Investment Preferable to Aid: European Officials

Cambodia should in the next few years start relying less on international aid and more on private in­vestors, European officials said Thursday.

The $7.855 billion given to Cam­bodia by foreign governments since 1992 was justified by the country’s huge reconstruction needs, but now that the economy is fast-growing, profit-making enterprises should take over, French Ambassador Jean-Francois Desmazieres said at a roundtable discussion on political and economic cooperation between the EU and Cambodia, which was organized by the Club of Cambo­dian Journalists.

“Cambodia remains one of the four least-advanced countries in Asia, but it has progressed enormously. It is therefore important—and that is one of the themes we’ll approach with the government—that private investment, the investments of businesses, take over from [foreign] taxpayers’ money,” said Des­mazieres, who also represents the EU during France’s presidency of the regional grouping.

“International aid should no long­er be the sole engine of growth,” the ambassador said, add­ing that fighting corruption was key to attracting major foreign companies to Cambodia.

The government is scheduled to meet next Thursday and Friday with international aid donors to set their pledges for the next fiscal year and beyond.

Desmazieres declined to specify a figure or a trend for France’s aid ahead of the meeting, but he said that there would be no “dramatic change” and that the global financial crisis would not alter France’s commitment to Cambodia. In 2007, France had pledged $201 million, he said.

Rafael Dochao Moreno, chargé d’affaires of the European Commis­sion, the top provider of aid to Cambodia, also echoed the ambassador’s wishes for more private in­vestment over aid handouts.

“Cambodia is a country that has received non-refundable aid for a certain number of years. Now it must be a country that starts having other sources of funding, including foreign investment,” Dochao Mor­eno said.

Government officials responded cautiously.

Cambodia wants to be economically independent, but the country has only been stable 10 years and still needs help, Council of Ministers spokesman Phay Siphan said.

“We are a small baby, and the challenge is huge,” he said, adding that the country still needs funds for the many reforms engaged in education and government for instance.

The global financial crisis is an­other obstacle that could discourage private investors, making aid much more of a necessity, Phay Si­phan said.

Cambodia has received about $690 million in foreign aid in 2008 and will request more than $500 million for 2009 at next week’s meeting, said CPP lawmaker Cheam Yeap, chairman of the National Assembly fi­nance commission.

“I am optimistic that the international community will still provide aid to Cambodia, even if there is a global financial crisis, because they believe in Samdech [Prime Mini­ster] Hun Sen,” Cheam Yeap said.

But the continuing corruption in the use of aid could push donors to reduce their pledges, even though aid is still needed, said SRP lawmaker Yim Sovann, citing the example of the recent accusations of systematic corruption in the distribution by local officials of emergency rice funded by the Asian Development Bank.

Also present at the forum, Ger­­man Ambassador Frank Marcus Mann said good governance was a constant concern of the donor community and would be discussed with the government next week.

“As much as we talk about the progress and development, we have to address at the same time deficiencies and encourage the government to improve its record on certain topics, and corruption is one of them,” Mann said.

The US is still working on its own pledge and figures are not available because of the political transition in Washington, said John Johnson, spokesman of the US Embassy in Phnom Penh.

“I think it’s the ambition of all donors that the countries they’re giving aid and assistance to graduate. As far as Cambodia is concerned, it’s a multistage process and it’s difficult to pin down exactly where we’re at right now,” Johnson said.

  (Additional reporting by Neou Vannarin)

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