June 27 2006 Cambodia at the Doorstep of

June 27, 2006 Cambodia at the Doorstep of International Integration and Economic Reform: Is Competition Policy and Law Needed? By Nuth Monyrath Researcher Is competition law and policy needed in Cambodia? 1

Cambodia and its integration June 27, 2006 Cambodia has opened its markets to the world and region: – A member of ASEAN in 1999 – A member of WTO in 2003 E. g. Status of trade liberalization: ranking 35 out of 170 countries (US Heritage Foundation). Is competition law and policy needed in Cambodia? 2

Benefits of Liberalization June 27, 2006 Better availability of products and services Better price Better quality Better choice Is competition law and policy needed in Cambodia? 3

Is liberalizing and opening the market enough? Is competition policy and law needed in Cambodia?

June 27, 2006 What happen in this liberalized market? The market is plagued by barriers to market entry: – Complicated business registration – Lack of transparency and accountability (procurement and licensing) – Weak institution and governance (IPs, counterfeit goods, taxes) Is competition law and policy needed in Cambodia? 5

June 27, 2006 What happen in this liberalized market? The market is plagued by unfair practices: – Conspiracy to limit access to markets/suppliers – Unfair provisions of subsidies – Violation of IPRs – Avoiding labor taxes/regulations Is competition law and policy needed in Cambodia? 6

June 27, 2006 What happen in this liberalized market? The market is plagued by unfair trade practices (UTPs): a perspective of businessmen, policymakers and consumers – Prevalence of UTPs – Most common UTPs: Raising barriers to entry and collective price-fixing, price discrimination, collusive tendering, and tied selling – UTPs are in important sectors: petroleum, telecommunication, public utility, pharmaceutical products, food and beverage Is competition law and policy needed in Cambodia? 7

June 27, 2006 What happen in this liberalized market? Explicit examples of UTPs: – Price-Fixing amongst boaters to Siem Riep – Refusal to deal in the telecom market – Anticompetitive acquisitions in the education Sector – Price fixing at provincial level business – Abuse of dominance in the mobile phone service market Is competition law and policy needed in Cambodia? 8

Why all these problems happen? June 27, 2006 Absence of clear competition policy: lack of transparency and accountability of public institutions (licensing and procurement) Absence of competition legislation No independent and autonomous body to control UTPs Lack of human and financial resources Is competition law and policy needed in Cambodia? 9

What are other concerns? June 27, 2006 Economic concerns: efficient and fair markets consumers’ concerns: best choice of products and services available at decent prices and quality Economic growth of about 10 % (2005) and fair allocation of resources Poverty reduction: poverty rate at 35% of the total population remains a challenging issue. Is competition law and policy needed in Cambodia? 10

Do we need competition policy and law? Is competition policy and law needed in Cambodia?

Competition law and policy? June 27, 2006 – There should be clear competition policy and law – Competition law should make exception to SMEs and export oriented enterprises and SOEs – Exception of competition law: technological advancement, protection of SMEs, disadvantaged groups Is competition law and policy needed in Cambodia? 12

June 27, 2006 Motivations for competition policy and law 1993 Constitution: state intervention to protect markets and consumers Rectangular strategy: promotion of competition WTO commitment Is competition law and policy needed in Cambodia? 13

What do we need to do? Is competition policy and law needed in Cambodia?

The way forward June 27, 2006 Policy and Law: appropriate competition policy and legislation Actions: proper sectoral policies, competent competition authority, effective and efficient and independent judiciary Capacity buildings: policymakers, judges, prosecutors, lawyers, businessmen, consumers, civil society, academia/media, etc. Reforms: good governance, transparency and accountable institutions contribute a lot to fair competition in the markets Voice of consumers: “Consumer protection organization” to protect Cambodian consumers and raise awareness Is competition law and policy needed in Cambodia? 15

Thank You! Is competition policy and law needed in Cambodia?