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Industry Predictions and Forecasts for 2014

Ian Watson, Cellcard CEO.
Ian Watson, Cellcard CEO. Heng Chivoan

Industry Predictions and Forecasts for 2014

A look ahead with Cambodia's business leaders.

Ian Watson, Cellcard CEO
The challenges facing the mobile operators in Cambodia are numerous. The market still needs to consolidate further. There are still too many mobile operators for the size of the market, and the confusion surrounding investment and pricing issues, which affect both customers and the mobile companies, needs to be addressed.

The telecommunications regulator will be key to ensure future growth and that the competitive nature of the market remains. It needs to lead and direct the market in a way which stimulates demand, whilst at the same time creating a fair and open market for both end users in terms of clarity of pricing, and as a result, give the mobile networks the confidence in terms of commitment to future investment.

The biggest growth will be from the rise in consumers utilising data. More and more people continue to access data through their mobile device and transact through their phone.

Song Saran, AMRU Rice (Cambodia) CEO
Song Saran, AMRU Rice (Cambodia) CEO. PHOTOSUPPLIED

Song Saran, AMRU Rice (Cambodia) CEO
WE EXPECT that the quantity of Cambodia’s rice exports will reach around 650,000 tonnes in 2014, closer to the government’s goal of 1 million tonnes in 2015.

Cambodia still has potential to expand the market in Europe, but exporters are also trying to go to emerging markets in Asia and West Africa to maintain sustainable growth.

We foresee that in 2014, the government of Cambodia will be more responsible for reducing unofficial payments than past years. The government is providing easier export procedures and facilitating the lower costs of transporting goods, which is a significant improvement to better compete with neighboring countries.

The industry is expected to see exports of more than $438 million in 2014. The average price of high-quality Cambodian rice will be maintained at $900 per tonne, and $460 per tonne for long-grain white rice.

Te Taing Por, FASMEC president.
Te Taing Por, FASMEC president. Hong Menea

Te Taing Por, FASMEC president
I believe Cambodia’s SMEs will keep improving year by year.

In 2014, FASMEC (the Federation of Association for Small & Medium Enterprises of Cambodia) plans to discuss with the Ministry of Industry and Handicrafts to promote copyrights of our products’ logo and labels. We also plan to discuss with banks and microfinance institutions about lowering interest rates on loans for SMEs.

We hope to see more startups with fewer challenges. The established ones are working to equip their products with standards and packaging, which I believe will help our local products target 60 million customers worldwide by 2015.

The challenges remaining for the sector are the high costs of production, especially energy costs. Marketing and advertising of products made by SMEs are still very limited – either they are too expensive or the SMEs do not do much marketing on the product.

Lamun Soleil, CSX official
Lamun Soleil, CSX official Hong Menea

Lamun Soleil, CSX official
Cambodia Securities Exchange (CSX) has received and approved two new companies on its Listing Eligibility Review request: Grand Twin International Ltd and TY Fashion Co Ltd Both were underwritten by Phnom Penh Securities.

We hope the stock exchange market will get more activity next year, as CSX is expecting at least [these] two companies to be listed – Grand Twin International Ltd will be on the listing in early 2014, and the TY Fashion Co Ltd will follow around mid-year.

But everything now is subject to change, as garment strikes are going on every day.

We do not know if the issue will have any impact on the possibility of the two companies to join the Phnom Penh Water Supply Authority on the exchange. Even though it is very unlikely, if the strike does not end soon, it can be a concern.

Content image - Phnom Penh Post
Bun Mony, Cambodia Microfinance Association president. PHOTO SUPPLIED

Bun Mony, Cambodia Microfinance Association president.
2014 is a promising year.
The size of outstanding loan portfolios will maintain 30 to 40 per cent growth rates, up from $1.2 billion at the end of 2013. Deposits will increase at least 50 per cent from 2013. Portfolios at Risk, a standard to measure the portion of a portfolio deemed vulnerable because payments are overdue, is expected to maintain below 1 per cent.

I don’t think there will be many new players in the market. By the end of 2013, there were 37 licensed microfinance institutions and two rural credit operators registered with our association. But the number of office networks and number of clients will go up.

One or two leading microfinance institutions will upgrade to commercial banks in 2014. We also expect that all key players will install at least 100 ATM machines by 2014. Microfinance institutions will continue to develop new products for the local market, such as mobile payments, housing loans and insurance products.

Content image - Phnom Penh Post
Peter Brimble, ADB Cambodia’s deputy director. PHOTO SUPPLIED

Peter Brimble, ADB Cambodia’s deputy director.
The Asia Development Bank forecasts growth to pick up from 7.2 per cent in 2013 to 7.5 per cent in 2014 as recovery gains traction in Europe and the United States, and traditional Cambodian growth drivers of agriculture, garments and tourism perform well.

