Wednesday, August 26, 2009

Cambodian investment approvals plunge, eclipsed by huge 2008 projects

TUESDAY, 25 AUGUST 2009 15:01 CHUN SOPHAL


Figures show $6.86bn drop in applications to invest in first seven months, but analyst says there is still growth in key industrial, agricultural sectors

090825_13
Photo by: HENG CHIVOAN
Four major development projects approved in the first seven months of 2008, including a $1 billion plan to upgrade Bokor Mountain Hill Station, above, contributed to heavily inflated investment figures last year, officials said.
AUS$6.86 billion drop in investments approved by the Cambodian government during the first seven months of 2009, compared with the same period in 2008, can be attributed to a small number of massive projects greenlighted last year, according to official figures.

Detailed figures from the Council for the Development of Cambodia (CDC), the government's investment arm, show that the value of approved investments dropped 82 percent, from $8.34 billion to $1.48 billion.

The biggest hit came in the tourism and service sectors, figures show.

"This year, the value of approved projects related to the tourism and service sectors is less than last year," said Youn Heng, deputy director of the Evaluation and Incentive Department at the Cambodian Investment Board, a body of the CDC.

A sector analysis shows nine tourism-related projects worth $487.1 million were approved between January 1 and July 30 this year. This compares with nine projects worth $6.97 billion in the corresponding period last year.

These include Evergreen Success and Asia Resort Development's proposed $1.8 billion development in Ream National Park; Sokha Hotel Co's proposed $1 billion Bokor mountain development in Preah Monivong National Park; and a $3.8 billion proposal by Chinese company Union Development Group Co to build a coastal development in Koh Kong.

Removing these, the three biggest tourism-related projects from that period, worth a combined $6.6 billion, from the total actually shows an increase of around $117 million in tourism-sector approvals.

The services sector was also swelled last year by GS Cambodia Development Co's $967 million International Finance Centre complex. However, there were just two approvals in the services sector this year - a $234.6 million telecommunications project and a $6.8 million water supply deal.

Silver lining
Stripping out last year's statistical outliers, worth $7.56 billion, however, actually results in a jump in approvals over the period from $780 million to this year's $1.48 billion, the figures show.

A project-by-project breakdown of approvals was unavailable Monday to determine whether any significant projects were approved this year.

But Kang Chandararot, director of the Cambodia Institute of Development Study, said the apparent decline in investment in the service and tourism sectors was not as important for the developing economy as the increase in the agriculture and industrial sectors.

"We had some major investments in the service and tourism sectors last year, and this year we may or may not attract investment in these sectors," Kang Chandararot said.

"But we don't think that it is a bad sign for our economy," he added.

CDC figures show 15 agriculture projects worth $426 million were given the go-ahead in the first seven months of this year, compared with three projects worth $81 million a year earlier.

The garment sector saw a downturn in investments in line with a global drop in export orders, but 18 projects worth $68.8 million were still approved over the period.

Three shoe manufacturing applications worth $7.12 billion were also approved.

The industrial sector as a whole, which includes garments, saw 38 projects worth $323.6 million approved in the first seven months of this year, almost double the value of the 42 projects worth $173.9 million approved in the corresponding period last year.

Tuesday, August 25, 2009

Cambodia needs to be more than dressmaker to the world

Wednesday, 26 August 2009

By Anne-Laure Porée
OnlineOpinion.com.au


Defying the gloom descending on the tourism sector brought about by the global crisis, the capital’s airport recently launched a hopeful initiative: a new airline. Cambodia Angkor Air was launched to boost tourism between the capital and Siem Reap near the famed ruins of Angkor Wat. With tourist arrivals falling sharply since late last year, this may signal a triumph of hope over reality. If anything, the hopes and fears surrounding Cambodia’s tourist revenue and garment trade underline how the fortune of the country has become intertwined with the larger world.

Since peace came to Cambodia in the last years of the last century, the country has emerged as a poster child of globalisation in South-East Asia. In the middle of this decade, Cambodia enjoyed double digit growth and even hoisted itself up to 6th place in the rank of the fastest growing economies for the 1998-2007 period.

And now the country is experiencing the downside of dependence on the world. The sectors most affected by the crisis - tourism and garment export - are the ones that have seen the most development thanks to the integration of Cambodia into the global economy a decade ago, after peace was restored in the country.

At this time, the economy was opened to foreign investors, who poured money into the garment industry, taking advantage of supports granted to Cambodia such as the Most Favoured Nation (MFN) and the Generalised System of Preferences (GSP). This status provided access to the American market and it enabled other Asian investors - Chinese in particular - to get round their own quotas or the Least Developed Country status conferred upon them by the United Nations.

But the happy days are now threatened by the shrinking world market. Of the four major pillars of Cambodian economy - the garment industry, tourism, construction and agriculture - three are seriously impaired by the global crisis. With 70 per cent of Cambodia’s garment production going to the US, the declining American economy, choosey shoppers and stay-at-home tourists have led to job losses in Cambodia.

The figures released in late July by the Garment Manufacturers Association of Cambodia (GMAC) showed a worse than anticipated loss: exports dropped almost 30 per cent and one garment worker in six lost her job in the first six months of 2009. Most of these workers are women who transfer a substantial part of their earnings to their family living in rural areas in order to supplement farming-based incomes. In some villages, every family has one or several members working in the garment factories based in the Phnom Penh suburbs. Some go for unpaid leave or part time jobs, some enter prostitution, but most decide to go back to their village in order to work in the rice fields.

