PM Unveils Package of Tax, Bank Measures

Speaking at the biannual Govern­ment-Private Sector Forum on Wednesday, Prime Minister Hun Sen announced a series of taxes and banking restrictions to help curb inflation and address other economic concerns.

The nationally broadcast forum, which brings government and private sector business leaders to­gether to discuss economic issues, was dominated Wednes­day by Hun Sen’s hours-long speech, which touched on inflation, the economy and politics.

Hun Sen placed the blame for rising domestic inflation on high oil prices, increased worldwide consumption of food and other goods, depreciation of the US dollar and the country’s economic growth.

From January 2007 to January 2008, consumer prices rose 18.7 percent, Hun Sen said, using figures from the National Institute of Statistics.

“The issue is not exclusive to Cambodia. Other Asean nations have high inflation like Cambodia,” he told the forum.

The prime minister then propos­ed a series of measures to deal with inflation, high property prices and food security—measures he said would also improve the government’s budget.

Hun Sen said the government would better implement taxation policies regarding land sales, which are supposed to be taxed by the government, and the oft-ignored tax on unused land.

To reduce inflation, Hun Sen said, the National Bank of Cam­bodia should in­crease the amount of money that commercial banks are required to put in the na­tional reserve from 8 percent of customer deposits to 16 percent. That would reduce loans and the amount of money circulating in the economy, he said.

The NBC will pay interest to commercial banks on the reserve money, he said.

“We will give you interest and this will help us to not sink our boat,” Hun Sen said, adding that his proposal will be discussed by banking officials and the NBC before it is implemented.

Hun Sen also said the NBC must restrict commercial banks from loaning money to real estate companies to stop the real estate market from “overheating.”

He said the government will suspend taxes on some imported agricultural and construction materials and equipment, while imposing new taxes on luxury goods such as motorbikes, cars, cosmetics, alcohol and cigarettes.

Defending his government’s handling of spiraling inflation, Hun Sen brought up the $6 monthly raise recently granted to garment workers.

Hun Sen also claimed that only the CCP would continue to hold the Government-Private Sector Forum, which has been held 13 times. He also criticized SRP pro­testations against the inflation rate as being political.

“The opposition wants to sink the boat. They have no responsibility,” he said.

SRP officials criticized Hun Sen’s speech, saying he had turned an op­portunity to exchange ideas with the private sector into a long, televised political campaign speech.

“This morning’s forum was a po­litical campaign. It is just propaganda. This shows Hun Sen’s failure in leading the economy,” SRP lawmaker Yim Sovann said.

Yim Sovann said the government allows petroleum companies to make too much money from customers and that Hun Sen’s proposals won’t affect gas prices. The government needs to address corruption so that tax revenue is properly spent, he said.

“The government fails to collect enough taxes. The government does not need to raise taxes on the people,” he added.

In Channy, president of Acleda Bank, said he agreed with Hun Sen’s analysis of the reasons for rising inflation, but that increasing banks’ reserve rates won’t affect those factors.

The 8 percent reserve rate is in line with neighboring countries, In Channy said, and raising it will slow down the economy.

In Channy said lending plays a part in economic growth.

“More lending, more investment, more employment, more in­come,” he said.


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