Monday, April 27, 2009

Recent News – continued

In today’s Phnom Penh Post Ms. Mu Suchua’s lawsuit against the Prime Minister got more coverage. It was reported that the words ‘cheung klang’ were part of the bone of contention, no pun intended, as ‘cheung’ means ‘bone’. ‘Cheung klang’ can be literally translated as ‘strong bones’ but is to be interpreted with slight variations depending on which context the words were said in. It can mean ‘fearless person’ or, implying both fearless and lawless, ‘gangster’, as applied to gang boss (‘bong thom’) or similar. ‘Cheung’ is used in Khmer much in the same way as in English, like in ‘my old or weary bones’, etc. Similarly, ‘cheung chas’ means ‘old bones’ in the sense of experienced, meaning somebody is an old hand at something.

It was also reported that the government is preparing a counter-lawsuit, without any details given on what basis that might happen.

Ms. Suchua took umbrage at those words and the context in which they were said. According to the PPP she found those words especially demeaning for a woman. I spoke with several Khmer people about this because as a Westerner I somehow failed to understand the deeper implications of her ‘beef’ with Hun Sen. Now one has to understand Khmer culture in order to understand this as an outsider. Despite their increasing role in both public and private life women are still supposed to be subservient to men, never raise their voices; generally be of a gentle demeanor. Consequently, if a woman is called ‘cheung klang’, it implies both fearlessness, indicating a will-power to win and to dominate – both undesirable qualities in a Khmer woman - but also possibly the character of a person of questionable background and dealings. Therefore, in other words, if applied to men it is both positive and negative, but if applied to women it is considered negative.

The Khmer people I asked about this concurred that it was not nice to refer to Ms. Suchua this way but in general was not considered court material. In normal life, this would end in a shouting match with most likely profanities hurled at each other.

It was also surmised that Ms. Sochua is probably a little in over her head, and possibly also a little too full of herself in this. She may be a fighter for women’s rights in Cambodia and her recent meeting with the U. S. Secretary of State Hillary Clinton may have given her the impression of a higher stature on the world stage than she actually has.

Both Sam Rainsy and Ms. Sochua seem to suffer from the same misconception shared by many returning overseas Khmer – the homeland Khmer nomenclature is by and large uneducated, uncivilized, unscrupulous, immoral, and wont to use direct or indirect force.

Needless to say, this doesn’t sit well with the powers-that-be. So, whenever they see a chance to teach those people a lesson they gladly take the opportunity to do so. In that vein, one has to see the government’s tactic of a counter-lawsuit with a possible lifting of the deputy’s parliamentary immunity. As mentioned before, one has to question the prudence of Ms. Suchua’s step simply based on the premise for it. It is widely believed to be for P. R purposes only. Many people just regard her, like Sam Rainsy and others, as someone who doesn’t really understand present-day Khmer homeland thinking. They dismiss her as a bothersome gnat.

Should the Khmer readers of this post disagree or have a different interpretation of the context I would welcome your comments.

Sunday, April 26, 2009

Recent News

Ms. Mu Sochua, the prominent female SRP deputy, the other day filed a lawsuit against the Prime Minister for defamation of her. The neutral observer is wondering why Ms. Sochua is resorting to a legal tactic usually employed by the government. After all, in the past only the Prime Minister and his Foreign Minister used this instrument. I didn’t hear the words spoken in Khmer so I have to rely on the various translations that appeared in the press. According to one source, this revolves around a speech the Prime Minister made in Kampot, Ms. Sochua’s district. He referred to a lady in the province as a ‘provocateur’. ‘She tripped on someone but she accused him of unbuttoning her blouse.’ Ms. Sochua claims she had an altercation with a CPP member over a photograph she was taking of an RCAF vehicle in the election campaign, which is against election regulations. In the course of the brief scuffle, a button of her blouse came off.

