Departing Caltex GM Recalls Cambodia’s Risks, Rewards

With any investment comes risk, and John Raeside has taken ma­ny during his tenure as the first general manager of the US pe­­troleum giant Caltex Cambo­dia.

But as Raeside prepares to de­part on Sunday, he says the risks have so far been mostly rewarded.

“We got where we wanted to be,” he said in an interview Tues­day.

Raeside is scheduled to leave for his new Caltex post in Jakarta, where he will take up one of two general manager positions in In­donesia. He will be succeeded here by Kit Heffner, the company’s marketing manager.

Raeside set up Caltex’s Cambo­dia operations in 1995, when the company returned after a 20-year absence. It took nine months to get approval from the Caltex board of directors to begin operations here, he said, because of the “risk factor.”

It was a situation he would face again and again as the risk factor constantly gave the board pause, especially following the factional fighting of July 1997.

Since 1995, Caltex invested more than $30 million to set up 20 gas stations, with two more due to come on line soon. Five “Star Mart” convenient shops have al­so been opened. And earlier this year the company inaugurated its $7.5 million marine depot in Sihanoukville.

Of the goals he set in 1995, Rae­­side said, many have been rea­­lized. The company has be­come involved in the community with the sponsorship of motorcycle safety programs and a football league.

The financial goals, though, will take longer to achieve.

The company’s break-even point was pushed back because of the economic slowdown after the factional fighting of July and the Asian economic crisis, he said. To save money, the size of the expatriate staff has been reduced from four to two, he said. The 500-member Cam­bo­­dian staff was not affected.

Still outstanding is a compensation claim for $300,000 from the July fighting, when one station and a Star Mart were damaged and looted. Raeside has in the past been one of the more out­spo­ken critics of the government’s failure to compensate, but he acknowledged the government cannot afford to pay it, even though “I would love to see it.”

The possibility of another financial loss was one of the reasons the company vowed to fight a Su­preme Court ruling over a com­plex land dispute where the latest Caltex station now stands.

“You take calculated risks in this country and this is probably one of the biggest risks we ever took,” Raeside said.

The property at stake was awar­ded to a Belgian national in 1993 as compensation in a business deal and allegedly sold from under him. The Supreme Court ordered Caltex to vacate the Cham­kar Mon district property that it bought last year. But Cal­tex argued that a lien was never issued against the land being sold and said that losing the case would be a million-dollar setback.

The company opened a gas station on the site last month.

Rae­side defended the com­pany’s de­cision to go against the ruling, citing “sufficient support” from both the government and King Noro­dom Sihanouk, who Raeside said had sent a letter to the Justice Ministry requesting the case be re-opened.

Supreme Court Judge Chiv Kheng said Tuesday he was not aware of a letter from the King. Although Raeside said the case is unresolved, Chiv Kheng said the law does not permit a civil case to be re-opened. Chamkar Mon po­lice said they were waiting for district Governor Lous Ry to issue an order to confiscate the land. Lous Ry could not be reached for comment Tuesday.

Raeside said the government needs to make progress on land and commercial laws. And luring future investors to Cambodia, he said, will require a “stable government with whatever that entails.”

Raeside also urged the government to end the practice of grant­ing duty-free exemptions for fuel im­ports, which he said is being abused by investors who are granted the exemptions but never implement their projects.

“The government has to monitor whether people are abusing the duty-free provision,” he said. “If you can’t monitor it you shouldn’t give it.”

But Sok Chenda, secretary-general of the Council for the De­velopment of Cambodia, said Tues­day the CDC does not give duty-free exemptions on fuel im­ports as incentives to private in­vestors. Some fuel import exemptions, he said, are given to those involved in large public investment projects such as road or bridge construction.

Although Caltex will not continue to expand at the same rate it has in the past three years, Rae­side said, future plans include more Caltex stations in the pro­vinces. Plans for places such as the former Khmer Rouge zones of Pailin or Phnom Malai are a long way off, he said.

Other long-range plans include expansion of the marine depot’s capacity and construction of a $10 million jetty in Sihanoukville in conjunction with Shell and Soki­mex. Although the companies will be cooperating on the jetty, Raeside expressed disappointment that previous efforts to get his competitors to share infrastructure—a practice common in other countries—failed.

Despite the long-term plans, Raeside had no predictions on how long it may take for an economic recovery.

“There is a lack of confidence,” he said. “I hope it will come back again.”

 

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