An opposition lawmaker has called for an investigation into a $17 million contract awarded to a South Korean company for the renovation of a 32.5 km stretch of National Route 3 between Kam-pot town and Trapang Ropaou village in Kampot district.
The demand comes as the Ministry of Public Works and Transport forges ahead with a request to lift import taxes for the Kukdong Engineering Co as it prepares to begin construction.
Construction on the section of road that leads to Sihanoukville is slated to begin this month with an inauguration by Prime Minister Hun Sen. Workers from Kuk-dong have arrived at the site in anticipation of the project’s launch, but no ground has been broken yet, Kampot provincial Governor Puth Chandarith said Tuesday.
But in a letter sent Monday to South Korean Parliamentarian Jay Kun Yoo, opposition party lawmaker Son Chhay asked the Korean lawmaker to lead an investigation into the $17 million loan granted for the roadwork. According to Son Chhay’s letter, under the terms of the loan, only South Korean firms could bid for the contract which, he said, had already been tainted with rumors of pocket-lining. One expert also calculated on Tuesday that $17 million was a very high price to pay for the roadwork.
Late last year, the state-run Export-Import Bank of Korea threatened to reject Kukdong’s contract for the project, calling the Cambodian government’s bid evaluation criteria “unreasonable, unfair and manipulated.” Kukdong was awarded the contract to renovate the 32.5 km stretch of road in late 2003, despite submitting a bid $240,000 higher than the lowest bidder, according to bidding documents.
Uk Chan, undersecretary of state for the Transport Ministry, said Tuesday that the bank eventually approved the loan, but dec-lined to say why it withdrew its original threat to withhold funds.
Officials from Kukdong could not be reached for comment.
In a letter dated May 10, Uk Chan requested the Ministry of Finance to lift import taxes on all construction equipment, vehicles and office supplies for Kukdong, which he confirmed Tuesday are currently en route to Sihanouk-ville port from Vietnam.
The undersecretary of state has also, according to documents provided by Son Chhay, requested that the Finance Ministry transfer $93,000 of the South Korean government’s loan into the Public Works Ministry’s bank account at the National Bank of Cambodia, in preparation for monthly payments to Kukdong.
But lifting the tax may not be possible, said Finance Ministry Deputy Secretary-General Hang Chhun Narun.
Companies are usually requ-ired to pay a 10 percent value-added tax on construction imports, Hang Chhun Narun said, although the tax is sometimes lifted for equipment that will stay in the country only a short time before returning home.
“I think companies always want to import construction equipment without tax and excises, but the government really needs [the money],” he said. However, “only the Finance Minister can make that decision,” he added.
On Tuesday, Uk Chan denied that lifting the import taxes would lose the government money. “I don’t think the state will lose revenue if the company asks for tax and excises free,” he said.
Kukdong will eventually send back all its equipment with the exception of the vehicles, which will be handed over to the Ministry of Public Works and Transport, Uk Chan said.
Kampot provincial officials are now working to arrange compensation for families living along National Route 3, who will be displaced by the construction, Governor Puth Chandarith said.
“I hope people will understand about state policy. National Route 3 will help a lot with economic improvement,” he said.