As senior minister
of the council of Minister, you are collaborating
with all ministries of the Royal Government of Cambodia
(RGC) and therefore have a global view on your country's
economy. Could you give us the highlights of the
Cambodian economy for the past 5 years and the RGC's
main objectives for 5 the coming ones?
Since 1999, Cambodia has made significant progress
in the following aspects:
- Maintaining macroeconomic stability
- Strengthening the banking and some financial
institutions
- Implementing fiscal reforms measures
- Ensuring a sound management of public property
- Increasing public investment to develop physical
and social infrastructure
- Integration into the international community
In fact, since 1993 average GDP growth has reached
5.6 percent and during the last 3 years it was
up to 7 percent, furthermore inflation has remained
low (under 3%). The value of domestic currency
has been broadly stable; due in part to the high
degree of polarisation and the managed floating
exchange rate policy, which have contributed to
maintaining the value of the Riel. In addition,
the Royal Government of Cambodia has adopted a
policy of avoiding budget deficit (traditionally
financed by the central bank).
Account deficit, for 2001, excluding official
transfers, represented 6% of GDP (USD 217 Million).
Official transfers were estimated to represent
8% of GDP. For the same year, Cambodia had an
overall balance of payments surplus of USD 71
million. Foreign investment flows were estimated
to be flat at USD 113 Million, due to global economic
slowdown. With the implementation of measures
to improve the investment climate, such as improvement
of basic economic infrastructure, amendment of
the laws on investment, taxation, corporate accounting
and audit (that entered into force on July 2002),
FDI is expected to increase at around USD 150-200
Million per year.
With this in mind, the Royal Government of Cambodia
has set out a comprehensive policy to increase
Cambodia's international competitiveness. By focusing
on development and improvement of physical infrastructure,
the RGC is responding to increasing needs for
basic services such as completion of the road
network, low-cost water and power-supply, financial,
information and telecommunication services. Moreover,
the RGC will focus on the proposed industrial
and Export Processing Zones (EPZ).
For the next 5 years the Royal Government of
Cambodia aims to achieve;
- Sustainable real rate of broad based economic
growth of 6 to 7 percent per year.
- Consolidation of peace and security; deepening
and widening of reforms in all sectors such as
fiscal, administrative, military, land and natural
resources management; reduction of poverty; promotion
of good governance; and macroeconomic stability.
- Establishment of a sound legal framework for
private sector to conduct their operations, to
ensure a fair competition, transparency and accountability
of both private and public sectors.
- Sector's policies:
o Cooperation to develop vast untapped resources
and potentials in agriculture and livestock's,
particularly in high-value products and processed
foods
o Promoting natural and cultural tourism development
o Industrial policy will concentrate on the following:
§ Labour-intensive industry such as garment,
toys and footwear industry, some more natural
resources-based industries and agribusiness.
§ Promoting SME and handicraft
§ Establish industrial and Export Processing
Zones
The budget of the state is still relying up
to 40 percent on the international organisation's
support, which has been playing a key role in
the reconstruction of Cambodia. Could you explain
us in which degree they cooperate with the RGC
and your relationship for the past 10 years?
Continuation of the ongoing efforts to improve
aid coordination and management is a priority
so that more resources are channelled to priority
areas. Avoiding aid duplication, promotion of
rational allocation and efficient utilization
of resources will be achieved by the phased introduction
of sector-wide and other approaches in specific
sectors such as education and health. Such modalities,
based on forging new partnership, offer the potential
for improved aid coordination and management.
However, project aid can also effectively contribute
to the economic growth and poverty reduction objectives
if it is appropriately geared toward the Government
national development strategy, policy and programs
priorities, on the basis of consultations with
stakeholders. In addition, the government recognizes
that the development potential of individual projects
would have enhanced prospects of realization if
the intended beneficiaries, or their representatives,
were involved from the start in identification
and design as well as implementation. The process
of decentralisation and its potential for greater
involvement of the poor in decisions that affect
them is a positive move in that direction.
Achieving broad based economic growth and significant
poverty reduction is a major policy challenge.
It implies a national effort in which all stakeholders,
under government leadership, work together to
obtain agreed development objectives. The tasks
ahead are complex and maintain the desired progress
will require a sustained collaborative effort.
Nevertheless, the government is confident that
with the collective support of Cambodian development
partners the required measures, such as sound
macroeconomic management, better governance, health
improvements, nutrition, land access, development
of physical infrastructures, reduction of gender
disparities and environmental protection is within
the capacity of the national to achieve.
