Khmer Magazine 2011: Khmer Star| Khmer News

MFI opens with $50m loan package

2011-11-13T14:57:00.002+07:00

Sonata Microfinance Institution, a joint investment between local and foreign investors, officially started operations in Cambodia yesterday.

A US$50 million loan package was signed during the ceremony on Thursday, providing Singapore-based EastWing Group and Japanese firm Grand Cooperation with a 30 per cent stake of the MFI.

“Although our partners hold only a 30 per cent share, Sonatra MFI received a robust financial recourse base from our foreign partners,” Sorn Sokna, chairman of the Sonatra MFI board of directors said in a speech during the ceremony.

Sorn Sokna, founder of securities firm Sonatra Securities, added that the two foreign partners are set to provide training, develop human resources and help to equip the financial institute.

Sonatra MFI successfully obtained the operating licence from the National Bank of Cambodia in January, though operations officially launched yesterday. The institute currently has three branches in Phnom Penh and is set to open a further three in Kandal, Kampot and Siem Reap provinces.

National Bank of Cambodia deputy governor Ouk Maly yesterday told the Post he welcomed new arrivals, adding that the industry needs strong financial resources in order to accommodate the growing customer requirements.

“We warmly welcome and applaud [Sorn Sokna] for his efforts in attracting foreign partners to invest in the industry,” he said. “Sonatra MFI will play a very crucial role in the Cambodian financial system by offering small loans to people and SMEs,” she said.

Ouk Maly added that a total of 29 MFIs had received licences from the NBC – seven of which gained deposit-taking licences.

Outstanding loans from microfinance institutions rose about 49 per cent year-on-year in the first half of 2011 hitting $5.04 million, while the number of borrowers increased 13 per cent to 1,002,926.

Source: the phnom penh post

Credit ratings don’t yet matter

2011-11-13T14:56:00.002+07:00

In a growing country like Cambodia, where international investors pour in billions of dollars, where GDP growth will once again reach double digits, and where bond issuance is non-existent, sovereign credit ratings are largely irrelevant.

Of course, that doesn’t stop the Kingdom from being rated, as we discovered this week when Standard and Poor’s cut its unsolicited rating on the country’s long-term debt to B from B+.
A B rating represents a speculative investment.

The standard reasoning was offered for the downgrade: “. . . the country’s low income, highly dollarised and narrow economic profile, and limited flexibility”.

By now, that refrain has become as monotonous as the Cambodian government’s pitch to foreign investors: the country enjoys political stability, offers an open regulatory environment and allows investment without requiring a local partner.

Sure, many of the concerns voiced by S&P – low per capita income, a highly dollarised and narrow economic profile – are valid.

Soaring fuel and food costs this year showed how few tools the National Bank of Cambodia has to fight inflat-ion, while reliance on all- important garment exports has stalled the domestic economy during past crises.

But the fact remains that Cambodia has not yet issued sovereign bonds as a source of fund-raising. Therefore, S&P’s credit rating should have little impact on public financing for the foreseeable future.

S&P said as much this week. Agost Benard, the analyst responsible for Cambodia’s sovereign rating, told the Post the rate cut was “unlikely to have a mat-erial impact” on the interest rate the Kingdom pays on its loans.

That was because Cambodia was not part of the international bond market, had no commercial external debt and all funding needs were taken care of by concessionary loans, he said.

An argument could be made, though, that potential investors still consider the sovereign rating before entering the Cambodian market.

However, the latest Council for the Development of Cambodia approved-investment figures, for the first nine months of 2011, showed a 305 per cent year-on-year increase to US$5.67 billion – hardly a sign that investors are worried about doing business here.

It’s worth pointing out as well that both ratings agencies had graded Cambodia in the B range since 2007, and investors had continued to come regardless.

The non-impact of credit ratings, at least for now, has been much discussed since Moody’s first downgraded ACLEDA Bank in September, then later changed its outlook for Cambodian Public Bank.

Insiders, experts and government officials largely agree those actions will have negligible, if any, effect for the time being.

There was, however, one interesting note from S&P’s Agost Benard regarding the downgrade: namely, that the ratings agency now lends greater weight to political stability in its sovereign evaluations.

