Gov’t Directs $30M Loan to Private Firm

The government has borrowed $30 million from China and loaned it to private firm AZ Distribution Co Ltd to establish a high-tech mo­bile phone service, Minister of Post and Telecommunications So Khun said Thursday.

The money was borrowed from China in 2004 and the AZ firm, which is headed by CPP parliamentarian Ung Bun Hauv, was officially licensed on Wednesday at a ceremony at the Council of Min­i­sters presided over by De­puty Prime Minister Sok An, So Khun said.

“AZ has borrowed from the government and it will pay back to the government,” So Khun said, though he did not specify when this would take place.

The new mobile phone service, offering numbers beginning with 019, should be up and running in one year, So Khun said.

He added that the phone service will operate a cordless digital multi-access system.

Sok An described the system as a “combination” of te­le­­phone, TV, radio and two-way ra­dio.

The system is expected to make international calls easier and Sar Vathana, a senior officer with AZ, said it would not be possible to tap phones that use the new service.

“It is a safe and secure system,” he said. “CDMA is a special version, modernized, with faster data speed where you can communicate secretly with your partner without bother from outside voices or having voices taped by someone.”

Sar Vathana said his firm re­ceived the loan because of a government policy to develop the private sector.

“The government has the will to help Cambodian companies prosper,” he said.

The AZ company, which ran into stiff criticism earlier this year after the government controversially granted the company the right to charge tolls on National Route 4, aims to provide good service and cost efficiency, Sar Vath­ana added.

“Where there is investment there is job creation,” Sok An said, ac­cording to a recording of his com­ments made at Wednesday’s license granting ceremony.

The loan from China was sign­ed in Beijing by Cambodian Fi­nance Ministry Secretary of State Ouk Rabun and An Min, Chinese vice commerce minister, on April 20, 2004, according to a copy of the loan agreement.

The terms of the loan, including reimbursement, will not exceed 20 years, and its annual interest rate is 2 percent, according to the document. Volak Sao, operations manager for First Cambodia, a firm working in the IT business, said the move is good news for the IT and tele­communications industry, and for phone users.

“It’s big news to us in the IT com­munity,” he said, adding that it shows the industry is gaining ground.

There is room in the market for a new mobile service, as the technology it is offering is not yet available, he said.

Kith Meng of the Royal Group of companies, which owns MobiTel, de­clined comment Thurs­day.

Opposition lawmaker Son Chhay said he was skeptical about the move, adding that Cambodia does not need another mobile phone company, and that the deal risks wasting state funds.

“It’s a private company. We don’t understand the reason be­hind the government’s commitment to borrowing money from the Chinese for that company. We’re doubtful of how we’re going to benefit from it,” he said, adding that AZ appears to be the “right hand” of the government.

One foreign diplomat said the move indicates the increased level of business interest in China to­ward Cambodia, though he ad­ded that the mobile phone market here may already be saturated.

The government’s support for AZ could put its competitors in the telecommunications industry at an unfair disadvantage, the diplomat said.

“If this guy is able to get financing from China that his competition doesn’t get, there may be problems in terms of fair play,” he said.

“On the flip side, where else can you get this financing. [AZ] is not doing anything terrible with the money,” he added. “Local financing is not available.”


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