However, following the government directive in November to enforce the legal tax rates on imported goods, the resulting inflationary pressures led to an adjustment of inflation in December 2013 to an average 3.5 per cent in 2013 and 4.5 per cent in 2014, up from the 2.5 per cent and 3.5 per cent in September 2013. These estimates assume no economic impacts of the instability following the July national elections and no deterioration in the external economic environment. These developments, as well as the damages caused by the 2013 floods, will be carefully monitored in early 2014.

Indications in ADB’s country pipeline for 2014–2016 are for Asia Development Fund loan financing amounting to $602 million over the three years.

Emmanuel Menanteau, Cambodia Airports CEO.
Emmanuel Menanteau, Cambodia Airports CEO. PHOTO SUPPLIED

Emmanuel Menanteau, Cambodia Airports CEO
Driven by government planning and the airlines themselves in 2013, Cambodia’s aviation sector is on track to maintain and even increase momentum in 2014.

With that, Cambodia Airports is addressing the Kingdom’s air travel industry for the next decade by launching extension works for the passenger terminals at the Phnom Penh and Siem Reap airports.

By 2015, it is expected that each platform will see its capacity double from the current 2.5 million passengers per year to 5 million per year.

Challenges for Cambodia’s airports and aviation in 2013 included completing the design phase for the coming extensions, planning the works of the contractors and our operational teams prior to the launch of the upgrading program.

Next year and beyond, however, we will finalise the master plan on the Kingdom’s airports and implementation of the extension.

Grant Knuckey, ANZ Royal Bank CEO
Grant Knuckey, ANZ Royal Bank CEO. PHOTO SUPPLIED

Grant Knuckey, ANZ Royal Bank CEO
2013 has been a great year for ANZ Royal, though one which could have been even better were it not for the sluggishness of the economy through the last few months.

There were two major challenges this year from a bank perspective: First, the impact of the election on business confidence, and second, the continued increase in competition in the banking sector. These both look like being continued challenges in 2014.

The banking sector has become “two-tiered” – a foreign-funded segment which has a funding cost advantage and is driving down loan pricing, which the intrinsic risk does not support, and a domestically funded segment, which is increasingly marginalised.

This is not healthy for the sector and yet can be easily prevented through the imposition of measures such as loan-to-deposit ratios.

Chhay Rattanak, IAC chairman
Chhay Rattanak, IAC chairman. PHOTO SUPPLIED

Chhay Rattanak, IAC chairman
Cambodia's insurance industry has enjoyed annual growth rates of about 20 per cent, and we expect that the performance in the industry this year will keep increasing at the same speed.

We have just amended our fire insurance standard rate, and it is already approved in principle by the Ministry of Economy and Finance. Thus, we will have the new standard enforced in the market in 2014.

Furthermore, the Insurance Association of Cambodia will cooperate with the Malaysian Insurance Institute to set up a training centre in Phnom Penh by the end of this year.

There’s been really good progress in terms of insurance awareness compared to 2012. Cambodian people are showing more interest in buying insurance, especially motor vehicle insurance, while in the past they used it as part of work benefits that their company paid for.

Keo Mom, CWEA board member
Keo Mom, CWEA board member. Vireak Mai

Keo Mom, CWEA board member
Women entrepreneurship has contributed to the expansion of Cambodia’s economy.

Membership in the Cambodia Women Entrepreneurs Association (CWEA) in 2013 has increased to more than 100.

Among the members, we have women from different sectors, ranging from hotel and restaurant service, to food production and handicrafts.

For 2014, I want to see more women entrepreneurs in the private sector.

The challenges remaining for women entrepreneurship is the lack of technical knowledge, including financial management to staff management, and the lack of capital to expand businesses.

The bank sector should consider providing loans to women entrepreneurs with lower interest rates.

In Channy, Acleda Bank CEO
In Channy, Acleda Bank CEO. Heng Chivoan

In Channy, Acleda Bank CEO
IN ADDITION to the financial sector, my eyes will be on Cambodia’s agricultural sector, which is on track for rapid growth in 2014.

For Acleda Bank, encouraging micro businesses, medium corporate enterprise, lending to the agricultural sector and agricultural related businesses will be our main focus for the year ahead.

Acleda’s major projects for 2014 include improving financial services for public sector employees and government officials.

Finally, expanding and upgrading Acleda’s electronic infrastructure remains a huge project, as we address and increase customer and banking staff security and risk mitigation.

Meanwhile, as 2013 comes to a close, Acleda Bank is on track to post assets totaling 104 per cent of the annual budget estimates.


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