Although S&P’s statement listed Cambodia’s political stability as a positive, Agost in the Post interview pointed to what he said were the Kingdom’s ineffective instit-utions and governance, and a lack of ability in transferr-ing political power.

He said Cambodia had an “untested succession mechanism and a corollary key-man risk” – referring, of course, to Prime Minister Hun Sen.

As previously mentioned, political stability is a proud bullet point in the Cambodian government’s pitch to investors, and there’s little doubt Hun Sen and the CPP’s hold on power will continue. But weak public institutions are most defin-itely a problem.

Johannes Lund, Southeast Asia analyst for the consult-ancy Control Risks in Sing-apore, said yesterday this weakness in fact benefited Hun Sen and his party.

Hence, the awarding of lic-ences and government contracts would be controlled by the CPP and Hun Sen instead of strong, capable and independent institutions.

As a result, “the operating environment in Cambodia would remain challenging,” Lund said.

That rampant corruption is most likely the biggest deterr-ent to investor confidence in the Kingdom – certainly more so than an unused sovereign credit rating.

Source: the phnom penh post

Private firms plan CSX IPOs

2011-11-13T14:55:00.000+07:00

A logistics firm and two garment manufacturers planned to list on the Cambodia Secur-ities Exchange during the second half of 2012, underwriter Phnom Penh Securities said yesterday.

The companies are the first known private businesses to confirm their intentions of listing on the Kingdom’s still-dormant bourse.

Manufacturing companies Grand International Ltd and TY Fashion Co Ltd signed initial-public-offering preparation contracts in June and July, respectively, Phnom Penh Secur-ities CEO Stephen Hsu said.

Olair Dry Port Worldwide Co Ltd, a logistics firm, had reached an underwriting deal in mid-July, he said.

The plans – among several rumoured private listings – were a welcome signal from the private sector, as so far only the state-owned firms Phnom Penh Water Authority, Sihanoukville Autonomous Port and Telecom Cambodia were expected to hold offerings, Hsu said.

“The listing of these private companies will add to the vitality and liquidity of the market,” he said, adding that Phnom Penh Securities submitted letters of intention to the Securities and Exchange Commission of Cambodia in mid-August.

The prospect of an incerease in public listings on the CSX represented a maturing Cambodian market, SECC deputy director-general Huot Pum said yesterday.

“It’s good news for us, because it proves that our people are aware of the new market and [it shows] we will have more liquidity,” he said.

“Whenever we get more private companies listed, it means that our market is improving.”

Phnom Penh Securities’ Hsu said at least 10 other private companies, including banks, transportation and insurance companies and garment manufacturers, had signed underwriting contracts or were in negotiations with his company. Subsequent letters of intent would be submitted when they were ready, he said.

“I predict about 10 companies will be listed on the CSX by end of 2012, five of which will be [underwritten by] Phnom Penh Securities. This will bring not only liquidity but also ensure the confidence of investors,” Hsu said. Phnom Penh Securities does not appear to be alone in advising clients on holdings IPOs.

Tong Yang Securities managing director Han Kyung-tae, underwriter for Phnom Penh Water Authority and Telecom Cambodia, claimed during a conference in October that his firm was in talks with some private companies about listing.

The bourse officially opened on July 11, but trading was delayed until the end of the year because the three state-owned enterprises that planned to list were not ready. Technical difficulties also accounted for the delay.

In October, Minister of Economy and Finance Keat Chhon announced listing would be further delayed until next year, saying also that Phnom Penh Autonomous Port was preparing for an IPO as well.

The delay should allow securities firms and potential IPO candidates enough time to get ready for the market and enable the governing body to improve and develop rules and regulations to ensure smoothness of the market operation and public confidence, Hsu said.

Grand International Ltd, TY Fashion Co Ltd and Olair Dry Port Worldwide Co Ltd declined to comment for this article.

Source: The phnom penh post

NBC asks MFIs to diversify

2011-09-09T21:18:00.000+07:00

The National Bank of Cambodia was pushing microfinance institutions to look to domestic banks for funding in an industry heavily reliant on foreign loans, experts said yesterday.

Although the NBC is seeking to foster healthier relationships between MFIs and the Kingdom’s commercial banks, a dearth of collateral among MFIs is hindering domestic borrowing.

