Proleung Khmer

Friday, February 11, 2005

Rich and Poor

The gap between the rich and the poor is very big.

World Bank Group President James D. Wolfensohn wraps up his visit to Cambodia by
urging Cambodia to seize the opportunity to "move urgently forward on the reform agenda it has adopted."

The problem in Cambodia is the corruption and poverty. Money coming from the World Bank went in the pockets of all these corrupt officials.

Enough is enough!

18 Comments:

  • World Bank warns Cambodia on corruption
    By Amy Kazmin in Bangkok
    Published: February 11 2005 13:55 | Last updated: February 11 2005 13:55

    Cambodia was on Friday warned by the World Bank that its economic future hinges on stamping out the flagrant corruption that has undermined the country's business prospects since the end of the Khmer Rouge era.


    James Wolfenson, president of the Bank, said Phnom Penh's top three tasks to promote economic development - essential to generate jobs for the youthful population - are "fighting corruption, fighting corruption, and fighting corruption."

    "This is Cambodia's problem... if you do not move no one will cry over Cambodia," Mr Wolfenson told the first-ever investment conference in a country scarred by three decades of civil war. "If you do not become a credible competitor, it will be because of Cambodians, not because of the international community."

    Prime Minister Hun Sen, the long ruling strongman, re-affirmed that he intended to cut the excessive red tape, and improve the country's governance to make Cambodia an attractive investment destination.

    But Mr Hun Sen, who has made similar sweeping declarations before, has so far taken little convincing action to tackle the deeply entrenched culture of official corruption by poorly paid civil servants, who have come to depend on shake-downs of business to supplement their meager official wages.

    Mr Wolfenson's warning comes at a pivotal moment for Cambodia. Its economy has grown by an average of 6 to 7 per cent a year in recent years, thanks in part to growing foreign tourist arrivals, but also due to a surge in garment exports to the United States.

    But the end of the global garment quota system in 2004 has threatened Cambodia's nearly $2bn in foreign garment sales, which accounts for nearly 80 per cent of its' total exports. Free trade in textiles allows buyers to source freely from the lowest cost, or most attractive, production locations namely China - a shift likely to take place gradually in the coming years.

    Cambodia's garment factories have opened themselves to intense scrutiny in a bid to promote themselves as a haven of fair labour standards and 'safe' production for image sensitive global brands. But bribes, pay-offs and "facilitation fees" are estimated to add around 10 to 15 per cent to the costs of garment exports.

    Both the World Bank and the IMF have projected that economic growth will slow to between 1.9 and 2.4 per cent a year as a result of the slowdown in the garment trade, following the end of the textile trade pact. Foreign investment has plunged from around $250m in 1998 to around $50m in 2002. In a World Bank survey last year of 800 businesses operating in the country, 75 per cent identified corruption as their biggest operational constraint.

    The leadership conference took place against the backdrop of a political crisis that has seen outspoken Sam Rainsy, Cambodia's opposition leader, and one of his deputies, flee into exile after their parliamentary immunity was removed.

    Another opposition MP, who also lost his immunity, has been arrested as part of a crackdown that US senators has described as an attempt to crush Cambodia's democratic opposition.

    By Anonymous Anonymous, at 5:15 PM  

  • The World Bank group

    World Bank Group President James D. Wolfensohn Wraps Up Visit To Cambodia,
    Urges: "Seize The Opportunity"
    Contacts:
    Phnom Penh : Bou Saroeun
    (855-23) 213-538
    sbou@worldbank.org

    Kimberly Versak
    66-1-875-5064
    kversak@worldbank.org

    PHNOM PENH, February 11, 2005 - "Cambodia is a country of great human,
    cultural, and natural resources with real potential to be a thriving
    economy, but it needs to move urgently forward on the reform agenda it has
    adopted," said James D. Wolfensohn, President of the World Bank Group, as
    he concluded his visit to Cambodia this week. He congratulated the
    Cambodian people on the progress they have already made, and said, "You are
    at a crossroads for change. Cambodia must not falter, but must move
    decisively forward if it wants to ensure that its vision for a stronger,
    healthier country and people is to be realized."


