• Civil service salaries are meagre. A mid-level senior employee with a foreign masters degree receives $70 per month, compared to a private sector alternative of about 20 times this amount. Ministers receive about $500 per month, but some seem to live quite lavishly.
• The country’s tax effort (its tax revenue as a percentage of GDP) is a paltry 11 percent, despite the introduction of a broad value-added tax. Thus the country’s infrastructure remains inadequate, in spite of the very large aid flows, and notwithstanding recent improvements.
• The number of banks has increased rapidly due to unfettered entry. The lax prudential supervision carries with it the possibility of a future meltdown.
• Shipping a container from factory to port costs about double the regional average owing to widespread “facilitation” costs, a feature apparently of most transactions with the government.
Five general lessons for late reformers stand out from the Cambodian experience.
First, liberal and open economies cannot function without due respect for property rights, as exemplified by the widespread land grabs.
Second, these liberal regimes need adequate regulatory capacity to manage a modernizing market economy, as illustrated by the banking example above.
Third, large inflows of foreign aid and natural resource revenues ought to be viewed as transitory, and invested wisely for broad-based development.
Fourth, donors need to better coordinate their work and avoid imposing excessively on a weak bureaucracy.
Fifth, civil service reform has to be undertaken early, with clear incentives and disciplines.
Unless these conditions are met, the danger is that in Cambodia, and many other similar states, the achievements over the past decade in particular could be undone by economic crises, or rising civil unrest driven by outrage at the political and bureaucratic excesses.
Hal Hill is a professor of economics at the Australian National University; Jayant Menon is principal economist at the Asian Development Bank; and Chan Sophal is president of the Cambodia Economic Association.
East Asia Forum
http://www.thejakartaglobe.com/opinion/cambodias-struggle-with-globalization/389063
August 02, 2010
Hal Hill, Jayant Menon & Chan Sopha
The charming riverside capital of Phnom Penh, home to about 1.5 million inhabitants, has seen a lot in its turbulent history. But arguably nothing is on the scale of its first skyscraper, the 42-floor Gold Tower now nearing completion, not to mention the university and bank complexes mushrooming throughout this ancient city.
This changing physical landscape reflects broader developments across the country, which has been experiencing rapid economic growth — the sixth fastest in the world in the decade to 2007 — for the first time in its history.
More than two million tourists now visit this country of 14 million, a 20-fold increase over the figure in the early 1990s.
The Cambodian people have better nutrition and access to education and health services than ever before.
Since the cessation of internal hostilities almost two decades ago, life expectancy has risen by almost a decade and infant mortality has fallen significantly.
The macroeconomy is stable, with inflation under control, underpinned by very high levels of dollarization, currently about 90 per cent.
Debt service is almost negligible and public debt has fallen sharply, to about one-quarter of GDP.
The economy is highly open, with exports plus imports equivalent to more than 120 per cent of GDP. The investment climate is welcoming, with generous tax incentives and low tariffs.
Aid flows are very large, currently almost $1.1 billion in a $10 billion economy. The country’s openness meant that growth dried up in 2009 as the global financial crisis hit, but the economy is now rebounding.
So much for the good news. Cambodia, however, also faces many daunting problems.
The country ranks 166th and 135th respectively out of 181 countries surveyed in the Transparency International corruption perception index and the World Bank’s Doing Business indicators.
Deforestation and what is referred to locally as “land grabbing” have also been rampant.
The local dailies abound with reports of land being awarded to the politically powerful for nominal amounts, and a startling detailed account is presented in the 2008 study by Global Witness entitled “Country for Sale.”
In addition, the land price boom has often made some of the most vulnerable worse off, as they have been evicted or forced off their land. The periodic household expenditure surveys report a significant increase in inequality.
The country will also miss some of its Millennium Development Goal targets.
These problems are illustrative of the challenges faced by poor transitional economies in the process of opening up without the institutions to manage the complex process of globalization.
In this environment, the recent discovery of oil and gas could complicate things, as articulated in the resource curse thesis put forth by Richard Auty.
The central challenge is to achieve growth that is durable, equitable and environmentally sustainable. This in turn requires the development of institutions which, while they may be rudimentary, are effective, trusted and clean.
Where to start? Consider the following, for example:
• Cambodia has no shortage of laws, especially after its accession to the World Trade Organization in 2004. But businesses view the courts as the most expensive last resort when all else fails. Legal judgements are routinely for sale.
• Civil service salaries are meagre. A mid-level senior employee with a foreign masters degree receives $70 per month, compared to a private sector alternative of about 20 times this amount. Ministers receive about $500 per month, but some seem to live quite lavishly.
• The country’s tax effort (its tax revenue as a percentage of GDP) is a paltry 11 percent, despite the introduction of a broad value-added tax. Thus the country’s infrastructure remains inadequate, in spite of the very large aid flows, and notwithstanding recent improvements.
• The number of banks has increased rapidly due to unfettered entry. The lax prudential supervision carries with it the possibility of a future meltdown.
• Shipping a container from factory to port costs about double the regional average owing to widespread “facilitation” costs, a feature apparently of most transactions with the government.
Five general lessons for late reformers stand out from the Cambodian experience.
First, liberal and open economies cannot function without due respect for property rights, as exemplified by the widespread land grabs.
Second, these liberal regimes need adequate regulatory capacity to manage a modernizing market economy, as illustrated by the banking example above.
Third, large inflows of foreign aid and natural resource revenues ought to be viewed as transitory, and invested wisely for broad-based development.
Fourth, donors need to better coordinate their work and avoid imposing excessively on a weak bureaucracy.
Fifth, civil service reform has to be undertaken early, with clear incentives and disciplines.
Unless these conditions are met, the danger is that in Cambodia, and many other similar states, the achievements over the past decade in particular could be undone by economic crises, or rising civil unrest driven by outrage at the political and bureaucratic excesses.
Hal Hill is a professor of economics at the Australian National University; Jayant Menon is principal economist at the Asian Development Bank; and Chan Sophal is president of the Cambodia Economic Association.
