A credit shortage spawned by the global financial crisis will mean less small loans to the rural poor.

One of the clearest sectors in Cambodia to be hit by the global credit crunch will be microfinance, limiting loans for small businesses among Cambodia’s poorest at a time when the system is just taking off, financial experts say.

The financial crisis that spread from a US mortgage meltdown and has shaken global markets will take money away from the international lenders that make microfinance possible, leaders of several Cambodian microfinance institutions said in recent interviews.

For Cambodia’s rising number of microfinance borrowers—mostly the rural poor who take small loans to start or expand local businesses—that means less money to go around and higher interest rates to pay back.

Micro-lender Amret will cut 10 percent of its loans to the poor in the coming year, the institution’s general manager, Chea Phalarin, said.

“We will reduce our mission in response to less foreign resources,” he said. “We will cut down the number of lenders.”

Amret had expected to make small loans to around 250,000 families in 2009, he said, but that number has been cut to an estimated 230,000. An extended financial crisis could mean even less people will be eligible for loans, he said.

Sem Senacheat, general manager of Prasac, a microfinance lender, said it will be a hard task now to find foreign lenders. Prasac has already seen a $10 million loan canceled thanks to the financial crisis.

“Loans that we had negotiated before were suspended by the lenders, and recently we have tried to contact many institutions we used to borrow from,” he said. “But most of them can’t offer us the money.”


Foreign lenders that can afford to make loans are doing so at higher interest, experts said, raising rates from an average 9 percent to as much as 11 percent. The higher interest will be passed on to borrowers.

An estimated 1 million Cambodians are benefiting from microfinance programs, up 73 percent from the beginning of 2008. The country has 17 microfinance institutions with a total capital of $270 million, typically loaned to rural villagers for small-sized businesses.

Chea Chanto, governor of the National Bank of Cambodia, has called microfinance the key to reducing poverty in rural areas.

But a slowdown means “people who need money to create new businesses or extend their businesses will be hurt,” said Kang Chandararoth, director of the Economic Development Institute.

Now, he said, microfinance lenders will have to amass local deposits, something local lenders say will be limited and far from able to reach the amounts of money foreign lenders can provide.

Micro-lenders also say they can’t seek loans from local commercial banks, because these are still not confident with microfinance systems.

The National Bank can’t help either; its reserves are too small.

“The National Bank can’t release much capital,” said Pal Nay Im, director of the National Bank of Cambodia. “Microfinance must find other new partners, especially the [World Bank’s International Finance Corporation], that don’t face a financial crisis.”

This will be hard as well, micro-lenders said. Lenders like the IFC or Asian Development Bank usually offer loans with higher interest rates, which would hurt borrowers.

For now, lenders are waiting to see how long the credit crunch will last.

“If the global financial crisis is not resolved as soon as possible, I am concerned that there will be a crisis in 2009," said Bun Mony, chairman of the Sathapana microfinance institution. “It means that our mission will be reduced to its lowest point.”

