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Thursday, November 15, 2007

Sam Rainsy's letter to Keat Chhon requesting for the application of appropriate measures to lower gasoline price

Kingdom of Cambodia
Nation – Religion – King

National Assembly

Phnom Penh, 14 November 2007

To H.E. Keat Chhon
Minister of Economy and Finance

Subject: Request for appropriate measures to lower the retail price of gasoline in Cambodia.

As Your Excellency is well aware of, the retail price of gasoline sold along the streets in Cambodia is much higher than those in neighboring countries. The list below indicates the price of 1 liter of gasoline sold on 14 November 2007:

* Cambodia: 4,400 riels
* Thailand: 3,658 riels (1 liter costs 31 Baths; 1 Bath is equivalent to 118 riels)
* Vietnam: 2,877 riels (1 liter costs 11,600 Dongs; 1,000 Dongs are equivalent to 248 riels).

In the name of poor people whose livelihood has deteriorated significantly due to increasing prices of goods, in particular the price of gasoline which has increased to an unacceptable level, I am requesting Your Excellency to take the following measures to lower the price of gasoline to a level on par with those observed in neighboring countries.

* Measure # 1: Lowering taxes on gasoline from over 1,000 riels per liter to 300 riels per liter.
* Measure # 2: Lowering the profit margin of gasoline distributors from more than 500 riels per liter to 200 riels per liter.

The combination of the two measures above would lower the price of gasoline by 1,000 riels per liter (a reduction of 700 riels from Measure # 1, and a further reduction of 300 riels from Measure # 2), thus lowering the price of gasoline from 4,400 riels to 3,400 riels per liter.

May I add that:

- Measure # 1 will help end gasoline smuggling which is endemic and reaches a very high level in Cambodia because our taxes are much higher than those in neighboring countries and because of rampant corruption. Due to smuggling, a large portion on taxes on gasoline do not end up in the State coffer, but instead they end up in the pockets of corrupt people who benefit from the support from powerful government officials. Following the lowering of gasoline taxes as proposed above, those who have been smuggling will have no more incentive to continue their illegal activities, and on the other hand, the lower taxes will be collected on the entire volume of gasoline imported into Cambodia. Therefore, the state will collect more revenues than before [a lower tax rate applied to a larger volume produces more revenues for the State than a high rate applied to a much smaller volume due to large-scale smuggling], while the population can buy gasoline at a lower price than before. Only the corrupt people who have been involved in smuggling will incur income losses, but the government should not protect these dishonest companies and businessmen.

Furthermore, may I remind Your Excellency that when crude oil price and gasoline price increase on the international market, States usually lower taxes on gasoline, just like what the Vietnamese government did recently.

- Measure # 2 is aimed at lowering the excessive profit margin of retail companies which are colluding to fix the selling price as high as they please, by choking off consumers. I am not talking about foreign companies (Total and Caltex/Chevron) which are paying the proper amount of taxes to the State, but I am pointing at some of the Cambodian companies (Tela and Sokimex) which are backed by powerful government officials, which are involved in smuggling and corruption and which are exploiting the hardworking people any way they want.

It is regrettable that, in current Cambodia, workers receive relatively low salaries, yet the price of goods are very high in comparison to those in neighboring countries where workers receive much higher salaries than ours, and the price of goods are much lower than in our country.

Trusting that Your Excellency will take the appropriate and fair measures as requested above, I convey to Your Excellency my sincere regards.

(Signed) Sam Rainsy
Member of Parliament

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