Business

Premier pushes skyscrapers

Fri, 10 Feb 2012 05:00:40 +0100

Prime Minister Hun Sen yesterday promised accolades to the builder of Cambodia’s next skyscraper, while downplaying disputes on tall buildings near the Kingdom’s monuments.

Construction investments in Cambodia increased by about 105 per cent in 2011, hitting US$1.73 billion, according to Hun Sen. “Currently, there are no problems with skyscrapers [in Cambodia] and I declare that I will grant a medal to the builder of the highest skyscraper,” the premier said before hundreds of government officials at the opening of a new Ministry of Land Management, Urban Planning and Construction building on the capital’s Monivong boulevard.

He also rebuked “extreme conservatism” on the building of skyscrapers near the Royal Palace, deeming anywhere except near the airport open for potential building projects.

Prices for office space fell on oversupply last year, real estate insiders have said, and the trend could accelerate with the opening of the Kingdom’s third grade-A office block, the 38-storey Vattanac tower, expected to be finished in October.

The price of A-grade office space fell by $2.5 per square metre to $21 in 2011, the Post reported last week. Phnom Penh Tower, which opened last year, had about a 50 per cent occupancy rate in January.

Keuk Narin, vice president at Asia Real Estate, said yesterday that builders should focus on grade-B office space to accommodate the expected increase in small-and medium-sided enterprises in the Kingdom.

“The price could stagnate this year and could decrease for some new buildings,” he said. “I don’t think skyscrapers are the priority for the builders now.”

The expected opening of the Cambodian Securities Exchange could create higher demand for the A-grade skyscraper space, he added.

Prices will remain stable in 2012 until new developments currently under construction open, Sung Bonna, president of the National Valuers Association of Cambodia, said yesterday. “Now it’s ok, but we are a little concerned when the Vattanac tower opens,” he said.

An increase in competition among developers, however, would improve the quality of construction projects, Sung Bonna said. International investors have showed interest in Phnom Penh’s Gold Tower 42, Sung Bonna said. Developers Yonwoo Cambodia would have potential buyers should it look to sell the partially constructed building.

Banks grab customers with mobile services

Fri, 10 Feb 2012 05:00:30 +0100

In a country where only one in 15 people has a bank account but nearly all have a cell phone, a handful of Cambodian banks are expanding mobile banking services in hopes of reaching new customers.

“In Cambodia, reports from various phone companies show there are more cell phones than people,” says Sok Sophea, senior vice president of marketing at ACLEDA Bank, which first introduced mobile banking to the Kingdom in April 2010.

Its mobile service is growing by 10 per cent a month and is used by 54,000 of the bank’s some 794,000 customers, Sok Sophea said.

Kim Vada, deputy general director of the National Bank of Cambodia, said at a banking and microfinance conference yesterday that mobile bankers in Cambodia number around 400,000 but growth in mobile banking has been slower than hoped because of a “limited understanding” of the technology.

The service is just one of several innovations banks are using to attract new customers and cater to the fast-changing market.

Internet banking, fingerprint verification at ATMs and dual currency dispensing ATMs were some of recent innovations mentioned at the conference yesterday by Senior Manager at Foreign Trade Bank of Cambodia Ros Sokha.

Banks are also working to establish ATMs where US dollars, riel, and Thai baht could be exchanged for one another, Rajan Narayan, managing director of BPC Banking Technologies Group, said at the banking conference yesterday.

Sihanoukville port revenues see increase

Fri, 10 Feb 2012 05:00:20 +0100

Cargo shipment revenue at Sihanoukville Autonomous Deep Sea Port increased 33 per cent in January compared to the same time last year, according to data obtained yesterday from the port.

The data showed that revenues reached $2.5 million, up from $1.87 in January 2011.

More than 29,400 tonnes of cargo passed through the port last month, a year-on-year jump of 24.8 per cent.

Growth in trade accounted for increased revenue, the port’s general director Lou Kim Chhun told the Post on Wednesday. He predicted a strong increase in shipments in the second quarter of 2012.

“There are a lot of goods being transported in May and June. Most of the demand is from Europe,” Lou Kim Chhun said, adding that clothing, cosmetics, electronics and vehicles composed the majority of the products crossing through the port.

Sin Chanthy, general secretary of the Cambodia Freight Forwarders Association and president of Linehaul Express (Cambodia) Co Ltd, reported a slight decrease in imports via the Sihanoukville port despite the climb in overall shipments.

“Most products are imported from China, but China was busy with Chinese New Year,” he said.

Banks sign agreement with finance ministry

Fri, 10 Feb 2012 05:00:10 +0100

ACLEDA and Canadia Bank have signed an agreement with the Ministry of Economy and Finance (MEF) to introduce a public financial reform management system in 17 provinces.