According to Van Sou Ieng, GMAC president, Cambodia is much more severely affected by the crisis than other Asian countries like Indonesia, Vietnam, Bangladesh or China because the industry sector in Cambodia is less competitive. “We need more time to produce than China or Vietnam,” he says. Though the government helps with profit tax exemptions or export charge reductions, there’s no miracle cure for Ieng.

Tourism - the second pillar of the economy - has suffered from the economic crisis, and the fallout from the swine flu. In Siem Reap, located next to the famed Angkor temples, a spot visited by more than 1 million tourists in 2008, the situation is described as “catastrophic” by hotel managers. The hotels’ occupancy rate has fallen 25 per cent compared to the same period in 2008. Several three- or four-star hotels have definitely closed their doors, and the mid-range hotels have been multiplying promotional offers for months.

The drop in western tourists’ arrivals (down 14 per cent during the four first months of 2009 according to the Minister of Tourism) has a direct impact on tourism generated incomes - foreigners spent US$1.6 billion in 2008. The Ministry of Economy and Finance expects a drop in tourism growth of 7 to 8 per cent this year.

The construction sector is also affected: many foreign investors have delayed, reduced or slowed their projects. The capital Phnom Penh started to change face in 2008 with the building of huge towers, business centres and shopping malls but activity slid in the second half of 2008, leaving workers without employment. Such trends have had significant consequences, particularly among the banking sector. The Acleda bank, which has the largest branch network in all provinces, reported a fall in profits in the second quarter of 2009 because of late payments and less lending. The Cambodians, who speculated on land as investment, are now facing difficulties because the prices of land and real estate have plunged and they can’t sell and get cash.

The hardest hit, of course, are the poorest of the poor who count each riel. For them, any drop in income, as well as any unexpected crisis, immediately results in cutting down the number of meals a day.

Agriculture, the fourth pillar of the Cambodian economy and the least exposed to global currents, could bolster the country’s 2009 growth, which is forecast at 2.1 per cent. The agricultural sector (with 4.3 per cent growth expected in 2009 depending on weather conditions) is essentially based on rice farming and fishing.

But the part of agriculture that has drawn foreign interest proves to be a mixed blessing.

In northeastern Mondolkiri province, plans by a French company to set up a rubber plantation have created a conflict that symbolises the double edged sword of globalisation. For several months, Bunong, a Montagnards ethnic group, has been fighting against the project - as their farmland gets swallowed up by the rubber company that has an agreement with the Cambodian government. The company is expected to make huge profits, a part of which could return to the community via the salaries of the plantation workers and the development of a new city.

The crisis has forced the government to pay attention to those left behind by globalisation. “We thought that the private sector could solve every problem but we have to reconsider the role to be played by the State in order to palliate the deficiencies of the market,” says Hang Chuon Naron, Secretary General of the Ministry of Economy and Finance.

The crisis has also led the leader of political opposition Sam Rainsy, former Economy Minister, to call for injecting government funds into the economy and for pushing reforms, in particular against endemic corruption. But the government would rather let the storm blow over, waiting for growth to come back in developed countries, hopefully pulling the country out of its recession in the process.

In the meantime, some hopes turn to the mineral, oil and gas resources development. But the revenues from these productions will be mainly derived from exports of raw materials with no local added value, whereas imports of manufactured goods will increase. Even after growth returns, Cambodia will still have to figure out how to hitch its industry to the global economy profitably rather than be a supplier of garments produced by cheap labour. Cambodia is beginning to learn the challenge of being part of an integrated world.

Sunday, August 23, 2009

Phnom Penh-More than a gateway to Angkor

Sara Veal , CONTRIBUTOR , JAKARTA | Sun, 08/23/2009 12:00 PM | Travel, thejakartapost.com

Thinking of visiting Cambodia? You’re likely picturing the serene faces of the Angkor temples. Possibly even the sandy beaches of Sihanoukville. But what about Phnom Penh?

I’ve met countless people who have either entirely bypassed Cambodia’s 143-year-old capital city in their quest for ancient empires and beach parties, or merely considered it a stop-off point, a place to quickly view the tragic remnants of the Khmer Rouge regime. Which is a shame, as Lady Penh (the city’s founder and enduring spirit) is a charming hostess – give her the chance, and she will make you feel right at home, offering an intoxicating, accessible mix of rich culture, fine cuisine and aesthetic delights.

Pathway to the past: The gardens behind the National Museum, which houses a vast array of Angkorian artefacts and Buddhas. (JP/Sara Veal)Pathway to the past: The gardens behind the National Museum, which houses a vast array of Angkorian artefacts and Buddhas. (JP/Sara Veal)

In a single day you can visit elegant pagodas, inspiring exhibitions, learn Khmer cooking, browse markets for silks and keepsakes, watch traditional dance and cruise along the Mekong. Punctuated this with mouth-watering meals and cap it off with hours of dancing at a sardine-packed nightclub and you may never want to leave.

Holly and I touched down in Phnom Penh International Airport in the early evening. After breezing through customs, we took a taxi into town – a flat US$9 to anywhere in the center – along the way admiring the eye-catching blend of reinvigorated yellow French colonial buildings, art-deco structures, Khmer temples, glassy office buildings and tacky, cake-like residences.

We stayed at the Blue Dog Guest House (#13, St. 51). Owned by newlyweds Ty and Hun, it’s within walking distance of one of the city’s key sights, the Independence Monument. Launched just over a year ago, it offers eight rooms priced between US$5-12 a night, as well as a limited but cheap and delicious menu.

If you fancy something more upscale, Phnom Penh is full of boutique hotels and 5-star luxury, such as the Frangipani Villa 90s ($25-60) or the Amanjaya ($155-250). If on the other hand you’re really trying to save, look around the Boeung Kak lake area for rooms as low as $3.

