Monday, 22 March 2010

In Cambodia, American Evangelicals Fight to End Child Sex Trafficking

Lon Nol’s plotting started back in 1959

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Monday, 22 March 2010 15:03 John Conner

Dear Editor,

The events of March 18, 1970, actually began in 1959 with an attempted coup by General Dap Chhuon Mchulpich, military commander of the Siem Riep area.

Supported by the US military and its puppets in South Vietnam and Thailand, this plot could have resulted in Cambodia ceasing to exist. The plan was to divide the nation between its neighbours, with the total area under de facto US control.

King Norodom Sihanouk’s film, Shadow Over Angkor, dramatises these events, which are detailed in his book My War With the CIA. A DVD of this film and a book are available in Phnom Penh.

Plots to remove King Sihanouk, due to his neutrality, began in the 50s. Neutrality was “unacceptable” to Cold War warriors like Allen and John Dulles, who constantly pressured Sihanouk to accept American aid and thus domination.

The 1959 coup was thwarted, and General Dap Chhoun arrested. King Sihanouk instructed Lon Nol to bring the general to Phnom Penh for questioning.

Lon Nol’s reaction was to have Dap Chhuon shot so as not to reveal Lon Nol’s involvement with the plot.

It took another 11 years before another coup was successful and Sihanouk was removed.

Perhaps if Lon Nol had been shot with Dap Chhuon, Cambodia may never have endured the horror inflicted on it by US aggression. In 1959 the Khmer Rouge were nothing, Cambodia was at peace, and its people lived in harmony.

In the 1971 Paris Peace Accords, Nixon agreed to pay Vietnam reparations of US$3.25 billion. Of course the US government never paid this money, which would be worth nearly $20 billion if paid today.

If Cambodia was to take action for damages, it could consider a figure of $10 billion to $15 billion as fair compensation for illegal US activities from the 1950s onwards.

The US has the gall to claim the Lon Nol era debt must be repaid.

Perhaps Cambodia can deduct this amount from its damages claim, which should be made soon while the US remains an existing nation.

John Conner
Phnom Penh

Send letters to:  or PO Box 146, Phnom Penh, Cambodia. The Post reserves the right to edit letters to a shorter length. The views expressed above are solely the author’s and do not reflect any positions taken by The Phnom Penh Post.

Cambodian gov't accuses UN official of interfering in internal affairs

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March 22, 2010

The Cambodian government warned the United Nations Resident Coordinator to stop interfering in the internal affairs of the country or will be expelled, said a statement from the Foreign Ministry seen Monday.

In a letter to Douglas Broderick, UN resident coordinator on March 20, Foreign Minister Hor Namhong said that Vijay Nambiar, chief of the Cabinet of the UN Secretary-General told Cambodian permanent representative at the UN in New York on March 19 that " United Nations Headquarters had not instructed the UN country team in Cambodia to make any comment or suggestion to the media on the issue" about the Anti-corruption Law passed by Cambodian National Assembly on March 11.

The UN country team on March 10, before the draft law sent to the National Assembly for debating, released a statement saying it "notes with concern that an extra-ordinary session was convened only days after the draft law was shared publicly with parliamentarians," and asking "sufficient time for Parliamentarians, civil society, donors and the UN to study the law so that if and where deemed necessary, amendments may be proposed for consideration."

"Therefore, as stated by the spokesman of the Ministry of Foreign Affairs and International Cooperation on March 12 , the United Nations Country Team had exceeded the limit of its mandate, " Hor Hamhong said.

"The unwarranted comments made by you (Douglas Broderick) in connection with the adoption of Cambodia's Anti-Corruption Law is a flagrant and unacceptable interference in the internal affairs of Cambodia," Hor Namhong added.

"Any further repetition of such a behavior would compel the Royal Government of Cambodia to resort to a 'Persona non grata' decision," he stressed.


Cambodia Culture: How to Sleep, Walk, Stand, Sit, and Speak
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Every culture trains its children to become good members of society in order to insure harmony, peace, and stability. Cambodian parents teach their children how to sleep, walk, stand, sit, and speak. For the parents, the values below capture...

PR Log (Press Release) – Mar 21, 2010 – Every culture trains its children to become good members of society in order to insure harmony, peace, and stability. Cambodian parents teach their children how to sleep, walk, stand, sit, and speak. For the parents, the values below capture the essence of a well-mannered Cambodian.

How to Sleep

• You must wake up before sunrise or you are lazy.
• Sleeping places in the home are determined according to status. (Cambodian families often live in one or two rooms, and everyone sleeps on the same bed, a large slatted wooden platform about eight- or ten-feet square. The parents sleep at the "head" end and the youngest children sleep at the "foot.")

How to Walk

• Tell people where you are going and when you are coming back. (This is important to show respect to others and to keep them from being embarrassed if someone asks and they don't know where you are.) • If someone of higher status is passing you, bend lower (from the waist) than that person.
• Don't make sounds with your skirt when you walk.
• Don't wear shoes or hats when you enter a house or temple.
• Close doors softly when you go through them.
• When you meet someone on the street, ask where they are going.

How to Stand

• Stand with your arms crossed at the waist. (Arms at the side means you are signaling that you are strong. Hands on the hips or arms behind your back or across the chest means you are rich, powerful, threatening, or disrespectful of other people.) How to Sit
• Sit with your legs straight down. (Crossing legs shows disrespect.)
• Never put your feet on a table or show the soles of your feet to others.
• Men can sit on the floor in the lotus position while eating.
• Women must sit on the floor with legs aside.

How to Speak

• You must speak softly and gently.
• Show feelings only at home.
• Children have no right to speak unless spoken to.
• A guest is polite and doesn't talk unless spoken to.
• Let others talk more than you.
• There should be limited talking at meals. Speak only if spoken to.
• If you speak with anger or emotion or express feelings, you will not be respected. You are behaving like an immature and uneducated child.
• Patience is a virtue. (Parents make a comparison between a gasoline fire which ignites quickly and burns to nothing, and a charcoal fire which is difficult to start but cannot easily be extinguished and becomes more intense.)
• Do not make aggressive movements or gestures--such as making a fist, pounding the table, or throwing something--while speaking.
• Moderated feelings are best, i.e., those that are neither very happy or very angry or sad.
• Giving criticism or discussing an individual's problems must not be done in public. (That person will lose face, want revenge, and will be unable to accept your idea.) If you must give criticism, do so in private and indirectly. Talk around the issue, ask for information about the issue, and then let the individual reach her own conclusion in her own time and way.