It was the third time ACLEDA had signed such an agreement with the MEF, and the second time Canadia had signed it. The first agreement was made in December, 2004 and the second was signed in December, 2008.

Aun Porn Moniroth, secretary of state for MEF, said the agreement would support financial accountability and push forth a highly efficient public financial management. “[This] public financial management reform is a significant step towards building a financial system of government to achieve noticeable growth and trust in the national budget,” he said.

The initiative would help deliver more jobs to the private sector and accelerate Cambodia’s economic development, Canadia Bank chairman of directors Pung Kheav Se said. “Powerful countries with advanced economies tend to offer some works to the private sector in order to reduce the state’s expenses,” he said.

Kingdom’s loans rise 33%, deposists 20%

Fri, 10 Feb 2012 05:00:10 +0100

Loan and deposits across 31 banks in Cambodia rose 33.5 per cent and 20.4 per cent in 2011 year-on-year, respect-ively, official data from the National Bank of Cambodia (NBC) shows.

The data shows the total amount of loans from all banks reached US$4.07 billion, with the total number of borrowers 294,533 and depositors numbering 1,266,412. “The sectors that contributed to this high growth were agriculture, industry, construction and commercial,” NBC governor Chea Chanto said during the bank’s annual meeting yesterday.

“These indicators increased the confidence and support of foreign investors in the banking ind-ustry, as well as the government’s economic development policy,” he said.

Across microfinance institutions, loans rose 46 per cent to $644 million and 1,141,913 customers, with deposits rising $116 million to 242,116 depositors.

ATMs rise on new banks, rural cardholders

Thu, 09 Feb 2012 05:01:25 +0100

Will Baxter/Phnom Penh Post

ATMs line the street in Phnom Penh.

Banks in Cambodia installed 87 new ATMs in the country in 2011 as branches and card holders continued a steady increase in and outside of cities, officials said.

The Kingdom had 588 telling machines at the end of last year, up from 501 in 2010, according to the National Bank of Cambodia.

NBC Chairwoman Nguon Sokha said foreign banks entering the Cambodian market, as well as the opening of rural ATMs, accounted for the increase.

Five foreign-owned banks, including industry juggernauts Bank of China and Industrial and Commercial Bank of China, entered the domestic sector in 2011.

A rise in technological savviness among depositors was followed by an increase in cardholders at ACLEDA Bank Plc, the country’s largest domestically owned bank, the bank’s senior vice president for marketing Sok Sophea said.

“Before, customers were not familiar with the technology. They didn’t know how to use the machines. But this is changing very quickly,” she said.

ACLEDA cardholders grew by about 20 per cent between 2010 and 2011 with about 414,600 active ACLEDA bank cards in the country at the end of the year, Sok Sophea said.

The bank has focused on rural customers. ACLEDA opened 26 ATMs in 2011, the majority of which were outside of cities, she said.

Malaysian-owned CIMB Bank, which entered Cambodia in late 2010, deployed three ATM last year for a total of 10, Pok Nivilay, a communications representative at the bank, said recently.

Pok Nivilay said CIMB was focusing on an affluent customer base in Cambodian cities.

Although the bank doesn’t have concrete figures for ATM installations in 2012, she said CIMB has discussed putting the machines at five-kilometre intervals in target areas of Phnom Penh.

5th Vietnam bank opens door

Thu, 09 Feb 2012 05:01:20 +0100

The first overseas branch of Saigon-Hanoi Commercial Joint Stock Bank (SHB) will officially launch in Phnom Penh today in its first bid to tap neighbouring ASEAN economies.

It is the fifth Vietnamese bank and 34th commercial bank to compete in Cambodia’s banking sector.

Officials said that despite there being too many commercial banks for the small country, Cambodia’s financial sector still has more room to grow. Experts, however, expressed concern over apparent overcrowding.

The recent surge of bilateral trade and investments from Vietnam were the two main reasons Vietnamese banks continued to enter the Cambodian market, Tran Tu, commercial attaché for the Vietnam Trade Office in Phnom Penh, said yesterday, adding that BIDC and Sacom Bank had already found success here.

“All businessmen need to borrow money for business and project development and make any payments by the banks,” he said.

SHB’s business strategy included becoming a strong financial holding group in the region by 2015, SHB CEO Nguyễn Văn Lê said.

Yang Chanthy, the human resource manager of Sacom Bank, which in November 2009 became the first Vietnamese bank in Cambodia, welcomed the new player to the industry regardless.

“We’re not concerned because we’ve already stood here for years. We have a lot of clients that already know about us,” he said.

