First State Funded SEZ
It is indeed a great honor for me to join with all of our people here to celebrate two key events – the inauguration of the Sihanoukville Autonomous Port’s Special Economic Zone and the meeting with our staff and workers in commemoration of the 126 anniversary of the May 1 International Labor Day. Please allow me to take this moment to beg for the understanding of the leadership as well as staff and workers of the Sihanoukville Autonomous Port for my absence in three consecutive years – 2009, 2010 and 2011. There had been various reasons and one last but major reason of all was the fighting at the Cambodian-Thai border that commander could not leave his commanding post.
At this time last year, fighting erupted (between Cambodian and Thai troops) from April 22 through to May 5 at the province of Uddar Meanjei province’s Ta Moan and Ta Krabei’s temples. There was no other way but to reschedule my trip here to another time. The defense matter does not relate only to Minister of National Defense and Chief of General Staff but also the decision of the Prime Minister, especially on what dimension should the war take and how to counter military move (from invading forces).
As is known to all, in between April 22 and 26, Cambodia had taken utmost patience up to 100 hours under heavy artillery shelling from the Thai side. We refrained from returning artillery weapons of similar scale so as to contain the dimension of war. In fact commanders in action requested for return fires since April 20 but (I) did not allow. After our patience had reached 100 hours, a heavy return fire was permitted. As a result, the situation had returned from total confrontation to negotiation. However, this year there is no war and as it is said these days to have good neighbors is like to have gold mines.
In fact I did plan to come last year, but because of sporadic fighting, I decided to skip it to next time. Now what I wanted to talk about is the creation of the Special Economic Zone financed by Japan as is reported by HE Tram Iv Toek, Minister of Transports and Public Works, and also by HE Masafumi Kuroki the Japanese Ambassador. It has been a complicated issue concerning the establishment of the Special Economic Zone (SEZ) at the Sihanioukville Autonomous Port (SAP). The talking about having the SEZ at the SAP had gone on for a long time but the investment site was for some time still in green. In the end a decision was made to buy 70 hectares of land from various people for the SAP.
In one of my meetings with former Prime Minister of Japan HE Koizumi, I proposed Japan help pay for the land. However, after a firm decision and commitment, thanks to the support of the Government of Japan and a thorough study conducted by JICA and various Japanese companies concerned, today we are putting into official use the SEZ at SAP, which is the only one SEZ that is funded by the state, unlike other SEZs in provinces of Svay Rieng, Koh Kong, the capital city of Phnom Penh, etc. which are built and managed by private sectors.
As Cambodia borrows money from Japan to build this SEZ at SAP, I share same belief with HE Kuroki that Japanese investors will start coming to the SEZ at SAP. As I noted, one cardboard box company from Japan has already come and since Cambodia continues to score economic growth in recent years, it seems more Japanese companies are showing their interest. I would take this opportunity to call on more interested Japanese investors to come to the Kingdom of Cambodia, in the SEZ at SAP for instance so as to help Cambodia improve its environment and boost up Cambodia’s economic growth.
I am so happy and sharing with you all the joy in noting the progresses made by the Sihanoukville Sea Port here. Maybe I should talk on whether it was correct or wrong decision that the Prime Minister has made (with regard to the port development) so that workers, staff and leadership of the SAP could review. In fact, in the first legislative term of the Royal Government of Cambodia (after the UN supervised general elections in 1993), when Cambodia then had two Prime Ministers, the SAP almost slipped out of the state’s control.
I started to frequently visit the port from 1996. There was a tendency in those days to privatize the SAP and Kampuchea Shipping Agency and Brokers (KAMSAB). Noting the move I came down here and promised to the staff and workers that I would not allow that happen on my watch. Why was I against the private investment at the time? For me, investment in the port of any kind has to be the construction of a whole new port or to expand a small port to larger one and its peripheral services. I would not accept any investment where investors would only bring in lifting equipments.
Relating to KAMSAB, many investors were brought to see me and I asked what they have in their investment plan for KAMSAB. They told me that they would install and operate radio communication. I said if that is what KAMSAB needs there would not be a call for investors. Cambodia can do this business on its own. We can equip KAMSAB with advanced radio communication and KAMSAB ships can navigate leading way for foreign ships to enter its territory after mounting Cambodian flag on it. It is easy money.