How to Eat

• Men can eat a lot but must not eat fast.
• Women can eat only a small amount.
• Take food only when asked or directed to.
• Use the communal spoon. Not using it indicates you are insincere or not part of the group.
• People of high rank do not expect to have to get their own food (especially at a buffet).

They are often seated in a private or special place and served by others to show status and respect.

• All guests must be served water or another drink even if they come for only a short visit. Give a drink rather than ask what they want which is impolite. If asked, they are obligated to choose the least expensive drink.
• If guests come during a meal, they must be invited to eat.

How to Greet

• Offer a traditional greeting with hands in front of face, palms together, in prayer-like fashion.
• Men can shake hands with men.

Cambodia threatens to expel UN envoy

Cambodian Deputy Prime Minister and Foreign Minister Hor Namhong has written a letter to UN resident coordinator Douglas Broderick alleging Broderick's office had been guilty of "a flagrant and unacceptable interference in the internal affairs of Cambodia" with the statement.(AFP/File/Tang Chhin Sothy)

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Mon Mar 22

PHNOM PENH (AFP) – The Cambodian government has threatened to expel a United Nations envoy if UN agencies continue "unacceptable interference" in the country, according to a letter seen on Monday.

The move came after UN agencies in Cambodia earlier this month urged "a transparent and participatory" process as parliament debated a controversial anti-corruption law.

In a letter to UN resident coordinator Douglas Broderick, foreign minister Hor Namhong alleged his office had been guilty of "a flagrant and unacceptable interference in the internal affairs of Cambodia" with the statement.

"Any further repetition of such a behaviour would compel the Royal Government of Cambodia to resort to a 'persona non grata' decision," he said in the letter, dated March 20.

Cambodia's Smart Mobile Deploys VocalTec's International Gateway Solution

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Press Release Source: VocalTec Communications Ltd.
Monday March 22, 2010

HERZLIA, Israel--(BUSINESS WIRE)--VocalTec Communications Ltd. (NasdaqCM: VOCL), a global provider of carrier-class VoIP and Convergence solutions for fixed and wireless service providers, announced today that Smart Mobile, an innovative and fast growing Mobile Service Provider in Cambodia, has selected and deployed VocalTec’s Class-4 International Gateway solution to enable seamless VoIP termination and network economies allowing for improved end-user pricing strategies.

VocalTec’s solution offers immediate economies in terms of network utilization and routing plan management. These intelligent and flexible routing capabilities allow Smart Mobile to dynamically adapt call routes in response to business requirements, enabling them to find the best termination peers worldwide and thereby optimize their cost structure through the implementation of flexible business models.

The solution includes the deployment of VocalTec’s Essentra CX, Trunking solution and Essentra EX, VoIP Peering Manager, the combination of which allows seamless interconnection between disparate VoIP networks and provides high quality termination to PLMN/PSTN services.

"We required a field-proven VoIP solution that would enable us to expand our international services in a cost-effective manner, without compromising quality of service," said Thomas Hundt, CEO at Smart Mobile. "VocalTec's solution satisfies all of our technical requirements and allows us to provide our customers with the highest levels of excellence in all areas of service provisioning. The ability to support both packet and legacy circuit traffic eliminates the need for additional investment in legacy infrastructures and allows us to maintain a competitive service in today’s ever-changing business environment.”

"We are proud to have been selected to power Smart Mobile’s VoIP solution and welcome them to our family of satisfied wireless service provider customers,” said Ido Gur, President and CEO at VocalTec. “As more and more mobile service providers turn to VoIP we see a growing need for these types of solutions. Smart Mobile is the perfect example of a solution which was implemented in record time. This allowed Smart Mobile to put technology concerns aside and quickly focus on managing its business. We look forward to continue working with Smart Mobile as they successfully grow their business.”

Student Groups Go Abroad to Cambodia and Nicaragua Over Spring Break

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by ANGELA MENG, NEWS EDITOR | March 22, 2010

While most Swatties spent their spring breaks at home, on campus, or maybe points southern, the SwatCambodia and Fellowship in Nicaragua student groups each went abroad, to their respective focus countries. The two groups focus on different ideas of community service, but both emphasized the importance of sustaining interest in these communities and maintaining a long-term relationship with the non-profit organizations they worked with.


Founded two years ago, SwatCambodia primarily focuses on spreading campus awareness about issues in Cambodia and building houses in Cambodia. During SwatCambodia’s the one-week trip, the group members participated in a building program started by the Tabitha Foundation, a nonprofit organization that focuses on helping community wellness in Cambodia. A variety of people participated in this one week program, including six Swarthmore students, two Swarthmore faculty members, one Swarthmore alumus, two local residents, and four others.

After a grueling twenty-one hours of flight, the group members arrived in Phnom Penh, Cambodia’s capital, on Saturday night, then participated in the Tabitha’s Foundation orientation the following day. The organization’s founder, Janne Riskes, held a brief orientation for the group that included a trip to the Killing Fields and S-21. According to Ivana Ng ’12, a student member of SwatCambodia, thousands of people were killed and buried during the Khmer Rouge regime at the site called The Killing Fields, and S-21 was a former prison where thousands of people were imprisoned, tortured, and killed. On the impact of this field visit, Ng described, “I had had a vague idea of what happened, but after talking to Janne and seeing these sites, I’m just left with a lot of anger (especially about the US’s role in keeping Pol Pot in power), sadness and compassion for Cambodia and its peoples.”

The rest of their trip focused on building a total of fifteen houses for homeless families in Kampong Thom, a small town approximately four hours outside of Phnom Penh. Jen Trinh ’11, the founder and current president of SwatCambodia, describes these families as “homeless” even though “some of the families had homes,” because “they were essentially palm-leaf shacks that were falling apart and would probably not have lasted through the monsoon season.” Fortunately, local Cambodian contractors had already placed the foundation for these fifteen houses, so the volunteers mainly concentrated on nailing the floorboards and walls of the houses.

After the two days of building houses, some volunteers went back to Phnom Penh to return to the US. The majority spent the rest of their week in Cambodia visiting ancient temples, including Angkor Wat, Wat Bayon, and Ta Prohm.

Fellowship in Nicaragua
The Fellowship in Nicaragua trip abroad also followed a similar itinerary of an orientation/meeting, community service, and a tour of notable sites in Nicaragua. The campus group works closely with ASODECOMAT (Associacion para el Desarrollo Comunitario de Matagalpa), a Nicaragua community development organization, on improving the general welfare of people in Nicaragua. The group particularly focuses on ASODECOMAT‘s psychosocial program on issues of domestic violence and abuse. Chemistry professor Tom Stephenson, who works with Joyce Tompkins of the Interfaith Center on advising the student group, describes, “Our hopes for the trip were to deepen our partnership and to get a better sense of how an on-going student group at Swarthmore can contribute.”