“We encourage direct links between MFIs and commercial banks because we want to stop MFI reliance on external sources,” Ngoun Sokha, director- general of the National Bank of Cambodia, said yesterday. “We want to avoid external exposure.”

International borrowing increased the chances that financial turmoil in foreign markets, such as the sovereign-debt crises in Europe, would wreak domestic havoc, she added.

A high level of liquidity in Cambodia’s commercial banking sector, along with lower interest rates compared to foreign loans, were also incentives for domestic borrowing, Nguon Sokha said.

Cambodia’s 23 MFIs loaned more than US$420 million in 2010, up from about $304 million in 2009, according to NBC data. The institutions held about $40.5 million in deposits at the end of 2010, according to the data.

Along with greater stability, processing domestic loans had become increasingly easy, Chea Phalarin, chairman of the Cambodian Microfinance Association, said yesterday. Complications and excessive requirements that once forced MFIs to turn to Europe for funding had been relieved, he said.

“More than anything, we can do the paperwork [for domestic loans] easily,” Chea Phalarin said.

Funding for the Amret Microfin-ance Institution, which Chea Phal-arin manages, was still wholly sourced from Europe, he added.

Prasac Microfinance is 70 per cent financed by loans from Europe, but general manager Sim Senacheert said he had taken a loan from a dom-estic commercial bank, Maruhan Japan, to diversify the institution’s sources of capital.

“This will help to curb the flow of our money abroad and keep our value added by generating more domestic jobs via increasing our branches,” Sim Senacheert said.

However, a lack of up-front guarantees from MFIs prevented the institutions applying for domestic loans, Canadia Bank’s Dieter Billmeier said yesterday.

“MFIs in general are not able to offer collateral,” he said, adding that Canadia Bank had for some years had a small wholesale loan agreement with an existing MFI on its books.

About $5 million, or 1.18 per cent, of Cambodian MFI loans at the end of 2010 were non-performing, according to NBC data, down from 2.8 per cent the year before.

Nguon Sokha agreed that inadequate collateral stood in the way of increased business between MFIs and domestic banks.

“This will not lead to smooth bank operations, because [banks] are mostly thinking about collateral,” she said.

The NBC was, however, preparing a study on how it can vouch for MFI collateral in the future, Nguon Sokha said. This move would lead to more free-flowing borrowing practices, although she said a time frame on when the new policy would be in place had yet to be determined. Source: the Phnom Penh Post

Lack of e-trade law an issue for CSX

2011-09-09T21:13:00.000+07:00

THE Cambodia Securities Exchange could begin trading later this year without the Kingdom having passed its long-awaited e-commerce law, insiders said yesterday.

An e-commerce law is necessary to protect investor data in the event of a system error or crash, among other things, and therefore lends secur-ity to investors and firms hoping to trade on the exchange.
“All the transactions are processed electronically. If we don’t have an e-commerce law, how can we operate the stock exchange?” Commerce Minister Cham Prasidh told a meeting of the US-ASEAN Business Council in Phnom Penh last week.

“That’s why I want to have the law in place before real stock operat-ions begin.”

The CSX was launched officially in July, although stock trading wasn’t expected until the end of this year.

Three state-owned companies – Telecom Cambodia, Phnom Penh Water Supply Authority and the Sihanoukville Autonomous Port – plan to be its first initial public offerings.

But whether the e-commerce law is in place by then remains to be seen. Nguon Meng Tech, director- general of the Cambodia Chamber of Commerce, said yesterday aims to enact the law before the end of 2011 were remote.

“I don’t think the law will be finalised by the end of this year because it is time-consuming, technical and complicated. It’s not easy,” he said.

At the same time, Tong Yang Securities (Cambodia) managing director Han Kyung Tae disagreed, saying that work on the law was ongoing and he was confident that the legislation would be introduced before year’s end.

Han, whose firm will underwrite the IPOs for Telecom Cambodia and Phnom Penh Water Supply Authority, stressed the importance of getting the law online so that trading could begin.

“It is crucial for us to have the relevant regulations in place, because electronic trading will happen very soon,” he said yesterday.

Cham Prasidh called on the US-ASEAN Business Council to provide the technical assistance necessary to implement the law, which must be in compliance with World Trade Organisation rules.

Although the law’s drafting pro-cess began in 2008, enacting the legislation has proved to require additional expertise.