    Mr. Wolfensohn, in his first trip to Cambodia, met with a number of key
    stakeholders here to learn more about issues important to the Cambodian
    people. He met with His Majesty the King, Norodom Sihamoni; Prime Minister
    Samdech Hun Sen; senior government officials; civil society; students and
    youth organizations; garment workers; members of the private sector; and
    donors. He also participated in a high-level panel discussion on
    Cambodia’s trade opportunities at the international summit: Cambodia:
    Seizing the Global Opportunity - a Growth Strategy in an Era of Free Trade.

    In each of his meetings, Mr. Wolfensohn underscored the need for Cambodia
    to promote good governance and fight corruption in order to promote
    broad-based growth and poverty reduction. He stressed the need to improve
    aid effectiveness and coordinate efforts to achieve the growth and poverty
    reduction objectives. He also made special efforts to reach out to youth
    in Cambodia, given their important role in the hope, inspiration, and
    vision of the future of this country.

    Mr. Wolfensohn noted that the analytical work - diagnosing the problems of
    poor governance, weak institutions, and corruption that are holding back
    economic growth, investment, and poverty reduction - has been done, the
    reform agenda has been set, and that now, "the key is implementation."
    Based on his own meetings with stakeholders in Cambodia, Wolfensohn said
    that the key to implementing the reform agenda and achieving Cambodia’s
    vision for the future rested in an aggressive fight against corruption.

    "There are many people in Cambodia who have asked why the World Bank
    remains involved in a country where the problems of corruption are as
    well-recognized as they are, by government, civil society, private sector,
    the media, and others," Wolfensohn said. "We believe, however, that we
    have an obligation to help the Cambodian people to have the opportunity,
    the hope for a better life. We believe that by working with Government,
    increasing our partnership with the donor community, and increasingly
    consulting with civil society groups, including youth - all who share this
    dream of a better future - that we can do more by staying engaged than by
    leaving. We have reduced our lending to Cambodia - as a response to the
    poor performance on governance indicators - but we have not reduced our
    commitment, nor our efforts to push for the kinds of reforms that are
    needed to bring about a better life for all Cambodians."

    Mr. Wolfensohn visited a garment factory with 380 employees, most of whom
    are women and supporting their families back home in rural communities.
    The garment sector is Cambodia’s largest industry, worth $1.6 billion in
    2003, and accounts for 80% of exports. He praised the International Labor
    Organization’s (ILO) efforts, through its factory monitoring program, in
    supporting the Government’s goals to make Cambodia an international leader
    in improving core labor standards. As part of these efforts, not only have
    the conditions of Cambodia’s labor force improved, but the productivity has
    increased and quality of products boosted, he noted.

    "The increasing competition faced by Cambodia as the MFA (Multi Fiber
    Arrangement) expires means that continued reform to improve productivity
    and competitiveness by reducing costs - many of which are caused by poor
    infrastructure, weak institutions, corruption, and layers of bureaucracy -
    and improving the skills and training of the workforce is all the more
    urgent." He warned that a workforce of some 1.2 million people directly
    and indirectly relied on the garment sector and if the government failed in
    its reform objectives, that these people would be seriously affected, and
    as much as 10% of GDP could be hurt. He urged renewed implementation on
    the Government’s 12 Point Reform plan, announced last August, which
    addressed competitiveness issues and impediments to private sector led
    growth.

    Another highlight of the visit was a ceremony where Mr. Wolfensohn handed
    out new land certificates to residents. He noted that having rights to
    land marks a new opportunity for the Cambodian people to invest in their
    farms, small businesses, and houses, to improve their financial security
    and their lives - and is key in the fight against poverty. With support
    from the World Bank-financed Land Management and Administration project,
    the Government is issuing 20,000 titles a month, mostly in rural areas, in
    a transparent and participatory process, with 80% of the these titles
    registered jointly by wife and husband or by female-headed households.

    Tackling another key issue - aid harmonization - Mr. Wolfensohn met with
    the government and a number of donors to discuss how to build upon the
    government’s efforts to increase the effectiveness of aid money - in
    particular, addressing issues such as the quantity and quality of technical
    assistance. Mr. Wolfensohn congratulated H.E. Keat Chhon, Minister of
    Economy and Finance, for his leadership in harmonizing aid - with donors
    increasingly cooperating with each other and aligning their programs with
    the government’s priorities, and government in turn taking on ownership of
    the development process and committing itself to reform of institutions and
    systems in a transparent and accountable manner. By improving national
    systems (ie, civil service, budgeting, accounting,) the government can
    reduce transaction costs and increase budget support from donors, Mr.
    Wolfensohn said. Partnership, better alignment, and strengthened country
    systems are absolutely crucial to making sure that the aid intended to he
    lp Cambodian people reaches them.

