In our Ministry we take care of the industry sector with all the manufacturing plants of the country including the water supply in urban areas except for the municipality of Phnom Penh. The second sector is energy. We are in charge of electricity and any other kind of energy form like hydropower or renewable energies excluding petroleum and gas. The gas and petroleum was our responsibility until end of 1998 when the CNPA (Cambodian National Petroleum Authority) was created and took care of this sector. The third sector comprehends all mineral resources.

The Garment industry has been showing a steady growth ever since the MFN status (Most Favoured Nation) and the GSP (Generalized System of Preferences) have been awarded to the country by the US and the EU. What is the state of this industry nowadays and what will it be after the end of the quota in the year 2005?

The most developed sub-sector in the industry sector is the garment industry. Most of the products from the garment factories are exported. In 2002, 70% is exported to the U.S. market, 25% goes to European Union, and another 5% to Canada, Latin America, East-Europe, Japan and some other Asian countries. The total amount exported in 2002 was worth nearly 1.5 billion USD. The number of factories has increased to 230, employing 228,000 laborers, most of them are women. Most of the garment factories are located in or around Phnom Penh, which implies a big migration from the countryside to the city. There is still room for the development of that sub-sector for the next few years. We have the opportunity, after 2005, to let this sub-sector grow by improving the labor conditions and keep our competitiveness, by offering other incentives to investors. Our salaries are not the lowest compared with those of Vietnam or China, but the RGC (Royal Government of Cambodia) is looking for creating further comparative advantages to attract more investment.

We can also start to develop other non-quota products. The export-oriented industry is one of the main objectives of our government because the domestic market is too small and the purchasing power is still too low. Under the GSP and MFN provided by the U.S. and other countries in Europe, there are more than 6,000 articles that are accepted by those countries for export from Cambodia. Right now it is only the garment industry that plays a very important role in the export to those countries, but our Ministry is starting to promote other industries like for instance the agro-industry.

Can you give us some facts and figures of the agro-industry in Cambodia?

Presently there are no exact figures yet because we are promoting the sector. But the opportunities in Cambodia are huge. We have a mass of land available for agricultural products. The northeastern part of the country covered by basalt that we call the "red soil" is perfect for the rubber industry. Close to that area the soil is also favorable to other agricultural products like beans, soybeans, maize, corn, and every other kind of tropical agricultural products. Due to the fact that the management skills are not so advanced it is still very difficult to market those products. When some products are needed the farmers produce them massively and the year after they collapse the market, making the prices go down. This is why I think the state has to play a role in the management of the market and the production.

One of the main issues for the economical development of Cambodia is the creation of affordable energy. Your Ministry has created the Energy Development Plan to solve this issue. Could you give us the main lines of this plan?

Cambodia has made a good pace of reform in the power sector; the electricity law was promulgated and the electricity regulator is established. The organism is regulating the sector to ensure the quality of supply, the safety and the compliance with the standards, licensing the service providers and setting tariff. We have formulated a strategy for the development of the power sector, specifically the electricity supply. Indeed electricity is one of the key factors to develop the other sectors of the economy. We have established a master plan for generation of electricity and another master plan for transmission to develop national grid. The master plan for generation includes thermal plants using gas, heavy fuel or coal, depending on what is feasible or is available in Cambodia. If gas were available offshore, a gas power plant would be installed in Sihanoukville. We are also looking at the possibilities of a coal power plant development in coastal areas. The other development projects for the generation of electricity are hydropower projects, those that we have selected as priority projects for development and for private participation, including the bigger scale projects to link to the regional grids, like the ASEAN or the GMS (Greater Mekong Sub-region) grids.

Following our transmission master plan, the first part to be developed is the southern grid from Phnom Penh to border of Vietnam via Takeo, with a link from Takeo to Sihanoukville through Kampot, linking up to the expected gas power plant in Sihanoukville. The idea is first to import from Vietnam cheaper electricity towards Phnom Penh. This transmission line is expected to start next year and to be commissioned in 2006. At the other side we can enjoy the electricity supply at a cheaper cost by interconnecting with Thailand in the northwest to Siem Reap and to Battambang, passing through Banteay Meanchey. The grid linking those three northern provinces will also go at the same time as the southern grid. After that, we link Phnom Penh to Battambang. Then we will connect the major generation sites, especially the hydropower plants.

The power importing strategy is first to widen the domestic electricity market as currently the market is very small because of the price. Once we connected with Vietnam and Thailand, where the electricity is cheaper, the local electricity market will be growing up and when the demand is big enough we can start to develop our own bigger hydropower resources. We have launched our offers to the private sector, foreigner or local. Some hydropower sites have been visited already by electricity companies. Battambang I and Battambang II are being studied by joint Cambodia-Malaysian consortium and Battambang III by a Korean company. Russei Chrum have also been visited by some companies and the study will commence soon. We need to develop those hydro resources to achieve cheaper costs of electricity.