The Prime Minister didn’t name her directly but the context probably left no doubt whom he was referring to. Ms. Sochua took offense at that and now brought a lawsuit seeking a symbolic amount as restitution for her blemished honor. Defamation is very broadly defined as making false allegations against a public figure.

The question now is, ‘Did the Prime Minister indeed insult or slander her, that’s what I would call an attack on my personal honor, or was he just describing an event in a snide fashion?’ Assuming he indeed meant her, one could also interpret his remarks as calling her a liar. Now that would be an insult and probably fall into the defamation category – she is a very public figure in Cambodia. But one must question whether this is an ideal case to make a point, which Ms. Sochua is clearly trying to do, or whether this is a rather futile effort in showing the world how justice is dispensed in Cambodia. Observers of the situation in Cambodia know how this is done anyway. There would certainly be better cases to highlight some not so palatable characteristics of the Cambodian judicial system. One would have wished she had chosen another avenue to raise her public image. Come to think of it, the SRP politicians didn’t mince any words either when they called the government a bunch of thieves. Politics is a rough business and one needs to be somewhat thick-skinned to survive.

In other news, the lately somewhat silent SRP-leader Sam Rainsy was reported as once again calling on the government to implement certain policies to alleviate the economic crisis in Cambodia. He was interviewed on the Khmer version of the Voice of America. He repeated his three points, which are

1. Allocate $500 million (sic) in a special package to increase expenditures on social programs that help the poor, bolster the health and education systems and prepare new investment sites to create jobs, he said.

2. The National Bank should decrease interest rates, to avoid confiscation of land and homes of people who may be struggling under debt, while at the same time promoting more loans as people cope with the downturn.

3. The government should seek to decrease the prices of electricity and fuel, along with the price of tolls and other services.

First, one must wonder why the reporter didn’t ask the ‘former Finance Minister’ how he would pay for this. Clearly, Mr. Rainsy must know that you need to have revenues in order to pay for your expenditures. And clearly, he must know that Cambodia’s national budget is a mere $1.8 billion. Where and how would a government raise this additional money, which amounts to roughly one third of the entire budget?

That would really be interesting to find out from the SRP. If they came up with a constructive proposal, e. g. how to restructure the national budget, this would certainly enhance their credibility, and they wouldn’t have to resort to lawsuits to heighten their profile. This does not imply that the government’s tactics in that respect are any better or are even endorsed.

Wednesday, April 15, 2009

Looking Back on My Cambodian Experience and Doing Business Here – Part I

Having talked about business and the economy here for some time I really haven’t devoted an entire post to this subject, that is, my experience in that field. After all, I have been doing this for most of my adult life, first as an employee for medium-sized to large corporations, then on my own, I should know a bit about both subjects – the economy in general and business in particular. This will also, quite naturally, include a description of the situation as it has developed in Cambodia over the last twenty years.

I first came to Cambodia in August 1989 when a Thai business partner had mentioned to me that both Vietnam and Cambodia would open up to the outside world, that is non-Communist world, and that we should go and have a look what we could do in terms of operating tours into both countries. We were already doing a comparatively small but pretty good business with Thailand for individual tourists and saw these two countries as nice extensions to our existing programs. The idea was that we would operate charter flights into Siem Reap. Additionally, as many Thai travel businesses do, my partner also dealt in gems, jewelry, and silk. For that trip, he put together a group of gem merchants that wanted to explore those opportunities in Vietnam. I was going to be drawn into that business too because of that trip.

Most of the long-time expats now living in Cambodia and Vietnam hadn’t been to either country at that time yet. Some of them are Vietnam War vets, but that was a different time.

You could count the number of cars on the roads in Ho Chi Minh City; this is where I went first. There were virtually no streetlights at night. The most widely used means of transportation was the light motorcycle, or moped, and the cyclo.

