Re: Debt is necessary for Cambodia's economic growth: economist
I agree with this person of economic progress, if it uses the funds properly. However, debt is not good for long term economic growth. It works for short term patches. Sooner or later, debts have to be paid back. The government lacks the ability to enforce tax law and its inability to generate revenues made it vulnerable to inflation and stagnant.
I think the government is banking on future oil revenue in 12-1-2012. But one must be realistic. Corruptions at every level could effect the cash flow.
So, why am I being pessimistic? Any time you take on new debt and has not begun to pay back old debts yet is alarming. There are too many causes and effects on the issue of this country economy. This forum is not the place to debate.
18 November 2011 1:56 AM
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Anonymous said...
Mr. kang, you are right to a certain point.
You are smart to frame the condition of using the borrowing money," if the government uses the money for economic developemt, Cambodia is better off." Sound like if we work together we can succeed everything. If we united, we stand. If we eat right and excercise, we are in good health. If we are not divorced, we will live together, ect... a nine yard long list.
But the question is not "IF", But rather how Cambodian Government can manage the money toward the development giving the level of corruption is unprecedented in Cambodian history and in the region. Simply it is the question of one dollar for the economic development and three dollars for administrative and personal/family use expenses.
Cambodia can't manage its own airline. Its CEO is a Vietnamese. Cambodia can't manage its airports, its CEO is French, railroad will be managed and run by Australian company and the list move on...Most of rural development planning and Phnom Penh are majority driven by the input of JICA (Japan International Cooperation Agency) and KIDA (you mean KOICA = Korea International Cooperation Agency?),USAID (United States Agency for International Development)and COMRAD (?), so forth... Yes, the government has created the security, safety and peace for things to happen. It is hugely positive but the time to take advantage is very slow and complicated.
Some people may say we are just in the stage of recovery of years of negligence and war. They can say these things but just look into Vietnam and other countries, which faced years of war but have emerged economically sound.
Increasing human resources, YES, but it takes time. But the foundation of desire to build the country of the ground up take just days after war and devastation. It means that overwhelming leaders in the Cambodian government are in the position of helping the country, not to channel money set for the development projects to the pockets. But so far it is not the case. There are many examples to be revealed from roads to bridges projects except private owned/run projects. The foreign friends are doing a bid and hand the key when they are done. What do they want to tell the government?
18 November 2011 2:14 AM
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Anonymous said...
I have read Dr. Kang analyses many times. His analyses were mostly based on his opinions, not based on rationale or academic assertion. I think he just want to please the CPP, Hun Sen or he is too afraid to say the truth. As a matter of fact, there is nothing wrong to borrow the money to build the infrastructure of the country. Many countries around the world have debts. But the level of debts must be sustainable, not over the country's ability to repay. But the most important thing is the debts must be spent responsibly. What we see now is that Hun Sen is borrowing and spending irresponsibly. Most of the borrowed money has gone down the drain, many infrastructures were built on private investors' money. And much of the tax collections have gone missing in corruption. With the level of debts now, rumored to be around $8 billion, Cambodia will be indebted for generations to come and the next generations could get poorer and poorer due to these debts. People must be mindful that many countries have become poorer after they have deposed their dictatorial leaders because the new government inherited heavy debts and a corrupt bureaucracy. The Philippines, Indonesia, Pakistan, Bangladesh etc, are reeling because they have been struggling to come out of economic and financial doldrums left by despotic leaders. Cambodia could even meet worse financial situations than these countries if the opposition is not attempting to stop Hun Sen from borrowing irresponsibly. I think we have enough debts, now it it time the government reform the financial system, strive to collect more taxes, alleviate corruption and reform the finance ministry and also the corrupt and inefficient bureaucracy.
5 comments:
The inflation rate in Viet Nam is double digits year after year but some people still think that their economy is better than Cambodia.
The Vietnamese are still trying to come and live in Cambodia every day. It is the same as Mexican are trying to come to the US.
The reason behind the population flow is different from person to person. But from the human point of view, beside the politic, those people just want to go some places that they can raise their family and make a good living. For the Vietnamese, in this case, the only place they can go on land, is Cambodia.
If you can create the safe road for those Vietnamese to leave Viet Nam freely, thousands families will leave every day.
The bottom line is, those Vietnamese came to Cambodia because of the economic reason !!!!
Actually, I agree with all of your idea. It is true that the big problem in Cambodia now is corruption. We are so poor that we don`t have enough capital to build our infrastructure, to promote education, tourism sector, and improve health and sanitation in the country without borrowing money from international, but the problem is that how our government spend those debts. We can`t stand still and praise that little achievement our government succeeded, but we should learn how to compare it to other achievement in neighboring countries. I agree that Cambodia economic growth is fast during this decade, but we are still lack of everything. Our economic is still very narrow to the world competition. If the US and EU stop importing textile and rice from our country, Cambodia economic will actually stagnate. Everything should be changed. The way government act now should be changed. We should change this country, and it starts from everyone of us.
Thank you so much for expressing good idea here. It contributes so much to the future of Cambodia.
It's true that Vietnamese are still coming into Cambodia, there is an ideology behind what they do. Obviously, Vietnamese citizens are allow or even encourage to migrate to Cambodia. If we just look at the top surface, it's true that they come to Cambodia seeking better life to find work and live with some sort of freedoms, but under the surface, it's deeper and darker than we wish to see. Haven't we learn fro our history already? Vietnam is an invasive creature. If you're not being aware and being undetective, it will consume everything in its path.
3:28 AM, I totally agree with your view on the stagnation of Cambodia's economic growth without the U.S and EU's imports of textile products from Cambodia. The textile industry employed over 300,000 workers and exported between $3-$6 billion worth of clothes. If the U.S and EU stopped importing these products, our economy will undoubtedly stagnate, causing unemployment and economic crisis in Cambodia.
Back to the debt. I think our level of debts is too high comparing to the annual GDP and the revenues the government collected annually. Coupled with high level of corruption, all the new borrowings will certainly disappear into the pockets of high-ranking officials. As a result, infrastructure will still need the upgrade and repairs while our level of debt will skyrocket and the new generation will be unable to repay and the country will face bankruptcy like Greece and Italy. We are already poor and will have no chance to emerge to economic recovery if the government continues to borrow and spend irresponsibly. Borrowings should be curbed and if corruption can be alleviated and revenue collections can be efficiently carried out, then Cambodia will be self-sufficient and can reduce new borrowings and then concentrate on repaying existing loans. However, I am pessimistic that the government has the ability in implementing these measures because it needs a political will, but the government has no political will as it means loosening its grip on power because all corrupt officials, their power base, have to be sacked or prosecuted if they commit corruption.
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