“Right now, the industry is very competitive and has too many banks. But, with good services and a wide range of products, we can provide to our customers,” he said.

Chheng Kimlong, a lecturer of economics and business at the University of Cambodia, said the recent surge of commercial banks in the Kingdom’s small economy surpasses the total demands from the industry.

“I am afraid that in the next four or five years, the industry will be in trouble as some banks go bankrupt and others pull out after they make a quick profit from us, thereby giving a negative image of our industry,” he said.

“The NBC [National Bank of Cambodia] should have clear regulations to govern them.”

He added that the situation would likely improve in the medium to long term as Cambodia’s economy continues to grow.

“Later on, when the biggest ones come in, there will be some merging so that there is just the right number of branches.”

SHB was first established in 1993, and has grown to include a chartered capital of 4.82 billion dong (US$229.28 million) and total assets of 70.97 billion dong ($3.38 billion), with a head office in Hanoi and nearly 200 branches and sub-branches in 25 provinces and cities throughout Vietnam, according to its press release.

Rubber orders up for domestic exporter

Thu, 09 Feb 2012 05:01:00 +0100

Mong Reththty Group, a Cambodian grower and exporter of palm oil, announced that 2011 exports to international markets increased 13 per cent.

Mong Reththy, a lawmaker from the Cambodian People’s Party and general director for the Mong Reththty Group, said that the company’s 2011 palm oil exports totalled about 17,000 tonnes and brought in US$17 million, while 2010 saw exports of 15,000 tonnes totalling $16 million.

The company has exported palm oil to Europe, India and Vietnam. He said that one tonne of palm oil currently sells for about $1,000. Khan Samban, director of the Department of Agro-Industry Crops at the Ministry of Agriculture, Forestry and Fisheries, said that the areas that oil palm trees can be grown are the Preah Sihanouk and Koh Kong provinces, but Koh Kong is yet to be cultivated. He said that the trees need a very specific environment in order to grow.

Powers of social media marketing

Thu, 09 Feb 2012 05:00:50 +0100

The term Web 2.0 describes the internet as a medium for users to generate content, share information, interact and collaborate, as opposed to websites just giving information and users simply accessing it. Social media originated as a personal tool, a medium for users to interact with friends and family. It has evolved into an essential medium for companies to develop relationships with customers and interact with them, creating loyalty, and is the optimal means of word-of-mouth marketing. The three largest social networking services are Facebook, Twitter and LinkedIn.

The power of social networking sites is best demonstrated in statistics. Facebook now has over 845 million users, up from the 100 million reached in August 2008. The phenomenal growth since its inception in 2004 is reflected in the graph in the included graph. In Cambodia, there are over 470,000 Facebook users, according to socialbakers.com which publishes social network statistics. In 2011, Twitter claimed to have over 200 million registered users and LinkedIn now has 135 million users, growing by 2 members per second.

According to socialbakers.com, the company with the largest following on Facebook is Coca-Cola with 38.5 million fans, followed by Starbucks with 28 million, and Red Bull with 26.4 million. McDonalds added 2.9 million fans in the last month. In terms of Twitter, Lady Gaga is followed by 18.9 million users.

It is absolutely essential for a company to have a social media marketing strategy integrated with their traditional marketing plan. Social media marketing involves engagement, customers are participating and interacting rather than viewing, and the end goals are to gain traffic and attention, build brand visibility and loyalty, and have the customer co-create value, especially through positive word-of-mouth advertising with their connections.

Social media marketing has many advantages. The scope of reach is unparalleled, with access to a global audience with the potential for users to forward content of interest to their links, an unlimited web of connections. Encouraging personal customer interactions will provide valuable feedback on products and services and demonstrate that the company cares and is listening. A company can learn about their customer base and target market by evaluating visitor analytics and posted commentary. Social media marketing is cost-effective, with a great deal of it free for starters.

On the downside, social media marketing involves significant time and effort. Content must be creative and innovative, and kept up to date. Commentary and customer feedback can also be negative and therefore a company must be prepared to manage and control this real-time.

The easiest way to start is to simply set-up a facebook business page, since it apparently has close to 12% of the world’s population using it. The best way to do this is through a personal account as the business page will be easy to manage and access, and you can invite friends and members of groups to become fans of the page or “like” the page, building an audience. A company can place their logo, description of the business, products, mission, locations, website, email and telephone numbers, and select a user name which will be accessible through search engines. Content such as special offers, events, product improvements, coupons, awards, sales, and videos can be posted.

Cambodian companies are taking a social media marketing seriously, have a look at SMART Mobile’s and ABA Bank’s fan pages on facebook for some good examples.