It is easy to get around Phnom Penh, as there is little traffic and most drivers know the city like the back of their hand. Pick up the free The Phnom Penh Visitors Guide as soon as you see it, for maps and tips; its usually available at eateries and guesthouses.

Visitors mostly travel via tuk-tuks (motorcycle trailers), which offer a surprisingly quiet, pleasant ride. I recommend committing to one tuk-tuk driver. Tuk-tuk drivers, who mostly have impressive English skills, can help you with booking bus tickets, arranging river cruises and even getting a SIM card ($10) for your cell phone.

Monument to past and future glory: The Independence Monument, which was inaugurated on November 9, 1962, to celebrate Cambodia’s independence from colonial rule. (JP/Holly Kosmin)Monument to past and future glory: The Independence Monument, which was inaugurated on November 9, 1962, to celebrate Cambodia’s independence from colonial rule.(JP/Holly Kosmin)

All the city’s major points of interest can be visited within a day, but its best to set aside at least two or three. The Independence Monument, an architectural celebration of Cambodia’s independence from foreign rule in 1962; Wat Phnom, a small hill that marks the city’s legendary founding site; the National Museum ($3 entrance); the Toul Sleng Genocide Museum; the Killing Fields; and the Royal Palace and Silver Pagoda, the King’s residence, should all be checked out. A market visit to either Phsar Toul Tom Poung, the Russian market, which offers a large selection of souvenirs, silks and curios, or Phsar Thmey (Central Market), a striking art-deco building, which specialises in jewels and gold, is also a must.

Beyond the obligatory sights, the city centre has much to offer in the way of shopping and dining. There are four main areas for these more leisurely pursuits: Street 178 or “Art Street”; Street 240; the Riverfront area and the Boeng Keng Kang area or “The Foreigner’s Quarter”.

Street 178 is right by the National Museum, so after I had spent the morning browsing Angkorian artefacts, I wandered around “Art Street”. Most of the artists can be seen at work and are happy to answer any questions you might like to bother them with. Chea Hak, of shop Hak Rachana, was working intently on a wood carving, which he said would take a week to complete. He can sell it for $100.

The best place to eat near Art Street is Friends (#215, St. 13), a delightful tapas restaurant that is run as part of a program to teach street youth marketable skills. Holly and I feasted on several dishes ($2-5), including mango coleslaw and zucchini fritters.

My favourite place in Phnom Penh is Street 240, a tree-lined avenue near the Royal Palace, which boasts excellent boutiques, unique handicrafts, second-hand bookstores, delectable eateries and the best spa in town (Bliss, #29). I splurged at Mekong-Quilts (#49, St.240), a non-profit organisation that aims to provide employment and increase family incomes for communities in the remote villages of Svay Rieng province.

I returned to haunt Street 240’s cafes several times, enjoying Mediterranean tapas at Tamarind (#31), burgers at Freebird Bar and Grill (#69) and cakes at The Shop (#39).

The Riverfront is a great place to spend the evening, affording a view of the Mekong sunset. It is home to many of Phnom Penh’s most enduring institutions, such as the famous Foreign Correspondents Club and the original Happy Herb Pizza. Cantina, a popular “gringo” haunt decorated with onset photos from Matt Dillon’s City of Ghosts (2002) had excellent Mexican food. Most of the best places to boogie are nearby too, such as the Riverhouse Lounge (#6, Street 110).

A thing of beauty: Street 178 artist Chea Hak at work, in front of his shop, Hak Rachana. He is carving an intricate, decorative wooden piece that will form part of a door. (JP/Sara Veal)A thing of beauty: Street 178 artist Chea Hak at work, in front of his shop, Hak Rachana. He is carving an intricate, decorative wooden piece that will form part of a door. (JP/Sara Veal)

“The Foreigners’ Quarter”, near the Independence Monument, is rife with embassies, hotels and expatriate residences. I frequented the Java Café and Gallery (#56, Sihanouk), a must for lap-top addicts, sampling a range of teas and fresh salads.

Nearby was Romdeng, a sister-restaurant to Friends, which offers Khmer specialities like fried spiders, as well as a fascinating exhibition “Imagine That” that showcased pictures street kids had taken of tourists in Siem Reap. The infamous Heart of Darkness nightclub is around here (#26, St. 51), where you can dance until dawn.

Besides all this, you can also take cooking classes at Khmer restaurant Frizz (#67, St. 240), watch shadow puppet performances at the Sovanna Phum Art Association (#111, St. 260), and Apsara dancing at Bopha Phnom Penh Titanic (Sisowath Quay). And no trip to Phnom Penh is truly complete with a boat ride down the Mekong, perfect around sunset ($5).

After a week of such delights, I felt relaxed, exhilarated, inspired and fatter. As the airplane took off, I watched the city disappear into the patches of green and brown paddyfields that dominate the Cambodian landscape, watching the ever-present Mekong shrink into a shimmering, twisting snake… and planned my next visit.

The gateway to the rest of Cambodia

Roads have been greatly improving in Cambodia, making it increasingly easy to travel from Phnom Penh to other Khmer cities. Buses are a (usually) comfortable and affordable way to get around, with one-way tickets starting from $5. You can also hire private cars from $25. There are several bus companies dotted around the city, especially near the Riverfront and Boeng Kak lake area. I visited Sihanoukville and Kampot.