After two days in conferences with ASODECOMAT offices on discussing a sustainable partnership in Managua (the capital of Nicaragua), the Fellowship of Nicaragua and its twelve volunteers (nine students and three adults) traveled to the countryside to spend a day learning about a psycho-social program in seven communities to expand opportunities for women and children, and another day making bricks as part of an ASDECOMAT program to “improve the safety and efficiency of wood burning stoves in individual homes,” according to Stephenson. On the group’s last full day in Nicaragua, the volunteers toured the Granada islands.

Erin Floyd ’10, founder and current president of the Fellowship in Nicaragua, said that the group’s main objective is to emphasize and expand ASODECOMAT‘s program for issues of domestic violence and abuse. The program focuses on providing psychological help to children who have experienced domestic violence, teaching them artisan skills, and enabling them to sell their original works. Floyd said, “I really like the idea the sustainable self-empowerment, [it] was an idea that I really enjoyed and wanted to help promote in developing countries.”


Reflecting on their respective trips, the volunteers have found their trip very inspirational, rewarding, and enriching. Members of both groups especially noted how the trips gave them new perspectives on the world. Heidi Wong ’10, a member of SwatCambodia, is interested in architecture; she said that for her, “it was refreshing to see architecture in this way, to build primarily for function…Hammering nails into crudely-cut wooden floor boards all day provided me with a different take on what building a house is about.” Likewise, Victoria Pang ’13, a member of the Fellowship in Nicaragua, said, “My stay with a Nicaraguan family without electricity or running water taught me so much about the strength of the people in Nicaragua, despite political turmoil, corruption, and widespread poverty.”

Despite experiencing a variety of challenges including language barriers, travelers’ sickness, flight delays, and fundraising, both groups have consistently emphasized the long-term goals of their service to Nicaragua and Cambodia, and they both plan on visiting their respective communities every other year. As Pang puts it, “I left the country inspired and energized to do more work with the Swarthmore student group.”

Cambodia threatens to expel senior U.N. official

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Mon Mar 22, 2010 
By Prak Chan Thul

PHNOM PENH (Reuters) - The Cambodian government has threatened to expel a senior United Nations official, accusing him of interfering in Cambodian politics.

Cambodia's foreign ministry expressed concern over comments by U.N. Resident Coordinator Douglas Broderick, who urged more public debate on an anti-corruption bill to safeguard the rights of Cambodians and to meet international standards.

The comments were a "flagrant and unacceptable interference in the internal affairs of Cambodia", Foreign Affairs Minister Hor Namhong wrote in a letter to Broderick on Saturday.

If they were repeated, Broderick would be expelled, said the letter, seen by Reuters on Monday.

U.N. spokeswoman Margaret Lamb declined to comment.

Cambodia's National Assembly, dominated by the ruling People's Party, voted in favour of the long-awaited bill on March 11 despite calls from the United Nations and civil society groups to postpone the vote so the public could be consulted.

Opposition lawmakers walked out in protest at what they said was a law that lacked transparency and would deter individuals from reporting corruption, rife in Cambodia where payment of bribes is part and parcel of doing business.

"To its knowledge, no draft law has been shared with interested stakeholders, including civil society, since 2006," Broderick, head of the U.N. Country Team in Cambodia, said in a statement to media on March 10.

Cambodia's foreign ministry said Broderick was acting without direction from the U.N. Secretary General in New York and the U.N. Country Team had exceeded the limit of its mandate.
Graft watchdog Transparency International last year ranked Cambodia 158th out of 180 countries in terms of corruption, with a low ranking denoting high instances of graft.

(Editing by Jason Szep and Jerry Norton)

The Phnom Penh Post News in Pictures

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Winner’s walk

Photo by: Photo Supplied

Monday, 22 March 2010 15:04 Phak Seangly

Dos Sopheap, the winner of the controversial Miss Landmine pageant, tries on her prosthetic leg, which was delivered by prosthetist Rune Nilsen to her home in Battambang province on Thursday. In addition to the leg, the 19-year-old also received US$1,000 for winning both an online vote and a pageant-in-exile staged in Norway. Speaking by phone on Sunday, she said, “Finally, I have received the prosthetic leg at my home. I almost can’t believe my eyes. It is even more comfortable and beautiful. I am quite happy.” A government decree issued in July 2009 banned the pageant and forbade its 20 contestants from leaving their hometowns to participate in it.

Sizzling charcuterie

Photo by: Heng Chivoan

Monday, 22 March 2010 15:04 Heng Chivoan

Keo Pisith, a 23-year-old vendor, barbeques sausages while waiting for customers in Daun Penh district on Sunday.

UN denies abuse of drug users

Photo by: Photo Supplied
A photo provided by rights group Licadho reportedly shows children about to be transported to the Youth Rehabilitation Centre in Choam Chao commune after being caught in police street sweeps. UNICEF says the vehicle was not used in the arrests.

via CAAI News Media

Monday, 22 March 2010 15:06 Irwin Loy

CHILDREN held at a controversial government-run rehabilitation centre in Phnom Penh are not subjected to systematic and violent abuse, according to the United Nations Children’s Fund, which for the first time has rejected allegations raised by a rights watchdog earlier this year.

Richard Bridle, UNICEF’s representative in Cambodia, said he now believes Human Rights Watch has erred in alleging abuse at the Youth Rehabilitation Centre in Choam Chao commune, which is run by the Ministry of Social Affairs.

In a January report, HRW said the facility, which UNICEF supported with US$28,440 in funding last year, is one of 11 government-run rehabilitation centres across the country in which detainees face beatings and forced detention.

“There is no culture of violence there,” Bridle said in an interview Thursday. “There is an error in [HRW’s] findings.”

Bridle said UNICEF workers visited the centre last week and were allowed unfettered access to the 82 children held there.

“When you meet brutalised kids, you can see there is this brutalisation going on. These were not brutalised kids,” Bridle said. “They were engaging. They sought out conversation. They wanted to joke with us.”

Bridle said UNICEF had based its conclusion on staff observations, including those from the visit last week; a Ministry of Social Affairs investigation – requested by UNICEF following the release of the HRW report – that he said found no evidence of abuse; and reports from local NGOs that provide services at the facility.

An official with Mith Samlanh, an NGO for street children that visits the centre at least twice a week, said he also does not believe there is evidence to support claims that the children are abused.

“In the past, that may have happened,” said Programme Manager Man Phally. “If someone breaks the rules and runs away, if they come back maybe they have consequences like being beaten up. But that happened a very long time ago.”

