Indochine Insurance says it is being victimised by the Government-owned insurance
Indochine managing-director Philippe Lenain says crippling Government investment
and deposit requirements have forced him to sell a majority interest to French insurance
giant Macif, and 20 percent to the French Development Agency (AFD).
In an announcement on September 17, Indochine said the deal allowed it to release
the full $7 million capital investment required under the banking and insurance law
of 2002 for a five year operating licence.
It also means Indochine will be able to pay a $700,000 cash deposit requirement to
the bank account of the Ministry of Economy and Finance.
The law requires commercial banks to invest minimum capital of $13 million and insurers
a minimum of $7 million, to obtain a licence to operate.
Indochine said the total insurance market revenues were only $8 million and the investment
law had proved excessive and constraining for Cambodia's financial services development.
The law had led to the withdrawal by the two biggest international banks, Standard
Chartered Bank and Credit Agricole Indosuez.
Despite the adverse conditions imposed, "Macif has sufficient vision to invest
in the long term opportunities in Cambodia, and sees the market developed by Indochine
over 10 years as a solid foundation. They plan to open several branches and employ
over 400 qualified staff," said a statement by Indochine.
The Ministry, however, continues to publish public notices headed 'press release'
claiming that Indochine refuses to comply with the $700,000 deposit requirement,
does not have legal rights to sell insurance, and that the Ministry is taking legal
action against the company.
Lenain said the notice was unsigned and the Ministry itself was acting unlawfully.
"They are trying to protect their Caminco business by attacking Indochine."
Lenain said that one year ago he decided to withdraw totally from truck and bus insuring
because the level of premiums, benchmarked by Caminco, was too low to cover costs
and Indochine was paying out $20,000-30,000 per month in accident claims.
"It was simply commercially unsustainable. Now you will notice that every truck
and bus in Cambodia is carrying a Caminco sticker. I predict that on the basis of
the current premiums, Caminco will inevitably run out of money and be unable to meet
He said Caminco's head office was subjected to a tyre-burning public demonstration
on July 12 by the relatives of victims of an accident who were protesting at low
compensation payouts by Caminco. On June 13 a busload of garment factory workers
headed for Sihanoukville collided with a truck on Route 4 at 3.30 am, killing 15
and injuring 32.
"Caminco paid only 250,000 riel per death ($62.50), whereas we pay $2,000-2,500
per death," Lenain said.
He said the decision to sell control of Indochine came after two years of operational
hardship caused by the insurance law. "It's a totally absurd sitiuation designed
to protect the government monopoly.
"I have been looking for a capital partner since January 2003. It has been very
arduous. I tried everything, went everywhere: the USA, UK, Switzerland, Italy, France,
Singapore, Malaysia. Finally in November I found Macif and the French Development
Agency. The $700,000 deposit will be paid."
An unsourced online Cambodian bulletin board claimed on September 22 that Macif was
already being advised by local experts to reconsider its investment decision because
of the difficulties of operating in a bribery- and corruption-plagued environment.
The report said: "Unsolvable problems will stem from the fact that anybody in
this country can easily obtain, through bribes, fake documents to falsely prove their
name, age, citizenship, occupation, address etc, while police reports related to
road accidents, murders, robberies can be written in a way to show anything but real
Lenain said the report was "completely false. I believe [this report] is politically
motivated and proceeds from sources who have an interest in disrupting the Cambodian
economy with a view to destabilise the current balance of power.
"I can testify that I have been operating insurance business in Cambodia since
1993 without meeting any 'problem' that I could not deal with. Identification of
individuals has never proved a problem and reports following traffic accidents, for
example, is a very straightforward process."