Anthony Galliano is the chiefexecutive of Cambodian InvestmentManagement. anthonygalliano@covenantim.com

Tourism officials look to clean up cities

Thu, 09 Feb 2012 05:00:50 +0100

Tourism officials laid down the strategy for cleaning up Cambodian cities by asking nine Phnom Penh districts and 26 other cities to compete in a “clean city” competition, officials said yesterday.

The campaign will focus on environmental management, city beauty, trash management and the establishment of green areas, Tourism Minister Thong Khon said, adding that the effort was related to an ASEAN-wide attempt to better the regions cities.

Ang Kim Eang, president of Cambodia Association of Travel Agents, said the work could be achieved as long as city leaders were committed to the effort, otherwise cleaning up the Kingdom’s cities would be difficult.

Exports to Korea climb 100%

Wed, 08 Feb 2012 05:00:50 +0100

Cambodia's exports to South Korea rose by more than 100 per cent last year, according to officials at the Korea Trade-Investment Promotion Agency (KOTRA).

Agricultural and garment exports largely accounted for the surge.

Mai Vireak/Phnom Penh Post

Containers unloaded after shipment at Phnom Penh port.

KOTRA data shows total exports were worth US$87.3 million in 2011, compared with $43.4 million the previous year.

Total imports from Korea also rose 35.4 per cent to $450.7 million, compared with $333 million a year earlier.

KOTRA director-general Kwang Ho Lee said the largest increases had been in the vehicle and automotive-parts sector.

Lee said that close ties and strong efforts between the two nations over the past few years had boosted both diplomatic and economic relationships.

“Last year, both Cambodia and Korea experienced a strengthening in their relationship, which weas especially important because it led to big increases in Cambodia's exports,” he said.

Lee said rising rubber, seafood, agricultural and garment exports last year had had significant consequences for the economy.

Cambodia had exported 30 tonnes of shrimp and crab to Korea last year, but rubber remained the Kingdom's biggest export, he said.

“We see more and more Koreans investing in Cambodia's garment manufacturing industry. In the past, most garments were exported to the US, but now that our garment sector is improving and there is more competition, new markets need to be found,” he said.

Trade exhibitions and joint trade fairs had also helped develop the import and export markets between the two countries, he said.

Nam Shik Kang, chairman of the Korean Chamber of Commerce in Cambodia, said Cambodia needed to diversify the products it exported to Korea.

“Cambodia should develop more good items to sell in the Korean market,” he said.

“Right now, there is little diversity in the few Cambodian items available in Korea. I strongly believe that both countries will tie up stronger economic and diplomatic relations this year.”

Cambodia's main exports to Korea are natural rubber, cotton, seafood, aluminum waste and scrap, as well as garments including jerseys, pullovers and cardigans, according to official data.

Korea's most profitable exports to Cambodia are used clothing, internal combustion engines, cylinders and cigarettes.

Tourists increase in Sihanoukville, Angkor

Wed, 08 Feb 2012 05:00:45 +0100

Local and foreign tourism in Sihanoukville province and Angkor Wat rose significantly last month, according to tourism officials.

Will Baxter/Phnom Penh Post

Tourists visit Angkor Wat in June last year.

Seng Kha, deputy director of the Tourism Department of Sinhanoukville province, said the number of local tourists to the province grew from 68,816 in January 2011 to 108,400 in January this year, an increase of 57.52 per cent.

The number of international tourists increased nearly 51 per cent from January 2011’s 15,268 figure to 23,041 people in January 2012.

He said that the first annual New Year’s sea festival held on the beaches of Sihanoukville, together with Chinese New Year’s celebrations and new air routes between Sihanoukville and Siem Reap provinces, has been expediting the new growth.

Director of the province’s International Airport Hun Chhoeun said the passengers utilising the new routes were mostly foreigners, and that flights in both directions were popular.

“Planes are full with only a few days where flights are not full,” he said.

Ho Vandy, co-chair of the Tourism Private Sector, said the more than 50 per cent increase was immense and that there were many reasons it, and the new air routes were likely a major cause.

“I think that if the airline companies make prices more affordable, the numbers would increase even more,” he said.

Officials based near Angkor Wat, by far Siem Reap’s most popular tourism site, claimed that the number of foreign tourists this January soared as well.

Tourism data for Angkor Wat Archaeological Park showed that the numbers of foreign tourists in January increased nearly 30 per cent month-on-month.

About 206,000 people visited in January this year, compared with 159,000 during the same time last year.

An official from the Authority for the Protection and Management of Angkor and the Region of Siem Reap said that each year’s earlier months saw increases in tourist numbers because of the numerous festivals celebrated.

Backing sought for coal-fired power plant

Wed, 08 Feb 2012 05:00:40 +0100

A Thai energy firm has completed a study for a 1,800-megawatt coal power plant in Koh Kong province, and had asked for Prime Minister Hun Sen's support in furthering the project, government officials confirmed yesterday.