    Mr. Wolfensohn addressed more than 800 students at Pannasastra University,
    where he announced the Youth in World Bank Cambodia Program - a special
    program modeled on successful pilots in other country offices around the
    globe to involve a youth in analyzing the Bank’s projects and programs and
    helping to incorporate their views and needs in the design and
    implementation. He noted that Cambodia needs a paradigm shift from a
    society that accepts corruption as a natural way of life, to one that
    demands the highest ethical standards, one that focuses on education and
    hard work, and noting that young people have a crucial role to play in
    making this shift, provided they refuse to play any part in corrupt
    practices. He reminded youth of the lessons he learned from speaking to
    other youth groups, in other countries, who told him that "youth may be the
    future, but we are also the now." He said that although Cambodians have
    suffered from a terrible past, the country has a great deal of unrealized
    potential a
    nd youth are an important part of that ; they must willing and confident in
    taking a leadership role in reforming Cambodian society.

    Mr. Wolfensohn also joined in the high-level conference: "Cambodia -
    Seizing the Global Opportunity: A Growth Strategy in an Era of Free Trade"
    and participated in a discussion about how Cambodia can create a domestic
    environment that supports sustainable growth in investment and productive
    jobs; how the private sector can contribute to this growth agenda, and the
    important role of trade, good governance and corporate social
    responsibility in a least developed country. He spoke about trade and
    development linkages and urged that Cambodia, as with all developing
    countries, needs to focus on three areas to reap the benefits of the global
    trading system :good governance, including institutions, training, people
    and systems; a functioning legal system; and strong anti-corruption
    measures. He also assisted H.E. Minister Cham Prasidh, Senior Minister of
    Commerce in awarding four awards for the First Annual Corporate Citizenship
    Awards, supported by the International Finance Corporation and selected
    through a comp
    etitive process based on a set of international criteria.

    Mr. Wolfensohn also met with members of civil society, and discussed with
    them key issues such as governance, use of natural resources, gender, and
    human and social development. "No society can move forward without respect
    for women and equal opportunity," he said.

    He urged strengthened cooperation between the Bank and NGOs in areas where
    the vision and goals of Bank and NGOS are aligned - such as good
    governance, social and economic justice, and poverty reduction - and said
    that they need to continue to openly discuss areas where they may disagree
    and work towards identifying way to collaborate so that together they can
    reach their shared goals of a more prosperous and equitable Cambodia.

    Mr. Wolfensohn concluded his visit with a meeting with His Majesty, King
    Norodom Sihamoni in which he stated: "The future is in the hands of
    Cambodians," Mr. Wolfensohn concluded. "The World Bank is ready to
    support your efforts - but ultimately, success or failure is in your hands.
    All have a role to play - the Government, the Parliament, civil society,
    the private sector, students, youth, media - in making their country a
    place of opportunity, of hope, and peace. Cambodia deserves this
    opportunity, and the World Bank is committed to being your long-term
    development partner and assisting you in meeting these dreams for a better,
    more equitable future for all Cambodians."[End]

    By Anonymous Anonymous, at 5:16 PM  

  • February 10, 2005

    James D. Wolfensohm, President
    The World Bank Group

    Dear Mr. Wolfensohm,

    On the occasion of your visit to Cambodia, the Members of Parliament of
    the Sam Rainsy Party would like to bring to your attention some major
    concerns the political opposition has regarding the paths the government
    and the National Assembly have taken in the months since the
    Consultative Group Meeting in 2004 that have alarming impact on
    democracy and responsible governance within Cambodia.

    Our first concern is regarding corruption in the government
    demobilization project sponsored by the World Bank. While we are
    encouraged by the government's return of the US$ 2.8 million that has
    been misused, we strongly believe that the Bank's extension of the
    auditing deadline and allowing the government to choose its own auditing
    firm could cause doubts concerning the transparency of the auditing
    process. We urge the Bank to require that the audit be undertaken by a
    firm without any ties to the government as well as recommend that strong
    measures be taken against officials and individuals found to be involved
    in the misdirection of the project funds. If taken, these measures could
    be a step forwards in the government's commitment to reduce corruption
    and gain confidence from the private sector.

