Tales of Asia - Cambodia Update

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A business venture gone astray

L'histoire Cafe will likely go down as one of Cambodia's shortest-lived, least successful, most tasteless, but most heavily publicized business ventures in the nation's history. The, umm, brainchild, of Hakpry Sochivan, this restaurant, briefly operating across the street from Phnom Penh's Tuol Sleng Genocide Museum, sought to recreate the Khmer Rouge dining experience: Waitresses decked out in black pajamas and adorned with red and white checkered kramas, seating on long benches, and a menu that offered all of one main dish - a watery rice porridge served in a metal bowl, set price $6 per person. Accompanying the gruel was a cup of bitter tea and a sumptuous egg - a special treat the Khmer Rouge meted out once a year on April 17 (in celebration and recognition of the day the Khmer Rouge took control of Phnom Penh and for that matter, all of Cambodia). Not surprisingly the idea didn't exactly bring in the masses, as when the Cambodia Daily reported on this venture on September 30, two weeks after the restaurant's opening, they admitted to so far having seen all of two foreign customers.

The Daily contacted the deputy governor of Pailin, Keut Sothea, where many a KR cadre still live in peace and quiet, harmony and stability - including Keut, and got the following classic quote, calling the idea "laughable," he said, "...they charge $6 for a set meal of food which is modeled from the Khmer Rouge regime. Khmer Rouge did not need to pay money. Everything was free in Khmer Rouge regime. If they use Khmer Rouge words they should not take money from people. Let them (eat) free. I will go to test it any day." But before anyone heads off for a laugh, test, or a protest, a few days after this initial report, the restaurant was closed, ostensibly for operating without a license, more likely for operating without a clue. And it's unlikely a license (or a clue) will ever be forthcoming. And for what it's worth, Hakpry Sochivan is under 25 years of age and did not live through the KR era.

No word whether he intends to head to China and open a Great Leap Forward Cafe... watch as the staff melts down all the cookware and while the menu promises gargantuan portions of international delicacies, your plate always gets the same: five peas and half a potato.

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http://www.talesofasia.com/forum/viewtopic.php?t=3318

Cambodia's business climate - this year's results are in

Two organizations released survey results gauging and comparing business climates in nations around the world. In neither one did Cambodia perform very well.

A World Bank survey "Doing Business in 2006" ranked 155 nations for their overall business environment. Cambodia came in at 133rd - one above Haiti, one below Senegal. In the neighborhood Singapore placed second, Thailand 20th, Malaysia 27th, China 91st, Vietnam 99th, and so Cambodia won't feel too down on itself, Laos came in at 147th. Rankings were based on the following factors: registration fees, building licenses, labor codes, property laws, access to credit information, taxes, contract enforcement, bankruptcy laws, corporate good governance, and customs procedures.

Business start-up fees are one aspect of the survey worth looking at. In Cambodia the costs of starting a business are approximately $1000, roughly three times the average Cambodian salary, for comparison, in Singapore the costs of starting a business are about 1% of a Singaporean's annual salary, which is kind of an apples and oranges comparison. While the relative starting costs in comparison to national salary averages may be quite high, how many Cambodians earning the average salary are in a position to start their own business anyway? Perhaps rather than looking at how much it costs to start a business, it might be more productive to ask why so many Cambodians can't afford to start their own businesses in the first place? Who cares if the registration fees are $100, $1000, or $10,000?

On a positive note, it's also worth pointing out that a year ago the cost in Cambodia was five times the average salary. In August 2004 the Ministry of Commerce reduced the registration fee from $635 to $177 and the minimum capital requirement from $5000 to $1000. It should also be noted that many small businesses are not even registered as such and hence these costs are not applicable, anyway. For most small businesses (capitalization of under $100,000) the process is simply to obtain the necessary licenses, register with the tax department and that's that.

The time needed to register a business remains entirely too long at 87 days average, though it is a slight improvement from last year's figure of 94 days. But some good news, since the MoC instated the aforementioned reforms the number of registrations has jumped from an average of 61 a month to 122 a month.

Need to recover a bad debt? Why bother? How about average costs of 21% higher than the actual debt itself! But pay your taxes? It takes only an average of 97 hours per year to remain compliant compared to 1,050 hours in Vietnam! Speaking from personal experience I would say as a small business owner in Cambodia the number of hours we've spent being tax compliant in the past twelve months was probably two - most of which was spent sitting at the tax office waiting for our turn to meet with the collector.

Depending on your perspective this survey can come as cause for optimism that things will only get better, or pessimism, how'd they get this bad. The business problems are not the result of poverty (or war, or Khmer Rouge, or evil foreigners) but one of lack of political will. The reforms needed are simply a matter of government action. The report cited that one of the top business reformers in the world is Rwanda, a country which recent history shares a lot in common with Cambodia, only their implosion is more recent.

I've always said the leading cause of third world poverty is third world governments.

The second report came from the World Economic Forum which ranked business environments for competitiveness. Cambodia received a ranking for the first time, placing 112th in a field of 117. Only Paraguay, Benin, Guyana, Kyrgyzstan, and Chad performed worse. In the neighborhood Singapore ranked sixth, Thailand ranked 36th, Indonesia 74th, and Vietnam 81st. The top two spots belonged to Finland and the United States. Results were based on a 130-question survey mailed to the heads of roughly 100 Cambodian businesses, both foreign and Cambodian owned.