The plant would be the largest power generator in the energy-starved Kingdom.

Ratchaburi Electricity Generating Holding would conduct an environmental impact assessment on the plant, Hun Sen's personal assistant, Eang Sophalleth, said on Monday after the prime minister met Ratchaburi chief executive Nopal Milin Thang Goon at the Peace Palace.

The Thai company, in which a controlling stake is held by the state-owned Electricity Generating Authority of Thailand, would sell power to Cambodia at “special tariff” rates, Eang Sophalleth said. The remaining power would be sold to Thailand.

Eang Sophalleth said Hun Sen welcomed the plan, but declined to give investment figures for the project.

A spokeswoman at Ratchaburi's Bangkok office also declined to comment on the project yesterday.

Cambodia's current power capacity was about 500 megawatts, the Ministry of Industry Mines and Energy's Toch Sovanna said in November, adding that by 2025 it would need 3,000 megawatts.

The high cost of energy was the biggest deterrent to industry investment in Cambodia, Chheng Kimlong, a business and economics lecturer at the University of Cambodia, said.

“It's about twice as expensive, or even higher, compared to neighbouring countries like Thailand and Vietnam,” he said yesterday.

A coal-fired plant, however, was not a form of renewable energy and the government should carefully consider the potential environmental impact of the project, Chheng Kimlong said.

Insurance premium, claims see quick rise

Tue, 07 Feb 2012 05:00:20 +0100

Although premium revenue for Cambodia's six big insurance companies rose 19 per cent last year, total claims grew at a rapid 178 per cent, according to official data from the General Insurance Association of Cambodia.

Sovan Philong/Phnom Penh Post

An Infinity billboard situated along a road in Phnom Penh.

GIAC's data revealed that total premium revenues were US$29.7 million in 2011, but they were surpassed by total claims of $33.5 million.

“The insurance industry has grown as we expected, in terms of premiums. This growth is attributed primarily to the economic performance of the country and people's awareness of the insurance industry,” Ty Atith, assistant to GIAC's chairman, said.

“But the industry was hit by a handful of severe claims that will be hard to manage. The claims will badly impact on the entire insurance industry from this year forward,” he said, in reference to the claims filed after two large garment factories in Phnom Penh, worth a purported $22 million, burned down.

Fire insurance managed the largest share of the Kingdom’s insurance market at 26 per cent, followed by auto insurance at 19 per cent.

Cambodia Vietnam Insurance chief executive Cao Minh Son said premium revenue had increased a steep 83 per cent to $1.74 million in 2011.

He attributed this rise to increasing insurance investments in the aviation sector, which paid $820,000, followed by property and motor insurance.

Of the total premium revenue, 18.4 per cent was paid in claims totalling around $320,000.

Youk Chamreounrith said the industry was not reaching its potential and blamed losses on poor regulation and enforcement.

“Our growth would be much more than the data currently indicates if the law was more fully followed," he said, mentioning that some corporations still did not buy domestic insurance.

“Most countries' insurance laws require its companies to buy insurance from domestic companies.”

Ty Atith has urged ministries and government institutions to co-operate with GIAC in enforcing the law.

“Of course, we need their co-operation. We are alone, and we don’t have the ability to do on-site observations on whether those companies buy insurance or not, especially the big construction investment companies," he said.

Ty Atith projected that the industry would continue to grow at about 20 per cent year-on-year.

Infinity Insurance chief executive David W Carter said his company's experience had been positive.

Carter said Infinity’s premium income had risen 11.7 per cent to $6.7 million in 2011, compared with $6 million the year before, and construction and property insurance were pushing the growth.

Any claims had been within budget projections, he said.

“We once again achieved very good results last year, which reflects our disciplined approach to risk selection and underwriting.

“We have been able to avoid exposure to major losses, which contrasts with the experiences of our competitors in the market.

“We are now well positioned for 2012, which, following a year of many catastrophic losses around the world, will lead to a strong tightening of terms, including an increase in insurance premiums.”

Youk Chamreounrith, director-general of Forte Insurance, said Forte's premium revenue had risen more than 20 per cent last year, but the number of small claims was rising.

More costly “severity claims”, however, were down, he said.

Investment in SEZs up 683%

Mon, 06 Feb 2012 05:00:30 +0100

The total values for investment projects in Cambodia’s Special Economic Zones (SEZ) increased about 683 per cent year-on-year in 2011, according to a report from the Council for the Development of Cambodia.

The CDC approved 39 projects worth US$715.25 million in 2011. It was a 683.83 per cent hike compared with 2010’s figures, which totalled 22 investment projects worth $91.25 million.

