Sunday, June 18, 2017

Legal Concepts - Sort of

Here is the short video clip of an accident that recently happened on a Phnom Penh street. It was picked apart and interpreted on an expat site with the majority saying the Khmer motorbike rider was at fault. I am putting this up here just for the individual viewer to draw their own conclusions although I will make a comment on a few facts.

Here is a still picture:

You will notice that the second is very close to the preceding SUV and there is a moto rider obviously trying to use the gap to get onto the other side of the street. There is no heavy traffic as in rush hour as the small SUV driver later claimed.

This video clearly shows that the small SUV is tailgaiting the larger SUV and speeding up unnecessarily. Rear-ending a preceding vehicle is always considered being at fault, by the way.

One has to bear in mind that Cambodian drivers and especially moto riders act very erratically in traffic. They might just turn this way or that way without using their turn signals, hand signals, or similar to indicate their intentions. When participating in Cambodian traffic this means that one has to be aware of this and act accordingly, e. g. with all caution, whether you are a pedestrian, bicycle or moto rider, or driving a car. In other words you have to take into account what the other participants might do at any moment and be ready to react instantly.

So what do you think given the circumstances and the country with its different culture? It should be quite clear, or is it?

Here is another examples how the law is interpreted and enforced in Cambodia.

The video is not too clear but the passing vehicle clips the car with the camera slightly and just keeps on driving. A classic hit-and-run accident. So the damaged vehicle is in pursuit to catch up with the offender. All of a sudden the window on the driver side of the fleeing Camry opens and a gun appears. A shot is fired and the pursuer gives up the chase and follows slowly. No one was hurt.

Amazingly, the police arrested the culprit in no time at all and, lo and behold, let him go. He happened to be the deputy police chief of a district with the rank of a lt. colonel and also the son of a high ranking official in the Interior Ministry, in charge of the police nation-wide. The district police chief even publicly said he was let go because of his father, a state secretary no less, who intervened. This state secretary even maintained his son had acted in self-defense as he was followed by a car (?????).

After a public outcry officialdom thought it expedient to do something so the offender was demoted to be a traffic policeman and fined a rather puny amount. Let's assume he will be back on his job with his old rank, maybe in another district, in not too distant a time. It never changes - it's been like this for decades.

Thursday, June 15, 2017

To Use or Not To Use the U. S. Dollar

Visitors to Cambodia know that about 80% of all trade and money transactions are conducted in U. S. dollars. Recently the governor of the National Bank, responsible for monetary policies in Cambodia, stated that the continuing use of the U.S. dollar is detrimental to the Cambodian economy. She mentioned as underlying cause the strengthening of the dollar against the Khmer Riel (KHR).

Now this is indeed the case. Officially the KHR is valued at KHR 4080, unofficially it is KHR 4000. Currency markets on the other hand haven't seen a strengthening in the past few months. The two world currencies, the dollar and the Euro, hover pretty much at the same level.

Now how the dollarization of the Cambodian economy is harmful is not really understandable. The major industries are garments/shoes, tourism, construction, and agriculture. The main markets for Cambodian-made garments are the U. S. and Europe. These markets pay in their own currencies, in other words, those capital inflows are not in KHR and will be credited to the manufacturers foreign exchange accounts. The majority of the products used in garments and shoes are imported, meaning they are paid in foreign exchange. Only the labor cost is in KHR; the minimum wage is set in U. S. dollars, so even if the dollar strengthens the manufacturers benefit from this as they exchange their foreign currency at the official rate. They get more Riels for their dollars or Euros. Prices are calculated and billed to foreign customers in dollars. No harm here for the manufacturers.

Tourism brings in foreign exchange, mostly dollars, as tourists usually exchange their home currency in dollars at home or they get it from an ATM here at the official rate. So in effect, any fluctuations tend to hurt the tourists but not the tourism trade in Cambodia. The hotels and restaurants pay in either dollars or riel, so it really doesn't matter to them either.

The situation is pretty much similar in the construction industry as most materials have to be imported, although the last few years have seen an increase in domestic production of cement and bricks. Iron in whatever shape or form is imported, as is gasoline, oil, etc.; only sand is dredged locally. Trucks and any other machinery used is also imported too. All these goods are paid in foreign currency, mostly dollars again. Builders calculate their prices in dollars as well and offer them to the market in dollars or riels, which is irrelevant to the consumer as they will use whatever is convenient for them.