As a matter of fact if we were to give the port to private investor, there would be no way that Japan offer to help. I am glad to note that with all these developments, with help from Japanese companies, the SAP is preparing to establish and trade its share in the CSX (Cambodian Securities Exchange). As you can see now what I have promised the staff, workers and leadership of the SAP that its development plan is moving ahead.
It should be reminded too that thanks to the promise I made and decision not to privatize the port that Japan offered us 35 million USD in loan for extending first of all 240 meters of port to 11 meter deep area between 2002 and 2005. Japan offers Cambodia with more grant than loans. That fact that we could not borrow Japanese money is because we have had outstanding debt to Japan that its law does not allow more borrowing at all.
Talking about foreign debts, I would warn other politicians not to try to improperly make political gain from bringing this up as I would not hesitate to reveal to the people and the world as to who before me have made Cambodia get into debt. We younger generations have the burden to pay the debts, to like the Asian Development Bank, incurred from previous leaders. We still have foreign debts to be paid to another country and I would not mention this country by name here.
I have read a newspaper article somewhere that Japan, true or not I could not verify, at this stage, has erased some 70% of debt from Myanmar. As for Cambodia, in order to repay the Japanese debts – principal, interest and fine altogether, Japan brought us goods and we had to sell them and used the return from selling the goods to pay the debts. However, Japanese Government kept the payment as its assistance for Cambodia. Following completion of several years of payment and debt conversion of this sort, Japan allows us to borrow money again. I would share with all of you that the first loan we got from Japan was the 35 million USD for the SAP.
The loan of 39 USD in between 2005 and 2007 was for SAP to extend another 160 meters 11 meters deep port, a one window administration office and lifting equipments. Later we borrowed a sum of some 3.8 million USD for engineering project. In the short time to come we will be seeking loans of 85 million USD in 2012-15 for the construction of 260 meter multipurpose port at 13 meters deep and 300 meter port at 7.5 meter deep for oil and gas drilling service and supply. Our port now could allow the visit of only 20,000 ton ships but it is our plan that by 2015, the ships of 50,000 tons could do so too.
This is what Cambodia needs. Nowadays, because our port’s depth could not welcome bigger ship, shipping goods from Cambodia has to unload and reload in ports in Vietnam or Singapore. Seeing this constraint, it is commonly purposeful to borrow money from Japan to extend our seep sea port service area so that heavy ships could visit our port directly. That would definitely we believe improve our edge of competition. Again, if it were to be given to private sector before, would we be able to knock on Japan’s door for loans?
I am so glad at everything that we have been working on and achieving together. As far as this SAP is concerned, I have developed a special personal connection to it from the early stage. (Right after the 7 January 1979 liberation) it was beyond belief that Samdech Heng Samrin, then President of the People’s Revolutionary Council of Kampuchea and President of the State Council and Prime Minister, chose me to head a commission to relieve goods that were sent from Vietnam, former Soviet Union and India, and jammed in the port of Kompong Som (currently SAP).
With me in the commission those days were HE Taing Sarim, Men Chhan, Khun Chhi, etc. It was like what has been mentioned just now by HE Tram Iv Toek, transporting goods from the port to Phnom Penh could be conducted only from 7 am to 11 am on 24 hours basis due mainly to insecurity. We were so poor that at night we had electricity from a small generator. We ran out of gas at midnight. We used the small generator to provide power for pumping water during the day. I have so many souvenirs from my involvement with this port. I could recall that our people then wore no shoes or thongs.
One fascinating thing I could remember from our hardships those days was when our people who helped unload the goods tied their trousers’ cuffs. Why? As you know that in those days we did not have lifting equipments so everything has to be carried off and on by human. There was this method that people tied each cuff to their foot making a bag so that they could pour rice into it. They stole rice. I then said to the port security and commission members that judging from the fact that everyone was in need of rice and because we needed labor to help us unload the goods, let’s not bother too much on that but total prevention must be strict against stealing in truckload amount.
Having given you all the facts so far I am sure that you find this Prime Minister trustworthy. As I said it is now time for SAP to be prepared with the Japanese company for share trading. I would urge HE Kuroki to further encourage the concerned company from Japan to prepare the joining share with SAP to enter the CSX so that SAP could accumulate more funds for further development. It has been assuring seeing SAP Chairman and CEO Lou Kim Chhun’s comparison of port activities from 284,000 tons of goods in 1992 to 440,000 tons in 2011. This has proven that some politicians’ comments that Cambodia is getting poorer are wrong.