Man Phally said that if children were suffering from abuse, they would likely report the violence to Mith Samlanh staff members, who visit the centre to provide basic medical care, vocational training in areas such as traditional music and haircutting, as well as antidrug programmes.

“We work there almost every week. So we know what happens also, even though we’re not there 24 hours a day. This is our opinion. There is no evidence” of violence, he said.

‘Everybody got beaten’
The HRW report was based largely on interviews with drug users who said they had been detained in one or more of Cambodia’s rehabilitation centres, which are run by a range of authorities, including civilian and military police, the Phnom Penh Municipality and the Ministry of Social Affairs. Various officials have denied abuse allegations, and Prime Minister Hun Sen last week blasted rights groups for criticising the facilities.

Alleged abuses in Choam Chao figured prominently in the HRW report, with former detainees telling of harsh treatment and violence that some characterised as “torture”. Those interviewed in the report described witnessing guards – actually fellow inmates appointed by centre staff members – whipping detainees with electrical wire, forcing captured escapees to roll in gravel until they bled and administering routine beatings for perceived indiscretions.

In interviews with the Post this weekend, people who said they were detained reported experiencing similar violence.

One 21-year-old man, who said he takes yama, a smokeable amphetamine, every day, reported that he had been detained seven times at a facility he identified as Choam Chao. He said he did not recall the dates of his confinements, but that the last occurred when he was 20.

“They kicked me in the chest. They kicked me in the stomach. Everybody got beaten,” said the man, who the Post is not naming to protect him from potential reprisals.

The 21-year-old described a system in which guards called chhmar, or cats, were tasked with keeping newer detainees in line.

He said he was beaten on a regular basis for quarrelling with other detainees, for smoking cigarettes and for complaining about the food.

“The cats have the rice. They can do anything they want,” he said. “After the meal, they locked us inside the room and started beating.... They used sticks. They unlocked the door, entered and started beating. They punched me in the face. They smashed my head against the wall.”

In his last detainment, the man was forced to expose his back while a guard lashed him using electrical wires that had been twisted into a whip, he said.

“They beat me three times with the cable in the same place,” he said. “You could see the flesh come out. It was like pieces of flesh from a fish.”

During the interview, the man lifted up his shirt to expose a sinewy scar that reached across his right shoulder blade.

A 17-year-old boy interviewed this weekend said he was released from a facility he referred to as Choam Chao last month. The boy said the guards, whom he also called chhmar, beat him immediately after he arrived at the centre.

“They said, ‘Don’t tell the staff’. You live in fear of being beaten more,” the boy said, showing small scars on his arms, back and legs, wounds he said were caused by belt buckles and sticks.

Occasionally, medical workers who identified themselves as working with Mith Samlanh would treat his injuries, the boy said.

“They asked me what happened,” he said, pointing at a scar on his arm, which he said was gashed after he was hit with a belt buckle. “I just told them that I fell. I just lied. I was afraid the boss will beat me further.”

‘I’m sure there is a mistake’
UNICEF, however, is questioning the HRW report’s findings on the Choam Chao centre, which the agency sees as a voluntary facility that offers an alternative to prison for children in trouble with the law.

UNICEF’s Bridle suggested that interviewees may have reported abuse that happened years before the agency’s involvement with the centre, which began in 2006, or that they may have confused the facility for Prey Speu, a separate social affairs centre that has long been criticised by rights groups and is located a few kilometres away in the same commune.

“I’m sure there is a mistake that has been made here,” Bridle said. “I’m not saying HRW is incorrect in all of the major findings of this report. I’m saying they made a mistake about this centre.”

However, Joe Amon, HRW’s director of health and human rights, said his organisation stands by the report’s findings on Choam Chao, which he said were based on a researcher’s interviews with 17 people claiming to have been held at the centre within the last three years.

“There is really no way to confuse Choam Chao and Prey Speu. The children we interviewed understood the difference. We have investigated both centres and understand the difference,” Amon said in an emailed statement.

“The suggestion that the abuses we describe at Choam Chao YRC really took place at Prey Speu is just a cynical and sad attempt at avoiding responsibility and accountability.”

Govt threatens to expel UN envoy

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Monday, 22 March 2010 15:06 Vong Sokheng and Sebastian Strangio

THE government has threatened the head of the UN Country Team (UNCT) with expulsion from Cambodia following the office’s criticisms of the passage of the long-awaited Anticorruption Law earlier this month.

In a letter to UN Resident Coordinator Douglas Broderick dated Saturday, Minister of Foreign Affairs Hor Namhong said that the office “exceeded the limit of its mandate” by issuing a March 10 statement expressing concern about the lack of public consultation over the law.

“The unwarranted comments made by you in connection with the adoption of Cambodia’s Anticorruption Law is a flagrant and unacceptable interference in the internal affairs of Cambodia,” Hor Namhong wrote.

The letter states that Vijay Nambiar, chief of cabinet of UN Secretary General Ban Ki-moon, met with Sun Suon, Cambodia’s ambassador to the UN, in New York on Friday and informed him that the UN had not instructed the UNCT in Cambodia to “make any comment or suggestion to the media on the issue” of the draft law.

As a result, the letter adds, “any further repetition of such a behaviour would compel the Royal Government of Cambodia to resort to a persona non grata decision” – a formal diplomatic request that an envoy be withdrawn.

Foreign Affairs Ministry spokesman Koy Kuong said Sunday that the letter was intended as a “warning” to the UNCT.

“If the UN Country Team in Cambodia repeats its critical interference in the internal affairs of Cambodia, we will expel them as we did with Thailand,” he said, referring to the expulsion of the Thai embassy’s first secretary during a diplomatic row in November.

Under Article 9 of the 1961 Vienna Convention on Diplomatic Relations, a state may declare members of foreign missions persona non grata “at any time and without having to explain its decision”.

Hor Namhong’s warning follows a March 10 statement in which the UNCT noted its concern that the release of the draft Anticorruption Law and its debate by the National Assembly gave little time for public consultation and discussions.

“The draft Anti-Corruption law should undergo a transparent and participatory consultation process to ensure that it is consistent with international standards,” the statement read.

The UNCT also encouraged parliament “to allow sufficient time for Parliamentarians, civil society, donors and the UN to study the law so that if and where deemed necessary, amendments may be proposed for consideration”.

The law was passed by the National Assembly without amendment on March 11 and approved by the Senate in a swift session on Friday.

The UN comments have already prompted strong statements from the Foreign Ministry and the Council of Ministers Press and Quick Reaction Unit, both of which said the UN criticisms violated Cambodian sovereignty. The ministry also accused the UNCT of acting as the “spokesperson” of the country’s opposition parties.

