Cambodians Open to Capitalism

ASIA'S poor nations often try to prove their economic maturity by opening a Coca-Cola bottling plant. Thus, in Cambodia, where a guerrilla war has taken a turn for the worse, the government plans soon to offer ``the real thing'' to dirt-poor peasants.

Such Western-style capitalism has not hit full force in communist-led Cambodia. But the gates for free enterprise and private initiative cracked open this year.

Small family plots can now be bought or sold - one to a family. State markets gave way to a mob of private vendors - plenty of gold, Lux soap, and videotapes are for sale.

And foreign investors are enticed with promises of no nationalization and 100 percent ownership - as would be the proposed Thai-owned Coke plant.

When leaders of Cambodia's Marxist-Leninist party were told last year that a Cambodian's average income ranked as one of the world's lowest at $130 a year, ``we decided it was time to open the economy,'' says Iv Thong, director of the regime's economic institute.

The role of ``family'' economy was acknowledged by the party as early as 1985, six years after the regime was installed with the aid of a Vietnamese invasion that ended ended Khmer Rouge rule.

But only last April, in an unusually bold party conference, leaders were criticized for having pushed too fast toward socialism.

``Socialism is now only in the minds of the Central Committee,'' says Cham Prasith, an aide to Prime Minister Hun Sen.

Since April, farm collectivization has been rolled back to a self-starting contract system and ``mutual assistance.'' Private transport can take goods to market, and farmers can get easy credit. Taxes are collected in cash, not rice, although running an economy by tax policy is such a new idea that it is fraught with problems.

Still, coercive economic policies have not been totally abandoned.

Residents in Phnom Penh, the capital, are still sometimes trucked to the countryside when the state needs short-time farm workers.

Officially, all agricultural land can be privately owned, defying a Marxist principle of state ownership. But provincial officials are now limiting any private sales to only the 2,000-square-meter plots already granted families.

Most farmland can only be leased, although it may be passed on to heirs. But the limit is about eight acres a family, and the state reserves the right to take back the land. Selling a house or land requires permission - not an easy process, unless a ``gift'' is passed to proper officials.

Because of confusion over the new titling of family plots, the regime has asked Australia to provide a few experts on surveying and property legalities.

``The people are very glad to own land,'' says Bin Sareth, the vice-governor of Kompong Speu. He calculates the new policy will increase the amount of cultivated land by 20 percent.

This latter-day commitment to private property is less a genuine ideological shift and more a reluctant bow to a poor economy and to the negotiating stance of Prince Norodom Sihanouk, the guerrilla resistance leader and former ruler.

The economic good times of Prince Sihanouk's rule from 1954 to 1970, before war and ruin engulfed Cambodia, are the regime's own benchmarks for progress.

One such goal was to reach a $150 average income by 1991.

That goal was made more difficult this year by a sudden spurt of inflation. The currency has fallen 40 percent and rice prices have nearly doubled in just one year. Gasoline prices have tripled.

The main reason is that the state bank has tripled the money supply in one year to pay for an expanding military. The regime has been left alone to fight Khmer Rouge and Sihanouk guerrillas following September's final withdrawal of Vietnamese forces.

``A country at war needs to provide money for national defense,'' says Iv Thong. Even as the war escalates, the new economic policies are creating a class of urban nouveaux riches. BMW cars pass ox carts whose design has not changed in 1,000 years. Giant video parlors beckon beggars on the street.

Outside the ``Assorted Cars Selling Company'' in Phnom Penh, a new sign offers Western models, even though the old neglected sign still hangs advertising Soviet Ladas and Volgas. A used Mercedes costs about $12,000.

Once the war ends, Cambodia is banking on playing the role of the middleman between the rich markets of Thailand and heavily populated Vietnam. It also pegs its future wealth on timber and rubber exports, foreign investment, and hard currency sent home to relatives from overseas Cambodians. The latter bring in about $10 million a year, officials estimate - more than the yearly official wages of all civil servants.

An average family in Phnom Penh needs $50 a month to live, but the top government workers earns only about $5. Thus, graft is rampant, and the state has been forced to allow bureaucrats to run businesses on the side.

Even a relative of Hun Sen rents out his big mansion near the river for $100 a day to Australian private relief agencies. When East-bloc diplomats recently visited the mayor of the port city of Kompong Som, they were surprised to see ``income from smuggling'' openly listed on a wall chart.

Officials know they are losing popular support because of a growing income disparity and to grumbles over corruption.

``We cannot solve the problem of corruption quickly,'' says Mr. Cham. ``Businessmen are trying to bribe our officials. And in our country, getting a gift is normal.''

A campaign against corruption took a bad turn when its leader, Chen Seng, died earlier this year.

``An evening of entertainment for a group of party cadre is equal to the cost of one small house for a poor family,'' says a Phnom Penh resident. He says the fences that hide the cadremens' wealthy houses are getting higher and higher. ``But I can peek in and see the expensive toys for their children, their new cars, their televisions, their Coca-Cola, their fancy cigarettes.''

Paying off police is now a normal practice. ``We Khmer have a new saying: `The police can eat money easily,''' the resident said. ``But we also say, `If you catch a cock, then I will catch one, too, and we will fight.'''