Sihanoukville: (Paramount Angkor Express, $11 return, 4 hrs each way) Cambodia’s premier beach town. Stay in Ochheuteal beach or Serendipity beach if you’re the dance-til-dawn type… if you’d prefer a blissful getaway, try the more low-key Otres beach or Victory beach. Sample fresh seafood, scuba-dive and take day trips to exotic islands. Stay at the Beach Road hotel ($10-45) and dine at Cambodge Garden ($2-5 per dish).
Kampot: (Phnom Penh Sorya, $10 return, 3 hrs) A quaint, sleepy town, with few tourists, colonial architecture and breathtaking views of the river and surrounding mountains, sheltering ghostly hill stations. The perfect place to truly get away from it all. Stay at the Bodhi Villa ($3-8), which offers an excellent mix of homemade comfort food and Khmer specialities, and a friendly bar.

Flights: Ours were $170 there and back thanks to Air Asia – book in advance and be prepared for two check-ins

Visa: $20 one-month tourist visa available on arrival. Can be extended for a further month. Good to have a passport photo ready.

Airport Tax: $25 – payable upon departure.

Currency: US dollars and Khmer Riels (about 4000R to US$1).

Accommodation: From $3, depending on where you’re staying

Meals: Expect to pay $4-7 a meal, minus alcoholic drinks, at popular eateries. Water is usually provided for free.

Transport: Tuk-tuks ($1-2 for short trips, $10-15 all day), motos and cyclos (1500-4000R, $8/day), taxis ($4-5, $35/day). You can also rent a bicycle, motorcycle or car for your trip – inquire at your guesthouse.

Language: Khmer. Most people you will encounter speak reasonable English, and don’t expect visitors to understand Khmer. French can also be useful.

Wi-Fi: Many cafes and guesthouses offer Wi-Fi access, either free or available through Hotspot cards (starting at $5 for 5 hours), which you can buy from most supermarkets.

Friday, August 21, 2009

Cambodia's salesman par excellence



Written by Roger Mitton
FRIDAY, 21 AUGUST 2009
ImageQ&A with a man trying to bring his country into the 21st Century

As Secretary-General of the Council for the Development of Cambodia (CDC), Sok Chenda Sophea travels the world urging investors to come to Cambodia.

Few guys are more suited to this job than the erudite, multilingual Sok Chenda. Simply to meet him in full sartorial splendor and hear his finely honed spiel is to be half convinced about a benighted country that has faced terrible adversity. But the salesman tag does not do him full justice, for Sok Chenda is already a full minister and a member of the Central Committee of the Cambodian People's Party. He oversees the Special Economic Zones and often travels with Prime Minister Hun Sen. Make no mistake, behind the suave exterior, there lurks a hard center – which leads some to characterize him as moody, thin-skinned and arrogant. He admits to being a tad volatile. Don't mess with this man.


Is the global financial crisis hurting Cambodia?
No, we are not really harmed financially because our banking system is not yet well developed and sophisticated. But for sure, our overall economy is affected because we are now more integrated into the global trading system. I was part of the team that secured our membership of the World Trade Organization in 2003. We took that step to open up a larger market for Cambodia – really, we are now very open in the private sector, especially compared to our neighbours.

Of course, when our markets in the United States and Europe are not doing well, we are affected. Businessmen express concern. But I tell them: please be calm. Look at the figures. All of our exports to the US are low-end or middle price, not high-end. And in troubled times, it is the luxury items like foie gras, cognac, caviar and designer clothes that people stop buying. They still buy bread and butter, you know, the basic things like jeans, T-shirts and so on that we export to them. So we may not be too much affected.


There may even be an advantage?
Well, you know, whenever there's a crisis, there are opportunities. Consumers in our export markets are now going for the cheaper products that we make. So instead of having a market shrinking, we may have the reverse. And remember, Cambodia has been through worse hell in the past, so this latest crisis does not scare me. Don't get me wrong, there is stormy weather ahead. And if we sit back and just say let's wait and see, we'll have problems. But if we take proactive measures to boost our competitiveness and be cheaper and faster than the neighbours, we'll weather the storm. We must work harder on trade facilitation, that is the key. That's why we are setting up the Special Economic Zones, which I'm overseeing.


How do you "sell" Cambodia to investors?
I tell them to look around. Not only do we provide excellent fiscal incentives, but we are the only place in the region that allows total foreign ownership. Here, they can they run a 100 percent foreign-owned bank, insurance company, telecoms company, even a newspaper. It is amazing. You cannot do that in Thailand, Malaysia, Vietnam, even Singapore – don't mention that place. We are quite unique. Also, I tell them, yes, as a businessman, you can go to London or Tokyo with your wife or your girlfriend, but what can you do? Most sectors there – energy, transport, construction, they are all covered. They don't need you. But here, there are so many untouched sectors, so many opportunities. And it is easy to set up here.

I know you were joking a bit, giving me the sobriquet of "salesman of Cambodia", but you are right. Except you forget that I'm not only selling to investors but also to my colleagues in government. You cannot imagine the time I spend selling good governance, streamlining the formalities and all that to them. I'm the go-between. The matchmaker. I really do it. I have so many meals and drinks with colleagues telling them that the destiny of the country is in your hands, brother. And the next day, it will be another brother.


Why does Cambodia get such a low rating in business surveys?
Good question. But there is hopeful news. In the
World Bank's ‘Doing Business 2009' report, we moved up to 135 out of 181 countries. Last year, we were only 150. But you know, in real life, investors never compare one country to another like that. They don't look at the physical incentives, the political regime, not even the religion – Ramadan or not, they don't care. It's about money. Investors never mention these surveys. Of course, I did ask the World Bank how they got their information, because I'm not sure they picked up the right indicators. Take the number of days needed to register a company in Cambodia. They say it takes a long time, but this is strange, because at my institution, the CDC, that does not happen.