East Asia Forum
http://www.thejakartaglobe.com/opinion/cambodias-struggle-with-globalization/389063
Friday, July 23, 2010
New plan for civil servant salary top-up
Thursday, 22 July 2010 15:03
The Phnom Penh Post
Irwin Loy
THE government has approved a revamped compensation scheme for civil servants, though observers say it remains unclear how quickly authorities and NGOs will be able to implement it.
The Priority Operating Costs scheme was approved July 12 as a replacement for a previous salary supplement programme that was abruptly cancelled last year.
Paul Pidou, deputy secretary general of the Council for Administrative Reform, confirmed that Prime Minister Hun Sen approved the sub-decree, which will be implemented retroactive to July 1. CAR officials were not available for comment yesterday.
A copy of the sub-decree obtained by the Post yesterday shows the new scheme will be more complex than the programme it is replacing. Under the POC scheme, development groups will be required to obtain permission to supplement civil servant salaries for each individual programme.
The sub-decree also outlines two broad levels of pay scales: “national” and “sub-national/public service delivery” .
Jeroen Stol, country director for Handicap International Belgium, said the new definitions could help equalise payments offered by NGOs under the old scheme.
“In the past, different organisations paid different incentives for the same types of jobs, which caused ... jealousy in some cases,” he said.
However, many details are still unclear, he added, including the payment levels in which civil servants will be grouped.
Authorities will need to add a new management layer to administer the scheme, according to its implementation guidelines. Each POC scheme will require its own director and must be approved by the relevan ministry, the development partner, the CAR and the Ministry of Economy and Finance.
Sharon Wilkinson, country director for Care Cambodia, said her NGO still has not received any official word about the new scheme. “I still do not feel there’s sufficient information available for us to implement this within the timeframe designated,” she said.
ADDITIONAL REPORTING BY CHHAY CHANNYDA
The Phnom Penh Post
Irwin Loy
THE government has approved a revamped compensation scheme for civil servants, though observers say it remains unclear how quickly authorities and NGOs will be able to implement it.
The Priority Operating Costs scheme was approved July 12 as a replacement for a previous salary supplement programme that was abruptly cancelled last year.
Paul Pidou, deputy secretary general of the Council for Administrative Reform, confirmed that Prime Minister Hun Sen approved the sub-decree, which will be implemented retroactive to July 1. CAR officials were not available for comment yesterday.
A copy of the sub-decree obtained by the Post yesterday shows the new scheme will be more complex than the programme it is replacing. Under the POC scheme, development groups will be required to obtain permission to supplement civil servant salaries for each individual programme.
The sub-decree also outlines two broad levels of pay scales: “national” and “sub-national/public service delivery” .
Jeroen Stol, country director for Handicap International Belgium, said the new definitions could help equalise payments offered by NGOs under the old scheme.
“In the past, different organisations paid different incentives for the same types of jobs, which caused ... jealousy in some cases,” he said.
However, many details are still unclear, he added, including the payment levels in which civil servants will be grouped.
Authorities will need to add a new management layer to administer the scheme, according to its implementation guidelines. Each POC scheme will require its own director and must be approved by the relevan ministry, the development partner, the CAR and the Ministry of Economy and Finance.
Sharon Wilkinson, country director for Care Cambodia, said her NGO still has not received any official word about the new scheme. “I still do not feel there’s sufficient information available for us to implement this within the timeframe designated,” she said.
ADDITIONAL REPORTING BY CHHAY CHANNYDA
Tuesday, July 13, 2010
Fresh census targets RCAF’s ‘ghost soldiers’
The Phnom Penh Post
By Sam Rith
Tuesday, 13 July 2010 15:03
DEFENCE Ministry officials say a more “thorough” census of the military currently under way will reduce the number of “ghost soldiers” on the government payroll.
Ministry spokesman Chhum Socheat said yesterday that officials were confident this year’s census would be more accurate than those carried out in previous years, in large part because of a new computerised storage system that includes information on each soldier.
“It is the annual census to find out the real number of soldiers ... by cutting the number of soldiers who have retired, died or did not appear,” he said.
As part of the census, which began last week, every soldier in the military will be required to show up in person at regional offices to verify their identities and salary claims.
Those who failed to do so by the end of the month would forfeit their salaries, Chhum Socheat said.
The problem of ghost soldiers – those who are on the military payroll yet serve no function – has plagued the country for years, sparked by the aftermath of the peace process in the early 1990s that saw fighters from various factions amalgamated into the national military.
But it remains unclear how many such soldiers there are. A 1999 survey eliminated more than 15,000 ghost soldiers and 160,000 nonexistent dependents from the records and declared a total force of 131,227, according to a 2008 World Bank report on a donor-funded demobilisation scheme. Yet those results were “widely discredited”, the report stated. By September 2002, Ministry of Economy and Finance statistics showed the defence payroll had been reduced to 112,359.
A security assessment on Cambodia released this year by defence publisher IHS Jane’s suggested that the military has an on-paper strength of 110,000, but a field strength of 70,000 troops.
Cheam Yeap, a senior parliamentarian with the ruling Cambodian People’s Party, said the new census procedure was implemented after Prime Minister Hun Sen urged all institutions, including the military, to reduce “the number of people who do not have names”.
“We are doing this more thoroughly than before. No one can fake,” he said.
Ou Virak, president of the Cambodian Centre for Human Rights, described the problem of ghost soldiers as “critical”. “Many soldiers ... are not active and they’re not trained. Who are these people? I don’t think the government itself even knows,” he said.
ADDITIONAL REPORTING BY IRWIN LOY
By Sam Rith
Tuesday, 13 July 2010 15:03
DEFENCE Ministry officials say a more “thorough” census of the military currently under way will reduce the number of “ghost soldiers” on the government payroll.
Ministry spokesman Chhum Socheat said yesterday that officials were confident this year’s census would be more accurate than those carried out in previous years, in large part because of a new computerised storage system that includes information on each soldier.
“It is the annual census to find out the real number of soldiers ... by cutting the number of soldiers who have retired, died or did not appear,” he said.
