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.
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.