Going to Cambodia was a major hassle at that time. Vietnam at least had an embassy in Thailand and getting a visa there was no problem at all. They had started their Doi Moi (open door) program to foreign investment already. But Cambodia was so isolated that there were no flights into Cambodia other than from Vietnam. Naturally, they had a consulate in Ho Chi Minh City. When I went there, I was told it would take three days to process the application – the cost was $5 or $10, if I remember correctly. Getting on a flight wasn’t easy either. If it took three days, I would miss my booked flight and would have to wait another 3 days. My schedule didn’t allow for that. I tried to cajole the officer in speeding it up – but all I got was ‘no can do’. Communication was haphazard at best too. They had a set time of 11 o’clock every morning for communicating with the Foreign Ministry in Phnom Penh. I then turned to the time-honored practice of putting a $50-bill in my passport. Then all of a sudden, the officer remembered that he needed to go to Phnom Penh himself tomorrow and I could hitch a ride with him in his car. He would also try do make that call, and maybe he could get that visa tomorrow before we left.

So what do you think – would he get it done? Sure enough, when I turned up at the consulate the next day, my visa was waiting and the car would leave at 12 o’clock for the 8-hour drive to Phnom Penh. 8 hours for 240 km? If you had seen the roads at that time in both Vietnam and Cambodia, you would know why. On top of it, as people who have been to Cambodia know, they aren’t the world’s best drivers either. Add to that potholes up to 50 cm deep, the bicycles, mopeds transporting pigs, those collective taxis consisting of a moped towing a trailer with 20 people on it, and not to forget the ferry at Neak Leung, you would actually think 8 hours is a good time. Crossing the border at Moc Bai/Bavet was actually less of a hassle than I thought. It took only twenty minutes. What are now brick buildings at the ferry crossing used to be nothing but wooden shacks. Border checkpoints were but a single building on either side. They clearly weren’t geared for a lot of tourists or business people at that time.

Needless to say that because of the lack of modern communication I had not been able to make a reservation at a hotel. But then, Cambodia was still a Communist state and the Ministry of Tourism arranged everything for you. And it wasn’t exactly overflowing with visitors from abroad either. So the consulate officer took me to the Cambodiana Hotel, the only one that was acceptable for Western people at that time. There were a number of different hotels available, but they were all in a decrepit state, as I found out during later visits. There is no need to list them here, as they are all either gone or have been renovated and conform to international standard - no $5 or $20 flophouses at that time.

Being in the hospitality business I was comped for the 4 nights I stayed there. The next morning I was somewhat surprised when I got a call that my guide was waiting for me at the reception. I hadn’t ordered a guide, since I was used to exploring things on my own. But I was quickly informed that moving about Cambodia on your own was not in the cards. You could not set foot outside the door without the company of a tour guide from the Ministry of Tourism. Aha, I thought the same policy as in all Eastern European countries. And after all, the trip to Vietnam was with a group of Thai gem merchants, and a guide from Saigontourist had met us at the airport as well.

But these two Communist countries seemed to be a lot more relaxed in their controlling of visitors. A Western consular officer later once told me, this is not the type of Communism one could compare to the Eastern European style at all – one could describe it as less dogmatic, a blend of Buddhism and socialism. In that sense, my guide, a very short guy in his 30ies, turned out to be very friendly and helpful. When we talked we could do this about everything very openly, and he did not toe any discernible party line at all. Also, this way I was driven around in one of the rare cars on the roads in Cambodia. The so-called ‘rebels’, as the NYT called them at that time, the coalition of various political factions, including the Khmer Rouge, were still very active in their fight against the government. This is why there was a 7 pm curfew in place. So forget about nightlife or any other entertainment. If you could count the number of cars on the road in Ho Chi Minh City, they seemed to be completely absent in Phnom Penh. Even the mopeds weren’t as numerous. Whoever owned one counted himself very lucky. It seemed to be the transport for the entire family (and still is today). Five people on one of those little things were no rarity, almost the norm. The cyclo drivers rode down the streets at an even slower pace. I won’t forget this one scene at the Independence Monument; we came down Norodom Blvd. in our car heading north when a moto with 4 people on it sped along Sihanouk Blvd. heading west; it’s almost needless to say they were going on the wrong side of the road, but never mind, with such few vehicles around it didn’t really matter. The moto was on a direct collision course with us. Our driver seemingly wasn’t going to give way either, as he made no effort to slow down. The moto driver was staring straight ahead obviously oblivious to us. Our driver finally slowed on my request but was almost onto the moto when he honked. The moto driver snapped his head around, a look of utter surprise turning into fear on his face. It was almost comical. Then of all things to avert this almost certain disaster, he extended both his legs to the pavement in order to brake the moto by slithering his sandals along the road. Apparently, the brakes were not working, or he was sitting too far up front to reach them. One of his passengers probably had his feet on the main pegs. This would not have saved them, had it not been that our driver had at last braked the car down to an almost complete stop. Now, if another vehicle had come down on the correct side of the road in the same fashion the moto had raced along, these people would have been history. Still seeing this scene in my mind, it is rather funny or even comical despite the possible deaths from this.