San Sim, 23, was weeks away from completing his third tour. Friday, October 24, 2008 By MICHAEL MELLO The Orange County Register Lance Cpl. San Sim came from a family of pacifists. His birthplace, the Phillipines, was ever a reminder of their journey from the terror of the Khmer Rouge. But after Sept. 11, 2001, Sim decided to fight. Sim was shot to death while on routine patrol in Afghanistan this week, near the end of his third tour of duty. He was 23. Seng Sim said his brother was shot Tuesday. He died Wednesday, the Department of Defense reported. A military attaché arrived at the family's home in Santa Ana that same day to notify them, Seng Sim said. San Sim was part of the 1st Battalion, 7th Marines, 1st Marine Division, I Marine Expeditionary Force, based in Camp Pendleton and Twentynine Palms. They were due to return to the U.S. next month, First Lt. Curtis Williamson said. Sim, a rifleman, and his unit headed to southwestern Afghanistan in April. Their mission was security training for the Afghan National Army and Afghan National Police, Williamson said, but “the situation on the ground dictated that they have more of a combat role. He was out there fighting.” Afghanistan was Sim's third tour abroad; he served twice in Iraq. He won commendations during his career, including two purple hearts. “He thought family was important, but that it was also important to help those who are suffering,” said Sim's wife, Karla Sim. It was that desire, she said, that pushed him to re-enlist after his initial four-year commitment. “We're really proud of him,” Seng Sim said. Sim's family settled in Santa Ana in 1985, after escaping Cambodia and the Khmer Rouge, and living in a refugee camp in Thailand. San Sim was the youngest of 11 children, born in the Philippines as his family worked to reach the U.S. Several family members gathered at the Sim's Santa Ana home, wearing white. Buddhists believe wearing white and keeping candles lit at the house helps to guide Sim's spirit home. They will observe 100 days of remembrance. Sim's participation in the military clashed some with his family's pacifist beliefs, but he felt strongly about his calling. “He was proud of what he did,” said sister Serene Sim. “He felt like he was really doing something. After what happen on 9-11, he wanted to go out there and put in his own effort.” “He felt the need,” sister Yasmine Sim said, “to serve the country that gave us the opportunity to escape from war.” Sim was in the process of gaining his citizenship; the rest of his family has already been naturalized. Family members said they will petition the government to award him citizenship posthumously. Sim was a student at Santa Ana Valley High School, where he was a wrestler. That's where he also met military recruiters and kept in frequent contact with them. “When he got out of high school, he wanted to do something for his country,” Seng Sim said. “Everything else could wait.” Family was a big part of Sim's life, evidenced by a pile of dozens of family photos at the Sim home. He always seemed to surround himself with children, his sisters said. With 21 nephews and nieces, that wasn't too difficult. In his spare time, he enjoyed fishing. Sim's body is expected to return stateside sometime next week. The Sim family mourns, but will wait for him to return to California before planning a memorial. “We came to this country to escape war. And now he's died in war,” Yasmine Sim said. “Our thoughts, prayers and wishes go out to the troops still out there.” Contact the writer: 714-704-3796 or mmello@ocregister.com

PHNOM PENH, Cambodia – An American man has been charged with soliciting sex from two Cambodian girls, officials said Wednesday.

Michael James Dodd of Washington, DC, was arrested at his rented house in the capital, Phnom Penh, on Sunday, said police Maj. Gen. Bith Kimhong.

He said police who raided the house found the two girls, ages 13 and 14, inside with Dodd.

Dodd was charged during a court appearance on Tuesday, said prosecutor Sok Kalyan. If convicted, Dodd could face up to 10 years in prison, Sok Kalyan said.

The suspect's Cambodian lawyer, So Dara, said his client denied the allegation against him.

Cambodia has long been a magnet for foreign pedophiles because of poverty and law enforcement undermined by corruption. But the country's police and courts have stepped up action against sex offenders in recent years.

A 59-year-old Michael James Dodd is listed as a sexual offender on a Web site of the Department of Law Enforcement of the State of Florida in the US. The listing gives his last registered address as Syracuse, New York.

It was not immediately clear if the man, who was convicted in July 2002 of sexual abuse of a child, was the same man arrested in Phnom Penh.

War-torn, poor and corrupt Cambodia is sometimes thought of as the missing link in rapidly developing Southeast Asia. But at least when it comes to train travel, the designation might soon end.

Currently, the national railroad’s cars chug along rickety rails at a sluggish 18 miles per hour. And riding the train carries about the same risk of death as hopping the NYC subway in the 1980s. Now, an Australian rail company is planning to purchase and overhaul the system, renovating the cars and adding new lines. Right now, long stretches of missing track prohibit train travel throughout the country except for trips between Battambang and Phnom Penh, and even then, the lumbering, open cars are subject to robberies.

The 30-year contract will split profits between the Aussie firm and Cambodia’s government, and the upgrades should be complete within three years. Seems like an optimistic time line for a country still fumbling around with its attempts try Khmer Rouge cadres for crimes they committed in the 1970s, but if the project works, maybe by 2050 Cambodia will have its own Danube Express.

BANGKOK (AFP) — Thai parliament has given the government the green light to launch talks with Cambodia aimed at settling a long-running border dispute which boiled over into violence, officials said Wednesday.

