Smugglers are taking advantage of Pailin’s unique tax-free status by transporting oil and gasoline destined for the capital without paying import taxes, customs officials said Wednesday.
Two truckloads of fuel were seized by the customs department in May and about 10 others are believed to be going through every month, according to In Saroeun, director-general of the customs department.
The smugglers are using Pailin’s three-year tax-free status which allows oil and other goods to pass from Thailand into the semi-autonomous municipality without customs duties being paid to the national government.
The former Khmer Rouge stronghold was granted the special status after its leadership defected to the government in 1996, In Saroeun said, explaining the status was granted to help the zone retain its own import duties to pay for development.
In Saroeun emphasized that petroleum products imported to Pailin are intended for the municipality’s use only, he said. He said the trucks shipping gasoline and motor oil through Pailin to Battambang province are avoiding paying standard import taxes to the national budget.
In Saroeun said the trucks, which usually contain 2,800 liters of gasoline or motor oil, are guarded by armed men, and customs officials are not armed.
“We don’t want to stop them by using weapons. We don’t want to fight, but we want them to follow the law,” he added.
Nam Tum, deputy governor of Battambang province, confirmed that smuggled oil was being trafficked through the province en route to Phnom Penh.
“If the door is opened, then the smugglers can go through,” he said, blaming the problem on customs officials in Pailin. “If the door is closed, there won’t be any smuggling.”
The two trucks seized in May carried the Petroleum Authority of Thailand logo, In Saroeun said.
However, the seized trucks are not owned by the authority, said the country director of fuel distributor Continental Indochine, which imports the Thai company’s products to Cambodia.
“We didn’t import it, it’s not our truck and its not our fuel,” Dan O’Donnell said Wednesday night. “The logo is unfortunate.”
He said the illegal cargo likely was carried by an independent contractor based in Battambang province. “Some guy and a truck with PTT labels brought it in,” O’Donnell said.
A PTT representative in Phnom Penh said he didn’t believe Continental Indochine would be involved in smuggling, and said his office only provided technical support for gas stations.
Continental Indochine, however, paid $116,000 in tardy duties and smuggling fines to the Finance Ministry in early 1995 for failing to declare imports of several hundred metric tons of diesel and jet fuel before it entered military-controlled Ream Harbor near Sihanoukville, according to a Finance Ministry and customs department investigation.
Petroleum products account for 74 percent of Cambodia’s customs revenues, In Saroeun said. Customs revenues fell 2 percent short of projected income in the first quarter of 1998, officials said in May.
The customs department collects $490 per ton for motor oil, $280 in duties per ton of gasoline, $27.80 per ton for aviation fuel, $69 for diesel fuel and $10 per ton for kerosene, In Saroeun said. Motor oil and gasoline are being clandestinely imported because they cost the most to legally import, he added.
Prak Long, Cabinet director at the Ministry of Finance, said it’s up to the customs department to solve the problem. “This is a duty of the customs department and they must take more action to stop the smuggling,” he said. He also said armed men were smuggling oil through Poipet in Banteay Meanchey province.
He said the ministry will soon call for a meeting between the customs department, the ministry and oil companies to discuss the problem, although he would not specify when.
O’Donnell said Continental Indochine imports all its fuel at Sihanoukville. “We’ve paid full duty for every shipment,” the country manager said. “We have nothing to do with Pailin. Trucks up there belong to independent suppliers working the border.”
(Additional reporting by Stew Magnuson and Chris Decherd)