A Suggestion for National Unity and Development

By Chan Sophal

A Khmer version of this article was published in the Phnom Penh Post on July 19, 2013

I’m really pleased by what I consider a win-win solution taken by the opposition and ruling leaders of Cambodia. It reflects the spirit of national reconciliation once again and demonstrates wisdom of both sides.

I believe as a small and poor country having limited capacity left from the killing fields, Cambodia would be best united in her endeavour to accelerate development. Instead of being fragmented and deeply divided, the scarce Cambodian talents should be united and work together to tackle the difficult reforms for faster and sustainable development for everyone.

I’m sure that CPP will win the election on 28 July 2013 and can easily form a government on its own and carry on with “business as usual”. However, there will be immense challenges for CPP alone to meet in the future. Unless it changes the current way of governance, for various reasons I think CPP will likely see a declining trend of its parliament seats. I’m sure there is another way for CPP to retain or even gain more popularity other than the current approach of doing politics.

Basically, Cambodian voters at this stage are generally to be satisfied with security and availability of roads, canals, clean water, electricity, schools, health services, etc. Ensuring delivery of these should be the role of government, not so much of party officials. Government needs more funding and well-paid civil servants to deliver such infrastructure and public services. Therefore, key is to ensure sound revenue collection and budget management.

Moving forwards, the top priority should be the transformation of informal payments to formal ones. For this critical transformation to succeed, businesses, especially the big ones, have to stop paying informal taxes. Should CPP find it too difficult to carry out this huge reform for some reason, it can use the assistance of CNRP to help. Thus, a coalition government would probably be not a bad idea.

However, both sides would have to agree on a reform agenda first in order not to be co-opted and corrupted. Such an agenda should include building independent and competent courts and military, and allowing independent media, academia and research institutions in order to have an effective system of check and balance, which is the backbone for sustainable development.

If these tremendous reforms are carried out by all the committed patriots, there will be great optimism for Cambodia to become a real dragon in the region, which many leaders in the past attempted but failed. A priceless by-product of pursing what is best for national interest would be genuine national unity, healing and solidarity in the nation. Now Cambodia has enough popular and powerful personalities and sooner than later they should start becoming heroic statesmen, building and strengthening institutions for a long journey to achieve a developed country status by 2050.

After many centuries of declining trend and decades of man-made sufferings, Cambodia and Cambodians now deserve such a new era. The choice is in the hands of the current leaders, which I believe are very capable. May we embrace a fantastic dream and realise it.

Chan Sophal
Former President of the Cambodian Economic Association
Disclaimer: The views do not represent any other than his own.

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Cambodia should focus on inclusive growth, not just growth

By Heng Dyna

A Khmer version of this article was published in the Phnom Penh Post on May 17, 2013

The article “IMF: How to grow Cambodia” is optimistic and motivating, sharing lessons on how Cambodia can sustain its growth take-off. It also reflects the commitment of an effective IMF team to institutional building and economic growth in Cambodia. Indeed, never before has Cambodians lived in such an exciting moment: long period of political and macroeconomic stability, robust economic growth, located and integrated in the dynamic region, evolving institutions, and hopeful young population.

However, this optimism should not overlook the major challenges and risks that we, the Cambodians, need to address in order to avoid disruption of Cambodia’s growth and development. At the same time, Growth has to translate into poverty reduction and job creation. In this regards, Cambodia should focus on the inclusiveness of growth, rather than just growth. Many studies, including those from the IMF, have demonstrated that more inclusive growth is likely to be more durable growth.

Development experience have shown that sustainable and inclusive growth is based on three key areas: (i) creating the right climate for investment and growth; (ii) investing in people; and (iii) ensuring that growth is sustainable and inclusive by protecting the environment. The first point was mentioned in the “IMF: how to grow Cambodia” article.

Investing in people means that, as soon and as fast as possible, Cambodia needs to improve health and skills of population so that they can be more productive and gain more from the production chain. So far, our growth has been largely driven by physical capital investment and “peace dividend”. Investing in our people will require not only additional budget for education and health care, but also the efficiency in our spending as well as leveraging our media in skills training and health awareness.

The environment affects everything- the food we eat, the water we drink, and the air we breathe. Gradually, we observe that environmental issues put pressures on economic and health issues. Yes, Cambodia needs growth, but it also needs a greener growth that respects a healthy livelihood and environmental sustainability. That means Cambodia needs a good planning for quality urbanization and environmental-friendly economic expansion.

Apart from these three key areas, Cambodia also needs to reduce institutional risks by ensuring the stability and the quality transition of governance-from weak to strong; from old to young- through institutional building. The baton is being passed to the younger generation now and we need to ensure that our capable and talented younger generation can engage in leadership and public services based on meritocracy.

Cambodia’s dream belongs to all Cambodians. And the transitioning from a developing to an emerging market economy is more than just about number. It needs inclusive growth and better quality of life. Growth is just a means to our ultimate goal, a happy and prosperous society with dignity. To reach there, our institutional capacity and good public service delivery, especially in education and health, needs to be in place. The rapid growth over the last decade should give us enough confidence to think and do so.