Another nice example of Khmer mentality at that time I could observe one day at the Cambodiana Hotel. I was sitting in the lobby with a couple of people. Some workers were repainting walls at one end. One of them was painting a wall with a picture hung on it. He painstakingly used his brush very carefully to paint around the frame of the picture, careful not to get any paint on the frame. Certainly, he was very conscientious, but he never got the idea that it would have been better to just take the picture off the wall. This attitude both in traffic and of workers can sometimes still be seen today. But the people and the situation have changed dramatically since then. And I recount this not with snideness or even malice but with a chuckle.

Part of my purpose was to meet with officials to learn what they had in mind in terms of opening the country up to Western tourists. So a meeting was scheduled at the Ministry of Tourism on Norodom if I remember correctly. I thought that I would meet with a couple of lower echelon experts, as I was not leading an official Western delegation. To my surprise, the minister himself greeted me and I saw myself seated across about 10 or 12 people in the conference room. One really has to picture this – on one side the lone Westerner and on the other side 10 or 12 Khmer officials. Naturally, one was busy taking notes of the meeting. After all, here was a Westerner and one never knows what’s behind those guys, right? They might be enemies of the state and try to subvert the country.

The meeting was in a friendly atmosphere; they all listened very politely to what I had to say about the nature and essence of Western tourism. They nodded their heads understandingly at the more salient points I was making. Unfortunately, their response exhausted itself in reiterating their great interest to welcome Western tourists, and that they would do everything to make them feel at home. I had offered to help them set up representative offices in Europe at no charge. The U.S. still had a complete embargo in place for both Cambodia and Vietnam, so that country was out of question. Yes, they understood the need for this and would certainly study this thoroughly in the time to come. Well, I thought, not too bad for a first meeting. (Needless to say, that nothing ever came of that plan. It’s easy to see why – they simply didn’t have the money for it, nor did they have the freedom to travel yet. Anybody who traveled to the West at that time would just use this to defect.)

The Silver Pagoda in 1989/90

Outside Phsa Thmey

On that first trip I also traveled to Siem Reap to see Angkor Wat. To be honest, at that time I did not know the significance this site held for Cambodia and her people. To me this was just another historic religious site – I had seen plenty of those, including Borobodur in Indonesia, probably the largest Buddhist temple in the world.

The flight was on an Antonov 24, a rickety Soviet-made 44-seater, without sufficient air conditioning, worn seats, and no service. The so-called airport was nothing but an airfield with s simple hut for a terminal. The Grand Hotel in Siem Reap was unique and very nice in its French colonial architecture. Unfortunately, it had fallen into great disrepair. The steps of the staircase were worn out and creaky. The rooms were spacious, but smelled musty. The bed sheets looked gray rather than white, and the bathrooms sported rusty and leaky plumbing. The beds were saggy. I didn’t dare look at the mattresses.