The next round of talks aimed at ending a military stand off on disputed land near Cambodia's ancient Preah Vihear temple will be held next month, after a border firefight on October 15 killed one Thai and three Cambodians.

"Parliament has granted the government two frameworks of negotiation," said Virachai Plasai, a foreign ministry official in charge of legal affairs.

"The two frameworks will allow the government to launch negotiations with Cambodia in order to solve the boundary and border issues," he told reporters.

Initial issues to be hammered out, beginning when the two sides meet from November 10 to 14, are the redeployment of troops on disputed land near Preah Vihear and removing landmines from the area.

In the longer-term, Virachai said, the two countries would try and settle ownership of patches of disputed land along Thailand and Cambodia's 798-kilometre (495-mile) shared border.

The Cambodian-Thai border has never been fully demarcated, in part because it is littered with landmines left over from decades of war in Cambodia.

Tensions between the neighbours flared in July when the 11th century Preah Vihear was awarded United Nations World Heritage status, rekindling long-running tensions over ownership of the surrounding land.

Two rounds of emergency talks after the October 15 clashes made little progress, with both sides only agreeing not to fire on each other again.

BANGKOK, Oct 29 (TNA) - Thailand and its neighbour Cambodia will officially confer to discuss ways to avoid armed confrontation along their disputed border areas between November 10-14 at a meeting to be held in Cambodia, a senior Thai foreign ministry official said Wednesday.

Director-General Virachai Plasai of Treaties and Legal Affairs Department said the upcoming meeting will discuss solutions to both immediate and long-term problems.

The meeting was organised after a joint session of Thailand's House of Representatives and Senate late Tuesday gave the green light to the proposed framework and approved a clear mandate for the Joint Boundary Commission (JBC) to negotiate with Cambodia on talks to settle the disruptive border dispute between the two countries.

Discussions dealing with the short-term problem will focus on avoiding confrontation between soldiers of the two countries at disputed borde areas, especially in the vicinity of the ancient Preah Vihear temple which was the scene of the latest clash on October 15.

Officials attending the upcoming meeting are also expected to confer on a border survey and demarcation based on the 2000 memorandum of understanding and set up a temporary coordination working group to consider the disputed border areas. Results from their assessment will be forwarded to a session of the Joint Border Commission.

A joint survey and land demarcation will be discussed under the long-term solution plan, based on the convention between Siam and France in 1907 and on Siamese and Cambodian-held Indochina maps, he said.

Cambodia uses a French colonial map demarcating the border, which Thailand says favours Cambodia. Thailand relies on a map drawn up later with US technical assistance.

Mr. Virachai said Thailand will also inform official delegates attending the Ottawa Convention banning landmine usage by signatory members during a meeting in Switzerland November 24-28 that Thai soldiers had found landmines inside Thai territory near the border between the two countries.

Also, Thai officials plan to inform the delegates concerning the October 15 clash in which Thailand charged that Cambodian soldiers based at Preah Vihear temple in firing at Thai soldiers.

Relations between the two countries flared up in July when Preah Vihear, which belongs to Cambodia, was awarded a World Heritage site status by UNESCO.

PREAH VIHEAR, Cambodia: Brightly colored lines of washing hang by the gray stone walls. A vendor offers sunglasses, shampoo and cigarettes from a plastic sheet under a tree. A man with a Polaroid camera sells souvenir photos to the Cambodian soldiers camped on the temple grounds.

At the main gate, where an hourlong firefight with Thai troops broke out nearly two weeks ago, the commander of a Cambodian border police unit is playing cards with his men.

It is a sleepy time here at Preah Vihear temple, on the Thai-Cambodian border, where a dispute over sovereignty has become the first international flash point in Indochina in 20 years.

Cambodian troops occupy the swooping clifftop temple, which is in Cambodia but is most easily reached from the high ground on the Thai side. The Thais, who claim parts of the territory around the temple, are mostly out of sight in the hills or in camps nearby in Thailand.

But the Cambodian government seems to be digging in for a long siege. A new budget expected to be approved next week would double its military budget to $500 million - or 25 percent of all government spending.