The Sihanoukville city is now getting bigger and more tourists are coming to visit and stay here. In fact I was invited by a US 7th fleet commander to visit the ship. Unfortunately I have a prior engagement so I have delegated HE Tia Banh, Deputy Prime Minister and Minister of National Defense to board the 7th fleet, which has arrived from the visit in Vietnam, on my behalf. As I said earlier, formerly on the National Road 4 between Sihanoukville and Phnom Penh, we could travel only about four hours in a day because of security reason. For instance, though I had the news that it was raining from morning till evening, even at about seven in the evening I was tempted to change my mind to come at night, not to wait till this morning.
I am sure our economy will continue to grow. Like what has been mentioned by HE Tram Iv Toek about a report on growing amount of rice for export to go through SAP as the country is making efforts to achieve its goal of exporting over one million tons of milled rice per annum by 2015. With this joy I would like to express my sincere thanks and appreciation to board members, general directors, leaders of all levels, staff and workers, for their combined efforts to contribute to the overall growth of the country’s economy.
Usually, in many discourses about future Cambodian economy, I always compare our economic growths and poles in the country to the shape of a dragon. (Looking at the Cambodian map) Sihanoukville is commonly understood to be the dragon’s head, Phnom Penh to be the dragon’s body, the provinces of Siem Reap, Ratanakiri and Mondulkiri to be its legs and Stoeng Treng to be the dragon’s tail.
As we are today celebrating the 126th International Labor Day – May 1, I would like to take this opportune moment to express my sincere appreciation and thanks to the workers here as well as in the whole country, whose combined efforts have effectively generated growth in our economy. As is noted in the speech of Ambassador Kuroki, despite financial and economic impacts, Cambodian economy is still making positive development. The economic growth in 2011, as is calculated on March 28, the previous predicted figure of between 6% and 7% has been upgraded to 7.1%.
However as is known to everyone, the Cambodian economy will finish its calculation only in June of the following year as we still have dry season rice to be harvested. The growth of between 6% and 7% is a good sign. It should be noted that this has been achieved thanks to the collective efforts, largely by the workers and farmers and investors. I have the information from HE Ith Sam Heng, Minister of Social and Veteran Affairs that over 12,000 workers in 172 factories in Phnom Penh are enjoying parties, while some also took their rights to the streets too.
On this occasion I would like to call on people who are traveling or thinking of travelling to the Cambodian-Thai border to find jobs – some are even attempting to cross the border illegally, to return to their home provinces. Going to Thailand illegally is not a good solution. Those who illegally entered Thailand have not yet received official permissions so others must not be going there. I am calling you to find jobs in the country as we are now in need of labor too. Take for instance in this report, SAP has offered jobs for between 10,000 and 20,000 workers. It has been noticed that more workers are needed in agriculture, construction and industry too.
Migrating illegally to Thailand to find jobs, you are to work in the areas of agriculture like cutting and collecting sugar canes and cassava but you are not paid more than in Cambodia either. You may get higher pay there but you take several risks too like being there illegally, coping with higher expenses and being separated from your parents and families. Taking all these conditions into consideration I am calling on you to reconsider and stay for local jobs that are also available. There is no place like home.
In similar instance I would urge investors to provide better settlements for workers. Here in SEZ at the SAP, I urge that necessary condition for workers to stay close to their workplace must be in place. Secondly, it is important to provide them with information and collaboration as far as job seeking and availability is concerned. I already advised on this issue in several Cabinet meetings. Factories in need of labor forces have to provide information so that workers in need of jobs are aware of the job availability. It is also important to inform workers of workplaces where they can find jobs. Thirdly, it is also critical for companies to readjust labor wages to be more competitive. However I warn that any demand for wage increment should not surpass agreeable term.
On April 28 I met with representatives of some 4,000 factory workers from 60 unions to figure out problems and identify ways to resolve. I would like to take this time to urge that coordination and abiding by labor law are the best ways to resolve all differences. It is important for us to understand that there would be no workers without factory owners and vice versa. It is therefore fundamental to balance interests between the two depending groups. The two groups need to be in harmony as there cannot be one without the other. To achieve this harmonious relationship, while making profit, owners of the factories should add a part of it into workers’ benefit, not just as financial but also health and training incentives.
It is a two way relationship. However, taking the roles of the Ministry of Social and Veteran Affairs, Arbitrary Council, which is the conflict resolution mechanism, and local authorities into consideration, such relationship is a knot of so many strings together. You may think in a simple way that in case of violent conflict that leads to fire or destruction of factories of some kind, workers are the ones to lose jobs. Though the owner may suffer loss of property, they would still have homes and properties.