Some hotels seem to believe they have to serve Western food to Westerners. This may be all right if it were tasty and well prepared. Nothing of that sort was available at the Grand Hotel at that time.

The next day we drove out to Angkor Wat. It was a great, amazing sight to see – even for a world traveler like me. What marred the impression somewhat were the soldiers with their ubiquitous AK-47s that were stationed everywhere along the road as well at the temple itself. My guide said we couldn’t go too far inside, as they never knew whether or not some Khmer Rouge had advanced overnight. Angkor Thom was out of bounds for us, since this was more or less Khmer Rouge territory. And when he made that point this was promptly underscored by the sound of distant gunfire. About half of Angkor Wat was still overgrown by thick jungle and not accessible at that time anyway.

Angkor Wat in 1989/90

One might think that all this did not sound too auspicious for organizing tours for pampered, experienced Western tourists; many of whom are prone to complain about everything, including about too much sand on beaches (I kid you not). But it sure did not deter me. I saw the novelty of Cambodia on the map and wanted to be one of, if not the, first one to send Western tourists to Cambodia. I had heard from my guide that people from the Soviet Union, Czechoslovakia, and other Eastern European brother countries came to Cambodia, but they were mostly embassy staff or technical assistance people. From what I heard, the local people didn’t like them too much, as they tended to be somewhat raucous and rowdy, drank a lot, and liked to swim in the nude.

On my return to Phnom Penh I went back to the Cambodiana but this time wasn’t comped. The made me pay $25 for a room. I had a couple of days to spare there and just lay by the pool soaking in some sun. In the evening, however, to my surprise I found the restaurant full of local people. I had thought they wouldn’t have the money to afford it (only dollars were accepted). And I was equally surprised to see that they broke out the big bottles of Hennessey XO to wash down their meals with. I knew of the Asian habit of drinking Cognac or Whiskey with instead of after the meals. However, I wouldn’t have expected this in Communist and backward Cambodia. But there they were, eating and drinking up a storm and being noisy as hell. Once they had finished their dinner, a side door opened and a middle-aged lady came in leading a phalanx of young pretty, overly made-up girls, all Vietnamese – the after-dinner entertainment for the locals. A band set up on a small stage and began to play. But only the girls used the dance floor, dancing with each other – the men were too drunk almost for the most part anyway. The mama-san walked from table to table taking her orders and then sitting down the requested girls with the guests. I knew already that Communists were no prudes; in fact, they were sexually more liberated before the West had its sexual revolution in the late ‘60ies. Again, I hadn’t expected such blatant show of ‘amoral’ behavior in Cambodia, but admittedly I didn’t know too much about the country and its people at that time yet. Well, I wondered where those party functionaries, this is what they obviously were, found the money for this kind of life-style. Also to my surprise, dollars abounded everywhere. In fact, it was the common currency then already. Obviously, at the first glimmer of the incipient changes a lot of dollars had found their way into Cambodia. Hard currencies could buy everything in Communist countries before, but normal people usually didn’t have access to it. However, they sure got their hands on it fast, didn’t they? When I returned to my room, I saw a couple of drunken men with their ladies of the night staggering along the hallway toward some rooms. Another surprise – they used the top hotel in Phnom Penh as an by-the-hour hotel? I think it was managed by Novotel at that time. I wonder whether they knew about this at their regional head office in Singapore.

On my final day of my first trip, a Sunday, my guide took me out to Kien Svay for a Sunday morning picnic. Only Khmer people there, no foreigners whatsoever. Again, here was another wanton side of Cambodia, at least according to my guide. Men came out here with their sweathearts, not their wives, rented one of the thatched huts that could be hung with bamboo mats to ensure privacy and obviously enjoyed a Sunday morning of delight. It was evident by the Soviet-made cars parked in front of those cottages that only the nomenclature indulged in those delights. On the other hand, at the main plaza, so to speak, many families with children had come there too. Otherwise Kien Svay offered beer on the rocks, for lack of refrigeration, and some really tasty food in a at that time still placid and pleasant setting. It was hot, the beer was still drinkable, I guess it made it a beer light, and you could really kick back. Once I got back to the hotel I was ready for a nice afternoon nap.


