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.
Thursday, August 5, 2010
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
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