    Our second concern is regarding the accelerated exploitation of land
    concessions by private enterprises. Despite conclusions and
    recommendations put forward in Cambodia at the Crossroads concerning
    land concessions, the government continues to allow private companies to
    exploit land concessions in spite of protests by local villages and the
    clear rules stated in the existing land laws. We are gravely concerned
    about the situation in Pursat and Kompong Chhnang where villagers are
    reporting increased activity by the Pheapimex/Wuzhishan companies that
    show no regard for the needs of the local people. Not only are the local
    people being prevented from accessing a traditional and vital resource
    for their livelihoods, the damming of streams in the concession is
    affecting their ability to produce enough food on their land outside the
    concessions. We strongly urge you, Mr. President, to stress to the Prime
    Minister this very urgent and crucial matter of survival of the poor and
    the detrimental implications on long-term economic growth. Once again,
    the opposition repeats its recommendation of a one-year moratorium on
    transactions involving State assets, pending investigation and proper
    evaluation.

    We are deeply concerned over the current situation within the National
    Assembly in regards to its relations with the opposition. The February
    3rd removal of the parliamentary immunity of three opposition lawmakers
    brings into grave question the government's commitment to democracy.
    With legal complaints having been lodged against lawmakers from both the
    government and the opposition, the removal of immunity from only
    opposition lawmakers can only be seen as an attempt to quiet criticism
    of the government rather than the government's claims that it was only
    allowing the courts to proceed. With the lack of an independent
    judiciary free of political interference, it should be clear why the
    opposition feels the removal of immunity is not just an effort to allow
    the judicial system to do its job but rather an overt form of
    intimidation. The opposition is also absent from all parliamentary
    commissions allowing the opposition no chance to voice its opinion on
    government decisions in any venue other than the National Assembly. It
    is a crucial aspect of democracy that all parties are allowed to freely
    speak on the issues of state and the current climate in Cambodia is
    making it exceedingly difficult for the opposition to do this
    effectively and free from fear of reprisal.

    Our final concern is the fact that certain items such as the use of
    foreign loans by government are not being properly discussed by the
    National Assembly as stipulated in Article 90 of the Constitution. The
    National Assembly is the proper body to be providing oversight of
    projects funded by foreign loans yet at this time the Assembly is
    provided with no information from the government concerning the
    operation of these projects. It would be of great use to all members of
    the National Assembly if the World Bank and other donors would provide
    all Members of Parliament with detailed information on all loan projects
    so that they can effectively undertake their roles of monitoring and
    maintaining accountability of these projects for both the people of
    Cambodia and donor countries.

    We hope that you will be able to consider and address these issues
    during the International Leadership Summit in Phnom Penh. We feel that
    these are issues that need to be resolved as soon as possible to ensure
    that Cambodia stays on the road towards democracy and responsible
    government.

    Sincerely
    (sgd.)
    Hon. Son Chhay, Member of Parliament

    By Anonymous Anonymous, at 5:17 PM  

  • The World Bank group

    News & Broadcast
    Headlines for Friday February 11, 2005
    Cambodia Needs Rapid Reforms In Vulnerable Garments Sector: World Bank
    The World Bank's chief East Asia and Pacific economist, Homi Kharas, said
    Cambodia needs to introduce labor market reforms rapidly if it wants to
    compete with giant neighbors in its key but vulnerable garments sector, the
    Agence France Presse reports.

    Kharas said this at a two-day meeting that opened Thursday night in Phnom
    Penh on fair trade and growth titled "Cambodia: Seizing the Global
    Opportunity - a Growth Strategy in an Era of Free Trade." Kharas praised
    development plans outlined by Cambodian Prime Minister Hun Sen but said the
    country needed to be quick in order to catch up with its neighbors. "The
    context for change is quite favorable and benign," Kharas told the
    conference. "For countries like Cambodia, which is starting late, movement
    is not enough. It must be fast and rapid movement. There is no country in
    the world that is as dependent on a single sub-sector as Cambodia," he
    added, referring to the garment industry.

    Hun Sen told the conference the way forward for his country was to stick
    with global labor market compliance standards. "We hope that our young
    people will grow up in a Cambodia that is known as a place where you can do
    good and do well, a place where good governance, corporate social
    responsibility and profitability go hand in hand," he said.

