When Cambodia struck oil several years ago, it was billed as a watershed event that was going to bring the country billions of dollars—and with that either a terrific blessing or a horrible curse.
But according to Finance Ministry Secretary-General Hang Chuon Naron, who addressed a youth forum in Phnom Penh on Sunday morning, it might not be such a big deal after all.
“If you put too much hope, that is not good,” he said before the packed auditorium at Pannasastra University. “We should hope on the resources that we can see and not hope on the resources that we don’t see,” he said.
There is still a lot that remains unknown about Cambodia’s oil situation—such as when exactly drilling will start and how much there even is to extract—but Hang Chuon Naron said that he thought oil production is likely to begin in 2011.
He estimated oil would bring in an additional $200 million to $300 million to Cambodia’s total revenue—figures that pale in comparison to garment exports, which was $3 billion last year and is projected to be $3.7 billion in 2011, and tourism, which was $1.2 billion last year and is estimated to reach $2 billion by 2011.
Oil, he said, is ultimately projected to be a small part of the country’s total revenue.
Cambodia should be thinking “more broadly, more comprehensively about how to manage all the industries, including oil. Oil will be a small part,” he said on the sidelines of the forum.
“Oil is underground. We can extract only 20 percent of that, and we don’t know whether we can do it or not,” he said, adding that Cambodia would be best served to focus on sectors such as rice exports, for which the potential is both knowable and close at hand.
“Like export of rice, we can do it,” he said. “We can increase our export, you know, to 1.4 billion US dollar from currently only about $800 million. We can do it immediately. Oil, we may or may not.”
Cambodia National Petroleum Authority Director General Te Duong Tara refused to comment Sunday.
SRP lawmaker Son Chhay said Sunday that he thought Hang Chuon Naron was purposely underestimating the potential of oil revenue in order to lower its profile internationally.
“They want to drag away international community concerns,” he said, adding that while oil revenue might only be about $300 million the first year, it would soon reach about $1.5 billion.
Laws are needed to regulate revenue of such magnitude, he said.
“We must have a law to control the revenue and separate oil revenue from the national budget” in order to keep clear track of the money and ensure transparency, he said.
Hang Chuon Naron said that the oil revenue would be split between the national budget, from which it would be allocated to development projects of national importance, and the National Bank of Cambodia.
The NBC would then be in a position to invest overseas and gain interest there without dangerously inflating the local economy, he said.