Anyway, speaking frankly, as a businessman, I would not care how many days I have to wait for my registration. What I would care about is if, in the operation of my business, I face harassment and other problems, because that is my daily life. The registration is a one-off thing. So to me, the survey is not an issue. I don't care about it. If I see the Cambodian people are less poor and have a better life, that I care about. But the indicators in a piece of paper, I don't know who pays attention to it. You put me at the bottom of your survey, I just don't care. It doesn't make my life better.


But many foreigners still think of Cambodia as a backward, corrupt country.
It's true and not true. If it were really true, we would not have all these investors still doing business here. They are staying and making money. So it cannot be that awful. For businessmen, the bottom line is profit or loss. If I am making a profit, then okay, I may have to make some payment that I should not really have to make, but at the end of the day, I make a profit. And when I say this, I am not accusing anyone, I am just speculating. Because in this region, if you look at transparency, Singapore is always number one. But Singapore has policemen and jails for a reason – because they also have people who are corrupt and who cheat the tax department. So they are not all angels in Singapore.


Businessmen complain about other things, like expensive electricity and transport.
It's true. At the moment, our production costs are too high because of our high electricity costs, and high telecom and transportation costs. That means that if your company is a big consumer of energy and you have operations, say, in China, and you want to diversify your source of supply, where will you go? You look around and the first place you cross out is Cambodia because the price of energy is too high.

To remedy this, we are buying a lot of electricity from Vietnam. What else can we do? No electricity, no activities. So let's be pragmatic, forget about energy independence and buy from the neighbours. It's sensitive: if they switch off, we are dead. But by doing this, we can supply power and some activities can come in. Those activities create a local market and so more businessmen come and invest here. If we didn't start like this things would never take off.


Are they taking off now?
We are moving in the right direction. Things are much better than ten years ago and getting better and better. Much better than some other places in the region. Our priorities are peace and stability. Other countries have never had to deal with such political and social upheavals as we did. Do not forget that Cambodia has only been fully at peace since 1999. That means that long-term investors, those who need peace and stability and who want to develop our reserves – the oil and gas and bauxite, they have only had ten years. So our reserves are a bonanza that is still untapped. But give us until 2011 or 12 and it may be another story. And remember, longterm investors like growing up with the host country. Sure, they want to make money, but they also want to do something for you. So it's a win-win situation.


It would be more win-win if you had a better trained work force.
I agree it would be an additional plus if our labor force was more skilled. We have to do more. That's why I want the aid donors to help us set up vocational training programs, because when investors come here, they say: Oh, it's quite nice, but do you have skilled labour? That's my problem. I keep harping on about it to the foreign agencies, the
Asian Development Bank, the World Bank, the United Nations, the Japanese, the French. But they don't seem to hear me, they don't react.


You've been quite critical of the international donors.
Well, personally, I, Sok Chenda, do not agree with some of their programmes. They have their agenda, but do they really think about the needs of the Cambodian people? In my opinion, only if you create jobs so that people make money, will you reduce poverty. It will take time, but it's the only way. So I tell them: Gentlemen, save all the money you spend on your programs for social development, human rights, democracy, whatever. Let's get to the point and don't blah blah.

I mean, consider their attitude to the Special Economic Zones. They ask: Where are they located? I tell them: Well, they're not in the middle of Central Park in New York, if that's what you think. They're far outside Phnom Penh, in the remote provinces, near our borders with Vietnam and Thailand. There, they'll create jobs that will keep villagers near their homes and help them get more qualifications. Then, because there's a shortage of skilled labour, businesses will go there and we will prevent the classic urban migration problems of prostitution, drugs, crime and so on. In this way, I told the donors, you will save the money you would spend trying to fix these problems. Perhaps I am being a bit simplistic, but perhaps I am right.


Your tourism sector has tanked due to the global slump.
Please keep things in perspective. This is not 1929. When you watch TV, you don't see long queues at soup kitchens. Yes, people will cut back on travel, but they won't stop entirely. It's like if you are used to eating filet steak, now you go for sirloin. And there are other factors. You know why the Koreans are our top visitors [by air]? It's not Angkor Wat. It's not our other temples, our beaches, our wonderful people, the food. It's direct flights. There are no direct flights from the U.S. or Europe or Japan to Cambodia. If we had regular direct flights from Tokyo, as we do from Seoul, the Japanese would be number one.


You travel a lot with Prime Minister Hun Sen, what's he like?
Before working for him, I didn't know the real meaning of the word "vision". He is a man of vision. Without him and his vision, there would have been no peace agreement in 1991. And he listens to all points of view. You may find that surprising when you look at Singapore and other places that do not tolerate any opposition press. Here, if you read Cambodian newspapers, every morning you have some newspapers criticising him. If he were the dictator people say he is, he would put them all behind bars. But that's not the case.

You know, years ago, when I read the newspapers, I thought, like everybody else, that Park Chung Hee, the President of Korea, was a dictator. But perhaps Korea's success today is due to him. The same for Mahathir in Malaysia. Later on, you look back and say: Oh, but thanks to him, here we are.
Lee Kuan Yew. He never tolerates criticism. I just tell you because Singapore is a piece of stone, a piece of rock. It's not a country, it's a city state.


You can be pretty scathing and rather volatile, especially with journalists?
Yes, it's true. I very rarely agree to do interviews, because most journalists go for sensationalism. Afterwards, they say: No, it was not me, it was my editor. You know the line. I don't buy it and one newspaper here I have boycotted because of this. I would like journalists to respect other people. Because you have a responsibility. If you are rational in reporting economic issues, you can give hope. But you can kill that hope by saying everything is dark and grey. Then the dark that would normally not occur, happens. It has a lot to do with pyschology. So you, too, Roger, I have to seek your kind understanding, because sometimes people need to be reminded. Okay? Now I have to run. I have to pick up my daughter at the British School. Bye.