Broderick could not be reached Sunday, and UNCT spokeswoman Margaret Lamb declined to comment on the foreign minister’s letter.

Ou Virak, president of the Cambodian Centre for Human Rights, said the expulsion of the UNCT would be a “major statement” for the government to make, but that the threat was likely a bluff.

“I think that the UN team should know full well that these threats don’t have any backbone behind them,” he said. The government “still needs the presence of the UN and Western aid”.

However, he said that Hor Namhong’s letter indicated the government’s reluctance to accept even mild criticisms.

“The Cambodian government releasing a statement like this says a lot more about the government than it does about the UN,” he said. “I don’t think any people from these offices will take these threats seriously.”

Cheam Yeap, senior lawmaker for the ruling Cambodian People’s Party, said that after its passage by the Senate on Friday, the Anticorruption Law will be submitted to the Constitutional Council on Monday before being forwarded to King Norodom Sihamoni and officially signed into law.

The law is not due to come into effect until at least November, when the Kingdom’s new Penal Code, which contains many of the definitions of and punishments for corrupt acts, enters into force.

Govt freezes marriage to SKoreans

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Monday, 22 March 2010 15:06 Mom Kunthear and Will Baxter

CAMBODIA has temporarily banned marriages between local women and South Korean men after officials broke up a human trafficking ring designed to facilitate such unions, a Foreign Ministry spokesman said Sunday.

Koy Kuong said a woman had been convicted on March 3 of recruiting 25 girls from rural areas and arranging for them to be married off to South Korean men for a US$100 fee.

Accepting a commission to facilitate a marriage is illegal, he said, adding that the convicted marriage broker is currently serving a 10-year prison sentence, and that the South Korean embassy in Phnom Penh had been notified on March 5 of the temporary marriage ban.

The ban will eventually be lifted, though not before the government puts in place an effective screening mechanism to prevent cases of trafficking, Koy Kuong said.

John McGeoghan, project coordinator for the International Organisation for Migration (IOM), said the temporary ban was a positive step.

“It’s good to see the Cambodian government is taking this issue seriously,” he said.

McGeoghan added that it is important to raise awareness among women looking to marry and move to countries such as South Korea about what life there will really be like.

Some Cambodian women use marriage as a way to earn money and send remittances back to their families, he said, but many unexpectedly end up marrying blue-collar or agricultural workers.

In March 2008, Cambodia imposed an eight-month ban on all foreign marriages to combat human trafficking after the release of an IOM report that found that as many as 1,759 marriage visas were issued to Cambodians by South Korea in 2007, up from only 72 in 2004.

Despite the 2008 ban, the number of Cambodian women marrying South Korean men rose from 551 in 2008 to 1,372 last year, according to the South Korean news agency Yonhap.

According to Yonhap, nearly 60 percent of marriages to foreigners in Cambodia involve South Korean nationals, most of which are arranged through brokers.

On Sunday, an editorial in the Korea Herald called the new ban “a rare negative step in the generally amicable relations between the two countries”, and urged Korean police to work with Cambodian authorities to help clear up the matter.

The South Korean embassy could not be reached for comment Sunday.

Villagers fear police retaliation

Photo by: Photo Supplied
The smouldering remains of an office owned by the Phnom Penh Sugar Company, which was burned down by villagers Thursday as part of an unresolved land dispute.

via CAAI News Media

Monday, 22 March 2010 15:06 May Titthara

AROUND 100 soldiers descended Saturday on disputed land occupied by villagers in Kampong Speu province’s Thpong district, and villagers in Oudong district fled their homes amid fears of arrests following an altercation with police last Thursday, villagers said Sunday.

On Thursday, about 500 villagers from Omlaing commune in Thpong district burned down an office belonging to the Phnom Penh Sugar Company, owned by Cambodian People’s Party Senator Ly Yong Phat, in relation to an ongoing land dispute.

Soldiers have now been sent to guard the disputed land, which is part of a 9,000-hectare concession to the sugar company.

Villager Hi Hoeun defended the burning on Sunday.

“We didn’t want to use violence, but we had to,” he said. “Local officers promised to settle our problem and told us to calm down ... but how can we calm down if we never get a response from the company or authorities?”

However, Kampong Speu Governor Kang Heang said, “What the villagers did is illegal because they violated the company’s property, so they will face the law if the company files a complaint against them.”

He also said that 90 percent of the villagers involved in the incident Thursday do not have land in the affected area.

Ly Yong Phat could not be reached for comment Sunday, and Chhean Kimsuon, a representative of Phnom Penh Sugar Company, declined to comment.

Meanwhile, village representatives in Oudong district’s Phnom Touch commune fled their homes late Saturday night after police were spotted in the commune, where an altercation Thursday resulted in the injury of 12 villagers and 14 local police.

“Last night at about 9:45pm, I ran away from home after I saw a policeman carrying a gun and flashlight, checking villagers’ houses and looking for representatives,” said Sun Bun Chhoun, a village representative.

Sun Bun Chhoun said he thought the police were looking to arrest leaders whom they suspected of inciting last Thursday’s protest.

However, Oudong district police Chief Khim Samon said police “did not go to make arrests or look for representatives”, adding that they were in the village on a routine patrol. “We always check the village because we’re afraid if the villagers lose a cow or buffalo they will blame us,” Khim Samon said.

According to a report released by the rights group Adhoc on Thursday, there have been 16 major cases of land disputes in which violence was used by authorities since January, during which villagers were threatened, accused of crimes, arrested or forced to flee their homes.

The report said 37 villagers have been questioned in court, and that 30 more stand to be called for questioning soon. It said 21 have been arrested and 18 seriously injured over land disputes in Phnom Penh as well as in Kampong Thom, Kampong Speu, Mondulkiri, Preah Vihear, Takeo, Preah Sihanouk, Pursat, Siem Reap, Oddar Meanchey, Koh Kong, Kandal and Battambang provinces.

Police Blotter: 22 Mar 2010

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Monday, 22 March 2010 15:03 Tha Piseth

A 30-year-old man was arrested last week in Banteay Meanchey province’s Poipet town after pummelling the head and body of his uncle while they were having dinner together. The uncle told police that he was unsure why the violence broke out, and that his nephew had been drunk. Police sent the case to Banteay Meanchey provincial court.

A 19-year-old man was cut in the head, ear and shoulder last week during an argument that broke out in the midst of a friendly volleyball game in Pursat province. Police said the culprit was a 29-year-old “gangster” who was drunk. The suspect allegedly left the game after the argument began and returned later with a knife to carry out the assault. He was later arrested, and the case was sent to provincial court. The victim was sent to a local hospital.