    Xinhua explains that the conference addresses Cambodia's garment sector,
    investment climate, and path towards international engagement. The
    expiration of the Multi-Fiber Arrangement and the consequent elimination of
    quotas in the garment sector have dramatically changed the dynamics of
    global garment production. These changes could have a profound effect on
    the Cambodian economy because garments are responsible for 80 percent of
    Cambodia 's export revenues, employ 270,000 workers and accounts for around
    12 percent of Cambodia's Gross Domestic Product.

    Reuters further reports that World Bank President James Wolfensohn said on
    Friday that impoverished Cambodia must stamp out rampant corruption if it
    is to succeed in an increasingly competitive world. "Fighting corruption,
    fighting corruption, fighting corruption," Wolfensohn told a conference
    when asked what were the three things the Cambodian government should be
    doing. "This is Cambodia's problem. If you do not move, no one will cry
    over Cambodia," he told the conference attended by businessmen and
    officials of a government that promises crackdowns on corruption but has
    yet to pass a law to deal with it. "If you do not become a credible
    competitor, it will because of Cambodians, not because of the international
    community," he said, calling corruption the country's core problem. "You
    have confusing bureaucratic practices, you have too many approvals, you
    have too many steps and every step is an opportunity for corruption,"
    Wolfensohn said.

    The Associated Press meanwhile reports that Hun Sen Friday vowed to cut red
    tape and eradicate corruption to help the country's fragile economy survive
    the removal of protective quotas for its main exports. "The challenge for
    Cambodia in the next 10 years is the strengthening of good governance, so
    that we can attract more investment and ensure our competitiveness with
    neighboring countries," he said. Hun Sen's pledges included expanding
    electricity and communications networks, minimizing paperwork, eradicating
    "unofficial" costs, and eliminating unnecessary licenses.

    Reuters however adds that Hun Sen has given no details of what steps he
    would take or when they would be taken despite criticism from aid donors,
    who give Cambodia $500 million a year. Foreign investment in Cambodia has
    fallen sharply from between $750 million and $800 million a year between
    1995 and 1998 to $251 million in 2003 and officials acknowledge red tape
    and corruption are largely to blame.[End]

    By Anonymous Anonymous, at 5:21 PM  

  • World Bank Warns Corruption Could Destroy Cambodian Economy By Kate Woodsome
    Phnom Penh
    11 February 2005



    The World Bank called on Cambodia this week to drastically curb corruption, or face isolation from the world's free trade markets. The country may have begun to put its house in order.

    World Bank President James Wolfensohn says the three greatest obstacles to Cambodia's growth are "corruption, corruption, corruption."

    According to a World Bank survey, as much as one-quarter to one-third of a foreign investor's profits in Cambodia are being siphoned off by corruption that takes place at all levels of economic activity.

    In a roundtable discussion in Phnom Penh on Thursday, Mr. Wolfensohn said the country would have itself to blame, if it failed to become a credible competitor in world trade.

    Prime Minister Hun Sen announced an ambitious plan on Friday to cut investment costs, including automating business registrations, and reducing import and export times.

    However, no deadline has been set for these efforts, and the government still has not passed an anti-corruption law, as required when the country joined the World Trade Organization last year.

    Pascal Lamy, former trade commissioner of the European Union, says the government knows it needs to reform, but is too slow to take action.

    "I think the path of passing the necessary legislation, and making sure it is enforced, with the necessary policing, or ability to litigate in court, for instance, is a bit too slow,” said Mr. Lamy. “Not that the commitment has changed, not that the direction has changed, but we need to speed up the process."

    When Cambodia joined the WTO last year, it was considered a pioneer, an example of how the world's least developed nations could gain access to normally unattainable markets.

    But international trade experts in Phnom Penh this week warned the country could squander the opportunity, if it does not diversify its exports, overhaul its multi-layered bureaucracy and reduce the corruption that adds costs throughout the system.

    Garments account for 80 percent of Cambodia's exports. No country in the world is as dependent on a single economic sub-sector. The country has no alternative export industries to help it diversify.

    The garment industry has been successful in part due to a reputation for socially responsible manufacturing. The government is banking on high labor standards, which are required by governments and activists in developed nations, to maintain the industry's viability.

    But the international Multi-Fiber Agreement, which provided some protection for the country's garment industry, expired at the end of last year. Now, Cambodia has to compete with industrial powerhouses like China. Experts say this leaves the country extremely vulnerable.

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