Wednesday, August 19, 2009

Cambodia: Pedal to the mettle

Posted by seng dara on August 19th, 2009

The New Zealand Herald
http://www.nzherald.co.nz/

Wednesday Aug 19, 2009
By Kerri Jackson

Silver has crossed my palm. Or, more specifically, my wrist. And being fatally attracted to shiny things as I am, silver – in a metaphorical, American dollar sense – is soon crossing the palm of the Cambodian girl now eyeing me expectantly.

I’m in a small silversmith village about two hours’ drive north of Phnom Penh, on the potholed, bustling NH5 highway to Battambang in Cambodia’s north west.

The city is another bone-rattling four hours away by bus, so this is certainly not the fastest way to travel between the country’s two largest cities, but it is a fantastic way to see the rural back blocks of this country. From the emerald-green rice paddies to the clusters of slow-moving oxen, this is a very different Cambodia from the hustle and edginess of Phnom Penh. The only similarity is the motor scooters which beep and toot their way along the highway – although here they’re laden with livestock rather than school children.

Then there are the small villages, like this one where our bus stops to load up with silver. Each village between Phnom Penh and Battambang seems to specialise in a craft or industry, whether it’s this exquisite silversmithing, pottery, stone carving, or silk farming and weaving.

Each is a small hive for tourists, but they are still a better place to buy your treasures than the heaving markets of Phnom Penh if you want “buy-from-the-manufacturer” bargains.

So it is that our bus now resembles a blinged-out Priscilla wagon, at least on the inside, as it wends its way into Battambang.

This city of some 140,000 people is an elegantly wasted place – comprising just five named streets and a beautiful collection of ramshackle French colonial buildings – located along the meandering riverbanks of Stung Sangker.

Today Battambang city works as a hub, servicing the surrounding agricultural region, home to what it claims is the country’s best rice, and a fledgling tourist industry. Visitors come here for the French architecture but stay for the easy pace, the friendly locals and the beautiful scenery.

The vast market seems to take up the entire centre of town. It’s a sometimes sobering, olfactory-challenging introduction to Third World food storage and preparation but mostly it’s a thriving community centre. With vendors selling everything from fish, meat and vegetables to ready-made snacks, clothing and bicycles, this is the beating heart of this small city.

Once you’ve explored the town centre there’s plenty to see in the surrounding areas. And one of the best ways to see it all is by bicycle.

Cambodia is as flat a country as you’re every likely to find, making it perfect for pedal-powered sightseeing. However, temperatures can be scorching, so a word of advice: start your trip early in the day to avoid pedalling through the searing heat of the midday sun. We learnt that the hard way.
The effort of battling through chaotic early-morning scooter traffic is soon rewarded with a calm riverside ride through the city’s outskirts towards Wat Slaket, where you can wander among the picturesque temple buildings and monks’ living quarters. The monks are friendly and happy to chat to visitors.

“Thank you for your smile. I give you my smile too. It is important to give your smile to people,” says one, his smile beaming from a window.

Another 12-year-old boy explains in Khmer to our guide that he asked his mother to let him live at the monaster, y already recognising it as offering a better type life in this very poor country.

For us though, it’s time to saddle up again for the big push on through villages and past rice paddies for another 11km to the spectacular Wat Ek Phnom.

Along the way, the roads are lined with stalls, drying rice paper and other bicycles laden down with produce and merchandise. Children rush out of houses giggling, waving and keen to practise their language skills with “hellos!” or “bonjours!”
Wat Ek Phnom, a partly ruined 11th-century temple that was once Hindu but now Buddhist, is a calm, contemplative place. On one side is a lotus-filled water reservoir; on the other, a giant Buddha statue stands majestically amongst the cattle.

Refreshed with a fresh coconut drink, it’s time to get our slightly saddle-sore hides back on those bikes for the ride back to Battambang.

As the temperature bolts merrily towards 40C, all sensible Cambodians have retired to the shade for a siesta while we desperately plug our pedals homeward dreaming of hotel swimming pools or cold showers.

Instead, there’s the quick, cooling violence of a torrential thunderstorm as we’re off the bikes and on the bus for the ride to Prasat Banan, an imposing five-towered temple atop a hill, 30km south of Battambang. More pressingly, it’s atop some 358 steps. They are, thankfully, largely under the shade, but still a big ask of bicycle-weary legs. But by the time you reach the top, and let the dots clear from your eyes, the panoramic views across the patchworked countryside more than make up for it. The temple is another moody 11th-century, falling-down stone structure locals say was a model for the grander, more famous temples at Angkor.

There’s one more surprise on the road back to Battambang – the Chan Thay Chhoeng winery. Yes, a winery.

Here, one Cambodian woman has taught herself winemaking from English-language books, while teaching herself English from a dictionary. The wine, from a sister in France, produces wine, that is, to be fair, a little rough around the edges but the commitment and story behind it, make it seem a little sweeter.

It’s a good spot to wrap up a tour of this area as it seems to encapsulate the mix of cultures and history that is Battambang’s biggest asset.

Kerri Jackson travelled to Cambodia with Cathay Pacific and Adventure World

Sunday, August 16, 2009

Vietnam, Cambodia sign US$400mln economic deals


Vietnamese and Cambodian businesses signed economic and investment deals worth more than US$400 during their talks in Phnom Penh on August 14.

