Threatening to cancel leases of private companies renting from the government may be the only way to collect long-overdue rents, officials said this week.
No ministry is owed more in back rents than the Ministry of Industry, which is receiving pressure from the Finance Ministry to take action to collect more than $700,000, officials said.
Kaing Leang Khan, acting director of the state property department for the Finance Ministry, said that 16 private companies that rented properties from the Industry Ministry have delayed the payment of rents for years and the debts now total about $724,000.
“The Ministry of Industry is the worst [leaser] among 11 ministries that lease some of the state properties,” said Kaing Leang Khan, noting the failure to collect the outstanding rent is hurting the cash-strapped government.
“We have asked the Ministry of Industry to discuss with the Ministry of Finance about the outstanding balance issue in order to decide if the government needs to cancel the contracts with private companies.”
The state leases more than 100 properties to the private sector, generating about $6 million annually, on paper. But that amount is not collected. For example, this year about $4 million has been collected, he said.
Frustrated with the outstanding debts, Finance Minister Keat Chhon sent a letter last week to Industry Minister Suy Sem, asking how he aimed to collect the hundreds of thousands of dollars owed. Suy Sem said the ministry has not yet set up a plan to collect the money it‘s owed.
“We have not met with the Finance Ministry yet…We will first have a meeting with senior officials to decide what we are going to do,” Suy Sem said Wednesday, adding the ministry has no intent to cancel the lease agreements at this time.
According to the Industry Ministry, it started leasing some of its properties in 1991 to generate revenue. Currently 16 companies lease from the ministry, using properties for such purposes as manufacturing, silk weaving, glass producing and plastic making, officials said.
“It’s not easy to ask them to pay the rents because they are in a financially difficult situation,” Bun Leang, deputy director-general for the Industry Ministry, said Thursday. He pointed out that the companies have been struggling and are losing money.
He said that among the 16, were three manufacturers that went out of businesses and ran away: one is a jute factory in Battambang province that has owed $60,000 to the government since 1992; two others are textile manufacturers in Phnom Penh that together owed $300,000.
Irritated that the Industry Ministry could not manage the matter, the Finance Ministry in August started to collect rents from the companies, two officials said.
“We just want to control the state property and put things in place,” said Kaing Leang Khan. “If the companies can pay the debts, they can continue to rent the properties. The problem is late payment.”