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
Tuesday, August 24, 2010
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
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