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Farewell to the King Father

By Vong Socheata

I was extremely overwhelmed by the passing of the King Father on October 15, 2012. The whole nation was in profound grief. As part of Cambodia’s youth, I have learned both positive and negative viewpoints about the King including: the legacy of how he achieved independence for Cambodia from France in 1953; his Sangkum Reastr Niyum (the unopposed era); the year he was deposed (1970); his observation of the country’s descent into genocide and civil war; his 1991 homecoming; his political deal for the first-ever co-premiership; and his 2004 abdication. The King Father’s final years were marked by his expressions of melancholy and frequent complaints about the poverty and abuse in what he called “my poor nation.” Such a mixed legacy over a long period of time made him an icon and Cambodia is unlikely to see such a personality ever again.  King, politician, bureaucrat, diplomat, playboy, teacher, judge, monk, filmmaker, actor, worshiper, communist collaborator, peacemaker; he was all these things and more.  I felt like I was reading a simultaneously joyous and tragic tale.  Sadly, his passing marks the end of an era for Cambodia. I had an opportunity to pay my final tribute to him at the Royal Palace on January 12, 2013, and I also joined thousands of Cambodian mourners at the final cremation on February 4, 2013. As a Cambodian, all I wish to express is that he left our nation and our people with profoundly bittersweet nostalgia beyond words.

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Guidance on Thesis Topics, Not Ban, Should Improve Quality

The Cambodia Daily

Despite its good intention to discourage plagiarism, the ban of research topics at the Royal University of Law and Economics (RULE) should be much discussed; as it could have many negative consequences; “Law Students Told to Avoid Thesis Topics,” Monday, page 17. First, such a ban violates academic freedom as stipulated in Article 66 of the Constitution. Second, it discourages critical thinking of students who are interested in the barred topics and their potential contribution to our society. Topics such as drugs and land disputes are very important and still deserve answers from many perspectives. And it is too early to conclude that these topics have been well researched. Third, such a ban can kill student’s curiosity and the process of learning to do research. If we are not wrong, most of the new ideas and findings so far are achieved during and after the research. Such things apply even among world’s top researchers.

In research, in spite of the same topic and questions, students can still come up with different answers or different approaches to the same answers. If universities want to discourage plagiarism, they should come up with a good punishment system and a warning letter, rather than simply the ban. In addition, it is the role of the schools and their academic staffs to guide student to contribute new things in the topics of interests to students. In other words, if a student is interested in a specific topic, the school and supervisor should encourage and guide, rather discourage them.

Indeed, the depth of today’s knowledge stock is based on the persistent research on the same topics. That is why economic and social policies, technology, and medical science, for instance, get upgraded and improved over time.

Cambodia lost a lot of human resources during the wars and the Khmer Rough regime. Now, let us work together to accumulate Cambodia’s human capital. In this regard, only through encouragement and intellectual challenges can Cambodia produce a pool of clever, respected, caring, committed, and responsible citizens with high dignity. Cambodian society should therefore be re-engineered based on this rather than such a ban of research topics.

Where countries are today affects where they can go. Cambodia’s future and its development capacity in the coming decades depend what this country does today to promote the intellectual ability, critical thinking, talent and skills of its people. Thus, our journey to the next stage of development is to promote intellectual prowess and innovative thought by letting our students pursue research of their interest.

So, our plea to all universities – not only RULE – in Cambodia is please remove any ban on research now, otherwise we will be again a laughing stock of the world.

Heng Dyna, Oum Sothea, Chan Sophal and Vong Socheata
Cambodian Professional Group
Phnom Penh

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More Appropriate Survey needed to measure the effects of Banks on business growth

By Heng Dyna

A Khmer version of this article was published in the Phnom Penh Post on January 13, 2012

In general, the concern on a financial sector is at least two-fold: the concern on the health of banks, and the concern on the effect of financial sector on business expansion and growth. So far, the media and the bankers report the high profitability and very low non-performing loan (NPL) which reflect the health (i.e viability and sustainability) of the bank/MFI. With these indicators, they also jump to the conclusion that their customers’ business expansion must be good too; otherwise we should not have growth in customer base, profitability, and low NPL.

Arguably, they can be right, but the conclusion is still crude as they lack other important indicators such as  the number of borrowers’ asset sale to pay back the loans , and  the number of SMEs that have high returns yet remain chronicle or stagnant. Indicator of borrowers’ asset liquidation would attack directly on the NPL/profitability-based argument. As much of the loans in Cambodia is collateral-based, the banks are able to recover its loan and thus secure safe returns despite borrowers’ bankrupt business. In such cases, we would expect low NPL/high profitability and high rate of bankruptcy.  Unfortunately, bankers might want to report only the low NPL and high profitability.

On the other hand, the number of SMEs which have high returns yet remain chronicle or stagnant would attack directly on the argument that the high rate is totally fine as the return rate of small business is high too. Indeed, the banks and MIFs can be right, but we need to delve deeper. First, the profit of many small businesses may be high enough to pay back the interest, but the profit usually does not take into account the wage of the small entrepreneur. Second, some business might have returns high enough to pay back the high interest rates and thus can survive for some years. But the high interest rate can gradually rip off their potential and resource to expand further, and leave them stagnant. Of course, sustaining the survival period of SME might be still argued to be the positive side of the bank. But the number of SMEs which have high returns yet remain chronicle or stagnant would help us understand more the “sustainability of the borrowers” in high-interest rate environment.

In addition, I believe that the current borrower base is still a small share of the potential borrowers. Thus, even the current borrowers are not doing well, the bank can still roll on to increase its borrowers by attracting new customers. Then, the increase in current borrower base could be a misleading indicator for the borrowers’ business expansion.

In short, the existing indicators are not enough and can even be misleading. National Bank of Cambodia should fund survey or require financial institutions to report (1) the number of borrowers’ asset fire sale to pay back the loan, (2) the survival rates and period of borrowers’ business, and (3). The component of bank’s borrower base (i.e old versus new borrowers, and their survival period)

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