The CDC report revealed that between 2006 and 2011, Cambodia’s SEZs received 96 investment projects worth $1.15 billion, which created jobs for 61,400 workers.

Several of the 2011 investments included electric equipment assemblers, something hailed by economists as Cambodia’s ascent up the manufacturing value chain.

Japan’s Marunix, a supplier of electronic parts to companies such as Sony, IBM and Canon, set up an assembly plant in the Phnom Penh Special Economic Zone last year, according to the CDC report.

Japan’s Sumi Wiring Systems Co Ltd also invested in Phnom Penh’s SEZ last year.

While SEZs near Phnom Penh and Sihanoukville have seen considerable investment since the Kingdom began developing the areas in 2005, the majority of the SEZs – situated on the Thai and Vietnamese borders – have not attracted substantial industry developments. Cambodia has 21 of the preferential tax zones.

Speaking at a seminar to promote SEZ development last week, General Secretary for CDC Sok Chenda Sophea said that SEZ investment has grown because of improving political, economic and social stability, coupled with skilled labourers, low prices, and the government’s efforts to encourage further investments.

“Cambodian investment law is open and encouraging to investors, in addition to offering benefits in the Cambodian markets,” he said, adding that current SEZ investors came primarily from Japan and China.

Nguon Meng Tech, general director of Cambodia’s Ministry of Commerce, said that the government had established the SEZs in order to attract investors to Cambodia, especially at border gates.

“They wanted to invest in those [border] areas because it was easier to do business, and because of the tax exemption in those regions,” he said.

He added that the SEZs attracting the most attention were primarily in Phnom Penh and Preah Sihanouk province, while in other distant border areas there was less investment due to bad infrastructure and problems with electricity.

Nguon Meng Tech said he remained hopeful of further development at more the more distant SEZs, given last year’s high investment rate.

“Although drawing attention to SEZs along the border will take time, these areas do have their advantages, and the government will establish infrastructure and electricity works in the near future,” he said.

Rising demand for Kingdom’s lobsters

Mon, 06 Feb 2012 05:00:20 +0100

Cambodian lobster farmers will attempt to boost their yields this year as they try to keep up with increasing demands for the crustacean, officials at lobster hatcheries said.

Prum Vath, a lobster farmer in the Angkor Borei district of Takeo, told the Post yesterday that he sold 700,000 lobsters last year, a 150 per cent increase over 2010 when he sold only 200,000.

To keep up with fast-rising demands, he hopes to hatch a million of the home-grown crustaceans by the end of this year.

“The Cambodian markets [for lobster] are expensive and somewhat scarce,” he said.

“Big-scale aquaculture does not yet exist.”

According to reports from late 2011 by Nao Thouk, director general of Cambodia’s Fishery Administration, current Cambodian market demands for lobster reach up to 1,000 tonnes per year, while annual domestic supplies barely stretched to 100 tonnes.

The biggest lobsters now fetch about US$35 per kilo, while smaller specimens cost about $28-30 per kilo, Prum Vath said.

New China deals inked

Fri, 03 Feb 2012 05:00:50 +0100

State-owned Export-Import Bank of China will lend US$302 million to Cambodia for three road and irrigation projects, officials said yesterday.

The loan will increase Cambodia’s debt to China by about 20 per cent to about $1.8 billion, according to figures disclosed yesterday by Minister of Economy and Finance Keat Chhon.

Exact figures for the Kingdom’s debt to China have been debated, with Prime Minister Hun Sen putting the figure at $2 billion in November.

However, the National Assembly’s finance commission chairman, Cheam Yeap, projected as much $6 billion just prior to the premier’s estimate.

The projects covered by the China Exim Bank loan included the 313-kilometre national roads 214 and 76 and an irrigation system in Kampong Cham, Keat Chhon said.

In August, Exim Bank gave Cambodia a $198.2 million loan at current exchange rates for Chinese-built Z-9 helicopters, the Post reported.

Increasing future debt obligations, not only to China but to other creditors, was cause for concern, Chea Kimsong, manager for the development issues program at the NGO Forum for Cambodia, said yesterday.

“While more loans may generate more returns for the economy, revenue collection should be improved too so that it may balance the future debt obligation,” he said.

The payment of interest and principle on Cambodia’s total loans was 3 per cent of the 2012 $2.6 billion national budget, Chea Kimsong said, larger than the budget for some of the Kingdom’s ministries.

Interest rates on the loans were not mentioned at yesterday’s signing.

Rates on concessional loans from China averaged 1.83 per cent as of October of last year, according to data from the NGO forum.

The rate is a percentage point higher than the average rate given from other donor countries and banks, 0.83 per cent.