Anti-drug police raided a house in Kratie province on Wednesday. The authorities arrested six students accused of being drug users and seized firearms and ammunition including an AK-47 assault rifle and a K-54 handgun. Police said the house had become a veritable vice den of late, popular among young drug users and gangsters in the area.

A 40-year-old chicken farmer was arrested on Thursday in Battambang province’s Kamrieng district with 14 tablets of an unidentified drug in his pockets. Local police said the man, who resides in Doung village in Raing commune, had purchased the drugs for personal use and did not intend to distribute them. The case has been sent to Battambang provincial court.

A 22-year-old security guard was beaten to death by a group of gang members on Thursday in Phnom Penh’s Tuol Tompong 1 commune in Chamkarmon district. Police said the man could be heard shouting for help outside the house where he worked before succumbing to repeated blows to the head and neck from his assailants, who were armed with an iron bar. Police said they have already identified some individuals who were involved with the assault.

Officials mull stiff penalties for acid attacks

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Monday, 22 March 2010 15:05 Mom Kunthear

PERPETRATORS of acid attacks resulting in death or serious injury could face life in prison, and those who commit attacks resulting in lesser injuries could spend between 15 and 30 years behind bars, said a member of a government committee that met on Friday to firm up the details of potential punishments for acid crimes.

Ouk Kimlek, the committee’s deputy director and an undersecretary of state at the Interior Ministry, said Sunday that the meeting had also covered acid “management”, meaning provisions related to buying, selling, importing and exporting the corrosive liquid.

“But we focused strongly on the punishment, because this is the very important thing. At last Friday’s meeting, the committee committed all together to make the acid law appear to punish users very strongly,” said Ouk Kimlek, who wrote the 20-article draft currently before the committee.

“It is a sentence of 15 to 30 years for injury, and if attacks lead to death or very serious injury, they will lead to life sentences,” he said, adding that examples of “very serious” injuries would be if victims were to become blind or deaf.

He said the committee still planned to finalise the draft law shortly after Khmer New Year, a timeline that was laid out last month.

He added that committee members did not want to unduly restrict the use of acid, which is routinely used to maintain motor vehicles, clear clogged drains and clean jewellery, and is readily available in markets.

“We don’t want this law to disturb people who use acid for making money, but we must stop the use of acid for fighting against someone,” he said.

Hout Sophorn, a social worker for the Cambodian Acid Survivors Charity, said she agreed that the perpetrators of acid crimes should face stiff jail terms, adding that crimes for attacks resulting in injuries should lead to sentences even longer than 15 to 30 years.

Since the beginning of this year, the CASC has recorded 10 acid attacks, in which there were 12 victims, she said.

RCAF crack down on logging

Photo by: Photo Supplied
A truck filled with recently felled timber is shown in Mondulkiri province earlier this month. The Cambodian military says it is working to crack down on illegal logging in border provinces.

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Monday, 22 March 2010 15:05 Tep Nimol

TROOPS of the Royal Cambodian Armed Forces are following Prime Minister Hun Sen’s January directive to crack down on unauthorised logging and other illegal businesses operated by government officials, Chea Dara, RCAF deputy commander-in-chief, said Sunday, citing several recently completed operations.

While several seizures this month near the Thai-Cambodian border have yielded large quantities of luxury timber, Chea Dara said the crackdown was ongoing.

“We are still hunting for the stubborn high-ranking officials involved in illegal logging in response to the prime minister’s order,” Chea Dara said.

Last Tuesday, Chea Dara said, RCAF troops seized seven luxury SUVs carrying timber from Preah Vihear province to Phnom Penh. On Friday, he added, RCAF troops seized about 400 cubic metres of timber in Oddar Meanchey province’s Trapaing Prasat district.

Though he could not provide precise figures, Chea Dara said the operations heralded new vigilance against illegal logging on the part of the military.

“In these two operations, we have arrested some offenders and confiscated 13 modern cars and many cubic metres of timber,” Chea Dara said, adding that an additional large-scale operation was progressing in Trapaing Prasat.

In January, Hun Sen told an audience of military commanders that he would no longer tolerate illegal logging and other crimes perpetrated by high-ranking officials.

“It is time to stop every activity involving illegal business or the support of illegal business. [I] don’t care how many stars or moons you have – I will fire you,” Hun Sen said.

Chan Soveth, a senior investigator for local rights group Adhoc, praised the anti-logging effort, but said it was long overdue.

“Chea Dara’s operations should have been done long ago – they should not wait until there is an order from the prime minister,” Chan Soveth said. “These operations must be done continually.”

Hor Namhong should testify at KRT: Rainsy

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Monday, 22 March 2010 15:05 James O'Toole

OPPOSITION leader Sam Rainsy challenged Minister of Foreign Affairs Hor Namhong last week to comply with a summons issued by judges at the Khmer Rouge tribunal and appear before the court.

The call came in a letter dated Thursday and written from Paris, where Sam Rainsy fled last year to avoid a prison sentence in connection with an October protest in Svay Rieng province.

“You know full well that you are required by the law to show up when summoned by the judge. But why do you refuse to testify?” Sam Rainsy wrote.

In September, international co-investigating judge Marcel Lemonde issued summons letters for Hor Namhong and five other officials from the Cambodian People’s Party (CPP). None of the group appeared before the investigating judges, however, prompting Lemonde to conclude in January that it was “not feasible” to pursue their testimony further, UN court spokesman Lars Olsen said.

Sam Rainsy was convicted of defamation in a French court last year and ordered to pay a symbolic one Euro (US$1.35) after a lawsuit by Hor Namhong. The foreign minister said that Sam Rainsy had accused him in an autobiography of heading the Boeung Trabek “re-education camp”, where diplomats and government officials from the Lon Nol and Norodom Sihanouk regimes were incarcerated by the Khmer Rouge.

Ministry of Foreign Affairs spokesman Koy Kuong said Sunday that Hor Namhong would ignore Sam Rainsy’s letter.

“He said that he does not respond to a person who is an accused by the French criminal court,” Koy Kuong said.

Kampong Cham man charged in fatal grenade attack

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Monday, 22 March 2010 15:05 Chrann Chamroeun

A KAMPONG Cham man has been remanded into custody following a grenade attack in Chamkar Loeu district that killed two young boys Wednesday, court officials said.

Than Sophak, a prosecutor at Kampong Cham provincial court, said Sunday that Em Sovan, 42, was charged Saturday with premeditated murder and the use of an illegal weapon.

“He didn’t confess to the two charges, which is normal for the offender,” he said. He added that the suspect did not have a lawyer, but that one would be provided by the court.

