US Firms Eye US$900M Project

A handful of US-based energy firms have met with the government over the past week to discuss plans for two large-scale power-generation projects worth a total of $900 million.

According to the Ministry of Commerce’s official Facebook page, representatives from US renewable energy firms Willowbrook Company and Sun Edison met with Commerce Minister Sun Chanthol on August 20 to present plans for a 200-megawatt solar power plant valued at $400 million.

“If approved, the project is scheduled to commence in 2015 and is expected to be completed by the end of 2017,” the statement said, adding that the firms would need to negotiate and sign an agreement with Electricite du Cambodge before getting the go-ahead.

“Once built and operational, the estimated year-one output for this fully operational plant will be 394 million kWh,” the statement said.

“This 500-hectare solar power plant in Cambodia is uniquely the first of its kind in renewable energy investment in Cambodia and Asia.”

On August 22, two days after the initial meeting, Chanthol met with representatives from US power-generation companies Beowulf Energy and Colorado Energy Management.

According to a second statement from the ministry, Beowulf is currently “evaluating the possibility” of investing $500 million into the construction of an oil refinery in the Kingdom.

“Beowulf is the second US company that visited Cambodia after the reverse trade mission to the US in June 2014 organized by the US Ambassador and attended by Minister Sun and businessmen from Cambodia,” the statement said.

Chanthol is reported to have approved in principle both projects and will consider giving the firms the green light upon the Council for Development of Cambodia (CDC) receiving an official investment proposal.

A spokesman for the Commerce Ministry could not provide further details, and CDC spokesman Chea Vuthy said he was only aware of the US firms’ presence and had not yet held formal talks with them regarding their plans.

“I know they have spoken with Mr Chanthol only and I do not know the details of their discussions. We have not received any formal documents from them for the proposals,” Vuthy said.

Meng Saktheara, secretary of state at the Ministry of Mines and Energy, told the Post that he expected to meet with representatives of Beowulf in the coming days.

“We have meetings planned, so we hope they show the same amount of interest with us as they did with Mr Chanthol. But we do not know more details. We will wait and see,” Saktheara said.

“Energy is a long-term project and requires a lot of preparation . . . US business needs to find and secure their place in Cambodia’s future energy development too.

“What we want is a quality and responsible investment. Cambodia is looking for a long-term partner rather than opportunistic [companies]. We are not in a hurry, we are scrutinising quality of investments.”

Source: Phnom Penh Post | August 26, 2014 | By: Eddie Morton

Gov’t Pays Auditors Incentive

The Ministry of Economy and Finance has installed an incentive program that awards employees of the General Department of Taxation (GDT) a share of the penalties incurred by firms found to have unpaid tax accounts.

Director general of the GDT, Kong Vibol confirmed yesterday that the GDT introduced the incentive program at the beginning of this year. The scheme grants government auditors 10 per cent of the total penalties imposed on any company, which that employee has reassessed and found to be non-compliant.

“The Ministry of Economy and Finance gives incentives to GTD tax auditors who can find more tax revenue, which the tax payers’ under-declared or evaded tax of their payment to GDT. By law whoever under declared or evaded of tax will be penalised,” Vibol said, adding that only auditors were granted the incentive scheme.

“This way government can get more revenue. This incentive will not affect the budget but instead increase the revenue to the government.”

The GDT’s penalties for late or unpaid taxes range from 10 to 40 per cent of the total amount owed to the authority. The penalties also carry a monthly 2 per cent interest charge. Put simply, if a company is found to owe $100,000 to the GDT, the firm could be penalised an additional $10,000 and the auditor will personally receive a $1,000 incentive payout once the company has paid its debts.

“The purpose of this scheme of incentive is to encourage tax auditors to work hard and reward them for those who can find more tax evasion and tax under-declared in order to promote tax compliance and enforcement of law,” Vibol said.

Cambodia’s GDT is on a mission to boost tax revenue to $1 billion by the end of the year.

Kol Preap, executive director of Transparency International in Cambodia welcomed the idea of new incentives for GDT auditors provided there is strict oversight of the employee’s compliance to the Kingdom’s anti-corruption laws.

“It could help them to conduct their work more effectively,” Preap said.

“Additionally, it is important that auditors conduct their assessments in an open and transparent manner. The auditing reports must imperatively be published and the private firms’ financial statements must be disclosed,” Preap said.

During the first Cambodia Tax Summit held at the Sofitel Phnom Penh yesterday, Clint O’Connel, a partner at law firm VDB Loi, said the GDT’s scheme stands to close unpaid tax accounts a lot quicker.

“But unfortunately that also means there is little chance of receiving a waiver of the penalties. You are essentially taking money away from the auditor,” O’Connel told the audience of about 300.

According to O’Connel, the GDT is also currently looking to install a raft of new reforms including a new arbitration committee, which would be charged with resolving tax related disputes.

“It would be the last stop in the government’s audit process,” O’Connel said about the proposed arbitration committee.

“But who will sit on this committee? You don’t want tax officers sitting on this arbitration committee because you want them to be independent.”

Source: Phnom Penh Post | August 29, 2014 | By Eddie Morton

Cambodia Economy Bucks Regional Trend

Driven by garment and improved agricultural export markets, Cambodia has bucked the wider trend of slowing Southeast Asian economies, according to the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).

ESCAP’s semi-annual Economic and Social Survey of Asia and the Pacific, published Wednesday, puts Southeast Asia’s annual growth at 4.6 per cent, continuing a three-year consecutvive, below 6 per cent trend for the region.

But despite significant infrastructure and human capital difficulties, Cambodia’s economy continues to show year-on-year above average growth and is on track to record 7.2 per cent growth in 2014, slightly down from 7.6 in 2013, the UN organization’s study says. The Kingdom’s inflation rate remained stable at 2.9 per cent in 2013.

“The least developed countries in the subregion, namely Cambodia, the Lao People’s Democratic Republic, Myanmar and Timor-Leste, maintained high growth rates, underpinned in part by steady inflows of foreign investment, especially in the resource sector,” the study reads.

The study adds that while China, India, Indonesia and Malaysia sustained or even increased the income gap between the richest 20 per cent and the poorest 20 per cent of their countries, Cambodia, fuelled by an increasing labour force, was one of the few that saw a decrease in income inequality.

But the UN-backed study also pointed out that Cambodia, along with its fellow least developed neighbouring countries, continues to lag behind the rest of the world with regards to integrating into global supply chains.

This in turn, “limits their ability to diversify their economies and engage in higher value-added activities,” the study says.

And in the garment sector, which accounts for 80 per cent of the Kingdom’s total export market, there is still room for improvement.

“The minimum wage in the (Cambodia’s) garment industry, which employs about 600,000 workers, was raised; yet, working conditions still need to be improved,” the report says.

Source: Phnom Penh Post | August 8, 2014 | By: Eddie Morton