Nor were contractors for the projects identified.

Chinese loans for infrastructure projects often return to China as companies such as state-owned companies China Road and Bridge Company tend to win bids for the contracts, the Post reported last year.

Cambodia has asked China’s Ex-Im Bank for loans on an additional four projects worth about $200 million, Eang Sophallet, Prime Minister Hun Sen’s personal advisor, said after a meeting between the bank and the premier on Wednesday.

4G claims seen as still 'way too early'

Fri, 03 Feb 2012 05:00:30 +0100

The Kingdom’s newest telecom firms have touted fourth-generation wireless services to set themselves apart from the crowded sector, but experts have said Cambodia is not yet ready to adopt the technology.

Both Emaxx and China’s Xinwei Technologies, which received its license from the Ministry of Posts and Telecommunications (MPTC) last August, claim they plan to deliver 4G capabilities to consumers.

And there’s speculation a third company, Alltech Telecom of Russia, which would be Cambodia’s 11th mobile provider, will utilise 4G speeds as well. However, experts have pushed back against the claims, saying most Cambodians could not yet afford the service, and that these companies are not technologically equipped to offer it.

“The business case for LTE [a 4G standard] in an emerging market like Cambodia is difficult, particularly for operations like Emaxx and Alltech who will have to spend heavily to build a nationwide network,” Shiv Putcha, a Melbourne-based telecoms analyst at international research firm Ovum, said in an email.

Emaxx announced in mid 2011 that it would be Cambodia’s first 4G provider. The company, with 40,000 subscribers, is the country’s smallest telecom, according to figures obtained by the Post. The number has remained unchanged since May.

Xinwei also recently claimed to be the vanguard of 4G technology in the country, though neither company has offered a deadline as to when these services would be available.

Analysts and insiders said Russia’s Alltech was issued a license to sell 4G services in Cambodia in December 2010, but the company has yet to make an initial investment. An official at MPTC said yesterday, however, that Alltech had not yet been issued a license.

“Frankly, I think it’s way too early for 4G services in Cambodia … it’s not economically viable or needed today,” Tokyo-based Frost and Sullivan analyst Marc Einstein said yesterday.

The technology is expensive and users would need to buy 4G-compatible phones, he added, a prospect still beyond many Cambodians.

Emaxx chief operations officer Frank May said yesterday via email that the company was carrying out network upgrades, and the service “will go online soon”. He maintained that the demand for data will drive the 4G market in Cambodia.

CMDA technologies were “core for the move to [4G]”, he said, and “lower cost for [an] operator to use”.

“Many of the current 2G-3G operators will have to upgrade to keep pace with the market,” May said.

The promise of 4G in Cambodia may be nothing more than a “marketing ploy”, Frost & Sullivan’s Einstein said. Other telecoms in the region have advertised 4G on networks, such as WiMAX, which simply don’t support the technology, he said.

Emaxx’s CDMA technology has similar problems, according to Einstein. Standard 4G cannot be provided on CDMA or GSM, which is a standard for 3G networks, he said.

MPTC issued Xinwei a license for Chinese-developed TD-SCDMA, the Post reported in January. Despite Xinwei’s 4G claim, analysts say the Chinese technology it not capable of offering the service.

“TD-SCDMA does not come close to 4G-like speeds,” Ovum’s principal analyst Daryl Schoolar said via email, adding that Chinese reports on the technology were negative.

Linehaul, logistically speaking

Fri, 03 Feb 2012 05:00:20 +0100

A strengthening economy and increasing demands from both domestic and foreign markets have pushed trade growth in the Kingdom, further driving the shipping industry. Linehaul Express president Sin Chanthy, who also serves as secretary-general of Cambodia Freight Forwarders, founded his company in 2000 as a joint venture with partners from Thailand and Hong Kong to capitalise on that growth. Phnom Penh Post reporter Rann Reuy met with Sin Chanthy to discuss the sector in detail.

HONG MENEA /Phnom Penh Post

Linehaul Express president Sin Chanthy gestures during an interview with the Post.

Exporters often complain that shipping prices in Cambodia are higher than those in neighbouring countries. Is this true?
I always hear this, both in radio and print. But I think some of Cambodia’s shipping costs are relatively similar to those in nearby countries.

Compared with Vietnam, for instance, our price is 10 per cent higher. Vietnam’s shipping sector is busier than ours, so prices are cheaper.

The government issued a policy to help facilitate the export of one million tonnes of milled rice to international markets by 2015. What is your opinion on this move?
We appreciate the policy so much. The government has really made the paperwork easier. Before, we had to ask permission from places before our products were all-owed to be delivered.