Gripes were incessant demands from civil servants for payments of bribes (cited as a major problem by 80% of the respondents), inefficient and excessive bureaucracy, an unreliable police and legal system, and a poor educational system creating insufficient numbers of skilled employees (see Guesthouse Saga 12 below for more on this problem). On the positive side favorable reports were given for the mobile phone network (apparently Sunday operation or lack thereof was not considered), low inflation and a stable currency, a reasonable tax code, and fewer barriers against foreign-owned business ventures.

A third study released recently rated the relative political stability of some 60-odd nations. Cambodia came out better than in the aforementioned surveys, the country was omitted from the study.

And while we're on the subject of development, government inaction, etc might I remind people that the road between Siem Reap and the Thai border is presently in the worst condition it's been in since late 2000... and the money was allocated by the ADB way back in November 2002. Something to think about when pulling out the ol' progress-o-meter.

Information for the above story came from two Cambodia Daily reports dated September 15 and September 30.

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Moving house

First the Siem Reap fire police ditched their prime digs and moved a few blocks away, leaving their Sivatha/Rte 6 corner location to become the Angkor Somethingorother Hotel, then the Tourist Police left town to set up shop opposite the Angkor Ticket booths (which sort of does and sort of doesn't make sense), and now it's the Siem Reap Provincial Police that have jumped into the land swap fray. Once conveniently located on the same block as the other now relocated police departments and barely minutes from anyone who needed them, their outrageously valuable land was simply too good to house a police department and better suited for something more important like another hotel (Angkor Police Hotel, anyone?). And with 7,100 square meters valued at roughly $7.1 million USD who can blame them for leaving?

In any event, once minutes from anyone who might need them, the various departments of the provincial police force (motto: to collect and earn) are now stuffed in a new building six kilometers and fifteen minutes away near the Siem Reap Airport on a generous plot of 21,000 square meters of land valued at a paltry $420,000 USD. According to the Phnom Penh Post report, nobody really knows what's going on because neither the chief of police nor the provincial governor had anything to say on the matter.

Such a move surprises no one here, with land values spiraling upward at seemingly exponential rates, prime real estate simply can't continue to exist supporting such unnecessary structures as that of the police and fire departments when there exists an opportunity to build another desperately needed hotel. One can only hope that the police will at least supplement their new digs by using their newly found wealth (though I wonder how much of that 7.1 million will actually make it to the department?) and create some sort of sub-station downtown somewhere. Meanwhile, keep in mind that if you need the police they are at least fifteen minutes to anywhere, except the airport and your wallet.

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http://www.talesofasia.com/forum/viewtopic.php?t=3320

Budget airline enters Cambodia

It doesn't do a thing for the Bangkok Airways or Vietnam Airways Siem Reap monopolies, but it's a start. Malaysia-based Air Asia will soon be offering discount flights between Phnom Penh and Kuala Lumpur (presently served by Malaysian Air) and reportedly a Phnom Penh to Chiang Mai route (presently served by no one) may be in the works. No word on what the fares will be, but in the tradition of Air Asia, I imagine the introductory fares will be outrageously cheap for those able to get a seat and meet the conditions, and standard fares will still be a bargain compared to pre-existing services.

Now imagine the possibilities... with discount air carriers popping up all over the place what stands to be cheaper? Bangkok Airways flying Bangkok to Siem Reap? Or a combination of flights - Bangkok to Chiang Mai to Phnom Penh to Siem Reap? Dare I say it that it might be the latter?

Perhaps it's time for the frustrated travelers in the region to kick off a pair of websites: ihatebangkokairways.com and cambodiaopenskiesisafraud.com.

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http://www.talesofasia.com/forum/viewtopic.php?t=3322

Siem Reap
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Rating the police

Breaking news! The police, particularly the traffic police, don't rate too highly with their fellow Cambodians. Seems that when it comes to traffic violations they pick on the poor (guilty or not) while ignoring the rich. Hmm... everyone knows that the more expensive your vehicle is, the harder it is for the police to see it. And if you really want to camouflage it, get red and blue military plates, that almost guarantees complete invisibility.

The flip side is one could argue that if you commit a traffic violation, and believe me, the flagrancy with which traffic rules are broken here, there is no shortage of violations to go around, one should be held accountable. Still somehow, the threat of confiscation of a motorbike for one week until the matter of going the wrong way on a one-way street can be sorted out does ring with a bit of unfairness. In such circumstances who in their right mind wouldn't try to settle the matter on the spot? And just exactly how is that it would take a week to sort out a minor traffic infraction and that it involves confiscating a motorbike?

In what must stand as one of the most unjustifiable justifications I've heard in years, the head of the traffic police was quoted as saying, "There is not corruption in the traffic police. Our policemen don't ask lawbreakers for money, but the lawbreakers are busy so they give us money." Sort of like saying, "I didn't inhale."