As part of the census, which began last week, every soldier in the military will be required to show up in person at regional offices to verify their identities and salary claims.
Those who failed to do so by the end of the month would forfeit their salaries, Chhum Socheat said.
The problem of ghost soldiers – those who are on the military payroll yet serve no function – has plagued the country for years, sparked by the aftermath of the peace process in the early 1990s that saw fighters from various factions amalgamated into the national military.
But it remains unclear how many such soldiers there are. A 1999 survey eliminated more than 15,000 ghost soldiers and 160,000 nonexistent dependents from the records and declared a total force of 131,227, according to a 2008 World Bank report on a donor-funded demobilisation scheme. Yet those results were “widely discredited”, the report stated. By September 2002, Ministry of Economy and Finance statistics showed the defence payroll had been reduced to 112,359.
A security assessment on Cambodia released this year by defence publisher IHS Jane’s suggested that the military has an on-paper strength of 110,000, but a field strength of 70,000 troops.
Cheam Yeap, a senior parliamentarian with the ruling Cambodian People’s Party, said the new census procedure was implemented after Prime Minister Hun Sen urged all institutions, including the military, to reduce “the number of people who do not have names”.
“We are doing this more thoroughly than before. No one can fake,” he said.
Ou Virak, president of the Cambodian Centre for Human Rights, described the problem of ghost soldiers as “critical”. “Many soldiers ... are not active and they’re not trained. Who are these people? I don’t think the government itself even knows,” he said.
ADDITIONAL REPORTING BY IRWIN LOY
Friday, July 9, 2010
Canadia Bank agrees to manage pensions
The Phnom Penh Post
Friday, 09 July 2010 15:01 Soeun Say
THE National Social Security Fund for Civil Servants agreed yesterday to cooperate with Canadia Bank in offering a pension and social security fund to civil servants.
The agreement was signed in Phnom Penh.
The new NSSFCS fund aims to manage and insure a social security fund for when a civil servant retires or becomes handicapped, pregnant, or is involved in an accident at work resulting in disability or death, according to Chou Ratanak, the director for the Fund, speaking at Canadia Tower.
“We will be offering the social security fund to them in order to reduce their difficulties while living with certain conditions,” he said.
The fund is to be tested initially in Phnom Penh, and will be available through the bank as a standalone bank account with its own ATM card, he said, and added that having the account accessible through the bank would allow the correct funds to get to the end-user in a timely manner.
“Moreover, they can save their money through the fund, which will also have an interest rate with Canadia Bank,” Chou Ratanak said.
The NSSFCS is also looking for a way to make it easier to provide health insurance, possibly in conjunction with a bank, in a partnership similar to the agreement signed with Canadia.
“NSSFCS is looking at issuing a sub-decree on health insurance social security for civil servants,” he said.
Friday, 09 July 2010 15:01 Soeun Say
THE National Social Security Fund for Civil Servants agreed yesterday to cooperate with Canadia Bank in offering a pension and social security fund to civil servants.
The agreement was signed in Phnom Penh.
The new NSSFCS fund aims to manage and insure a social security fund for when a civil servant retires or becomes handicapped, pregnant, or is involved in an accident at work resulting in disability or death, according to Chou Ratanak, the director for the Fund, speaking at Canadia Tower.
“We will be offering the social security fund to them in order to reduce their difficulties while living with certain conditions,” he said.
The fund is to be tested initially in Phnom Penh, and will be available through the bank as a standalone bank account with its own ATM card, he said, and added that having the account accessible through the bank would allow the correct funds to get to the end-user in a timely manner.
“Moreover, they can save their money through the fund, which will also have an interest rate with Canadia Bank,” Chou Ratanak said.
The NSSFCS is also looking for a way to make it easier to provide health insurance, possibly in conjunction with a bank, in a partnership similar to the agreement signed with Canadia.
“NSSFCS is looking at issuing a sub-decree on health insurance social security for civil servants,” he said.
Bombs away! Remember Cambodia
Jul 9, 2010
By Ben Kiernan and Taylor Owen
Asia Times Online
The United States war in Afghanistan is "going badly", according to the New York Times. Nine years after American forces invaded to oust the repressive Taliban regime and its al-Qaeda ally, "the deteriorating situation demands a serious assessment now of the military and civilian strategies".
Aerial bombardment, a centerpiece of the US military effort in Afghanistan, has had a devastating impact on civilians there. Along with Taliban and al-Qaeda insurgents and suicide bombers, who have recently escalated their slaughter of the Afghan population, US and North Atlantic Treaty (NATO) aircraft have for years inflicted a horrific toll on innocent villagers.
When US bombs hit a civilian warehouse in Afghanistan in late 2001, then-secretary of defense Donald Rumsfeld responded, "We're not running out of targets, Afghanistan is." There was laughter in the press gallery.
But the bombing continued and spread to Iraq in 2003, with the United States determined to use "the force necessary to prevail, plus some", and asserting that no promises would be made to avoid "collateral damage".
Afghan and Iraqi civilian casualties, in other words, were predictable if not inevitable. The show of strength aside, didn't the US underestimate the strategic cost of collateral damage? If "shock and awe" appeared to work at least in 2001 against the Taliban regular army, the continued use of aerial bombardment has also nourished civilian support for the Taliban and al-Qaeda anti-US insurgency.
In March 2010, the New York Times reported that "civilian deaths caused by American troops and American bombs have outraged the local population and made the case for the insurgency." Beyond the moral meaning of inflicting predictable civilian casualties, and contravention of international laws of war, it is also clear that the political repercussions of air strikes outweigh their military benefits.
This is not news. The extension of the Vietnam War to Cambodia, which the US Air Force bombed from 1965 to 1973, was a troubling precedent. First, Cambodia became in 1969-1973 one of the most heavily-bombarded countries in history (along with North Korea, South Vietnam, and Laos). Then, in 1975-79, it suffered genocide at the hands of Pol Pot's Khmer Rouge communists, who had been military targets of the US bombing but also became its political beneficiaries.