As you all can see, in the 2008 financial crisis and economic downturn, which has extended its impacts to the present, had brought about the closure of some 54 factories in Cambodia, causing job losses for tens of thousands of people. The state then was forced to spend money for skill retraining and new job creation for laid-off workers. However, thanks to combined efforts, in 2011, we have been able to put into operation some 80 factories, where tens of thousands of workers can resume their jobs. The Royal Government in this instance has made every effort on the one hand to maintain political and macroeconomic stability, security, social order, and on the other to attract foreign investments while expanding existing markets and accessing new ones.
In 2011, as a result, our export to Europe reached close to one billion US dollars and I am sure because of combined efforts we also will be hitting a new growth. It is in this perspective that I am calling on all to work to achieve win-win situation among workers, management and investors. You may ask for what purpose we need to invest some 45 million USD in SEZ at the SAP. It is for the attraction of foreign investors to come build factories. And who will work in those factories? In light of this, because more investments will be for higher-end and more sophisticated products, it is important that we have to have human resource training.
It is in this concern that in meetings with the Japanese companies, I learned of their explicit concerns about lack of high skilled labors. We have now come to a stage of lacking labors in household agricultural activities, small, medium and/or large scale rubber or sugar cane farms, construction, and in industry. Why our people migrate illegally for jobs in foreign country? My main point here is that those people do not have information about job availability in the country or nearby there residential areas. Tricked by some cunning labor trader could be another reason.
I would advise our people on reason that they could earn 300 Thai Baht per working day in Thailand as (the Pheu Thai’s policy which has now become) the Yingluck’s Government’s policy is to be applied for Thai people and up to the present, it has not been applicable in throughout the country yet.
Starting from May 15, I will not give anymore discourses as it is prohibited by the electoral law while we will be in the electoral campaign for the communal elections. We have to spend money on communal elections this year according to schedule. With or without financial assistance from other sources, we will have to carry the elections through. In 1998 we were short of money to carry out the elections. Japan and the European Union provided us with financial assistances. That is why I told HE Obuchi, the former Prime Minister of Japan, that Japan and European Union are midwives of the second term Royal Government of Cambodia.
I meant that only Japan and the European Union offered us financial helps to carry out the general elections. We did not have money at the time. We even did not have money to pay for our public officials and staff. Now we have some money but that does not mean that we rule out the help given by Japan at all. If Japan considers offering us help for the communal elections, we will be most happy to accept. However, with or without the help, the elections will have to be conducted according to schedule as I already sign the paper to transfer money for the job already.
In 1993, the United Nations (Transitional Authority in Cambodia) or UNTAC paid completely for then general elections. In 1998, most of the money was provided by Japan and the European Union. In 2003, Cambodia covered 40% of the total amount of money needed for carrying out the general elections. In 2008, Cambodian share for the task reached 60%, while only 40% of the amount covered by foreign assistance. We also understand that it is a difficult time for some in this financial crisis.
Maybe I should add a little as we just finished the Japan-Mekong summit. Japan declares providing a fund of 600 billion Yen or 7.4 billion USD for a period of three years for the five Mekong countries. In bilateral meeting with HE Yoshihiko Noda, Prime Minister of Japan, I have proposed to him on the one hand to maintain the grant and on the other to increase the amount for concessional loans. The concessional loan from Japan has a loan-term of 40 years with 10 year grace period and 0.01% interest per annum. However, I did not mention anything about asking Japan to help with the elections.
Despite this, HE Sar Kheng, Deputy Prime Minister and Minister for Interior already sounded out the idea with friends. By and large, we should also scale down the culture of asking for help while increasing the share of self responsibility on issue of regularly developing democracy in Cambodia. Next year we will be conducting the general elections too. We plan to spend between 18 and 19 million USD for the communal elections and the similar amount will be spent in the general elections next year.
There are ten political parties to contest in the communal elections and I wish to appeal to all parties to act neutrally and freely so as to guarantee that we will have an acceptably fair and just elections. I would call on all political parties to accept the results of the elections as none of them now claims to be the weak but strong ones. I warn them not to complain when they lose as their party agents are going to observe the elections too. It is ridiculous that some in the opposition parties have called on the majority to respect the minority. Does this means that in the future we (the Cambodian People’s Party) should aim for minority support in the next election to be respected?