In Phnom Penh, the Cambodian government is sacrificing up to US$70 million in monthly tax revenue to help shield citizens and businesses from rising global fuel prices. The announcement was made by Mines and Energy Minister Keo Rottanak on May 18, as authorities continue efforts to reduce the financial burden caused by volatile international energy markets. While Cambodia remains fully dependent on imported refined petroleum products, officials say tax relief measures are currently one of the few available tools to keep domestic fuel prices under control.
The government’s intervention comes at a time when fuel costs continue affecting transportation, food production, and everyday living expenses across the country. According to officials, Cambodia has been extending fuel tax cuts and subsidies in an attempt to protect households, manufacturers, and small businesses from severe price shocks. More updates on Cambodia’s energy sector can be found through the official Ministry of Mines and Energy Cambodia.
Government Sacrifices Up to US$70 Million Monthly
Speaking to reporters, Minister Keo Rottanak acknowledged that Cambodia cannot completely avoid the impact of global fuel price fluctuations because the country imports all of its refined fuel products. However, he stressed that the government is actively trying to soften the impact through strategic partnerships and tax reductions.
“What we can do is diversify partnerships to secure the most affordable fuel sources for industries and the public, while using all available tax and duty measures to reduce the impact,” he told reporters.
According to the minister, Cambodia is currently losing at least US$55 million every month from reduced petroleum duties alone. When combined with additional tax relief measures, the total monthly revenue sacrifice could climb to US$70 million.
LPG Tax Cuts Support Vulnerable Groups
One of the most significant support measures involves liquefied petroleum gas, commonly known as LPG. The government has already removed taxes and duties on LPG completely to support industries and workers who rely heavily on fuel for daily operations.
“On LPG, because it is so important for some industries, cooking businesses and tuk tuk drivers, the government has reduced everything to zero, leaving no further room for additional tax reductions,” he said.
Officials say the tax exemptions are especially important for food vendors, manufacturers, and tuk tuk drivers, many of whom have faced increasing operational costs due to higher global energy prices. By reducing LPG related taxes to zero, the government hopes to help vulnerable groups maintain stable incomes and continue operating despite economic pressures.
Further Support Faces Financial Limitations
Although the government is considering additional support for tuk tuk drivers and other affected sectors, Minister Rottanak admitted that Cambodia’s financial capacity remains limited. He explained that authorities must carefully balance fuel subsidies with other national spending priorities and long term economic sustainability.
“We are not fully satisfied with the current intervention, but given fiscal capabilities, competing priorities and long term sustainability concerns, this is what we can do at this moment,” he stressed.
The statement reflects the difficult challenge facing many governments across the region as they attempt to control inflation and protect consumers without placing excessive strain on national budgets.
Fuel Prices Show Slight Improvement
Fuel prices in Cambodia have shown slight improvement in recent days following the extension of tax cuts and subsidies. Last week, regular gasoline prices dropped to 5,150 riel, or around US$1.28 per litre, while diesel prices fell to 5,200 riel, or approximately US$1.30 per litre.
Officials said the latest price adjustments were influenced by changes in both regional and international fuel markets. Despite the recent decline, authorities continue monitoring global oil trends closely due to ongoing uncertainty surrounding energy prices worldwide.
Conclusion
Cambodia’s decision to sacrifice up to US$70 million each month highlights the government’s efforts to protect citizens and businesses from rising fuel costs. While the country cannot fully escape the impact of global energy markets, tax cuts and fuel subsidies are helping ease financial pressure on vulnerable groups and key industries. As global fuel prices remain unpredictable, Cambodia faces the ongoing challenge of balancing consumer support with long term fiscal sustainability.