Despite key differences, an important similarity links the current conflict in Afghanistan to the 1970-1975 Cambodian war: increasing US reliance on air power against a heterogeneous insurgency. Moreover, in the past few years, as fighting has continued in Afghanistan supported by US air power, Taliban forces have benefited politically, recruiting among an anti-US Afghan constituency that appears to have grown even as the insurgents suffer military casualties.
In Cambodia, it was precisely the harshest, most extreme elements of the insurgency who survived the US bombing, expanded in numbers, and then won the war. The Khmer Rouge grew from a small force of fewer than 10,000 in 1969 to over 200,000 troops and militia in 1973.
During that period, their recruitment propaganda successfully highlighted the casualties and damage caused by US bombing. Within a broader Cambodian insurgency, the radical Khmer Rouge leaders eclipsed their royalist, reformist, and pro-Hanoi allies as well as defeating their enemy, the pro-US Cambodian government of Lon Nol, in 1975.
The Nixon Doctrine had proposed that the United States could supply an allied Asian regime with the materiel to withstand internal or external challenge while the US withdrew its own ground troops or remained at arm's length.
"Vietnamization" built up the air and ground fighting capability of South Vietnamese government forces while American units slowly disengaged. In Cambodia from 1970, Washington gave military aid to General Lon Nol's new regime, tolerating its rampant corruption, while the US Air Force (and the large South Vietnamese Air Force) conducted massive aerial bombardment of its Vietnamese and Khmer Rouge communist opponents and their heterogeneous united front, across rural Cambodia.
United States policy in Afghanistan has shown a similar reliance on air strikes in fighting the motley insurgency there. These strikes, while far more precisely targeted than the earlier bombing campaigns in Indochina, inflicted substantial civilian casualties in the first year of the Afghan war in 2001-02.
The Project on Defense Alternatives estimated that in a three-month period between October 7, 2001 and January 1, 2002, between 1,000 and 1,300 civilians were killed by aerial bombing, and The Los Angeles Times found that in a five-month period from October 7, 2001 to February 28, 2002, between 1,067 and 1,201 civilian deaths were reported in the media.
Deaths reported in newspapers should be treated with caution, but not all are reported, and the total was undoubtedly high. And the toll has continued long after the initial US invasion. According to Human Rights Watch, air strikes by the US Operation Enduring Freedom (OEF) and its NATO-led coalition, the International Security Assistance Force (ISAF), killed 116 Afghan civilians in 2006, and 321 civilians in 2007.
And the number rose again in 2008: according to a United Nations study on the humanitarian costs of the conflict, air strikes accounted for 530 of the 828 civilians killed that year by US or Afghan government forces. The same study found that between January and June 2009, 200 of the 310 recorded civilian deaths were caused by air strikes. Overall in 2009, the UN reported that 2,400 civilians were killed in Afghanistan, though the number killed by foreign and Afghan troops was down 25%.
While their large-scale killing of civilians presented a moral challenge to the US-led coalition forces, there has also been increasing acknowledgment of strategic costs accompanying these casualties.
In mid-2007, the London Guardian reported that "a senior UK military officer said he had asked the US to withdraw its special forces from a volatile area that was crucial in the battle against the Taliban" after the US forces were "criticized for relying on air strikes for cover when they believed they were confronted by large groups of Taliban fighters".
The paper added: "British and NATO officials have consistently expressed concern about US tactics, notably air strikes, which kill civilians, sabotaging the battle for ‘hearts and minds'."
NATO's secretary general added that NATO commanders "had changed the rules of engagement, ordering their troops to hold their fire in situations where civilians appeared to be at risk". More recently Command Sergeant Major Michael Hall, the senior NATO soldier in Afghanistan, has argued that many of the insurgents being held at Bagram air base had joined the insurgency due to deaths of people they knew.
He told the troops, "There are stories after stories about how these people are turned into insurgents. Every time there is an escalation of force we are finding that innocents are being killed." The same report cited a village elder from Hodkail corroborating this argument: "The people are tired of all these cruel actions by the foreigners, and we can't suffer it anymore. The people do not have any other choice, they will rise against the government and fight them and the foreigners. There are a lot of cases of killing of innocent people."
Yet the bombings have continued and the civilian death toll has mounted. In 2008, after US aircraft killed more than 30 Afghan civilians in each of two bombardments of rural wedding parties, the top US commander in Afghanistan, General David McKiernan, "ordered a tightening of procedures for launching air strikes" and proclaimed that "minimizing civilian casualties is crucial". In December 2008, McKiernan issued another directive, ordering that "all responses must be proportionate".
Again new procedures failed to stop the slaughter from the air. Following an investigation into a 2009 air strike in Farah province that killed at least 26 civilians (the Afghan government reported a much higher toll of 140 dead), McKiernan's replacement, General Stanley McChrystal, issued new guidelines meant to minimize civilian casualties.
In earlier testimony to the Senate Armed Services Committee, McChrystal had stressed the strategic importance of civilian protection. "A willingness to operate in ways minimizing causalities or damage ... is critical," he argued. "Although I expect stiff fighting ahead, the measure of success will not be enemy killed. It will be shielding the Afghan population from violence." So far the cost of failure, for instance by inflicting more civilian casualties, has included a political windfall for Taliban insurgents, who by 2009 posed a much stronger threat than they had in 2005.
Since the issuing of McChrystal's 2009 directive, however, air strikes have continued to kill civilians, the toll increasing with the escalation of the US ground war in response to the greater Taliban threat.
In February 2010 alone, 46 Afghan civilians were killed in just three strikes. An errant rocket attack on February 14 killed 12 civilians. Four days later, a NATO air strike mistakenly killed seven Afghan police officers. Another NATO strike on February 20 killed 27 civilians.
In comparison to the previous year, the three-month period from March to June 2010 saw a 44% drop in civilian casualties caused by the coalition. Yet, nine years after the US went to war in Afghanistan, bombing remains part of US strategy and the death toll in aerial strikes continues. In a March incident, a US air strike killed 13 civilians and in June, 10 more civilians, including at least five women and children, were killed in a NATO air strike.