The conference brought together officials from Cambodian ministries, sectors and localities, and leaders of 20 Vietnamese groups and corporations investing in Cambodia. It was jointly held by the Council for Development of Cambodia (CDC) and the Bank for Investment and Development of Vietnam (BIDV).

CDC Secretary General Sok Chenda vowed that the Cambodian Government will create the best possible conditions for Vietnamese businesses to operate efficiently in the country. He stressed the need to boost the two countries’ economic cooperation on a par with their political ties and the time-honoured friendship.

Vietnamese businesses have increased their investment in Cambodia in recent years, with their total investment in the first half of this year rising 80 percent from a year earlier.

Cambodia sends soldiers to join multinational training exercise in Mongolia

PHNOM PENH, Aug. 15 (Xinhua) -- The w government has sent 51 soldiers from Royal Cambodian Armed Forces (RCAF) to participate in the UN's peacekeeping training operation exercise in Mongolia entitled, "Khan Quest 2009", a Cambodian military source said on Saturday.

Mongolian president Tsakhya Elbegdorg addresses the openning ceremony of Khan Quest 2009 joint military exercise at Mongolian Force Training Center, 65 kilometres west of Mongolia's capital Ulan Bator, Aug. 15, 2009.

Mongolian president Tsakhya Elbegdorg addresses the openning ceremony of Khan Quest 2009 joint military exercise at Mongolian Force Training Center, 65 kilometres west of Mongolia's capital Ulan Bator, Aug. 15, 2009.(Xinhua Photo)
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"The peacekeeping exercise is so important for our armed forces to join with other countries to keep the peaceful stability, security and order in the world," said Taing Sambun, Cambodia's director of Institute for Training Peacekeeping Forces, Mine and UXO clearance. The process of exercise will be lasted for three weeks.

"The Cambodian delegation was led by Gen. Meas Sophea, deputy commander-in-chief of RCAF and infantry commander," he said, adding "we have support from UN for joining this exercise," he noted.

It is a good cooperation between our country and other countries to share experiences and learned experience from each other about the strategies in peacekeeping in a country, he said.

"These forces will be used for reconciliation in a war-torn country, or a country which used to have internal conflict and a post-war country when the war ended," he added.

"The main role of the peacekeeping forces is to join to seek peace, stability and safety for people in the war-torn country," he stressed, adding "this exercise is not the military exercises but for peacekeeping for the UN's peacekeeping forces. It is a second time for Cambodia to participate multinational exercise in Mongolia and we become an active member," he said.

In a farewell ceremony on Friday, Moeung Samphan, secretary of state for national defense called the soldiers "to focus on training and learning from other partner's experiences and to prepare for joining other peacekeeping mission in other places in the future."

Khan Quest is a multinational training exercise with the goal of improving peace support operations. The exercise is hosted by the Mongolian Armed Forces and sponsored by the U.S. Pacific Command.

Mongolian president Tsakhya Elbegdorg inspects the guards of honor at the openning ceremony of Khan Quest 2009 joint military exercise at Mongolian Force Training Center, 65 kilometres west of Mongolia's capital Ulan Bator, Aug. 15, 2009.

Mongolian president Tsakhya Elbegdorg inspects the guards of honor at the openning ceremony of Khan Quest 2009 joint military exercise at Mongolian Force Training Center, 65 kilometres west of Mongolia's capital Ulan Bator, Aug. 15, 2009.(Xinhua Photo)
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As part of the exercise, troops will conduct field exercises, humanitarian civic assistance training, medical readiness training and will take part in a peacekeeping operations seminar.

Thursday, August 13, 2009

Japan provides loans to develop Cambodian Sihanoukville port

PHNOM PENH, Aug. 13 (Xinhua) -- Japan on Thursday provided 72 million U.S. dollars in concession loans to develop Cambodia's Sihanoukville port to expand its capacity.

"The fund is to improve the capacity of Sihanoukville port, the only international deep sea port in Cambodia, by constructing multipurpose terminals including a bulk terminal and oil supply base, and developing infrastructure related to the terminal at the port," Hor Namhong, deputy prime minister and minister of foreign affairs and international cooperation told reporters.

The minister signed the exchange note with Shinohara Katsuhiro, Japanese Ambassador to Cambodia, with the presence of Prime Minister Hun Sen.

It will also help contribute to industrial development and economic growth in Cambodia. And it is the third time that Japan has helped Sihanoukville port since 1999 aimed at improving handling capacity of containerized cargos, Hor said.

Japan also provided about 10 million U.S. dollars non-project grant aid for promotion of economic and social development efforts in Cambodia, Hor said, adding that since 1993, under the type of grant aid, Japan has extended to Cambodia a total amount of 187 million U.S. dollars.

Royal Group to buy MIC’s Cambodian operations

Luxembourg-based telecoms group Millicom International Cellular (MIC) has announced it has signed an agreement with the Royal Group of Cambodia for the sale of its Cambodian operations. For USD346 million in cash, the Royal Group will acquire MIC’s 58.4% stake in CamGSM, which provides mobile services in the country under the Mobitel banner, as well as its holdings in Royal Telecam International and Cambodia Broadcasting Services. If approved by the regulator, the sale is likely to be completed by the end of 2009 and would bring the Royal Group’s shareholding in Mobitel to 100%. Mikael Grahne, president and CEO of MIC, commented: ‘We are delighted to reach agreement on the sale of our Cambodian operations to our local partner, the Royal Group. We are very proud of having played an important role in the development of the leading mobile operator in Cambodia and are very confident of the continued success of Mobitel and its people within the Royal Group.’