The greatest benefit of the dollarization is for agricultural products that are exported, e. g. rice and rubber. We have the same effect here as in the garment industry. The big difference is that no foreign materials go into the production of their products excepting fertilizer and other chemicals used.

As long as Cambodia has no manufacturing base which would make its products truly made in Cambodia as opposed to being processed it doesn't really matter which currency is used. Almost all items for daily use are imported. Consequently, the trade balance is negative.

Let's not forget: the main reason investors open factories here is for the low labor cost, relative ease of conducting business with the government, and lax enforcement of international regulations.

And finally, the National Bank pegs the KHR to the dollar anyway. On what this is based I haven't fathomed yet - how many dollars are in circulation?  It seems that this discussion is rather moot at this point in time. So  except for national pride this issue is not really important. It remains a mystery what the opposition would gain from abolishing the dollar as an official tender as they recently promised if they were to win the next election.

Thursday, June 8, 2017

The Commune Elections 2017

After a hiatus of one year I now have a little more time as my business does not require my presence as much as before thanks to the invaluable help from my step-children. I will again post comments on the situation in Cambodia and Sihanoukville in particular so readers abroad who still come across this blog in a good number can find out a few things as observed by a foreigner. As I say in the description in right side panel this blog is unbiased.

Now to the subject above. This past weekend local or commune (Sangkat) elections were held. Each province is subdivided into communes for a total of 1645 for all of Cambodia, of which the Cambodian People's Party (CPP) won 1163 and the Cambodian Rescue Party (CNRP) garnered 482. The voter turnout was remarkable with nearly 90% or almost 7 million. The popular vote was 48% for the CPP and 46% for the CNRP. All results are still unofficial so please don't hold me to 100% accuracy.

There seems to be a discrepancy in the shares won vis-a-vis the popular vote but one has to understand that the communes are ruled by the commune chiefs who are elected directly. Depending on the size population of the commune a certain number of councilors is elected but the real power lies with the chief. The commune chief's direct mandate explains the discrepancy between the popular vote and the number of communes won by a party. People vote for persons and personalities in the commune elections, not for parties.

The communes do not collect any taxes directly but are allocated funds by the Finance Ministry. By what method is not quite clear. It is understood that the commune chiefs put in requests for infrastructure projects which are then approved (or not). Since transparency is not very pronounced in Cambodian politics, hard figures are hard to come by. However, the chief's position is important and vital to the community.

In order to understand this one must also look at the structure of the administration. There are 24 provinces (khaet), divided into districts (srok), then into communes (khum), and finally into villages (phum). The communes are called differently in Phnom Penh (khan), and the communes Sangkat. But as far as I know people in the provinces call their communes Sangkat too, only in official documents are the a. m. designations used.

One also needs to understand that governors and district chiefs are appointed by the Interior Ministry, or the governor respectively, which are, of course, firmly in the hands of the CPP. This system ensures the control of the finances stays with the governing party and anybody requesting funds better be a member of the same party.

What is noteworthy in this election is first the high voter turnout, that the opposition party increased their number of commune chiefs from 40 in 2012 to 482 this year; and secondly, according to neutral election monitors the close results in the popular vote. The CPP claims 51% whereas independent sources put it at 48% vs. the 46% for the opposition.

The Prime Minister had warned repeatedly during the campaign that a victory for the opposition would lead directly to civil war. Clearly those scare tactics did not work. It might impress the older generation that still has memories of the time before 1989 but the younger generation does not even know a whole lot about that part of Cambodia's history. After all more than 60% of the population is under 30.

Another surprising facet is the fact that the former leader of the opposition who has been banished into exile did not have any obvious impact, e. g. that the opposition would be weakened by a virtual leaderless party. From the results one might deduce that his role is now perceived as unimportant, possibly redundant as a driving force. It seems that the new president of the party Kem Sokha finally came out into his own. As it happens Sam Rainsy did not have much to offer other than blaming everything on the Vietnamese neighbor anyway.

If this trend continues chances are that the opposition will win in 2018 or at least come very close to it. Since the scare tactics obviously don't work the ruling CPP better come up with a few arguments in that campaign. A firm commitment to stamping out corruption, the introduction of a free health care system for the poor, an affordable health insurance for everyone, a viable retirement plan will resonate much more with the electorate than incessantly harping on having brought peace (which they didn't, the U. N. did), relative prosperity, and stability. Most of the accomplishments came about with foreign aid and loans and know-how rather than through their own initiative anyway. Let's see whether this was a wake-up call for the CPP.