One reaction to the McChrystal directive has been an increased US use of unmanned aerial drones to deliver air strikes. While proponents of targeted drone strikes argue that they offer greater precision, and therefore minimize civilian casualties, it is also possible that the greater ease with which they can be deployed could instead increase the number of raids and thus the civilian casualty rates.
By Ben Kiernan and Taylor Owen
Asia Times Online
The United States war in Afghanistan is "going badly", according to the New York Times. Nine years after American forces invaded to oust the repressive Taliban regime and its al-Qaeda ally, "the deteriorating situation demands a serious assessment now of the military and civilian strategies".
Aerial bombardment, a centerpiece of the US military effort in Afghanistan, has had a devastating impact on civilians there. Along with Taliban and al-Qaeda insurgents and suicide bombers, who have recently escalated their slaughter of the Afghan population, US and North Atlantic Treaty (NATO) aircraft have for years inflicted a horrific toll on innocent villagers.
When US bombs hit a civilian warehouse in Afghanistan in late 2001, then-secretary of defense Donald Rumsfeld responded, "We're not running out of targets, Afghanistan is." There was laughter in the press gallery.
But the bombing continued and spread to Iraq in 2003, with the United States determined to use "the force necessary to prevail, plus some", and asserting that no promises would be made to avoid "collateral damage".
Afghan and Iraqi civilian casualties, in other words, were predictable if not inevitable. The show of strength aside, didn't the US underestimate the strategic cost of collateral damage? If "shock and awe" appeared to work at least in 2001 against the Taliban regular army, the continued use of aerial bombardment has also nourished civilian support for the Taliban and al-Qaeda anti-US insurgency.
In March 2010, the New York Times reported that "civilian deaths caused by American troops and American bombs have outraged the local population and made the case for the insurgency." Beyond the moral meaning of inflicting predictable civilian casualties, and contravention of international laws of war, it is also clear that the political repercussions of air strikes outweigh their military benefits.
This is not news. The extension of the Vietnam War to Cambodia, which the US Air Force bombed from 1965 to 1973, was a troubling precedent. First, Cambodia became in 1969-1973 one of the most heavily-bombarded countries in history (along with North Korea, South Vietnam, and Laos). Then, in 1975-79, it suffered genocide at the hands of Pol Pot's Khmer Rouge communists, who had been military targets of the US bombing but also became its political beneficiaries.
Despite key differences, an important similarity links the current conflict in Afghanistan to the 1970-1975 Cambodian war: increasing US reliance on air power against a heterogeneous insurgency. Moreover, in the past few years, as fighting has continued in Afghanistan supported by US air power, Taliban forces have benefited politically, recruiting among an anti-US Afghan constituency that appears to have grown even as the insurgents suffer military casualties.
In Cambodia, it was precisely the harshest, most extreme elements of the insurgency who survived the US bombing, expanded in numbers, and then won the war. The Khmer Rouge grew from a small force of fewer than 10,000 in 1969 to over 200,000 troops and militia in 1973.
During that period, their recruitment propaganda successfully highlighted the casualties and damage caused by US bombing. Within a broader Cambodian insurgency, the radical Khmer Rouge leaders eclipsed their royalist, reformist, and pro-Hanoi allies as well as defeating their enemy, the pro-US Cambodian government of Lon Nol, in 1975.
The Nixon Doctrine had proposed that the United States could supply an allied Asian regime with the materiel to withstand internal or external challenge while the US withdrew its own ground troops or remained at arm's length.
"Vietnamization" built up the air and ground fighting capability of South Vietnamese government forces while American units slowly disengaged. In Cambodia from 1970, Washington gave military aid to General Lon Nol's new regime, tolerating its rampant corruption, while the US Air Force (and the large South Vietnamese Air Force) conducted massive aerial bombardment of its Vietnamese and Khmer Rouge communist opponents and their heterogeneous united front, across rural Cambodia.
United States policy in Afghanistan has shown a similar reliance on air strikes in fighting the motley insurgency there. These strikes, while far more precisely targeted than the earlier bombing campaigns in Indochina, inflicted substantial civilian casualties in the first year of the Afghan war in 2001-02.
The Project on Defense Alternatives estimated that in a three-month period between October 7, 2001 and January 1, 2002, between 1,000 and 1,300 civilians were killed by aerial bombing, and The Los Angeles Times found that in a five-month period from October 7, 2001 to February 28, 2002, between 1,067 and 1,201 civilian deaths were reported in the media.
Deaths reported in newspapers should be treated with caution, but not all are reported, and the total was undoubtedly high. And the toll has continued long after the initial US invasion. According to Human Rights Watch, air strikes by the US Operation Enduring Freedom (OEF) and its NATO-led coalition, the International Security Assistance Force (ISAF), killed 116 Afghan civilians in 2006, and 321 civilians in 2007.
And the number rose again in 2008: according to a United Nations study on the humanitarian costs of the conflict, air strikes accounted for 530 of the 828 civilians killed that year by US or Afghan government forces. The same study found that between January and June 2009, 200 of the 310 recorded civilian deaths were caused by air strikes. Overall in 2009, the UN reported that 2,400 civilians were killed in Afghanistan, though the number killed by foreign and Afghan troops was down 25%.
While their large-scale killing of civilians presented a moral challenge to the US-led coalition forces, there has also been increasing acknowledgment of strategic costs accompanying these casualties.
In mid-2007, the London Guardian reported that "a senior UK military officer said he had asked the US to withdraw its special forces from a volatile area that was crucial in the battle against the Taliban" after the US forces were "criticized for relying on air strikes for cover when they believed they were confronted by large groups of Taliban fighters".
The paper added: "British and NATO officials have consistently expressed concern about US tactics, notably air strikes, which kill civilians, sabotaging the battle for ‘hearts and minds'."
NATO's secretary general added that NATO commanders "had changed the rules of engagement, ordering their troops to hold their fire in situations where civilians appeared to be at risk". More recently Command Sergeant Major Michael Hall, the senior NATO soldier in Afghanistan, has argued that many of the insurgents being held at Bagram air base had joined the insurgency due to deaths of people they knew.