Only a few days earlier, Japanese mobile operator NTT DoCoMo expressed an interest in buying MIC’s stake in Mobitel. According to TeleGeography’s GlobalComms database, Mobitel was the country’s largest cellco by subscribers at 31 March 2009, with a mobile customer base of 2.17 million, representing 46.4% market share.

Millicom to sell Cambodian operations for $346 mln

LONDON (MarketWatch) -- Millicom International Cellular(MICC 72.13, +1.56, +2.21%) said Tuesday that it has agreed to sell its Cambodian operations to The Royal Group, its partner in Cambodia, for $346 million in cash. The deal comprises Millicom's 58.4% holdings in CamGSM, Royal Telecam International and Cambodia Broadcasting Services. Completion if the deal is expected to take place before the end of 2009.

Cambodia trade with S Korea drops 22% in first 5 months

PHNOM PENH, Aug. 12 (Xinhua) -- Trade volume between Cambodia and South Korea dropped 22.6 percent in the first five months of this year, a sign that the global economic crisis continues to grip both countries, local media reported on Wednesday.

Total volume through May reached 114 million U.S. dollars, down from 147.27 million U.S. dollars over the same period last year, the Phnom Penh Post quoted Lee Hyoung-seok, deputy director general of the South Korea Trade-Investment Promotion Agency, as saying.

Lee said that South Korea's principal export products to Cambodia included textiles, motor vehicles, consumer electronics and chemical products, while Cambodia's main exports were garments, agricultural products and timber.

"We are seeing a decline in volume because demand has fallen ...(leading) many manufacturers to reduce production," Lee said, adding "I forecast that for the rest of the year, bilateral trade will continue to fall at a similar rate, though things may improve next year."

Lee added that trade volume between the two countries reached 294 million U.S. dollars last year.

Thon Virak, deputy director of the International Trade Directorate at the Ministry of Commerce, declined to comment, according to the Post, saying he did not have bilateral trade figures.

But Kang Chandararot, president of the Cambodia Institute for Development Study, said that a stabilizing South Korean economy may gradually stimulate commerce as the year progressed.

Saturday, August 8, 2009

Last of the Cambodian Trains




The last running train in Cambodia, going each weekend from Phnom Penh to Battambang. It runs at under 20km an hour, can be easily out-run and remains one of the few places where you can ride the roof. Just watch out for the power lines.

Thursday, August 6, 2009

Banks in Cambodia

VNBusinessNews.com - Following Agribank and Sacombank, the Bank for Investment and Development of Vietnam (BIDV) has just purchased a private Cambodian bank and opened a representative office in the country. Other Vietnamese banks are also eyeing the market.

The door is now open wide

By June 30, 2009, Cambodia had 25 commercial banks, including four foreign bank branches and 21 local banks (local banks also mean 100 percent foreign-owned banks), six specialised banks, two representative offices and micro-financial institutions and registered foreign exchange conversion offices.

According to Tran Bac Ha, Chairman of BIDV, in general, the banking system in Cambodia remains small. By early January 2009, the total assets of the commercial banks in the country reached 4,284.9 million, or just 28 percent of BIDV’s total assets. The four biggest banks in Cambodia hold 64 percent of total assets, 72 percent of total outstanding loans and 70 percent of the total deposits of the whole banking system.

Cambodia is now opening its doors wide to foreign investors, which explains why 2/3 of the banks here are foreign-owned banks, which hold 65% of the market share.

However, banking products remain very poor with deposit, lending and payment services the three most popular products. Meanwhile, card services remain limited, the interbank market has not developed, derivatives products and a bond market have not appeared yet.

According to Vietnam’s trade counsellor to Cambodia, the investment and trade relations between the two countries have been developing strongly. To date, Vietnam has 400 representative offices in the country, 28 investment projects totalling $228 million, or 28 percent of Vietnam’s outward investment.

Joint venture, representative office or definitive purchase?

The counsellor says that as Cambodia is now in the first stage of development, it offers easy conditions for joining the market, thus there are big opportunities for Vietnamese banks to conquer the market.

Before BIDV made its trade and representative presence in Cambodia, Vietnam had two representatives in Cambodia already, Agribank and Sacombank, which opened branches in June 2009.

But no one is sure which mode of investment Vietnamese banks should follow: gradually penetrate the market and expand market share by setting up joint ventures with Cambodia partners, open representative offices, set up branches or purchase Cambodian banks outright and then restructure them?

An official of a state-owned bank said that the last solution proves to be the best one as the technical barriers set by Cambodia remain relatively low, and there are private banks for Vietnamese banks to negotiate to purchase.

However, if Vietnamese banks choose the solution, they need to have high corporate governance and finance capabilities and good human resources. Moreover, they need to have good negotiation skills to purchase the banks at the best prices. After the deals are made, Vietnamese banks will have to spend years restructuring the Cambodian banks.

Regarding human resources, Vietnam Airlines once also met difficulties when it teamed up with a Cambodian partner to set up Cambodia Angkor Air. Vietnam Airlines had to recruit Khmer people who are living in the Mekong Delta for the joint-venture airline. However, these people were not able to begin work immediately. They had to undergo training courses before they could start.

Similarly, BIDV has decided to send the Director of LaoViet Bank from Vientiane to hold the post of Director of PIBank in Cambodia, and send key personnel from Vietnam to Cambodia.

The said official also mentioned the forming up of joint-venture banks, but he said that this is not really a good choice, since Vietnamese banks would not have a lot of power in the joint ventures. Meanwhile, it is not easy to find suitable partners for such ‘marriages’.

The official said that it would be better to open representative offices of bank branches.

Sacombank, one of the biggest banks of Vietnam, spent one year surveying the Cambodian market before it opened a branch there.