On Wednesday evening, a grenade was thrown into a grocery store in Chamkar Loeu, killing two boys and injuring 10 other people, who were immediately sent to a local hospital.

Provincial police Chief Nuon Samin said Em Sovan, also known as Lok Vanna, was detained later that evening after four witnesses linked him to the attack.

As of Sunday, Nuon Samin said, the 10 attack victims were in stable condition at a hospital in Kampong Cham.

Police say they believe the grenade attack stemmed from a long-running business dispute between the suspect and his victims, who lived about 100 metres away from each other in the village.

If found guilty on both charges, Em Sovan could face life in prison, Than Sophak said.

PM warns officials of vice sweep exposure

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Monday, 22 March 2010 15:05 Cheang Sokha and Chhay Channyda

PRIME Minister Hun Sen has urged police to continue a series of raids on karaoke bars and other venues believed to be havens of prostitution, and has also warned that any government officials swept up in the raids would see their faces broadcast on television.

Speaking at the National Institute of Education on Friday, Hun Sen said the raids on karaoke bars, massage parlours, night clubs, brothels and cafes were necessary to crack down on vice.

“Any government officials who go to karaoke bars, please be careful of handcuffs,” he said. “I tell you, your arrest will not be tolerated. When arrested, ministers, secretaries of state, undersecretaries of state, provincial governors or deputy ones, officials at all levels must have their faces shown on TV.”

In a speech earlier this month, right as the recent round of raids was getting under way, Hun Sen lashed out at officials who he said had undermined efforts to target “human trafficking”. In the same speech, he declared that the government would redouble its attempts to eliminate human trafficking, drug use, gambling and prostitution.

Those who advocate on behalf of sex workers have expressed concern that the raids are sending a marginalised group further underground and possibly hindering HIV-prevention efforts. A local NGO reported earlier this month that the raids had seen at least 280 sex workers lose their jobs, including 85 who subsequently disappeared or fled.

But Hun Sen on Friday said the raids should continue.

“Do not just do like a heavy rain, and then finish,” he said. “You must continue cracking down on these operations like drizzling rain that doesn’t stop.”

Kirt Chantharith, spokesman for the National Police, said police in all provinces were carrying out Hun Sen’s recommendations.

Sam Rainsy Party spokesman Yim Sovann said he supported the raids, and agreed that officials should not be spared.

“If the authorities find them committing wrongdoing and conspire to commit corruption with them, then the measure will be nonsense,” he said.

Road collisions rose in February, officials say

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Monday, 22 March 2010 15:04 Chhay Channyda

THE government has counted 538 total traffic collisions for the month of February, up from 407 in January – an increase that officials attributed to Sinospheric Lunar New Year celebrations.

The accidents resulted in 164 deaths, an increase of 26 over January, said Preap Chanvibol, director of the Department of Land Transport at the Ministry of Public Works and Transport. In addition, there were 890 injuries stemming from the accidents, 457 of which were identified as “serious”.

“Comparing January and February, traffic accidents have increased, but this is mostly because of the Chinese New Year holiday,” he said.

He noted that the government’s February statistics would likely differ from those compiled by the Road Crash and Victim Information System, which have yet to be released. RCVIS reported 670 accidents in February 2009.

Preap Chanvibol also said that enforcement of a regulation stipulating that motorbike drivers must wear helmets had increased.

The government is currently weighing a proposal to increase the helmet fine from 3,000 riels to 21,000 riels (about US$5), which traffic safety experts say could dramatically reduce road deaths.

There were 12.6 road fatalities per 100,000 Cambodians last year, up from 12.2 per 100,000 in 2008.

The Phnom Penh Post News in Brief

Australian man charged with purchasing child prostitution against 2 VN girls

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Monday, 22 March 2010 15:04 Chrann Chamroeun

Phnom Penh Municipal Court on Saturday charged a 53-year-old Australian man with purchasing child prostitution from two underage Vietnamese girls aged 16 and 17, whose a 16-year-old girl was engaged, according to anti-human trafficking police and court officials told the post Sunday. Police on Wednesday night raided into a guest house in Preah Sihanouk province where the 53-year-old Australian man, Michael John Lines stayed, founding 3 girls including his four-year-old adopted daughter along with other two foreigner nationals of American and New Zealand.

Memorial: Stupa to honour war journalists

Monday, 22 March 2010 15:05 Khouth Sophakchakrya

The city is set to build a monument to dozens of local and foreign journalists killed covering the country’s 1970-75 civil war, Minister of Information Khieu Kanharith said Sunday. In a letter to Phnom Penh Governor Kep Chuktema, he said a ceremony will be held next month in advance of its construction, coinciding with an April 20-23 reunion of foreign correspondents who covered the war. At least 37 journalists – from Japan, France, the United States, Sweden, Germany, India, Laos, Australia and Cambodia – were killed or disappeared during the conflict between the US-backed Lon Nol government and the Khmer Rouge, which captured Phnom Penh in April 1975.

SRP officials to visit villagers in Svay Rieng jail

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Monday, 22 March 2010 15:04 Vong Sokheng

AROUND 30 lawmakers and senior officials from the opposition Sam Rainsy Party (SRP) will pay a visit on Wednesday to two villagers jailed in Svay Rieng province for the destruction of border demarcation posts. It was reported last week that the pair were suffering from a lack of food and medical care.

SRP spokesman Yim Sovann said Sunday that a doctor from the SRP will examine the two jailed villagers and bring them medicine.

“We have received permission from prison officials for the visit. Only five people are allowed to enter the prison and can visit only about 30 minutes,” he said.

“We need to ensure that they are safe, and we continue to send the message to the world about their bravery, because the conviction against them was not fair.”

However, Ken Saveun, the chief of Svay Rieng provincial prison, said Sunday that he was not aware of the plan to visit the prisoners.

“Until today, I’m not aware about the visit to the prison organised by the opposition party lawmakers,” he said.

On January 26, Svay Rieng provincial court sentenced Meas Srey, 39, and Prum Chea, 41, to one year in prison for uprooting six temporary border markers in Chantrea district in October. SRP president Sam Rainsy, currently in France, received a two-year sentence for his role in the border incident.

Last week, the two villagers began complaining of health problems and what they described as the lack of medical care inside the prison.

Meanwhile, members of a parliamentary delegation from the European Union met last week with SRP officials to examine the state of politics in the country. “We had a reasonable dialogue and wanted to promote further dialogue between the government and the opposition,” Werner Langen, the head of the delegation, said Friday.