He told the troops, "There are stories after stories about how these people are turned into insurgents. Every time there is an escalation of force we are finding that innocents are being killed." The same report cited a village elder from Hodkail corroborating this argument: "The people are tired of all these cruel actions by the foreigners, and we can't suffer it anymore. The people do not have any other choice, they will rise against the government and fight them and the foreigners. There are a lot of cases of killing of innocent people."
Yet the bombings have continued and the civilian death toll has mounted. In 2008, after US aircraft killed more than 30 Afghan civilians in each of two bombardments of rural wedding parties, the top US commander in Afghanistan, General David McKiernan, "ordered a tightening of procedures for launching air strikes" and proclaimed that "minimizing civilian casualties is crucial". In December 2008, McKiernan issued another directive, ordering that "all responses must be proportionate".
Again new procedures failed to stop the slaughter from the air. Following an investigation into a 2009 air strike in Farah province that killed at least 26 civilians (the Afghan government reported a much higher toll of 140 dead), McKiernan's replacement, General Stanley McChrystal, issued new guidelines meant to minimize civilian casualties.
In earlier testimony to the Senate Armed Services Committee, McChrystal had stressed the strategic importance of civilian protection. "A willingness to operate in ways minimizing causalities or damage ... is critical," he argued. "Although I expect stiff fighting ahead, the measure of success will not be enemy killed. It will be shielding the Afghan population from violence." So far the cost of failure, for instance by inflicting more civilian casualties, has included a political windfall for Taliban insurgents, who by 2009 posed a much stronger threat than they had in 2005.
Since the issuing of McChrystal's 2009 directive, however, air strikes have continued to kill civilians, the toll increasing with the escalation of the US ground war in response to the greater Taliban threat.
In February 2010 alone, 46 Afghan civilians were killed in just three strikes. An errant rocket attack on February 14 killed 12 civilians. Four days later, a NATO air strike mistakenly killed seven Afghan police officers. Another NATO strike on February 20 killed 27 civilians.
In comparison to the previous year, the three-month period from March to June 2010 saw a 44% drop in civilian casualties caused by the coalition. Yet, nine years after the US went to war in Afghanistan, bombing remains part of US strategy and the death toll in aerial strikes continues. In a March incident, a US air strike killed 13 civilians and in June, 10 more civilians, including at least five women and children, were killed in a NATO air strike.
One reaction to the McChrystal directive has been an increased US use of unmanned aerial drones to deliver air strikes. While proponents of targeted drone strikes argue that they offer greater precision, and therefore minimize civilian casualties, it is also possible that the greater ease with which they can be deployed could instead increase the number of raids and thus the civilian casualty rates.
Tuesday, July 6, 2010
An Alternative for Cambodian NGOs: Democracy or Poverty Reduction?
Cambodia is well-known to the outside world for its human right violation, crime, corruption and poverty. There are hundreds of local NGOs working on human right protection and promotion of the rule of law. Bingo! they are dealing with one of the pressing issues in Cambodia. They produce good reports for international donors and Western media and convene public forums every month to disseminate and educate people about their civic and political rights and freedom. Every year, they spend hundreds of million USD to support their activities.
In return, they spread the knowledge of democracy to Cambodians, who are hungry for both Western values and lifestyle, and unfriendly behavior of the Cambodian government towards Western values. More and more Khmer rural people are aware of their unspeakable rights and freedom. They are no longer patient with suppression and exploitation by the ruling elites and powerful. Everyday, you can see they protest and gathering in public places to demand justice for illegal eviction and unfair judgement by the corrupt judicial system. Moreover, garment workers are on strike almost everyday both in the capital and provinces to ask for better pay and working condition. More importantly, in the Western media like AFP, AP, CNN or BBC everything about Cambodia is corruption, illegal eviction and poverty. They often quote or refer to reports produced by local and international NGOs or personalities that are not happy with the government actions. It is understandable that usually Cambodian government under Prime Minister Hun Sen is not so friendly with Western media (Sic!)
Do they have anything to do with ECONOMY or BASIC SERVICES? In short, RARELY! Why? Cambodia is a very poor country why economic growth and necessary services are not prioritized by the civic groups? Well, to be honest, I dont know as I never work with any NGOs. However, what I strongly agree is economic development and basic services should be pursued first. When people are better off their children will better education and they will have higher demands from the government for better service delivery and performance from the public officials. What is the effect from hundreds of million USD spent by those NGOs if they turn them into economic development? Why don't we nurture rural Cambodians about entrepreneurship and small business knowledge? How important it is to educate poor family about the importance of health and education! How useful it is to spend some portions of their funds to build roads, schools and health centers for rural Cambodians!
Experiences of East Asia Miracle (Japan, South Korea, Singapore, Taiwan and Hong Kong) and later some new industrialized countries such as Malaysia, Thailand and Indonesia, show that democracy is not the definitive reason behind these economic successes. On the contrary, when countries become more develop there is an emerging class of the society called MIDDLE CLASS who always press their governments for better performance and efficiency in handling public affairs. Poor economic performance or low revenue are no longer an excuse by the government as it is obvious that the countries develop.
Friday, July 2, 2010
Balancing out development
The Phnom Penh Post
Thursday, 01 July 2010 15:00
By Nicola Crosta
Cambodia has made strides in sustainable development, but progress will hinge on bridging existing disparities that separate the rural and urban populations
Over the last decade, Cambodia has been successful in achieving sustained economic growth, but this has been narrowly based and continues to be challenged by stark social and territorial disparities. Alongside these challenges, there is enormous unexploited potential for sustainable economic development and diversification across both rural and urban Cambodia. Clearly, many of the key factors influencing the country’s development dynamics – both positive and negative – are localised, and are thus best understood and addressed at the sub-national level. This is one of the main conclusions we reached in the Local Development Outlook: Cambodia, launched on Wednesday by the UN Capital Development Fund in Phnom Penh at the UNCDF/UNDP Local Development Forum.
On the one hand, modest progress towards some of the Millennium Development Goals (MDGs) is concentrated in specific regions and dependent on local circumstances. On the other, Cambodia possesses significant unexploited potential. Notably, some of its strongest assets are localised just where poverty and exclusion is the greatest. For example, despite its strong tourism and construction industries, Siem Reap remains one of the country’s poorest provinces.
