Cambodia: Cambodia loses 22 million dollars to beer smuggling in 2006

Beer smuggling cost Cambodia's government 22 million US dollars in lost tax revenue last year, according to an economic think tank, which warned Friday that contraband alcohol was on the increase, AFP reported May 11.

Millions of bottles and cans of beer imported from Singapore and Thailand simply disappeared at the Cambodian border before being taxed, the Economic Institute of Cambodia (EIC) said in a report commissioned by two local breweries, Cambrew and Cambodia Brewery Ltd.

"With weak governance and law enforcement, 'contraband' beer has ... been booming," the EIC said, adding that the smuggled brew accounted for 29 percent of the country's total beer market, far outstripping legal imports at six percent.

The Japanese beer Asahi, the cheapest foreign brand on the market, made up the largest percentage of imported beer, the EIC said.

"It is crucial the government take energetic measures to combat 'contraband' beer, especially along the Thai border," it added.

The losses represent about three percent of Cambodia's total budget revenue, and have wider implications for anyone trying to produce locally, business experts said.

The Swiss foods giant Nestle closed its factory in Cambodia several years ago because its locally produced products could not compete with smuggled goods, according to Bretton Sciaroni, who co-chairs a monthly working group on law, taxation and good governance for the private sector.

Corruption cost Cambodian businesses some 330 million dollars in 2005, while the government failed to collect 400 million dollars in taxes, the EIC said in a report released last year.

The impoverished country is plagued by graft at almost every level of government and the misuse of funds has been the major focus of donors during their annual review of the country's reform efforts.

Cambodia's parliament has yet to pass anti-corruption legislation that has been demanded by the country's donors.

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