The National Assembly has allocated $13 million of the 2002 national budget to convert the state-owned Cambodian National Insurance Company (Caminco) into a state-supervised, quasi-private venture.
“We cannot remain state-owned with small salaries anymore,” explained Rath Sa Rath, the Ministry of Finance official who manages Caminco. “If we run it as a public enterprise, the staff will have better pay.”
The combination of competition from other companies and better salaries for its staff will make Caminco a better business, he said.
A public enterprise is a business that operates in the private sector under a board of directors appointed by the government. Cambodia’s electric company, Electricite du Cambodge, is one such venture.
“It is still under the supervision of the Ministry of Finance, but the management system is private,” Rath Sa Rath said.
Caminco has sent a draft subdecree ordering the change to Prime Minister Hun Sen’s Cabinet and expects it will be approved in January.
Under Cambodian law, insurance companies must have a minimum of 56 billion riel (about $14.3 million) in capital investment. Caminco already has more than $1 million in its coffers, so the budget allocation will allow it to register to operate in the private sector.
The idea of making Caminco a public enterprise was supported by the Asian Development Bank, Rath Sa Rath said.
The insurance industry in Cambodia, however, is still a fledgling one, as Rath Sa Rath admitted. Furthermore, the world insurance industry has suffered since the Sept 11 attacks on the Pentagon and the World Trade Center in the US.
Some lawmakers have said they don’t believe it is the best time to take Caminco into the competitive arena. Although it eventually passed, the section of the budget approving the Caminco transformation—Article 9, Chapter III—drew heated debate in the National Assembly.
Funcinpec parliamentarian Keo Remy said it’s not the right time for Caminco to undertake such an ambitious move. “My personal point of view is, I am still opposed to the government spending $13 million in state money on Caminco,” he said.
He said pubic-private collaborations are dangerous because they put government funds at risk. He also said Cambodia still lacks the law enforcement resources to make such a venture work. The Caminco project is typical of a government that tends to make laws before it has the capacity in place to make them viable, he said.
Ouk Sameath, sales manager for Indochine Insurance, said another competitor wouldn’t be a problem for his company. He said insurance companies in Cambodia face many problems, including unreliable law enforcement and a lack of human resources.
Currently, four insurance companies—all foreign-based—operate in Cambodia: Indochine Insurance, Forte Insurance, Asia Insurance and Pana Insurance.
Foreign-based companies, such as garment factories and NGOs, are the main customer base for Cambodian insurance companies, since the concept of insurance is not well understood by the Cambodian population, especially in rural areas.