The important international institutions and
cooperation's in Cambodia are the following:
Structural Adjustment Credit (SAC) WB
ESAF, PRS and growth facilities IMF
SEDF II, NPRS ADB
Working conditions in garment industry ILO
Reform of the system of Investment Incentives
FIAS/ IFC- WB
Asean Investment Area-agreement ASEAN
One crucial point nowadays within the several
reforms undertaken by the RGC, is the demobilization
of armed forces. How is evolving this process
so far?
Military demobilization is not only another success
story of Prime Minister-led Government reform
policy aimed at allocating scare national resources
to social sector, most specifically toward poverty
alleviation, buy also offers to the rest of the
world a new model of reduction in forces, which
generally responds to the special conditions of
military reform and restructuring; needs of demobilized
soldiers to built their lives as civilians and
requirements of stakeholders who co-finance this
project, as a whole.
Since 1999, over 40.000 names of soldiers were
removes from the military payroll. As it turned
out, the government can save from its national
budget allocated to the army and transferred it
to the social sectors development encompassing
health and education while other economic development
initiatives are being directed from non-productive
sectors to the improvement of productive forces.
Furthermore, military demobilisation has provided
the opportunity to ex-combatants of prolonged
and destructive warfare to become productive members
of civilian society.
Last but not least, this military demobilisation
greatly contributes to further pacifying the country
in its process of continued democratisation and
building up of a culture of peace and non-violence.
And finally, it goes without saying that demobilisation
does help strengthen peace, stability and security
in the region and the world as a whole as experiences
and lessons learnt from this high political sensitive
project will be shared with the rest of the world.
You are also the chairman of the Apasara Authority,
which is in charge of the development, exploitation
and conservation of the Angkor site and other
temples in the country. Could you give us the
main lines of your policy in this field, the evolution
for the past 5 years and your future perspectives?
After years of being neglected due to war and
insecurity, Angkor Archaeological Park has now
been reintroduced to the tourism world. Since
the introduction of the Royal Government of Cambodia
open sky policy, a number of positive trends are
noted in the area of social and economic development,
tourism, and historical and monumental research.
APSARA Authority has primarily set the objective
to maintain a balance between actions to protect
the cultural heritage and the environment and
the need to develop a strong tourism industry
as part of a necessary socio-economic development
in Siem Reap. To succeed this ambition, APSARA
Authority is undertaking two major approaches;
urgent and immediate approach and long-term approach.
The urgent and immediate approaches are as follow:
1 Tourism Management
- Directory signs and information panels are being
put up for tourists,
- Temple approach areas are being planned so that
there is a proper layout of business sites, parking
lots, restroom facilities and visitor intake spaces,
- Trash collection and treatment in the park is
being set up in order to maintain the quality
of the environment surrounding the monuments,
- The establishment of rest areas, picnic areas
and footpath are underway, so there is something
for everyone to enjoy regardless of age,
- Tourist flow control by setting up tour routes,
- Establishing a training program in cooperation
with the ministry of tourism for travel guides,
thus the quality of offering service will be a
token of a worthy experience for the tourist.
2 Monument management
- There are 15 international organisations actively
working with APSARA Authority in order to preserve
the temples,
- Rules concerning tour inside and outside the
monument (approach areas and surrounding park)
are in practice,
- Information boards about the history of temples
are being put up at the approach areas of the
monuments, so tourist could understand the background
of the temples,
- Training of monument guards is also necessary
to improve their interaction with visitors and
guides alike. They will become guardians of their
own culture by providing insightful surveillance
of their heritage,
- Encouraging travel agencies to inform their
customers about the fragility of the heritage
and elicit their compliance with the rules when
visiting,
- Organising an awareness-raising seminar for
local communities in order to get them involved
in preservation and maintenance of the sites as
well as tourism development,
- Offering local residents the tourism related
employment opportunities and allow them to benefit
first in line from tourism.
The major activities that need to be undertaken
by APSARA Authority for the realisation of future
development of the Angkor Site are the following
ones:
1. Scientific, cultural and tourism communication;
Angkor had hosted major events ranging from academic
conference to environment awareness campaign to
meaningful cultural shows and world-class entertainment.
The ambition of APSARA Authority is to establish
Angkor as a regional hub for cultural centres.
2. Environment awareness; Angkor will
be the world's first cultural heritage site to
be awarded an ISO 14001 certificate for the implementation
of environment. Management System Environment
promotions are in practices, as we were just kicked
off the ASEAN Environmental Year in Angkor last
month, reforestation is another fundamental element
to promote sustainable environment.
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3. The improvement of infrastructure;
the improvement on transportation connections
is vital for Angkor Archaeological park, as well
as the whole region of Siem Reap. Based on this
judgment, APSARA Authority had decided to construct
three major roads connecting various temples in
the park. This determinant was made because a
well connected road system in the country would
offer tourists a pleasant journey to Siem Reap
and that travelling by plane or boat are no longer
the options for them.
