People who have been following this blog know by now that this is one of my pet subjects. Sam Rainsy has spoken again. He gave an interview to the Phnom Penh Post, which I am including here with my comments (in red).
As a former finance minister, what would you do to address the financial crisis if you were in the same position now?
Even before the financial crisis, I would have done things differently. Regarding agriculture, I would protect ownership for farmers of the land they live on, I am against these megaprojects that are creating farms with tens of thousands of hectares.
This is nonsense. It makes farmers landless and turns them into labourers.
I don't think this is the right approach. We need to protect the land owned by farmers and provide them with the inputs they need to improve productivity....
The current government has granted 99-year leases for companies in what they call the agri-business - I think this approach is totally wrong.
So what would those inputs be? Farmers keeping their land alone won’t solve the problem facing the agricultural sector. Besides, prices for agri-products have plummeted along with the all the other commodities.
Second, regarding non-agricultural sectors, we need to diversify.
There is the garment industry, which is the foundation of the economy. So we have to promote and encourage foreign direct investment in a more appropriate way by combatting corruption.
Investors are complaining about corruption and they are going to other countries.
So you think investors are now turning to Thailand, Vietnam, Malaysia, Indonesia? Even though the corruption index for Cambodia is higher than in any of those countries, one needs to take a second look at what the index comprises. A lot of the corruption in Cambodia is petty, e. g. tea money for speeding things up, which in its pervasiveness distorts the picture. And where do most of the investors come from? South Korea, China, Taiwan. Those investors have problems of their own right now. This is why they put things on hold. Corruption didn’t keep them from coming to Cambodia in the past, did it? (Not that I am in support of corruption.)
So we have to attract legitimate investors ... but also high-quality investors with technical expertise, and that will diversify industries.
Can you tell us for once what you are thinking of?
How seriously do you expect the crisis to affect Cambodia?
More, much more than the current government says. They maybe don't realise what is going on.
Are you saying that you don't believe the government's current growth forecasts?
I think we will see less investors with this crisis. We will be left with destitute farmers, and the country is less than self-sufficient.
And with a weak agricultural sector, you can't expect the country to grow.
First you say we need to innovate agriculture, but you don’t tell us how. So the agricultural sector is weak, but if it were stronger the crisis would still be there.
But let's look at the three sectors driving the Cambodian economy: textiles, construction and tourism.
These sectors are going to be hurt by the economic crisis, and more severely than the current government can understand and realise.
They say that we can hold out, but they don't realise the implications of the current crisis.
Look at textiles. Competition will increase and profits will drop as people cut their spending worldwide.
And competition from countries like Vietnam and China will increase. We are facing tough times and already factories are closing.
Believe it or not, these countries face the exact same problems as Cambodia, and not only in the garment sector.
Look at Tak Fat [garment company] in Hong Kong - they went bankrupt.
Do you read the newspapers at all? Didn’t you read that thousands of factories in China are closing or cutting down production?
In Cambodia there is half capacity, and some people having trouble in Hong Kong are coming to Cambodia to hide - the shareholders being cheated and assets are being transferred. So this is just the tip of the iceberg.
What does that have to do with the price of fish, meaning with Cambodia?
Second, in terms of construction, many projects have been stopped or put on hold. Many big investors from Korea have moved out - look at the drop in property prices - this is an indication that the crisis is serious and will take a long time to heal. When these projects started construction a few months ago, they expected that their commercial centres would be rented - but now these prospects have to be revised. They can't continue at the same pace and projections have been revised down.
What you don’t seem to realize is that this crisis was not foreseen by anybody, not the U. S. where it all started, not in the EU, nor did any economist ever predict a slump like this, not in their wildest nightmares.
We already know that tourism is being affected by the crisis - tourism is going down and the Thailand crisis is making it worse.
So, the three engines of the Cambodian economy are in trouble....
I think that, on the whole, there will be a serious economic slowdown. People will lose their jobs, incomes will drop, and because of monopolies, prices will remain high. In a recession, normally prices drop, but because of corruption and monopolies, prices will remain high....
