Stimulus Package "Reasonable" With Reduced Government Corruption

Sam Rainsy's letter published in The Cambodia Daily, February 9, 2009

STIMULUS PACKAGE "REASONABLE" WITH REDUCED GOVERNMENT CORRUPTION

In "Reforms Needed To Tackle Crisis, Forum Told" (Friday, page 1), it was reported that "[Prime Minister] Hun Sen rejected an opposition recommendation of a $500 million stimulus package as 'unreasonable' for Cambodia given its budget."

On January 16, in my capacity as an elected representative of the people, I wrote to the prime minister suggesting that the government adopt a series of appropriate and urgent measures to cope with the unfolding world financial crisis.

In particular, I suggested a $500 million stimulus plan designed to reduce the economic and social repercussions from the global slump that are being increasingly felt by Cambodia ("Sam Rainsy Urges Government To Prepare Stimulus Package", January 19, page 33).

The indirect and negative response I received through the press shows either the government does not yet fully understand the seriousness of the situation or it lacks the sense of responsibility to take appropriate action.

What Mr Hun Sen said at last week's Third Annual Cambodian Economic Forum seems no more than a repetition of long-heard commitments that proved to be lip service for the donors' easy satisfaction. The Prime Minister is quoted as saying: "In the current context, the Royal Government clearly sees the opportunity and needs to push forward the systematic and interrelated reforms, which aim at improving investment and business climate."

The key word among all the empty ones we often hear, is "reforms". But what long-awaited reforms have been implemented over the past 10 years? Land reform? Judicial reform? Civil service reform? Anti-corruption reform? None of them. In particular, the anti-corruption law, which has officially been "in preparation" for more than a decade, is still in limbo.

My proposed $500 million stimulus package is considered "unreasonable" compared with Cambodia's budget of $1.8 billion for 2009. But in 2004, a USAID-funded corruption assessment highlighted the significant loss in state revenue due to smuggling, bribes and other illegal practices, which possibly totaled as much as $500 million.

Since 2004, corruption has dramatically increased, with the plunder of state assets and land grabbing by government officials and their cronies occurring on a larger and larger scale.

Therefore, the above stimulus package could be financed by a reduction in government corruption.

Besides, international financial institutions such as the World Bank, the Asian Development Bank and the International Monetary Fund, and major donor countries such as Japan, have stated that they have set aside funds to help poor countries cope with the world crisis. But countries like Cambodia must first devise a concrete contingency plan and ask for help in a responsible way.

In the current context dominated by the world crisis, Cambodia needs a significant and thoroughly planned stimulus package whatever the name we give to the series of fiscal and monetary measures aimed at boosting economic activity.

All Cambodia's neighboring countries including China, India, Indonesia, Malaysia, Thailand and Vietnam, have already released their first economic stimulus packages and are preparing new ones in the face of the intensity and the possible duration of the crisis.

Cambodia cannot afford to have leaders who ignore that we are facing an emergency situation that requires prompt and adequate measures. It's very worrying to see our government taking lightly the people's sufferings and distress while having no credible plan for the future. Through a significant stimulus package that comes on top of the already known budget for 2009, any responsible government would implement a number of projects such as:

- Setting up mechanisms to support and stabilize agricultural prices in order to protect farmers' revenue and living conditions

- Investing in human resources by increasing spending on education, training and health

- Building infrastructure that Cambodia lacks most (roads, railways, water-control and irrigation systems, housing for the poor)

- Works to protect the environment and to restore the ecological system that has been disrupted nationwide, including replanting trees (reforestation) and dredging lakes and rivers

- tax cuts and reduction in fees for the use of public services including road tolls and the electricity price

- Special social allowances for the poorest segment of the population

- Loans with reduced (lowest possible) interest rates for small domestic entrepreneurs and the needy.

The objectives of the above measures are two-fold:

- In the short term, protect revenue and create jobs by boosting aggregate demand through an increase in public and private expenditures triggering the multiplier effect;

- In the longer term, lay the foundations and create the conditions for a sustainable and equitable development.

Sam Rainsy

Member of Parliament

Former Finance Minister