Even so, one insider has said trading may not be contingent on the law being passed.

Securities and Exchange Commission of Cambodia director-general Ming Bankosal said yesterday that contracts could be drawn up between investors, securities firms and stakeholders in order to avoid loss in the event of a system crash.

“Even if our e-commerce law has not materialised, we are going to set a clear mechanism to deal with [problems with the electronic system],” Ming Bankosal said. Source: the Phnom Penh Post

Chinese mobiles dial up big sales

2011-08-29T15:12:00.000+07:00

Cambodian consumers have noted a preference for Chinese-made, imitation mobile handsets, as they offer cheap yet viable alternatives to name-brand cell phones.

The demand is coming largely from low- and middle-income Cambodians seeking functional handsets at affordable prices. As a result, these consumers have said they are choosing established brands less and less.

Chea Bun Leang, 25, working at a shop near Boeung Trabek market in Chamkarmon district, touted Chinese phones for being both inexpensive and up-to-date.

“The programes on these phones are not that different from what you get on an original Nokia. And they’re not so expensive that I can’t afford them,’’ he said.

Some Chinese-made phones sell for as little as US$10 and offer dual-SIM capability. Even the more expensive models, which imitate Apple’s popular iPhone, are significantly cheaper than their branded counterparts.

High-priced phones were simply not necessary for many Cambodians, Lin, a clothes seller at the Boeung Trabek market who asked to be identified by her first name only, said.

“The phones are usable, whether they’re expensive or not. I don’t need much because I’m either at home or selling at the market,’’ she said, adding that Cambodia’s upper classes might not share her sentiments.

Keo Tharith, general manager of TR Mobile, a cell-phone shop also near the Boeung Trabek market, noted the growing market share of Chin-ese phones thanks to their low price. That has brought mostly middle-class customers and students to his store.

“I think Chinese phones are getting more and more popular because they are so competitive with name-brand handsets,’’ he said, adding that those handsets ranged between $18 and $20 at his shop.

Nokia, however, pushed back against the idea that it was losing ground to competitors in Cambodia.

“Competition is not new for Nokia. We welcome competition from legitimate vendors who have legitimate [intellectual property] and follow the law,’’ Nokia communications manager in Cambodia Y Sokun said. “We are confident that we can tackle our competitors, as we have done in the past, by concentrating on our strengths. We have a wide range of handsets, including entry-level handsets at very competitive prices.”

Y Sokun also pointed to something Nokia can offer that the Chinese phones cannot.

“In today’s world, it’s not just about devices but services and solutions. We see ourselves as a strong challenger in mobile solutions, which is the combination of a specific service along with a device.

“Many of our competitors can’t copy this solutions focus.”

Other shop owners also said Chinese phones might prove to be only a fad.

Still, cost seems to be the primary factor for some. Porn Soeun, a 61-year-old motorbike taxi driver working at Boeung Keng Kong market, said Chinese phones were his only option.

“I cannot afford a high-priced phone because I can make only 10,000 riel per day.” Source: the phnom penh post

National Bank makes the correct decisions

2011-08-19T22:35:00.000+07:00

The National Bank of Cambodia’s decision this week to keep banks’ reserve requirements steady at 12 percent was the right one, though questions remain as to what’s in store for the Kingdom’s economy over the coming year.

Despite rising prices across the board, the NBC tempered its inflation concerns with concern about economic volatility across the globe. By not boosting reserve requirements, the central bank wisely left itself an open door to growth should the US and Europe sink back into recession.

Peter Brimble, senior country economist at the Asian Development Bank in Cambodia, yesterday agreed, calling the NBC’s move “sensible”. He said that problems in Europe in particular could potentially ripple out to the Kingdom in the short term.

In fact, the strong growth Cambodia has seen so far this year “may be toned down a bit in the rest of the year,” he said, adding 2012 may see a possible slowdown in exports and tourism if Europe’s problems get worse. Of course, there is no guarantee this scenario awaits the Cambodian economy, but the NBC needed to be prepared nonetheless.

There is, however, the possibility that inflation will again become the central bank’s main priority. Certainly, it has been the main concern of late, as spiking food and fuel prices have led to public cries for government intervention.

ANZ Royal Bank CEO Stephen Higgins said yesterday: “Whenever they stop publishing Consumer Price Index numbers, that is when you start to get nervous about what the inflation number is.”