"We cannot sit and watch Thai troops encroach on our border," Cheam Yeap, deputy head of the national assembly's finance commission, told Reuters. "Our army needs to be more organized, better trained, with newer bases and well-fed troops."

The encampment here has the village feel of Cambodian deployments throughout conflicts in recent decades.

A small market has opened under red and blue tarpaulins; a barber has put out his chair by a temple wall; a satellite dish brings in both Thai and Cambodian soap operas for the officers to watch.

Soldiers calling their families wander the cliff's edge searching for a cellphone signal, which switches between Thai and Cambodian carriers as they walk.

At the bottom of the great stone causeway, giant loops of silver razor wire close off the main entrance, which is guarded by armed men wearing sandals; the 900-year-old temple, with its sagging walls and tumbling columns, is empty of tourists.

The commander of the forces here, General Chea Dara, claimed a great victory in the little skirmish that took place on Oct. 15.

"They left with their hands in the air!" he said of a group of 10 Thai soldiers whom the Cambodians captured and returned. He raised his arms and shook them, adding, "They were trembling! They thought we would kill them."

Other tales are told on the Thai side, and the origins and outcome of the clash remain unclear. Soldiers here say that three Cambodian soldiers died, two by gunfire and one from a heart attack. The Thais admit to one death and several wounded.

Tiny marks of shrapnel fleck the great stone staircase that rises from the Thai side to the temple, along with two stone dragons that flank the steps. But nothing seems to have been gained or lost in the fighting.

The dispute flared in July, when Unesco, the cultural agency of the United Nations, declared the temple a World Heritage site based on a Cambodian government proposal. Domestic politics in Thailand fueled a nationalist backlash, and troops, artillery and tanks were moved into position.

The confrontation echoes with the history of the rise and retreat of empires over the centuries, and old fears and hatreds still burn between Cambodia and its more powerful neighbors, Vietnam and Thailand.

The dispute also draws together the tangled strands of more recent conflicts, with roots in the Vietnam war and the brutal decades of massacre and civil war involving the Khmer Rouge of Cambodia.

One Chinese-made 85-millimeter artillery piece at the lip of the precipice was brought to Cambodia by invading Vietnamese soldiers in 1980, and it may have been used against U.S. troops a few years before that. Since then, both Khmer Rouge and government soldiers have fired it as control of Preah Vihear changed hands.

After that civil war ended a decade ago, the Khmer Rouge were integrated into the government army, and the combined force is facing off now against Thailand.

The Thais, armed and equipped mostly with American weaponry, have the advantage in firepower as well as air cover from fighter jets. Their 300,000-strong military is three times the size of the Cambodian armed forces.

But the Cambodians, with their more tormented history, are more hardened soldiers. Some of them have fought on one side or another - or on more than one - since they were boys in the 1960s.

"They wanted to test us, to see if Cambodian troops are easy to intimidate," said Colonel Meas Yoeun, 48, a ranking commander in Preah Vihear Province.

"They curse us and mock us and look down on us," he said of the Thai soldiers. "They say we have old weapons and ask us if they really fire."

According to the Cambodian soldiers camped here, the Oct. 15 battle began with taunts as Thai troops across a small stream shouted at them, "Come on, let's fight!"

Touch Socheat, 39, a captain in the border police, said he had come to know some of the Thai soldiers by name over the weeks as they called back and forth, and he felt betrayed when they started shooting.

"One guy got hit right over here as he was taking a bath," he said, pointing to an open pump. "I'm not going to trust them any more."

Srum Mao, 45, a deputy post commander for the border police, said the two sides watch each other quietly now, waiting for some new surprise.

"We watch what they do," he said. "When they carry ammunition, we carry ammunition. When they dig a bunker, we dig a bunker. When they put down their weapons, we put down our weapons. We are watching each other."

Hong Kong, China — As the Cold War drew to a close, 18 countries, including the five permanent members of the U.N. Security Council, assembled in Paris in October 1991 to end the protracted war in Cambodia. They laid down in a peace agreement a set of basic principles to be incorporated in the Constitution of Cambodia to serve as its governing principles.