Officials say no staged fights in SR prison

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Monday, 22 March 2010 15:04 Cheang Sokha and Rann Reuy

PRIME Minister Hun Sen said last week that prison officials in Siem Reap province must put a stop to nighttime fights staged between prisoners, a practice local officials insist has not been permitted.

Speaking at the Ministry of Interior on Wednesday, Hun Sen said he had heard rumours about the fighting from a prisoner who was recently released from a correctional facility in the province.

“I heard that a prison in Siem Reap is letting prisoners exercise at night by fighting each other,” Hun Sen said in an address to around 300 anti-drug police officers. “This kind of activity should not be allowed – prisoners should be resting at night.”

Khoem Sopheak, deputy director of Siem Reap provincial prison, said the type of scene the prime minister had described was not taking place in his facility.

“We know about human rights, so we cannot do that. We only let them exercise in the early morning, and we never allow any fighting,” Khoem Sopheak said.

Khoem Sopheak speculated that rumours may have reached Hun Sen after a recent brawl at Siem Reap provincial prison that occurred while prisoners were eating dinner unsupervised.

Heng Hak, director of the prisons department at the Ministry of Interior, said he had immediately checked with prison officials in Siem Reap after Hun Sen’s comments and and had found no evidence of unauthorised fighting.

“We did not find anything like that,” Heng Hak said.

Though prisoners are permitted to exercise and meet with family members during the day, Heng Hak added, they are locked in their cells and monitored in the evening.

Govt warns developers to apply for licences

A street vendor sells sunglasses Thursday on Monivong Boulevard in front of Gold Tower 42 in Phnom Penh. Firms will have to act quickly to apply for new property development licences or face the threat of suspension after only 10 firms applied since the start of last month, a Ministry of Finance official said Sunday. AFP

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Monday, 22 March 2010 15:00 Soeun Say

Ministry of Finance says just 10 companies have applied so far

THE Ministry of Finance will summon all of the Kingdom’s 60 or more real estate developers to a meeting Tuesday after only a fraction of them applied for newly required licences, a ministry official told the Post Sunday.

“We told property developers to apply for a new real estate development licence from February 1, 2010, but so far we have received only about 10,” said Norng Piseth, head of the Ministry of Finance’s Real Estate Department. “This is a very small amount of real estate developers to come and apply for a new licence. We don’t know why.”

The ministry will discuss the new regulation at Tuesday’s meeting and warn developers they have until April 30 to apply, Norng Piseth said. Those who miss the deadline will be shuttered or penalised, he added.

Prakas No1222, which regulates property developers, was issued in December 2009 in an effort to better manage inspection and licencing in the sector following the flight of developers from the country as the global economic crisis hit at the end of 2008.

The regulation requires developers who use customer financing to post a security deposit of 2 percent of a project’s estimated cost into an Inter-Ministerial Working Group account. It requires developers to have a commercial bank account in Cambodia to prevent transactions from being made independently, exposing customers to risk.

The regulation also abolishes a requirement that a development be 3 percent finished before it is advertised for sale, and drops official advertising fees.

In the past, real estate purchasers have bought directly from developers, leaving them open to losses if the development was unfinished, Norng Piseth said. The rule requires developers to complete projects or forfeit assets.

Developers said Sunday that they were working to meet the April 30 deadline.

“We will follow 100 percent because this law will protect buyers and make them feel confident ... to buy real estate,” said Touch Samnang, a project manager for Canadia Bank’s Overseas Cambodian Investment Corporation, which is building a US$200 million development on Koh Pich, an island in Phnom Penh’s Chamkarmon District.

Sung Bonna, president and CEO of Bonna Realty Group, said developers were likely delaying their applications to see how well the government will shore up the sector.

“They are waiting for government activity in this industry,” he said, adding that now was the “right time” for developers to start doing business.

Loan growth could hit 20pc: IMF

Photo by: Sovan Philong
ACLEDA Bank customers use ATM machines in December. The IMF predicts deposit growth will slow over the rest of 2010.

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Monday, 22 March 2010 15:00 Nguon Sovan

IMF Representative John Nelmes says deposit growth is likely to slow as profits are squeezed

CAMBODIA’S banks could see lending growth climb as much as 20 percent in 2010, with a slower growth in deposits, marking a slight recovery in the sector, said the International Monetary Fund's chief representative in the Kingdom.

“Lending growth has picked up recently after a very substantial slowdown through most of 2009,” John Nelmes, IMF resident representative, wrote in an email Friday. “Lending growth of between 15 and 20 percent in 2010 would be in line with a modest recovery in economic activity and a reasonable increase in loan demand.”

Cambodian banks put restrictions on their lending in the fallout from the global economic crisis, but they have continued to compete for depositors.

Loan growth grew just 3.2 percent to US$2.42 billion in 2009, up from $2.34 billion the year before, according to National Bank of Cambodia figures. Deposits rose 32.7 percent to $3.28 billion in the same period.

Deposit growth is likely to slow as banks back away from competitive offers that have created too much cash and forced them to make large deposits in the National Bank at low interest rates, Nelmes said.

“This negative spread – the difference between what banks pay for deposits and what they earn on them – is undermining profits,” he said.

“That situation cannot continue indefinitely, so looking forward, I would expect to see deposit interest rates decline, and deposit growth slow,” he said. “At the same time, lending rates may not fall very much, as banks look to rebuild their profit margins.”

Yum Sui Sang, CEO of Union Commercial Bank, whose clients are mostly garment manufacturers from Hong Kong and Macau, said the bank has seen an increase in borrowing demand.

“Lending growth will definitely increase this year but I cannot predict the increase percentage,” he said, adding that demand for loans remains low.

Union Commercial was seeking to reduce its cash by dropping a percentage point on deposit rates, to 6.5 percent, he said, but the bank still wants to attract more depositors.

“Even though we are too liquid, we’re still willing to attract more deposits, as it is the blood of the bank for the long-term goal,” he said.

Dieter Billmeier, vice president of Canadia Bank, told the Post this month that the bank had $200 million in deposits at the National Bank at the end of 2009 and that borrowing demand had climbed from October 2009 into February 2010. Canadia Bank expects growth potential of 15 percent to 20 percent over 2009, he said.

National Bank Director General Tal Nay Im said Sunday that bank lending would depend on an economic recovery.

“We have seen gradual lending growth since the start of the year, but it’s still too early to predict,” she said. “If the economy recovers well, the capital demand for production will increase as well.”

At the end of 2009, commercial surplus liquidity reached $900 million. High liquidity can drive down loan rates, when banks want to turn their assets into profits, but it can also lower deposit rates as they seek to balance profit margins.

Tal Nay Im predicted an increase in depositors in 2010, as more people realise the advantages of bank accounts.