Hence his continued focus on the inflation threat. He said Cambodia has recovered from the global financial crisis of 2008 and 2009, and the problem now is keeping the economy from overheating.

The NBC will have to increase reserve requirements if the next few months show the West’s problems are less severe than expected, he said. That decreased liquidity would help to keep prices down, and banks from lending imprudently, both of which lead to unhealthy economic growth.

Some have complained that Cambodia’s fluctuating reserve requirements over the past few years – they’ve ranged between 8 percent and 16 percent depending on the economic situation – hurt smaller banks.

However, Higgins shrugged off that concern, saying flexible reserve and interest rates were in fact normal parts of a vibrant financial system. Therefore, they were good for the Cambodia’s economy.

What was most important, he said, was preemptive action from the NBC to curb dangerous levels of inflation at all cost. Otherwise Cambodia could end up like its neighbour, Vietnam, whose focus on growth without regard for rising costs has led to an inflation rate of over 20 percent.

“It’s far better to go early and possibly be a little harsh than to go too late and need to be very harsh,” Higgins said.

Higgins and Brimble both offered very similar targets for the Kingdom’s ideal inflation rate: between 3 percent and 5 percent, and 4 percent and 5 percent, respectively. While many developed economies aim for between 2 percent and 3 percent, Cambodia’s focus on growth allows it a higher rate.

As a result, the NBC’s expected inflation rate of 6.5 percent this year presents problems, which brings us back to reserve requirements. The central bank will need to put to use its only real tool to fight inflation should present pricing trends continue.

Brimble noted that even the NBC’s intention to use foreign exchange auctions to control the exchange rate would have little effect, as the economy is more than 90 percent dollarised. Only so much riel can be taken out of the economy to boost its value in that situation.

Of course, Cambodia may one day boast strong capital markets, and a central bank capable of buying and selling interest rate-based assets in order to impact rates as a whole. But the day is still some ways off, and until then, Cambodia’s bankers have done well with the tools they have available. Source: the phnom penh post

Mfone looks to the future

2011-08-19T12:31:00.000+07:00

The owners of Cambodian mobile operator Mfone are considering a number of strategies to strengthen the firm, after the head of the its majority owner said it would contemplate pulling out of the Kingdom.

Thaicom chief executive Suphajee Suthumpun last week said the company was considering exiting Mfone along with Laos Telecommunications Company in the wake of lagging performance at both firms.

“We are pondering many alternatives, including pulling out of there. A decision on this matter should be made soon,” she reportedly said.

“We may get rid of them, keep one of them, or keep both. It’s all possible.”

The comment had raised questions about the fate of Mfone, which saw its subscriber numbers decline 21 percent between the first and second quarters of this year.

However, Thaicom’s CEO was stating merely “the possibility and not the intention” of selling Mfone, said Atip Rittaporn, managing director at Shenington Investments, the holding company under which Thaicom controls Mfone.

“The current situation is not favourable to future operations in Laos and in Cambodia, so we have to make a move. If there are interested parties, we are open to the possibility of discussion,” he said yesterday.

Thaicom controls 51 percent of Shenington Investments, which owns 100 percent of Mfone. The remaining 49 percent of Shenington is held by Asia Mobile Holdings, a joint venture which is 75 percent held by Singapore Technologies Telemedia (STT) and the remainder by Qatar Telecommunications..

Atip Rittaporn said Thaicom could also buy out Mfone’s other shareholders, though that strategy “has not been explored” yet.

He also sought to temper speculation about Mfone’s future, saying the company has for some time been researching its options so as to better position itself in the market. He cited previous merger talks with Hello and qb as specific examples of actions Mfone has taken, though those talks eventually fell through.

While qb officials could not be reached for comment yesterday, Hello CEO Simon Perkins acknowledged that discussions with Mfone had taken place previously. However, he reiterated his previous statement that Mfone had not since approached Hello about a possible merger.

Atip Rittaporn also said that while he could not comment for STT, he assumed they were committed to Mfone’s success.

“I don’t think they’re going to be away from Cambodia. They still have a very strong intention to stay in this market.”

Mfone CEO Yap Wai Khee said yesterday that strong support from its shareholders was “one of the key strengths” the company can leverage.

