A Change of Guard

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Friday, 7 December 2012

A nation hobbled by debt

Thursday, 06 December 2012

 Tong Soprach - PPP

Workers during construction of the Kamchay dam, in Kampot province. The dam, capable of supplying 193 megawatts of electricity, was built by the Chinese company Sinohydro. Photograph: The Phnom Penh Post
A new-born Australian baby is eligible for benefits of AUS$5,437 (around US$6,000). But there is nearly $1,000 of national debt for every Cambodian baby. How does that influence these infants’ respective futures?

Recently, there have been been varying estimates of the scale of Cambodia’s debt.

Cambodian People’s Party parliamentarian Cheam Yeap claimed the national debt amounted to about US$7 billion, but Prime Minister Hun Sen said the figure was just over $2 billion. 

After that, Yeap didn’t comment further on the matter.

Meanwhile, the Sam Rainsy Party says Cambodia’s debts total about $10 billion. According to Reuters, Cambodia’s debt to China alone is at least $4.7 billion.

The question is, which figure is accurate? And when will the Royal Government give us a valid estimate of how much it owes?

Last week, the National Assembly allowed the government to borrow $900 million from abroad in 2013. Meanwhile, Hun Sen has asked China for an additional $500 million to build roads.

Some local economists have urged the government to borrow as much as possible. But who will pay it all back? 

Many of Cambodia’s natural resources are already gone, and it is unclear whether oil reserves on the sea floor are even ours.

As for the culture of selling, so much has already been sold in the name of  “development”, including our cultural heritage, state buildings, Cambodian embassy buildings abroad and even our women’s hair. 

What will be next? Selling our underwear?

If all these companies plant rubber and coconut trees for export, they don’t develop local production. Even our pens are imported; it’s shameful.

Many countries constantly think about their income, but Cambodia seems to be always thinking about how to receive donations and borrow more money.

Is it fair for people to borrow vast amounts of money, then expect their children to pay off all their debts?

Behind every debt is a lender who never forgets. During the Lon Nol regime from 1970 to 1975, Cambodia borrowed US$370 million from the US; this money was used to buy weapons and bombs that killed Cambodians.

Parliament and the Royal Government insist that the US must cancel this debt, but America still expects it to be repaid.

So, if the Kingdom is borrowing more and more money, is this debt really for development? Or just to build some infrastructure while fuelling corruption and allowing the ruling party to remain in power?

USAID reported in 2009 that Cambodia was losing more than US$500 million every year to corruption.

This is the issue: foreigners pity Cambodians today, and the next generation too.

It is so unfair that for every innocent baby born, there are thousands of dollars of debt to repay, and that this borrowed money is not always used for the nation’s development.

This is a painful reality for the poor Cambodian people who not only receive meagre benefits but also have to help pay back huge debts.

Does the government recognise these debts? This is not the karma of Cambodians who didn’t do well in a previous life and must suffer to repay debts from previous regimes.

This is also different from the Angkor era, when temples and natural resources were preserved for the future.

Since 2007, after the arrest of the Khmer Rouge leaders, there have been lots of donations and loans from China to Cambodia. China has replaced Japan as our biggest donor.

The question is whether Beijing is being so generous to Cambodia because China is now the world’s second-biggest economy.

Or is it because China is trying to confront the South China Sea issue while Cambodia is the chair of ASEAN?

Or perhaps because China is trying to atone for the fact that the Khmer Rouge, supported by China, killed at least 1.7 million innocent Cambodians?

The Extraordinary Courts in the Chambers of Cambodia (ECCC) have been able to prosecute only two categories of alleged perpetrators for crimes allegedly committed between April, 1975 and January, 1979: senior leaders of Democratic Kampuchea and those believed to have been most responsible for grave violations of national and international law.

After receiving so much unconditional money from Beijing, the Kingdom is always trying to please China.

As for the Khmer Rouge trials, the ECCC has concluded only Case 001 –  and Duch was the lowest-ranking of the leaders arrested.

After the ECCC is finished, will Beijing’s donations continue? Is this an effort by China to offset its mistakes, as Japan did?

After the 1993 United Nations Transitional Authority in Cambodia's election, Japan became the biggest donor to Cambodia, which it occupied during World War 2.

But Cambodia made no claims against Japan for the suffering it endured during that occupation.

Blinded by money, we have forgotten all the death and destruction.

In the end, the broken infrastructure is for Cambodia, the dead people are Cambodians, the Khmer Rouge trials are of Cambodians and the huge debts are Cambodia’s too.

Tong Soprach is a social-affairs columnist for the Post’s Khmer edition.


Anonymous said...

Hun cent hardheaded won't won't listen to anyone but his eco-maniac's way!....Hun cent can't even count to ten,how can he knows what was owed in term of national debt owes to foreigner he children were millionaires won't effect them because they (hun's families) stole more than enough to help five generations of his families to live off it.

Stop put khmers childrens to enslave foreigners because of your irresponsible borrower and stop create more debt,listen to someone who can count Mr 5th grader!...Oh by the way in Pagoda monk didn't teach mathematic they only teach how to read and write a little bit.Mr 5th grader[Hun Cent] after Pagoda you run to jungle you can't count Khmer rouge didn't teach you mathematic either,so please listen to some one who know about debt,losen up your eco-maniac way for the sake of all Cambodian.

Yobal Khmer

Anonymous said...

Here are the numbers and not politics!
According to the IMF, Cambodia sovereign debt-GDP ratio @ 28.60 % is slightly higher than Australia, but a lot lower than the US. Currently the US gross debt-to-GDP ratio is a bit over 100% while according to IMF Australia recorded a Government Debt to GDP of 22.90 percent of the country's Gross Domestic Product in 2011. Economists have been saying that a debt to GDP ratio of 6 per cent is like a household earning $100,000 with a mortgage of $6000.
Last month Standard & Poor's affirmed its 'B' long and short-term sovereign credit ratings for Cambodia and said the outlook for the long-term rating remains stable.
Strong growth prospects and substantial donor engagement would enable Cambodia to maintain a low debt and interest burden.