The Ministry of Finance has ordered the Thai-Cambodian border closed to fuel-carrying trucks in an effort to stop smuggling that is costing the government some $800,000 per month. Petroleum products will come into Cambodia only through water ports in Phnom Penh and Sihanoukville, ministry officials decided.
In perhaps one of the first crackdowns on fuel smuggling, seven oil trucks traveling into Pailin town from Thailand were seized by Battambang provincial authorities last week, according to provincial police chief Chan Kosal.
The trucks were part of a nine-vehicle convoy smuggling oil across the border around midnight Sept 4, Chan Kosal said Thursday. Two of the trucks were turned back. After being held at the Rattanak Mondol district police headquarters for 22 hours, the other seven trucks also were sent back to Thailand, he said.
“We didn’t want an armed clash,” Chan Kosal said of the decision to release the seized trucks. “There were many high-ranking government people who intervened to compromise on this problem.”
But he said Battambang provincial police will continue to stop petroleum-carrying trucks, despite the relative wealth smuggling has brought to that region.
Late last year government officials acknowledged fuel smuggling through former Khmer Rouge zones near the Thai border had become a serious problem. About $800,000 in revenue is lost each month to smugglers, Finance Ministry officials have estimated.
At a finance workshop in November 1998, Finance Minister Keat Chhon said customs would be strengthened on the Thai border, though he would not say what actions specifically the government would take.
Khieu Thavika, adviser to the Council of Ministers, said Wednesday the decision to close the border to overland fuel transports would both curb smuggling and create a fairer market for legitimate petroleum companies.
A petroleum company official praised the decision. “Anything to stop smuggling helps,” said HC Lim, general manager for Shell. “It will ensure a more even playing field [for petroleum companies] but it will also benefit the country as a whole.”
But some government officials doubt the government can effectively police the Thai border and say the solution to encouraging legitimate fuel distribution is to lower the taxes on petroleum products.
Gasoline costs $320 per ton, according to Te Duong Tara, economic adviser to cabinet Minister Sok An. But gasoline is taxed at $350 per ton, Te Duong Tara said Thursday, and can be bought more cheaply from Cambodia’s neighbors.
“In order to stop smuggling you have to make the price competitive. The Finance Ministry has to refigure how they tax gasoline,” Te Duong Tara said. “The Thai border is very long. How can you put all policemen along the border?”
Closing the overland routes to Cambodia’s more isolated regions also would raise the price of fuel, which must now be off-loaded from tankers and trucked from Phnom Penh and Sihanoukvlle, government spokesman Khieu Kanharith said Thursday. “To stop smuggling is impossible,” he said.
High taxes, particularly the recently implemented Value Added Tax, have been blamed for encouraging the smuggling of all goods, particularly automobiles, which can be bought much more cheaply from smugglers than from legitimate dealers who must increase their prices to cover the cost of the VAT.