During your presentation you presented renewable energy sources as a priority for your ministry, what are your priorities on those matters?

First of all we have formulated the Rural Electrification Strategy. This strategy includes program for rural electricity development and investment. The electricity development program includes grid extension to the areas that are close to an existing grid and the development of stand-alone systems with diesel generators for villages and small communities and the development of renewable energy sources with projects like the micro-hydro in the northeastern or western part of the country, and the solar power energy. This solar energy system is still relatively expensive but we need that development and we are asking for assistance from the developed countries. Japan for example is helping with small installations mainly for lighting.

This program of rural electrification is expected to be financed by donors and the World Bank. The first five-year program for rural electrification is expected to commence soon, and the World Bank is mobilizing resources to finance it. In the rural electrification strategy, one of the main components is to create the Rural Electrification Fund (REF) to subsidize one part of the rural electrification investment; the other sources of financing are: (1) longer term loan from local commercial bank designated by the World Bank and (2) self equity. This way we can assist in the investment in the rural electrification projects. We are launching this program and formulating the sub-decree and royal-decree for the creation of this fund. Maybe next year or at the end of this year the fund will be established, the Board will be put in place, and the Rural Electrification Program will be started.

Cambodia is known worldwide for its rubies, but there are more mineral resources in the Cambodian soils. Can you give us an image of the current situation of the mining sector of the country?

We have a lot of indications of mineral resources in Cambodia, but so far there is not much development, only construction material such as stone, gravel or sand is being developed. There was also phosphate extraction for fertilizer, but the fertilizer plant was not able to work well, this is because of the quality and technology.

According to you what are the main investment possibilities in the three sectors your Ministry represents?

We would like to promote the investment in agro-industry as we have a very good soil and products of excellent quality. The main issue is how to manage to produce the quality and quantity for export. Each farmer has its own small piece of land and its own production technique. I think that to promote the development of this sub-sector, production cooperative or association gathering few hundred farmers owners of the land should be formed. The investor would introduce technology, construct irrigation systems, acquire mechanical equipment and fertilizers, then buy products and transform to export. You can help the people in the association to develop itself. There is no need to buy the land, just gather the owners of the land to form such an association. There have been examples like in Kandal province; investor gathered farmers owners of about ten thousand hectares of rice field to form an association, then the final product is sold at an agreed price to the investor, which in turn processes and exports it.

In the small and medium industry sub-sector, the problem is that the development is quite slow because of accessibility to finance and technology. These two things result in low competitive advantages with countries in the region.

In the power sector we would like to invite investors to come develop our hydropower resources. This is a very good opportunity, once we have linked our network with the neighboring countries, we can even sell the excess of power to them. The GMS countries have signed the Inter-governmental Agreement for Power Trade. So once we have interconnection between the countries we can sell towards the neighboring countries.

For water supply, I mentioned that except for Phnom Penh, the other urban areas are the responsibility of our Ministry. We have set a target for 2015 to supply about 60% of the total population. The supply will be tap water from a pipe, not pit water. This is one opportunity for investment also. The private sector can participate in the water supply development in urban areas throughout the country. The World Bank is assisting us to make a study to select the urban areas that have more than one thousand households to be accommodated in that development. We are conducting feasibility study, listing selected areas for private participation. This is an ongoing project; the list will be issued soon. In connection to that sector, we are going to pass a law on water supply and sanitation, establish a regulator to regulate the sector, set the tariff and to issue licenses to suppliers, the same we had done in the electricity sector.

Can you tell us what is your career path?

My background is electrical engineering. I completed my Ph.D. studies between 1995 and 1997. I got my Doctorate degree in Business Administration at the Southern California University. Before the Khmer Rouge regime, between 1970 and 1975 I was a professor of electricity at the People University and Technical University in Phnom Penh. In 1975, the same as the other Cambodians, I was sent by the Khmer Rouge regime to a countryside working in the rice field in Kampong Cham province. We had to work hard, very hard with nothing to eat. Then in 1979, after the liberation of the country I came back to Phnom Penh, worked as chief electrician at a distillery and was nominated as the director of the factory in 1980. In 1984, I was designated as a vice-minister of this Ministry and promoted as a secretary of state in 1994. I have held this almost same position for 19 years.

What would be your final message for investors interested into Cambodia?

We would like to invite investors to invest in any sub-sector that the Ministry is responsible for, including the manufacturing, especially in the agro-industry. We are going to establish an industrial area to facilitate the investment, and facilitate the operation of the manufacturing sector. The power sector has a good potential, especially the hydropower resources. We are very pleased to invite the investors to participate in the mineral resources development. We have a lot of indication of minerals, even after the overexploitation by the Khmer Rouge; we still have gold and gemstones. Gemstone is still a very good potential for the country. The last sub-sector is water supply in urban areas throughout the country, there are also good opportunities for private participation in that sector, because we are going to establish the law and the regulator for that sector.