Cambodia’s own Constitution, adopted two years later in 1993, enshrined all these basic principles. Besides, it further specified the separation of powers, the organization and functioning of state institutions, and the election, appointment and status of officers to run them.

However, 17 years on, constitutionalism has not yet taken root in Cambodian soil. In fact, several new developments have taken place to counter it.

Last July, the Cambodian People’s Party won the parliamentary election, again, with an overwhelming majority of seats – 90 out of 123 – in the National Assembly, the lower house of Parliament. On Sept. 24, the new Parliament was sworn in.

According to the 1993 Constitution, the election of the president or speaker and vice-chairmen of the National Assembly should have followed. Unfortunately, that did not happen. The chairman of the National Assembly in consultation with the vice-chairman should have nominated a leader of the majority party for the king to appoint as prime minister. The latter should then have formed a government and submitted it to the National Assembly for a vote of confidence. The election and the vote of confidence should have been conducted by secret ballot. However, constitutional rules were ignored.

The winning party applied rules stipulated in the Additional Constitutional Law of 2004 to organize a bloc vote by a show of hands for the election of the parliamentary leadership and the vote of confidence. This law allows for such election and vote of confidence as a “necessity” when the application of the rules of the 1993 Constitution obstructs the smooth functioning of state institutions.

This bloc vote violated the Constitution on two counts. First, the constitutionality of the additional law itself was very dubious right from the start. The CPP, which won the 2003 election, forced the new Parliament to adopt it prior to the election of its leadership.

This party had not been able to form a government on its own, and a deal with a coalition partner was made to secure a two-thirds majority vote of confidence as required by the 1993 Constitution. But the leader of the stronger faction, Prime Minister Hun Sen, nominated many of his supporters in the government, as he was not sure of securing sufficient votes from its weaker coalition partner in Parliament.

The CPP feared that following the rules of the 1993 Constitution and holding an open debate would allow dissent and could thwart the planned composition of the leadership of the National Assembly, the government and the premiership of Hun Sen. The additional law allowing a bloc vote by a show of hands was introduced to silence such dissent.

Secondly, in this year’s election, the same party won more than the absolute majority required for the election of the leadership of the National Assembly and the vote of confidence in the government. But the rules of the 1993 Constitution were not applied first, according to the Additional Constitutional Law, to see whether they would have led to any particular obstacles that warranted the short cut with the bloc vote.

The new government has further violated the Constitution. After the vote of confidence, Hun did not make a policy address to the National Assembly, which he should have done to announce the political program of his government and seek the Assembly’s approval. Instead, the next day he made a policy address to his Cabinet at its first meeting, announcing that his government would continue to implement the political program of his previous government.

Such implementation is in beach of the Law on the Organization and Functioning of the Government (1994) whereby it implements policies and plans that received prior approval by the National Assembly.

The third and most serious violation was the ultimatum Hun gave to Thailand on Oct. 14, to withdraw its troops by the next day from the disputed territory near a temple called Preah Vihear on the Thai-Cambodian border. The area was occupied by Thai troops since July 15, 2008. Hun told reporters that the visiting Thai foreign minister and Cambodian army leaders including commandos at the frontline were instructed, “This place is a life-and-death battlefield.”

Hun’s warning to Thailand and instructions to Cambodian army commanders amounted to nothing short of a declaration of war. On Oct.15, Cambodian and Thai troops engaged in a brief battle, which caused death and injuries on both sides.

Hun’s action violated the Cambodian Constitution, according to which only the king of Cambodia, the supreme commander of the Cambodian armed forces, can make a declaration of war after both Houses of Parliament approve it. Hun Sen usurped the king’s power.

Constitutionalism in Cambodia exists only on paper given its past and present violations. The signatories to the Paris Peace Agreement should work with the Cambodian government to implement it the way they set out to do when they signed it in 1991.
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(Lao Mong Hay is currently a senior researcher at the Asian Human Rights Commission in Hong Kong. He was previously director of the Khmer Institute of Democracy in Phnom Penh, Cambodia, and a visiting professor at the University of Toronto in 2003. In 1997, he received an award from Human Rights Watch and the Nansen Medal in 2000 from the United Nations High Commissioner for Refugees.)