Gov’t Blaims Multi-Million Dollar Losses on Smuggling

Rampant smuggling is costing the government some $2 million per month in revenue, Finance Minister Keat Chhon told Nation­al Assembly members Monday.

“The government has lost about $2 million of revenue each month because of smuggling…. We are not happy with this at all,” he said.

Customs officials have difficulty apprehending smugglers, Keat Chhon said, acknowledging there is dishonesty among some customs workers, who are under the jurisdiction of his Ministry.

“There are good and bad [customs] officials who cause money to be lost,” Keat Chhon said.

Customs Director Pen Simon and Kong Vibol, secretary of state for the Finance Ministry, declined comment Monday. Keat Chhon could not be reached. Officials have said most goods illegally enter Cambodia from Thailand, though borders with Vietnam and Laos are also porous.

In a half-year report on the economy issued earlier this month, the Finance Ministry said the government collected only slightly more than half of the amount it expected in customs tax revenue during the first six months of 1999.

Fuel smuggling, in particular, is a problem. The amount of revenue generated through customs tax on fuel imports increased only 1 percent in the first half of 1999, compared to the same period in 1998, according to the report.

“This constitutes proof that smuggling of fuel remains strong,” the report stated. “Oil prices in Cambodia are much higher than in neighboring countries. This has encouraged smuggling of fuel, which has a serious effect on budget revenue.”

Petroleum typically is smuggled into Cambodia from Thai­land through border areas Pailin, Sampeou Luon and Poipet, government officials said. The convoys entering the country often are armed, but not customs officials .

Keat Chhon said late last year petroleum smuggling cost the government $800,000 per month in lost revenue and vowed to take measures to curb it.

In the half-year report, the Ministry of Finance stated the government plans to train up to 20 customs officials in an effort to beef up tax collection. The government must stamp out smuggling and reform the customs department in order to meet International Monetary Fund requirements for renewed aid to Cambodia, the report said.

The IMF pulled its funding to Cambodia and closed its representative office here in late 1996, largely because the government failed to increase revenue and failed to make genuine efforts to halt uncontrolled logging. Earlier this year, an IMF delegation held talks with the government about restoring some funding, provided certain conditions are met.

Economic analysts and auto dealers in Phnom Penh recently criticized the government for indirectly encouraging smuggling by charging the new value-added tax plus high import tariffs. The 1999 initiatives make it more expensive to bring vehicles legally into Cam­bodia compared to 1998.

The tariff structure has nearly stalled sales at dealerships, said local auto distributors, who claim customers are looking toward the Thai border for cheaper prices.

(Reporting by Lor Chan­dara, Kay Kimsong and Hillary A Jackson)

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