In this context, a strong consensus is emerging across both developed and developing countries that a new policy approach is needed – one that builds on local knowledge to tailor public policy to locally specific circumstances. This should allow the provision of public goods when they are needed and where they are needed, in an integrated fashion. This logic is behind recent efforts to use more disaggregated data, such as that gathered in Cambodia through the already existing commune database, to localise the MDGs and attack poverty traps via deliberate, place-based strategies. For instance, in many countries, local MDG “scorecards” are being developed to track progress at the local level and provide input to national and sub-national planning processes. This approach also guides local development strategies that seek to harness endogenous potential and capitalise on opportunities for economic diversification and development. Additionally, this localised approach is increasingly being adopted to drive policy responses to climate change that has significant – and territorially asymmetric – impacts across developing countries.
What does this mean, in practice, for Cambodia? As argued in the Outlook, action is needed on at least two fronts. First and foremost, decentralisation reforms must advance. This will provide the necessary governance infrastructure to empower local actors as agents of change and development. Decentralisation is not just about promoting local democracy and participation; it is also a key tool to promote economic development. Second, policy that clearly outlines a localised approach to development is needed at the national level. This doesn’t mean top-down planning. It means adopting a strategic approach that is sensitive to the different characteristics of different parts of the country. This includes – for instance – developing the government’s capacity to tailor its sectoral policies to the specific context of rural areas, urban areas and cross-border or coastal provinces.
But realising local development potential is not just the responsibility of government. Private sector and financial institutions have a critical role to play to ensure local economic development opportunities are harnessed. Development partners can also do more to make sure their support is strategically targeted where it is needed and in ways that maximise synergies and integration, rather than duplication.
This local perspective may not be the solution to Cambodia’s economic, social and environmental challenges. But it is certainly part of the solution. Anyone who has travelled across Cambodia knows that this is a land of immense opportunities. A future is possible where rural areas thrive and where Cambodian cities act as hubs for development. But for this to happen, efforts need to be localised: Economic growth in Phnom Penh does not automatically translate into development in Ban Lung. In other words, growth is necessary, but it doesn’t necessarily imply balanced, sustainable development. If sustainable development is the objective, key actors need to act collectively, strategically and deliberately towards it.
This will allow all Cambodian regions, and their populations, to participate in national growth and development.
Nicola Crosta is chief technical advisor to the UN Capital Development Fund, the UN’s investment agency for least developed countries.
http://www.phnompenhpost.com/index.php/2010070140195/National-news/balancing-out-development.html
Thursday, 01 July 2010 15:00
By Nicola Crosta
Cambodia has made strides in sustainable development, but progress will hinge on bridging existing disparities that separate the rural and urban populations
Over the last decade, Cambodia has been successful in achieving sustained economic growth, but this has been narrowly based and continues to be challenged by stark social and territorial disparities. Alongside these challenges, there is enormous unexploited potential for sustainable economic development and diversification across both rural and urban Cambodia. Clearly, many of the key factors influencing the country’s development dynamics – both positive and negative – are localised, and are thus best understood and addressed at the sub-national level. This is one of the main conclusions we reached in the Local Development Outlook: Cambodia, launched on Wednesday by the UN Capital Development Fund in Phnom Penh at the UNCDF/UNDP Local Development Forum.
On the one hand, modest progress towards some of the Millennium Development Goals (MDGs) is concentrated in specific regions and dependent on local circumstances. On the other, Cambodia possesses significant unexploited potential. Notably, some of its strongest assets are localised just where poverty and exclusion is the greatest. For example, despite its strong tourism and construction industries, Siem Reap remains one of the country’s poorest provinces.
In this context, a strong consensus is emerging across both developed and developing countries that a new policy approach is needed – one that builds on local knowledge to tailor public policy to locally specific circumstances. This should allow the provision of public goods when they are needed and where they are needed, in an integrated fashion. This logic is behind recent efforts to use more disaggregated data, such as that gathered in Cambodia through the already existing commune database, to localise the MDGs and attack poverty traps via deliberate, place-based strategies. For instance, in many countries, local MDG “scorecards” are being developed to track progress at the local level and provide input to national and sub-national planning processes. This approach also guides local development strategies that seek to harness endogenous potential and capitalise on opportunities for economic diversification and development. Additionally, this localised approach is increasingly being adopted to drive policy responses to climate change that has significant – and territorially asymmetric – impacts across developing countries.
What does this mean, in practice, for Cambodia? As argued in the Outlook, action is needed on at least two fronts. First and foremost, decentralisation reforms must advance. This will provide the necessary governance infrastructure to empower local actors as agents of change and development. Decentralisation is not just about promoting local democracy and participation; it is also a key tool to promote economic development. Second, policy that clearly outlines a localised approach to development is needed at the national level. This doesn’t mean top-down planning. It means adopting a strategic approach that is sensitive to the different characteristics of different parts of the country. This includes – for instance – developing the government’s capacity to tailor its sectoral policies to the specific context of rural areas, urban areas and cross-border or coastal provinces.
But realising local development potential is not just the responsibility of government. Private sector and financial institutions have a critical role to play to ensure local economic development opportunities are harnessed. Development partners can also do more to make sure their support is strategically targeted where it is needed and in ways that maximise synergies and integration, rather than duplication.
This local perspective may not be the solution to Cambodia’s economic, social and environmental challenges. But it is certainly part of the solution. Anyone who has travelled across Cambodia knows that this is a land of immense opportunities. A future is possible where rural areas thrive and where Cambodian cities act as hubs for development. But for this to happen, efforts need to be localised: Economic growth in Phnom Penh does not automatically translate into development in Ban Lung. In other words, growth is necessary, but it doesn’t necessarily imply balanced, sustainable development. If sustainable development is the objective, key actors need to act collectively, strategically and deliberately towards it.
This will allow all Cambodian regions, and their populations, to participate in national growth and development.