“Therefore, Mfone does not foresee any impact on its operations from the potential exit of a shareholder,” he said.

He called the shareholders “very supportive,” saying: “The decision whether to sell or not will probably be based on value creation to the shareholders, and also creating a much better and stronger Mfone in the future.”

Just who in fact buys Mfone, if a sale takes place, is up to those shareholders, he said.

Yap Wai Khee defended his company’s performance, citing Mfone’s near 20-year history in the Kingdom and its “sizeable loyal and high ARPU [Average Revenue Per User] customers”.

He blamed the decline in subscribers to other telcos not following the Ministry of Post and Telecommunications prakas on minimum pricing, which allowed competitors to draw away customers from Mfone.

Still, he claimed “most revenue generating subscribers stayed with Mfone”.

“Mfone as a standalone business is financially feasible,” he said.

Officials at STT said they had no comment about a potential sale of Mfone, while Thaicom officials did not immediately return a request for comment. Source: the phnom penh post

Cambodian Wedding Photography

2011-08-09T14:03:00.000+07:00

Cambodian Wedding Ceremony

2011-08-09T13:49:00.000+07:00

Chevron talks oil production

2011-08-05T13:44:00.000+07:00

Chevron Overseas Petroleum (Cambodia) has been actively exploring Cambodia’s offshore Block A, and applied for a permit to begin extraction from government authorities.
Yesterday, The Post caught up with its President Steve Glick, who has been in his present role in Phnom Penh for about three months, to discuss the company’s operations in the Kingdom, as well as the issues affecting the domestic oil and gas industry.
Edited for length by Tom Brennan.

You’ve described the oil in offshore Block A in the Gulf of Thailand as difficult to reach, as it’s spread out across many smaller pools rather than collected in one large reservoir. Given that, is Block A financially viable as a production area for Chevron?
Certainly it has its challenges. It is relatively small, and it’s technically challenging to drill. So we need to be careful, and that’s the very reason why we’re pursuing this with a phased approach and one platform at first to see how it does. But we’re optimistic that we’ll come out okay for everybody and we can move ahead.

Prime Minister Hun Sen has called for oil production in Cambodia by December 12, 2012. Is Chevron on track to meet that deadline?
Well, let’s take a step back here. Since 2002, we’ve been here. Over that time period we drilled 18 wells, $160 million worth of investment …

As of August of last year, when we had drilled our last well, we felt we had enough information and we declared commerciality of the field. A month later, we submitted the production permit application to [the Cambodia National Petroleum Authority]. So since that time we’ve been working with the CNPA and the various government agencies to get a final investment decision on this project. We’re making progress.

I think we all need to understand that this is the first project for Cambodia. And for obvious reasons, everybody wants to do it the right way the first time. The government wants to make sure that they’re making the right decisions, and certainly we want to do a good job for them. So we’re all taking a major methodical approach to making this happen. Technically, Chevron’s ready to go … And we’re working through the remaining issues with CNPA with the target of getting a final investment decision this year.

If you are able to meet the government’s deadline of 12-12-12, what will that initial production look like?
Unfortunately, until we have a final investment decision our general policy is that we can’t divulge cost, production levels, or anything on any given project. Once that’s there, certainly we’ll give more details at our announcement for that investment decision.

You were supposed to receive the production permit from CNPA in the second quarter of this year. Has that happened yet?
We are waiting for two things: We are waiting for the production permit approval from CNPA. We do not have that yet. And then subsequent to that, we would go into a final investment decision.

What’s the ETA on that? Have you had any discussions with CNPA?
We’re working with them everyday.

Can you speak to the potential for changes to the tax regime that the Cambodian government has set up for you?
I can tell you what our expectation is: that we expect sanctity of contract to be in place, that we adhere to the rule of law, adhere to the agreements that are in place, and that includes Cambodia. So our expectation is that that will occur and that’s where we’re moving toward with regard to a final investment decision. I can’t comment on anything else that maybe the government is thinking about.

Wikileaks released cables from the US Embassy in Phnom Penh that claimed former Chevron General Manager for Exploration Gerry Flaherty had said Block A wasn’t a viable resource on its own. What is your reaction to those comments?
All I can say is that this is a conversation that supposedly happened many years before I got here. So I can’t comment on what was said, and I think we need to leave it at that. Our focus is today, and what we need to do to get our investment decision done by the end of the year.

