The government has decided to terminate a pre-shipment inspection contract with a Swiss firm and has started searching for another contractor.
Top officials of the Customs and Excise Department for the Ministry of Finance said Wednesday that the government and representatives from Societe Generale de Surveillance in Geneva met Oct 15 and both verbally agreed to terminate the contract.
The move comes nearly four months after SGS suspended its major inspection operations, accusing the ministry of owing millions of dollars of fees.
“There’s no other way because SGS has still suspended the operations,” said a senior customs official. “We need pre-shipment inspection services to collect taxes.”
But Richard Hines, SGS country’s chief executive, said Wednesday that nothing has been finalized yet.
“We have not received any official letter to confirm the government’s intention [to terminate the contract] yet,” said Hines, adding SGS neither agreed nor disagreed with the government proposal when an SGS vice president met Cambodian counterparts two weeks ago. “We have not terminated the contract yet,” Hines maintained. “Solving the repayment issue on the outstanding fee is the first thing to do.”
SGS has solely provided pre-shipment import inspection services since August 1995 when it signed a five-year contract with the government. According to the contract, the government pays a 0.75 percent commission for its services. But the Finance Ministry couldn’t pay all the commission because of lack of budget, officials said. About $6.8 million in debt has accumulated since mid-1997, officials said.
Primarily because of the debt, SGS suspended its major operation on July 1 and proposed the government repay outstanding fees by August 2000.
During the Oct 15 meeting, the government agreed to repay all the debt and also proposed to terminate the contract, the customs official said.
Last week, the Customs department placed an advertisement for another pre-shipment inspection company.
“We don’t want to blame [SGS], but there was a big gap between the contract and the real implementation,” the customs official said. He claimed the company violated the contract because it has not strengthened Cambodia’s custom operations as stated
“We would like to have a contract with a company that will transfer their technology and technical skills to Cambodia,” the customs official said.
Businesses in Cambodia have a mixed view on the government decision.
Kith Thieng, president of the Royal Group of Companies, said that terminating the contract is a good thing to do because SGS didn’t contribute to Cambodia’s economic development.
“SGS has slowed down Cambodia’s businesses by delaying products shipped in and made [it more difficult for] investors to come to Cambodia,” he said.
But Kuon Khemara, president of the trading company SITCO Ltd, said he hasn’t had any problems with SGS’ pre-shipment inspections, and its services could help quality control.
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