Nicola Crosta is chief technical advisor to the UN Capital Development Fund, the UN’s investment agency for least developed countries.
http://www.phnompenhpost.com/index.php/2010070140195/National-news/balancing-out-development.html
Tuesday, June 22, 2010
Workplace bans on beards raise hairy questions
Tuesday, June 22, 2010
By MIKI NAKANISHI
Kyodo News
MAEBASHI, Gunma Pref. — The issue of men with facial hair in the workplace has recently prompted serious discussions as well as actual bans based on "decorum."
News photo
Hairy issue: A bearded shopkeeper is given a "no" sign by a customer in an illustration addressing the issue of banning facial hair in the workplace. TARO ARAI ILLUSTRATION / KYODO
In May, the city of Isesaki, Gunma Prefecture, banned all male municipal employees from sporting beards in the office on the grounds that public servants should look decent. The city took the action after some residents complained about its bearded workers.
In response to the news, the Internal Affairs and Communications Ministry said it had never heard of any municipality introducing such a rule.
Isesaki's move, however, is nothing new. A growing number of Japanese, including athletes, are being prohibited from turning up for work unshaven so they won't "offend" the public.
Seven-Eleven Japan Co. is particularly strict about the appearance of its employees and says it won't hire men with beards.
"We might fire workers growing beards regardless of whether they are regular staff or part-time workers," a public relations official said.
Oriental Land Co., owner of the Tokyo Disney Resort, also bans beards, like its U.S. counterpart.
"It's important that workers serving our guests maintain an immaculate image," an official said. "But the rule doesn't apply to the man playing the role of Captain Hook in our park."
The manufacturing arm of razor maker Kai Corp. tests the quality of its products almost every month on its male workers. They grow facial hair until the monthly test date arrives and get back to work cleanshaven after the tests.
Some men take issue with the bans.
An employee of Japan Post Service Co. sued the firm to protest a pay cut imposed because of his beard.
In March, the Kobe District Court ordered the company to pay him ¥370,000 on grounds that a person's appearance is a matter of personal freedom and a uniform ban on beards is unreasonable.
In sports, the Yomiuri Giants baseball club is well known for its ban on beards. When he left the Nippon Ham Fighters for the Giants in December 2006, infielder Michihiro Ogasawara made his fans gasp by shaving his trademark beard.
The baseball star said abiding by his team's rules was a matter of manhood.
No regulations exist regarding facial hair in the world of sumo, the most tradition-bound of sports in Japan.
According to the Japan Sumo Association, some non-Japanese wrestlers have taken flak in the past because they tend to be more hairy than most Japanese and some fans found their bushy facial hair unseemly. By and large, not wearing a beard is a tacit rule.
The association, however, is rather flexible regarding the issue.
"We work in the world where luck counts a great deal, so some wrestlers don't shave during a winning streak" because they fear it would change their luck, an association official said.
"It is said that growing a beard or not should be a matter of personal freedom and left to each individual to decide, but organizations fail to function well if they lack a certain measure of discipline," said Mitsuru Yaku, a cartoonist and commentator on various social issues who himself sports a beard.
"A beard is a symbol that is the polar opposite of a virtue associated with a serious-minded adult, and many people equate beards with decadence or moral laxity," he said.
By MIKI NAKANISHI
Kyodo News
MAEBASHI, Gunma Pref. — The issue of men with facial hair in the workplace has recently prompted serious discussions as well as actual bans based on "decorum."
News photo
Hairy issue: A bearded shopkeeper is given a "no" sign by a customer in an illustration addressing the issue of banning facial hair in the workplace. TARO ARAI ILLUSTRATION / KYODO
In May, the city of Isesaki, Gunma Prefecture, banned all male municipal employees from sporting beards in the office on the grounds that public servants should look decent. The city took the action after some residents complained about its bearded workers.
In response to the news, the Internal Affairs and Communications Ministry said it had never heard of any municipality introducing such a rule.
Isesaki's move, however, is nothing new. A growing number of Japanese, including athletes, are being prohibited from turning up for work unshaven so they won't "offend" the public.
Seven-Eleven Japan Co. is particularly strict about the appearance of its employees and says it won't hire men with beards.
"We might fire workers growing beards regardless of whether they are regular staff or part-time workers," a public relations official said.
Oriental Land Co., owner of the Tokyo Disney Resort, also bans beards, like its U.S. counterpart.
"It's important that workers serving our guests maintain an immaculate image," an official said. "But the rule doesn't apply to the man playing the role of Captain Hook in our park."
The manufacturing arm of razor maker Kai Corp. tests the quality of its products almost every month on its male workers. They grow facial hair until the monthly test date arrives and get back to work cleanshaven after the tests.
Some men take issue with the bans.
An employee of Japan Post Service Co. sued the firm to protest a pay cut imposed because of his beard.
In March, the Kobe District Court ordered the company to pay him ¥370,000 on grounds that a person's appearance is a matter of personal freedom and a uniform ban on beards is unreasonable.
In sports, the Yomiuri Giants baseball club is well known for its ban on beards. When he left the Nippon Ham Fighters for the Giants in December 2006, infielder Michihiro Ogasawara made his fans gasp by shaving his trademark beard.
The baseball star said abiding by his team's rules was a matter of manhood.
No regulations exist regarding facial hair in the world of sumo, the most tradition-bound of sports in Japan.
According to the Japan Sumo Association, some non-Japanese wrestlers have taken flak in the past because they tend to be more hairy than most Japanese and some fans found their bushy facial hair unseemly. By and large, not wearing a beard is a tacit rule.
The association, however, is rather flexible regarding the issue.
"We work in the world where luck counts a great deal, so some wrestlers don't shave during a winning streak" because they fear it would change their luck, an association official said.
"It is said that growing a beard or not should be a matter of personal freedom and left to each individual to decide, but organizations fail to function well if they lack a certain measure of discipline," said Mitsuru Yaku, a cartoonist and commentator on various social issues who himself sports a beard.
"A beard is a symbol that is the polar opposite of a virtue associated with a serious-minded adult, and many people equate beards with decadence or moral laxity," he said.
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