Where do you live? Prices in Cambodia have come down, be it gasoline at KHR 3700, or steel, or bricks, food prices, etc. It’s just not true.
Countries need to be prepared, but Cambodia's foundations are weak, we will suffer more than the government says.
Does the government deserve credit for the strong growth seen over the past few years?
The figures for economic growth are misleading.
The first thing to keep in mind is that the growth we have seen is not sustainable, it is rather artificial.
That applies to most economies. Cambodia had, and still has, a lot of catching-up to do. So it is only normal that initial phases will produce extraordinary growth. If it had not been for this world, repeat world, financial crisis, the growth rate would have continued along the 7% originally predicted, which was scaled down to 3%. European countries would be happy if they had that.
Second, it was not equitable - the quality of growth is poor. The figures being put forward are misleading because the majority of people remain poor, and the growth has benefitted a small group of people.
Correct, but as any economist will point out, underdeveloped countries never develop from the bottom up. They develop from the top down. It is an economic law.
Of course, there is a trickle-down effect, but is has been slow. If you go to the countryside, the vast majority remain poor ... these are the ingredients for instability...
Correct again, except for instability. This country will not take measures to upset the small progress it has made.
What is happening is not sustainable - cutting the forests, overfishing and exploiting resources.
I could probably double the growth rate if I over-exploit the resources in a small period of time. But you jeopardise the prospects for the country.
What political implications would a deeper economic crisis have for Cambodia?
They would be very serious. As I told you, this growth is not sustainable and this will have social implications.
Public discontent will increase and people that have lost their land, lost their homes, lost their livelihoods - they become desperate....
You can crack down on it, but don't forget that the Khmer Rouge started in similar circumstances.
Now people are educated and they understand the cause of their misery.
So you are implying social unrest like in Thailand? One can only hope you are not encouraging this, though one is reminded of your call to people power, which you actually wanted to organize with failed demonstrations after the elections, or your May parades.
What should the government be doing to prevent the crisis from seriously impacting the local economy?
First, the current budget is out of date - it needs to be updated. We need to meet with experts and other interested persons to set a strategy for the crisis - we should not keep this budget that was developed before the crisis unfolded - it is outdated. You have countries that are even better off than us that are implementing plans to support the economy, to protect jobs and increase spending in a responsible manner.
A budget is a budget, that is to say it is a plan. Wait a few months and see what happens.
If the situation is as bad as you say, why hasn't that translated into stronger support for the opposition?
The situation has gotten worse since the election, but people are starting to feel the pinch. In terms of the election, there was massive electoral fraud. In countries like the US, the elections reflect the will of the people, and as a result, when a party wins the election, there is an outpouring of joy, but here, there was no celebration in Cambodia. The people remained sad and depressed ... the majority of the population has been deprived of their voting rights.
Dear Sam Rainsy, don’t use the 2008 elections in the U. S. as an example. Use the 2000 and 2004 elections. Half the population was shocked to see GWB win. In Europe nobody outside the winning party really celebrates, let alone an outpouring of joy. And to be honest, I don’t see a whole lot of sad and depressed people. They can still laugh and have a good time. They can make do with less as they have for a long time. Don’t paint such a dreary picture. Politicians should instill confidence and faith in the furture in the population.
Summing up, one can only come to the same conclusions that I have voiced in the past. Sam Rainsy is the wrong person for the job. The opposition’s role is not to oppose for the sake of opposition, it is to present a clear alternative to the party in power. This is what the SRP has so far failed to do. They have not formulated a detailed program of how to expand agriculture, how to attract more foreign investment that actually creates new jobs, how to reform the educational system, etc. Apart from generalities and platitudes nothing concrete has been forthcoming. Sam Rainsy has preached the same sermon for the last 10 years. His rhetoric exhausts itself with blasting the government and its endemic corruption. And when it came to making a firm stand because of the alleged election fraud he buckled down at the last minute to take his seat in the Assembly. This is not the leadership his supporters want and can look up to.