4. New attractions for visitors: visitors
are now given a life time opportunity to view
the greatest Angkor Wat temple from a hot air-balloon
and helicopter with 360 degree angle.
5. Investment opportunities: APSARA Authority
has reserved for investors a large portion of
area with the capacity of 1007 hectares. This
area is officially named as the "Gate to
Angkor". The Gate of Angkor is potentially
reserved to foreign investors who would want to
seek greater investment growth in tourism facility.
Concerning the Energy sector, you are also
the chairman of the Cambodian National Petroleum
Authority (CNPA); could you introduce us, briefly
its main attributions and objectives? The petroleum
exploration is actually going on in Cambodia and
could change the done for the country's development.
What are the first results of this exploration
and could you give us also an insight view of
the overlapping claim area with Thailand?
The CNPA sees the discovery and processing of
oil and gas products within Cambodia as a vital
step in accelerating the country's economic development.
At present, petroleum products for domestic and
industrial use are imported, at an ever-increasing
rate and at great expense, from Singapore, Vietnam
and Thailand.
In order to create a climate where such gains
and benefits are possible, the CNPA is committed
to putting in place certain regulatory and physical
infrastructures. To this end, the CNPA's current
development goals and objectives include:
- Providing a comprehensive legislative framework
and a fair petroleum policy for the exploration
and exploitation of oil and gas, comparable with
international standards;
- Putting in place the necessary incentives to
promote, encourage and accelerate the exploration
and exploitation of oil and gas by the private
sector;
- Establishing a National Petroleum Training Centre
to ensure that sufficient local personnel are
trained and skilled in relation to petroleum and
mineral potential and production;
- Establishing a local Petroleum Laboratory to
provide physical and chemical data in support
of the supervisory, research, exploration and
evaluation activities of the CNPA; and
- Supervising and regulating activities relating
to the exploration, production, refinement and
sale of crude oil, natural gas and other derivate
products.
Exploration activities undertaken in Cambodia
to date indicate that the geology of Cambodia
is such that it is likely to be prospective for
both gas resources and petroleum, and considerable
petroleum reserves may exist. The following areas
of Cambodia are considered to be the most prospective
for Hydrocarbons:
- The offshore area in the Gulf of Thailand,
being an area of approximately 27.000 square kilometres
i.e. areas I, II, III and IV (totally 9 blocks),
in relation to which Cambodia and Thailand have
asserted overlapping claims for sovereign rights;
- Offshore Blocks I to VII located entirely within
undisputed Cambodia waters, being an area of approximately
37.000 square kilometres which covers portions
of the khmer trough; and
- The onshore Tonle Sap Basin, which extends for
approximately 30.000 square kilometres in the
northwest region of Cambodia.
Within the last year, the Royal Government of
Cambodia and Thailand have made considerable progress
toward resolving their overlapping claims to sovereign
rights covering the OCA that is considered to
be highly prospective for hydrocarbons, with some
estimates of up to 11 trillion cubic feet of natural
gas and undermined quantities of condensate and
oil.
In June 18th last year, the RGC and Thailand
agreed and signed a Memorandum of Understanding,
regarding the Area of their Overlapping Maritime
Claims to the Continental Shelf, to lay down the
foundation for a new era of cooperation in relation
to the Joint Development of Petroleum Resources
which recorded their intention to divide the OCA
into two zones and to attempt, through accelerated
negotiation, to agree upon:
- A treaty of the joint development of the hydrocarbon
resources located within the areas II, III, and
IV of the OCA which have been designated the "Joint
Development Area" (JDA); and
- A defined maritime border for the northern Area
I of OCA, which has been designated the "Area
to be Delimited".
Talking now about the offshore blocks, wells
were drilled between 1991 and 1998 and three discoveries
were made with these finds containing varying
amounts of gas, condensates and light, waxy crude
with low sulphur contents. Test flow rates were
less than 5m cubic feet a day (ef/d) and 225 barrels
a day (b/d) of oil and condensate. However, by
the end of 1997, each of the original holders
of the production sharing co-contracts had relinquished
their blocks, at least in part due to collapsing
world oil prices.
On March 18th, 2002, Chevron Overseas Petroleum
(Cambodia) Limited (COPCL), Moeco Cambodia Co.
Ltd., and LG-Caltex have been awarded block A,
Offshore Cambodia, for the exploration and production
of oil and gas (Map 4). Chevron Overseas Petroleum
(Cambodia) Limited, which is the Operator, received
a 55 percent interest in this block, which covered
6,278 square kilometres. 30 percent interest was
awarded to Moeco Cambodia co. Ltd as a 100% subsidiary
of Mitsui Oil Exploration co, Ltd. (MOECO). LG-Caltex,
which is also Chevron Texaco's affiliate, got
15 percent interest share.