To be continued

Thursday, April 9, 2009

Contraction or Growth?

With all those dire predictions coming out virtually every day, or so it seems, and each one giving a different figure to boot, one doesn’t really know what to think anymore. The latest one to weigh in was the World Bank with a 1% contraction, and the previous one was the Economist Intelligence Unit with a prediction of Cambodia’s susceptibility to social unrest and an increase of 200,000 people to fall below the poverty line.

The government, with the Prime Minister seemingly the most vociferous one, vehemently denies all those findings and sticks to its predictions of continuing growth, albeit at a slower pace.

I believe we can discount the SRP’s comments altogether, as those folks don’t have a clue about the economy at all. They keep blowing hot air.

What struck me most, however, was a comment made by Chap Sotharith of the Cambodia Institute of Cooperation and Peace (CICP), which I read in today’s Phnom Penh Post. According to him, the growth rate will be approximately 5 – 6%, thereby sticking to the government’s line. He also said that export revenue made up only 20% of the GDP. Now I don’t know where he got that number. But the last time I looked agriculture made up 30%, industry 30% and services 40% of the GDP. However, a disproportionate number of approximately 75% of the labor force work in agriculture, but that’s not a factor for the GDP.

With the decline of about 30% to 40% in the garment sector reported, and a 15% drop in rubber exports (not in tonnage but because of a sharp drop in prices), and a decrease of tourist arrivals (2% so far isn’t all that much; we still got 9 months to go), one thing is for sure, the GDP will shrink. By how much will be anybody’s guess. Depending on the parameters, used one might conclude a contraction, like the World Bank, or a growth rate of about 3%, although 5-6% seems a little far-fetched. For those people having an overly optimistic view the results most likely will be disappointing. Officialdom must paint a rosier picture. They want foreign capital inflow to resume to at least a semblance of the previous years; they want to assure investors that Cambodia is still a place where they can safely invest. Who can blame them for that? It’s their job, isn’t it?

Additionally, one important factor mostly overlooked is the question of whether all the numbers used are reliable. Given the government’s state of computerization and reporting I venture to doubt that. For those readers of this blog who are gathering information about Cambodia for a possible business venture or a return to their homeland, don’t be confused by all those predictions - just sit back and relax, and do your due diligence and act with prudence. The rubber industry, my own industry, still operates at a profit despite the 15% drop.

And even a 1% contraction, which would amount to approximately $1.2 billion, won’t really be seen or felt dramatically. People will lose their jobs, small business owners will feel the pinch, and hotels will have to make do with fewer guests for some time, but over all life will go on.

The social unrest risk has to be seen in Cambodia’s context. First, it is a risk, meaning it might or might not occur. Second, the mindset of the population in general really isn’t wont to wander in that direction.
200,000 more poor people? They used $1.25 per day, while the government uses $.60. Before they all used $1.50 or even $2.0 a day. Now which is it? Of course, there will be more poverty in a recession. Just look at the U. S. People live in tents there because they lost their homes. Throwing out all those numbers doesn’t really help anybody. What we do know is that one cannot live on $50 or $60 a month in Phnom Penh. But one can scrape by on that in the countryside. With 75% employed in agriculture, and with the majority of the rural population living on subsistence farming, it is hard to draw a definitive line of poverty there.

For social unrest to really happen you need agitators. I would think those would be quickly dealt with in Cambodia. People with political leadership qualities instigate social unrest. There simply aren’t any of those around outside the government in Cambodia.

And another thing is certain. Most of those reports, while in themselves conceivable and well-founded on their parameters, don’t have a lot to do with how things are on the ground in Cambodia. Statistics show the weak spots and offer a guideline, but we all know that a lot still needs to be done in Cambodia.