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http://www.talesofasia.com/forum/viewtopic.php?t=3323

A new case for Court TV?

No surprise that it's in America where one can be sued for human rights abuses committed (or allegedly committed) in foreign nations and Sam Rainsy and three others have taken advantage of the litigious USA and filed a 19-page complaint against PM Hun Sen and some of his bodyguards for human rights abuses under the US Alien Tort Claims Act and Torture Victims Protection Act. The suit charges a key role in planning the March 30, 1997 grenade attack on a Sam Rainsy party demonstration in Phnom Penh as well as human rights abuses dating back to Hun Sen's Khmer Rouge days in the 1970s. As a head of state, the US government can intervene on his behalf and dismiss the case on grounds of immunity to prosecution.

While the outcome may not be favorable for the plaintiffs, the intent of the suit is more to bring attention to alleged abuses on the part of the Hun Sen government. Which, if you are a US taxpayer, you get to pay for.

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Website of the month

Following in his father's footsteps, the new king, HM Norodom Sihamoni, has launched his own website:

http://www.norodomsihamoni.net

But unlike his father, one does not have to read French to read the website as there's an English-language version.

The guesthouse saga part 12

Okay, we're back with another installment. Let's start with the big story first...

We have a cat.

What you thought I might have a story more important than our new cat?

Well, that's right, there is now an official Two Dragons cat. And he needs a name. I'd post a photo of the furry feline but somebody (apparently me) left the cable to his digital camera in Bangkok so I can't download any photos until I get back there. So you'll just have to listen. Two Dragons in fact has three cats that lurk about the guesthouse (probably creating confusion with the ghosts), two orange ones that are not seen very often except when they choose to fight in the ceiling area above the restaurant, and a small black and white one which is seen often, but until recently remained entirely unapproachable.

A few months ago he started turning up in the restaurant at night (probably to raid the kitchen after we all went to bed), but remained as untouchable as ever. So I started feeding him a plateful of Friskies wet cat food each night (Have you seen this stuff lately? Some of it looks better than what we eat!). My first offerings, though accepted, were done so to the accompaniment of hisses, spits, and snarls... particularly frightening coming from a four-pound cat with protruding ribs. Still, as cats that are fed but otherwise left alone will do, he mellowed in time, and one day, for whatever reason he up and decided we were not so evil and started following us around the restaurant rubbing against our legs and making a nuisance of himself. He's since discovered that the life of a domestic cat is not such a bad one and not only does he follow us around incessantly demanding attention, relishing in chin scratches, head pats, and back rubs, he's found the restaurant chair cushions a great place to spend a quiet afternoon. He is, as I expected, a very playful cat with a lot of personality (which means he's a bit of a nuisance, too) and with regular feedings as well as some very healthy doses of worm medicine he's started to fill out those ribs a bit. Try not to sit on him and watch your ankles, he chases feet and sometimes nips. And he needs a name. Suggestions welcome.

Siem Reap has a labor shortage. Don't know if you knew that or not, but it does. With the hyper-development of hotels and tourist businesses the demand for quality workers with a strong command of foreign languages far exceeds the supply. And English is hardly the only sought-after language, Korean, Japanese, and Chinese can all go a long way. And we're stuck, too.

Our manager quit. Found a prospective husband and split... with six days notice. Gee, thanks for the warning. I'll spare the details but suffice it to say the whole matter of insufficient notice and poor timing (we we're in Bangkok on our way to northern Thailand to start a little groundwork for some future projects) as well as a few other things which I'll keep to myself saw what was otherwise an outstanding employee leave on significantly less than outstanding circumstances. Still, others would say I was lucky even to get six days notice. And confidential to anyone provided with information to the contrarary she was not offered any increase in salary or additional money to stay. I think somebody out there might need to know this.

The end result is we are now one more in a long line of Siem Reap tourist businesses looking for the following:

Job Description: Manager of small service-oriented guesthouse in Siem Reap.

MUST be Cambodian and female, roughly aged 23-30. Absolutely fluent in English (AND I MEAN IT!) as in ACE graduate (level 12 completed), prefer high school graduate, additional education a plus, should have professional work experience. References required.

Salary and benefits: Salary will be based on qualifications and experience, but will be generous. Food allowance and some medical included. No B.S. - I pay well.

You might also want to have a look at a discussion that's begun to develop over my posting of this announcement on my discussion forum. Look here:
http://www.talesofasia.com/forum/viewtopic.php?t=3312

In other staff news, we promoted one of the cleaning girls up to front desk/waitress duties (she's the only one who could speak any English) and brought in a new girl to join the cleaning staff. Aside from a manager we also plan to hire one or two other girls in one, anticipation of high season and two, to help with a few restaurant ideas we will kick off once the rainy season ends and the high season kicks in.

In the absence of the manager we also have two girls working extra shifts. When asked if they'd be agreeable (they get paid extra for it, of course), one girl's response was "I get how much to work extra? Really! Can I do this forever?" The other girl said "up to you," to which I said, "No, not up to me, up to you, you're the one who has to do the work." To which she repeated "up to you". I took this as a yes. She still hasn't said no.

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http://www.talesofasia.com/forum/viewtopic.php?t=3325

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