Q1. Could you give us a brief outline of the commerce in Cambodia and its main statistics?

A1. First of all I believe it is important to understand, when you start talking about Cambodia, that it is a least develop country; it is ranking 45th out of 49. I believe this last 5 years we have been able to climb the ladders quite fast. Since peace has come back to Cambodia, we have been in a greater position to start expanding our trade and also at some point develop our economy. Since we are one of the latecomers, we have been trying to catch up with the rest of the world, especially the rest of Asia. In the year 2000, only three years ago, and in order to speed up our development and our integration with ASEAN we adopted a very liberal economic policy, and also a very liberal trade policy.

Compared to other countries in the region, I believe that Cambodia has almost no restrictions, except for several types of goods that are quite sensitive like wood, which we have still to be careful with when we export, because we have to make sure that it is coming from illegal logging. Apart from these, there are no import restrictions so far, except for those who are harmful for the environment, and we have got almost no import licence also. This is the kind of environment that I want to share with you before we talk about statistics.

The statistics were from the old days, since this country was liberated from the Khmer rouge, it was a time of centrally planned economy and trade was depending on external assistance rather than trade. Trade has been developing after national reconciliation has come back to Cambodia when we started to expand our trade with neighbouring countries. But the balance of trade shows that we import about 2/3 and we export only 1/3. There has always been a large deficit but this amount has been reduced little by little. Over the past 5 years we have been able to expand our export to a very steady level.

During the past two years, we have even been able to export over 1 billion dollars, mainly of garment. If you look to all the investment data you have from the least developed countries, you'll see that none of them have been able to cross that $1 billion bar, but Cambodia did and continue to have a steady growth. By increasing our export, we have been able to decrease our trade deficit. The trade deficit is now almost nil. This shows also the increase of the Cambodian garment export to the world; you can see a steady growth of about 15 to 20% annually. This cannot be seen in other countries in terms of garment export.

Being a latecomer, we have to face very stiff competition with other countries that enjoy the same privileges, the same treatment from developed markets as you. What do you do in order to be more attractive? You offer investors a very liberal investment environment and you can also offer something special to buyers. Since 1999, we have signed a bilateral trade textile agreement with the United States, in which we link, for the first time, trade with labour conditions. You will see that a lot of countries are opposed to this condition; nobody wanted to follow us in linking trade with labour conditions.

Cambodia has been the first one to do it. How have we been able to do so? We tried to think about the reasons why other countries had objected to this linkage. In fact, they did so, because they feared that the US would use it to bar their exports into the US market. But in Cambodia we improved the idea; instead of the US barring our import, we have a safe control system; US is holding the carrot, we are holding the stick. This means that the garment industries here produce and have to conform to the labour code. If we respect the labour code, the US is going to reward us and we will enjoy more access to the US market; if we do not implement our labour code, we will still have access through the normal door. That means the US cannot bar our imports. With this type of system we have been able to link trade with labour standards, and other countries are now looking at the success story of Cambodia. It is still at a very limited level, because those who are trying to do this, is because they want to avoid the US quota level. If they cannot do it and they are still non-WTO members, it means that they have to face the quotas impositions of the US.

Q2. You have been talking about the garment industry, this is the most powerful industry in Cambodia, but in the year 2005, your quota will come to an end, which measures is your ministry taking in order to keep this industry a competitive one?

A2. As I mentioned before, we are linking labour standards with trade, this way we ensure that Cambodia is free of "sweat shop"; free of child labour and free of forced overtime. By so doing, we are creating a safe environment for all the major world brands like Nike or GAP. They will feel safer to place orders here because they know that there are no "sweat shops". This way they will prevent future boycott of their products by European consumers or US. This is very important and it will differentiate us when we are competing with other countries. If they produce the same type of products, with the same material, the same quality and maybe even the same price, we'll still have something special: the linkage with labour conditions.

Q3. One of the other major projects your Ministry is involved in is the growth corridor. Can you tell us more about this initiative?

A3. We have developed the growth corridor with JICA from Japan. The growth corridor, that goes from Phnom Penh to Sihanoukville which is our main international deep-sea port. We are now trying to make it as a linkage with other corridors we are developing in the Greater Mekong Sub-region. There is the North-South corridor, the West-East Corridor and the one from Thailand going to Phnom Penh until Ho Chi Minh City, what we call the Southern corridor; the one we are developing from Phnom Penh to Sihanoukville is a spur of that corridor that will help to develop the whole region.

Q4. What about the Special Promotions Zones and the Special Processing Zones that you are creating?

A4. This is also special for Cambodia. We will maximise the potential that we get from the special and differential treatment we have from the developed countries. The European Community for instance has provided the EBA initiative, that means Duty free and quotas free access to the market to any kind of product, except weapons. For Cambodia, we compare ourselves to our neighbours. How are our neighbours getting access to the EU market? Thailand is considered as a newly industrialised country, so when they go to Europe they have to pay MFN rate duty. Vietnam is a developing country so they still pay MFN rate. Cambodia is least developing country that benefits of the 0% tariff rate. So what we do is to set up Export Processing Zones, next to the Thai and Vietnamese borders. We try to get the factories installed on the other side of the frontier to come across the border, resettle in our side and produce using our export documents. They may re-export their production from the same port of Thailand and reach the same old customer in Europe, but cheaper because it is duty-free. According to me, it is a win-win solution that we are providing to Thai and Vietnamese industries, or to those who are investing in Vietnam or Thailand. They will still have access to the good highways and ports on the other side of the border but will beneficiate of our tax rates.

