The Phnom Penh Post
Written by Kay Kimsong
Wednesday, 27 May 2009
After Royal Group is awarded exclusive 15-year contract for new limousine service, opposition lawmaker calls for greater openness in contracting process
THE opposition has renewed calls for the government to increase the transparency of contracts and licences issued to the private sector following the launch of a limousine service on Monday by the Royal Group under an exclusive 15-year contract.
Opposition lawmaker Son Chhay said Tuesday that such agreements between the government and private sector are nothing new, citing similar contracts in the past that have seen Sokha Hotels receiving a licence to part-manage Angkor Wat, and another for operating road tolls on National Road 4.
"We have to have some sort of law or regulation to force government officials on how to make a decision on contracts ... with transparency, we have to do something to change government practice," he said.
The UN Development Program - among other organisations - has pushed the government for years on this issue, he added, but to no avail.
"I think that donor countries must stop talking, and take action instead," said Son Chhay.
The government on Tuesday defended allocating the exclusive contract to the Royal Group, saying that such a service necessitated a large initial investment - estimated at more than US$10 million - and therefore the company in question should be permitted a certain amount of protection.
"If any ministry needs a limousine service, they must hire from Royal Cambodian Limousine [Service Co] and the Ministry of Finance will pay for the service," said Nguon Meng Tech, director general of the Cambodian Chambers of Commerce, reiterating the exclusive nature of the licence awarded to the Royal Group subsidiary.
The contract relates to the provision of vehicles for government ministries, dignitaries and delegations from overseas.
In a press release, the Royal Group said: "Royal Cambodian Limousine Service will look to find a niche for a high-end chauffeured driven car service in addition to servicing the government."
Chan Sophal, president of the Cambodia Economic Association, said Tuesday that the government singled out certain companies for some contracts where potential investors were lacking, particularly where the investment capital required was large.
"Whenever service costs are high, the government will give an exclusive contract," he said, adding that for this kind of agreement the government needed to know the company and its level of expertise.
"I think sometimes exclusive licences could be an advantage for investor opportunity if the government is capable of limiting the service to a fair cost to pay for such a service," he said, warning that unregulated pricing structures in a monopoly market can mean artificially high prices for the consumer.
Royal Group signed an agreement with the government in March that will see the company operate a fleet of 100 Mercedes E280 sedans, 40 of which have already arrived in the Kingdom. Royal Cambodian Limousine Service Co will begin its first assignment this week with the EU-ASEAN Summit in Phnom Penh beginning today.
"I think with EU members in town, we should raise this [transparency] issue," said Son Chhay.