Now, if we want to export milled rice, we just transport it to the Sihanoukville Autonomous Port, which also helps make the price cheaper. In the past, if we wanted to export one container of milled rice, the fee was more than US$400, but now we can just transport to SAP. It’s too easy.

Have your firm’s profits decreased as a result of more competition in this sector?
Competition has indeed grown, but income decreases because the local market is not like markets in developed countries. Everything in our country is limited, both imported goods and consumers. Previously, one container could earn $100 in profit, but now the profit has dropped to $40. I think customers can save at least 15 per cent because of the competitive environment.

Are you worried about the competition?
I think all companies have to try hard, especially to train their staff to a professional standard. My company has been around for a while, so we’re not worried.

I think consumers are getting smarter and are looking for a company that has experience. For example, previously no one even knew about insurance, but now customers ask whether we guarantee or not. Shipping companies must have networks, and my company has contacts with nearly 200 countries worldwide.

How do you get that many network contacts?
I pay about 2,000 euros ($2,620) each year to be a member of the networks, and spend around $5,000 each year to cover the expenses of attending a meeting between the shipping units of those countries.

How has the shipping business in Cambodia changed from its early days?
My opinion is that has generally gotten easier. The opening of land routes with neighbouring countries and new air connections has made it much easier.

But some obstacles still exist, such as forms and letters that take three days to fill out and get approved when they should take a maximum of two days.

MFIs still seeing significant growth

Thu, 02 Feb 2012 05:00:20 +0100

Outstanding loans and deposits in 28 of Cambodia’s microfinance institutions rose between 30 and 40 per cent year-on-year in 2011, official data from the Cambodian Microfinance Association indicated.

The CMA’s data showed outstanding loans rose 41.5 per cent from US$916.3 million with 1.3 million borrowers in 2011, compared to $647.8 million with 1.22 million borrowers a year earlier.

Deposits grew by 32 per cent to $1.26 billion with 1.1 million depositors, compared to $952.2 million with 36,776 borrowers in 2010. MFIs in the Kingdom first began to take deposits in early 2010.

Non-performing loans (NPL) declined from 1.3 per cent of the loan total to 0.4 per cent. Officials and insiders said a strong macro-economy performance and clear regulations were responsible for the shift.

National Bank of Cambodia director general and spokeswoman Ngoun Sokha recognised the favourable direction the economy was heading, especially in the agricultural sector, which she believed was responsible for the rising demand for loans.

“The government supports the agricultural sector, especially the export of milled rice. So we promoted the adoption of MFI loans for agriculture and actually received a lot of growth in that area, adding up to more than 50 per cent of all loans,” she said.

Bun Mony, director of CMA and chairman of Sathapana Microfinance, told the Post that loan portfolios at Sathapana rose about 65 per cent to $94.6 million compared to $57 million in 2010. The number of borrowers grew from from 43,565 to 55,001.

“There was a high demand for loans as business activities continue to grow, and we don’t even seem to have any problems with repayment,” he said, adding that the NPL rate declined to from 0.93 per cent to 0.22 last year.

Sathapana provides loans to all sectors, with 40 per cent going to retail and small businesses, and more than 20 per cent to the agricultural sector.

The country’s biggest MFI, Prassac Microfinance, reported that by December 2011 its gross loan portfolio was $151 million, an increase of 43.6 per cent, with active borrowers increasing 10.9 per cent to 125,127.

“In general, I think that the industry performed well last year because all MFIs grew their portfolios while the NPL rate decreased,” Sim Senacheert, president and CEO of Prassac, said.

Prassac loans to the agricultural sector accounted for 33 per cent of its total portfolio, with trading and service making up 47 per cent.

Hout Ieng Tong, general director of Hattha Kaksekar Microfinance, reported that loan portfolios rose 70 per cent to $75 million with 62,703 borrowers, from $44 million with 47,952 borrowers the year pior.

He added that NPL declined from 0.9 to 0.07 per cent, and that agricultural loans accounted for 35 per cent of total stocks at his compay. Sathapana Microfinance’s total deposits rose 129.4 per cent from $39 million to $17 million, while Hattha Kaksekar’s total deposits grew more than 160 percent to reach $15.78 million compared with only $5 million the year before. Prassac reported smaller increases, as its operations just began in mid-2011.

The successes are tempered, however, by the uncertain economical fates of the EU and US, where much of the industry gets its primary funding. “We are a bit worried,” said Bun Mony.

“We see the EU in a crisis, and think there could be some slight impact on us, specifically regarding investments.”

Ngoun Sokha suggested a solution, saying, “We try to teach MFIs good governance, and to strengthen their internal capacity for infrastructure, so that they will be able to easily seek a source of funds domestically rather than just looking abroad.”