Mr. Keat Chhon: I Believe that the Cambodian Economy Will Not Face a Crisis – Saturday, 6.6.2009

Posted on 7 June 2009
The Mirror, Vol. 13, No. 615
http://cambodiamirror.wordpress.com/

“Phnom Penh: The Minister of Economy and Finance, Deputy Prime Minister Keat Chhon, said in a document about different measures of the Royal Government, which had been taken to alleviate poverty during the present financial and economic crisis, ‘I believe that the measures taken will really be able to stabilize the economic situation in Cambodia so that it does not to fall into a crisis.’ In the meantime, the government still adheres to the high ambition to achieve an economic growth of around 7%, and to succeed in poverty alleviation by more than 1% per year…

“What are the measures taken by the government to withstand the global economic crisis?

“Journalists would like to publicize the special measures related to four sectors that are an important basis for economic growth in Cambodia: agriculture, the garment sector, tourism, and the construction sector.

“Deputy Prime Minister Keat Chhon wrote in his letter:

For Agriculture:

“In 2008, the government provided US$12 million special financing through the Rural Development Bank to private rice mill owners to buy paddy rice and milled rice to ensure local supplies, and it continues to add this up to US$18 million for 2009.
The government created the Foundation for Agricultural Support and Development with Riel 72 Billion (US$17 million).

“The creation of this foundation aims to provide short-term loans for buying of paddy rice and milled rice from farmers at suitable prices… and to provide medium-term loans to rice processing companies, in order to expand the capacity of their storehouses with communal rice drying facilities and other processing machines, and to provide loans for investment to produce agricultural products which can meet local needs and are also suitable for export. The Rural Development Bank will contribute US$2 million to the Foundation.

“The Royal Government will offer tax incentives for agriculture, by canceling tax payment requirements on the profits for three years for any investment of more than Riel 4 billion [approx. US$980,000], irrespective of whether those investment plans are short, medium, or long term. These incentives are included in the adjustments of the financial law for 2009. The Royal Government is reviewing and discussing whether to adjust a sub-decree about mandatory audits on investments and it will implement it soon, so as to encourage investment projects that make products by using resources from local farming, and investments for the storing and processing of rice for export, and investments in the irrigation system of more than US$200,000. The Royal Government is encouraging partnerships between farmers who own small plots of land and large farms, agricultural corporations, and economic land concessions, and especially between farmers’ associations and companies that buy, process, and export rice.

“The government keeps on adjusting the procedures for rice export as much as possible, and gradually strengthens the mechanisms to monitor paddy rice export.

“The Royal Government continues to implement a soft policy which includes measures of lowering the tax rate to zero percent, and by putting additional taxes on the import of agricultural materials, such as seeds, fertilizer, pesticide, animal foods, and other agricultural tools, in order to promote the implementation of a policy to support farmers products, so that there is a special competition to export rice [from Cambodia].

For the Garment Sector:

“Deputy Prime Minister Keat Chhon continued that the restoration of the garment sector relates also to building a social safety system. To reduce difficulties and to ease the cash movement of garment and shoes-making enterprises, the government prolongs the suspension of tax payment obligations, reducing the monthly tax to 1% for two more years (from the end of 2010 to the end of 2012), and to share the monthly occupational hazard insurance payments of 0.3% of the wage of each worker, instead of having the factory owners paying this, for two years (2008-2010).

The government sets up trade-facilitating plans by implementing the Automated SYstem for CUstoms Data – ASYCUDA, and creating procedures to reduce unnecessary expenses both officially and unofficially.

The Royal Government is taking more administrative actions, like taking action to prevent the stealing of garments from factories to be sold at the local markets. To deal with social problems and to help increase work productivity in the garment sector and for the nation, the Royal Government prepares to release US$6.5 million to create a special scholarship fund, the ‘Special Foundation of Prime Minister Samdech [Hun Sen],’ to offer short-term professional training in agricultural technical skills, and for the more than 40,000 workers who lost their jobs already. At present, the Ministry of Economy and Finance and the Ministry of Labor and Professional Training are providing short-term training courses to our workers.

In the meantime, the government plans to release about US$1 million for the ‘Foundation for Self-Employment’ administered by the National Training Committee to provide micro-loans to trainees who have received training and who are found to be capable to create their own jobs.

For Tourism:

“As for tourism, Deputy Prime Minister Keat Chhon wrote that tourism can be restored by thoroughly guaranteeing peace, security, political stability, social order, and safety for tourists, and by building more infrastructure, improving the legal framework, creating human resources, and expanding the tourism market. He added that at the same time, the Royal Government is already prepared to intervene in tourism, like by cutting visa fees, if a study about the expense system would shows that doing so really helps to attract more tourists to visit Cambodia, which in turn benefits the Cambodian economic system. The government also improves the Angkor Wat visiting card system.

For the Construction Sector:

“Regarding the construction and real estate sector, Deputy Prime Minister Keat Chhon wrote that to restore these two sectors which are being affected by the global financial crisis and by the global economic downturn, the Royal Government is paying attention to speculation operations by mortgaging property, by using also property which cannot be used as property to be mortgaged to cover immediate and short-time cash needs. This is how capital is transfered short term outside of the banking system, and it can help to encourage the movement of capital from being used for mortgage property, to be rather used in the economic system. The ministry will organize temporary management system for the above operations, by cooperating with relevant institutions and by searching students to gather experiences from some other countries as a basis to clearly control this sector, following international standards.” Rasmei Kampuchea, Vol.17, #4913, 6.6.2009.”

Rasmei Kampuchea, Vol.17, #4913, 6.6.2009
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Saturday, 6 June 2009