The drilled "High and Tight" plan for
the initial two wells, namely Kdang Ngea and Angkea
sel, were due to be conducted by COPCL in block
A, in January 2003. The first well as been successfully
completed, for the second one we expect it to
be completed by 2004 as we need some complementary
3D seismic studies. Kdang Ngea well will appraise
the area around Angkor-1 and Angkea sel well will
appraise the area around Koah Tang-1. Kdabd Ngea
was spud and drilled successfully in good structural
position. As a preliminary result, reservoir quality
stands were found.
The offshore area includes the Khmer Trough,
part of which is located in the OCA. This trough
contains all of the offshore wells that have been
drilled to date and is considered to share geology
similar to the highly productive Pattani Basin
in the Gulf of Thailand. However, while it has
the potential for further discoveries, exploration
will be challenging.
Within this development context of the sector,
many investment opportunities have to arise. What
you be your message to potential investors?
There are presently numerous opportunities for
investment in Cambodia's petroleum industry. In
particular, the CNPA is seeking foreign investment
in:
- Renewing offshore hydrocarbon exploration;
- Further examining the potential of its onshore
acreage; and
- Developing the necessary infrastructure to support
petroleum operations.
Cambodia presently offers an attractive environment
for investment in its petroleum industry, assisted
by the following factors;
- The political environment in Cambodia has been
stable in recent years and is likely to remain
so, going forward. Cambodia has joined the United
Nations and has become a member of the Association
of South East Asian Nations (ASEAN).
- Cambodia has been experiencing consistent economic
growth of between 4 to 6 percent per annum, and
is the beneficiary of a variety of multilateral
assistance programs, including soft loans through
international agencies.
- The security situation in Cambodia has dramatically
improved in recent years.
The Government has made it clear that one of
its highest priorities is to encourage and facilitate
the development. The CNPA has indicated its willingness
to be flexible and proactive when considering
any proposals for investment in the petroleum
sector.
The present investment regime for proposals exploration
and infrastructure projects in Cambodia is based
on regulations and production sharing contracts.
Each project is considered by the CNPA on a case-by-case
basis, and the terms on which investment proceeds
are flexible and may be negotiating with the CNPA.
To date, all exploration arrangements have proposed
production share terms between investors and the
government.
The CNPA had data coving most of its available
acreage and is willing to share this information
with companies that are interested in conducing
further exploration.
Last but not least you are also responsible
for the Management policy of the Cambodian Airports.
We assisted recently to the launching of the "open
sky" policy, which has been a success, which
are your actual plans of development and do you
have in mind the creation of a new national carrier,
since Cambodia Airways collapsed a few years ago?
At present, seven domestic airports are operated,
managed and maintain by SSCA; Rattankiri, Mondulkiri,
Stung Treng, Battambang, Koh Kong, Previhear and
Kratie. BOT/BOO/BOOT arrangements are being sought
for upgrading five of these; Koh Kong, Stung Treng,
Rattankiri, Previhear and Mondulkiri.
Pochentong International Airport in Phnom Penh
is contracted out for operation, management and
development on a built-operate-transfer (BOT)
basis to a French-Malaysian consortium. In April
2000, the government entered into an agreement
that provides for a concessionaire (SCA) to operate
Siem Reap airport and share revenues with the
government. In the long-term it is expected that
a new international airport will be constructed
in Siem Reap to meet the demand of growing air
traffic and for development into a profitable
and self-financing operation. In conjunction with
the development of leisure resorts and a free
trade zone in sihanoukville, there is the promess
of development of Kang Keng airport as a regional
and international airport. For Kompong Chhang
airport, global international freight services
are planned as part of further development under
ongoing BOT/BOO agreement.
In December 2000, the Government and SAMART Corporation
entered into an agreement whereby SAMART established
a company under Cambodian Law to develop and operate
the civil air traffic control and air navigation
system in the country, on a Built-Co-operate and
Transfer basis.
The medium term goal of civil aviation is to
provide safe, high quality, and cost-effective
civil aviation services in a competitive environment,
so as to maximize the contribution of civil aviation
services to economic growth and international
and regional cooperation.
The Government supportive objectives are;
- To establish a legal and regulatory framework,
- To develop commercially oriented airports,
- To develop and, where appropriate, privatise
air navigation services,
- To introduce a new community navigation surveillance/air
traffic management (CNS/ATM) system,
- To develop human resources to cater to the specialised
economic, technical, and operational requirements
of civil aviation,
- To transform SSCA from a single centrally-controlled
Government agency into separate autonomous civil
aviation entities,
- To develop information technology.
Concerning the possible creation of a new national
carrier, we have the honour to inform that our
royal government is doing is best to find out
a partner for re-establishing our new national
airlines.
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