This is the kind of initiative that is very profitable for a country like Cambodia; in the ASEAN you have two other least develop countries; Myanmar and Laos. But compared with these two countries Cambodia, is in the best position to exploit to the maximum our possibilities in terms of proximity with Thailand and at the same time an access to the Sea. Laos has more problems, it has no access to the sea, and exporting by air is not economic at all.

Q5. What kind of companies do you want to attract to this Special Zone?

A5. For those who feel they are loosing competitiveness, those who feel that for them is more secure to be in Cambodia rather than going to China or Vietnam, we are offering them something special: we are providing them a very stream lined procedure in the Export Processing Zone and one-stop service. Furthermore we propose all kind of incentives that we have provided in our investment law.

Q6. What other measures are you preparing in order to attract foreign direct investment to Cambodia?

A6. The next policy that we intent to settle, is to start linking trade with intellectual property rights. This is something that some countries have not even considered yet and we have to study to what extent we can develop such a policy, as we did successfully linking trade to labour conditions. If we link this, we will provide security for those companies who come to Cambodia to invest. They will make sure that other companies will not steel the technology they have introduced previously in the country. They would be protected, and if you have this kind of policy to link trade to intellectual property rights, I believe that many industries which have high-tech will be willing to come here. We have learned from China that some companies are reluctant to go there because of the property rights problem. We feel that if we find a way to implement this aspect in Cambodia and wipe out all the piracy problems, this will make us different from other countries and a lot of people could come here.

Q7. As Vice-chairman of the CDC, can you tell us which are the main issues the Council is dealing with in order to improve the investment climate in Cambodia and which are its main strategic objectives?

A7. The investment board of the CDC is in charge of creating the best climate for foreign investment. Creating the best climate means first of all to ensure that the country is macro economically stable, politically stable and at the same time also providing the entire legal framework that is suitable to the private sector. That is quite important and at the same time we are offering something plus: the special treatment we have for being a least developed country.

At the CDC we also offer a lot of incentives, almost comparable to the ones that are offered by neighbouring countries. But apart from streamlining procedures, we offer them something special: a government with receptive ears. We set up, twice a year, a meeting between our Prime Minister and investors. Furthermore, every month we have about seven working groups in different sectors that are dealing with their partners in the private sector. Chaired by a minister, those working groups allow the private sector to raise their concerns. I am, for example, chairing the working group for trade facilitation; if any company has a problem, they can come to me. If I cannot settle this at my level, I go to the Prime Minister's level. We ensure that on a daily basis we can solve a lot of problems. There is a real dialogue between the private sector and the government. In Cambodia, if you have a problem you just have to call and we will arrange a solution! In other countries, even if you are a big investor and you ask for an appointment with a Minister it can take you even months to get results.

Q8. The Kingdom of Cambodia is working hard to join the global community. You are already member of ASEAN, and now you are in charge of the negotiations to join the WTO. What are your expectations by joining this organization and which are the last requirements to fulfil?

A8. By joining the WTO we will be on the same footing as other countries. We try to be special compared to other LDC's, but if we do not join the WTO, we cannot be special by trying to stand up alone. We have to be at least at the same level, and then we will have something special that makes Cambodia more attractive than other countries. This is the way we see our membership to the WTO. Of course by obtaining the WTO membership, a small country like Cambodia will be also protected by international rules and regulations.

We are actually in the final phase of our accession; we are going in April to Geneva for maybe the last round of negotiations. We should complete all the bilateral negotiations by the end of March. Afterwards it is just a matter of small protocol procedures, so we should be able to join the WTO in September, in Cancun. Which are the main issues we are facing to join the WTO? We still have a lot of laws and texts to adopt and, as the elections are approaching, not too many laws will be adopted on time. But we already have an action plan to adopt them by the end of 2004. In any case those laws that are priorities for the WTO will be adopted on time; and as the laws related to intellectual property rights, trade mark, patent, copyright and customs have been already adopted. Those are the main issues that should be ready before our accession process. The others can wait and the WTO gives us some transitional period to adopt those laws.

Q9. As a final question, we would like to know a bit more about the person behind the Ministry; Could you tell us something about your career path and your greatest satisfaction while being in office?

A9. If you are talking as a private citizen, I will say that I am a politician against my will and I am an economist against my will. When I was studying at school of laws and business economics I intent to join the private sector as an accountant. But, due to circumstances like Cambodia going through 6 political regimes, and being in 1979 in a country with 6.5 million people with only 64 intellectuals surviving, I could not stay in the private sector and I had to join the government to help the country. I was amongst the 64 who came and served the country at the time where there was no more administration. Since 1980 I joined the government. The country was liberated in January 1979, but at that time I was in the countryside and did not want to join but when you feel that you country needs intellectuals and there is so few, you have to come back and serve the government.

From a small clerk in the Ministry of Foreign Affairs I climbed ladders until here; it has been a long way. We have been saluting 6 different national flags in Cambodia and we are fed up with so many changes, we are trying now to do what is best for Cambodia. But it takes time because people need to be educated; they need to get used to accustomed the pen instead of the weapon.

My greatest satisfaction is that, as a Minister of Commerce, I have been able to open this country to the world; by integrating our economy into ASEAN; by changing our entire legal framework from the socialist type to the Anglo-Saxon model. At the same time my final satisfaction will be the WTO membership, with it we ensure that we have integrated our economy in the world trading system and this will put Cambodia with more solid foundations for its future development.

Q10. What would be your final message to the foreign investors that are interested in Cambodia?

A10. My final message is that we will welcome all the foreign investors in Cambodia, because we want to create the best conditions for them, make them feel at home. As I mentioned before, one thing is very different in Cambodia; we have very receptive ears, and we try always to solve problems even when we do not have enough legal framework in place we always refer to international rules and regulations.

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