So you do think Block A is financially viable?
Sure. We wouldn’t be here unless we felt like it was a development that Chevron could do with the government. There are some technical challenges associated with it. But certainly we believe that we can make a go of it. Time will tell as we get more information.

Among the first oil companies doing work here, how have you managed to navigate what is Cambodia’s well-known corruption problems?
First of all, Chevron is a member of the Extraction Industries Transparency Initiative, so we support their initiatives. It’s really up to the local host governments to give direction on revenue transparency. We will adhere to the letter of the law that’s in the host country. And we will certainly adhere to the tenets of what the EITI is trying to instill in Cambodia.

Reports have said some companies are downsizing their operations here as a result of Cambodia’s Anti-Corruption Law. Is Chevron affected in any way by that?
It’s an easy answer: We will comply. Whatever law is out there, we will comply.

But do you find any steps along the way difficult to get around because of the law? Any system of informal payments that puts Chevron in a difficult position?
When the law comes into effect and they enforce it, we don’t expect any problems. Source: The phnom penh post

NGO law draft gathers pace

2011-08-05T13:41:00.000+07:00

The government confirmed yesterday that its draft NGO law has been submitted to the Council of Ministers, despite concerns it would restrict Cambodian civil society.

Phay Siphan, spokesman for the Council of Ministers, said yesterday that the law had been submitted last week.

Nouth Sa An, secretary of state at the Ministry of Interior, indicated yesterday that the time had passed for NGOs to submit recommendations.

When asked whether he would accept further input from civil society, Nouth Sa An said that, after meeting last Friday with NGOs, “the civil society organisations no longer have to worry about the law”.

He reportedly told Voice of America on Tuesday that NGOs would have to submit recommendations to the Council of Ministers if they sought further changes, but spokesman Phay Siphan said yesterday there were no plans for the Council of Ministers to accept further input. “They should talk with the initiators [of the law] at the Ministry of Interior and the Ministry of Foreign Affairs,” Phay Siphan said.

It was unclear yesterday how civil society groups could get further changes in the law, which would mandate NGOs and associations to register with the government and adhere to numerous reporting requirements

Ou Virak, president of the Cambodian Centre for Human Rights, said yesterday that “from experience, it’s very difficult to change and very difficult to influence” legislation once it has reached the Council of Ministers, but warned that passing a restrictive law could end up hurting the government by turning away investors.

“This law... will hurt Cambodian businesses who need foreign direct investment,” he said, arguing that civil society groups had been the driving force behind efforts to ensure transparency and investor protections.

The United States, the most vocal of donor countries in its opposition to the legislation, said its position “remains the same” on the law’s latest draft.

“We urge the Royal Government of Cambodia to consider the views expressed by donors and civil society, and refrain from passing any new law that restricts, rather than enhances, the important role of civil society in Cambodia,” embassy spokesman Sean McIntosh said yesterday. Source: the phnom penh post

Net surfing: Smart in internet launch

2011-08-02T16:13:00.000+07:00

SMART Mobile yesterday announced the official launch of its 3.75G data service, a key part of the company’s strategy to capture Cambodia’s burgeoning mobile internet market.

“3.75G technology allows faster and more convenient internet surfing whether it is a mobile device or a laptop which supports 3.75G technology,” the company said in a statement.

The firm estimated its 3.75G would allow for data download speeds of up to 21 megabits per second and upload speeds of up to 5.7 megabits per second. However, speeds will depend on the subscriber’s device, location and network utilisation.

Some domestic competitors offer mobile download speeds of about 7 megabits per second.

Its 3G network is presently available in Phnom Penh and Sihanoukville, with service to be extended over the coming weeks to Siem Reap, Battambang and Kampong Cham and then to all of Cambodia’s towns and cities.

“We are delighted to announce this attractive addition to our family of internet and data packages which makes us, together with the launch of our 3.75G network, a leader in mobile data services in Cambodia,” Smart CEO Thomas Hundt said. Source: the phnom penh post

Microfinance up on agriculture advance

2011-08-02T16:11:00.000+07:00

THE Kingdom’s growing agricultural sector is leading to more loans and deposits at microfinance institutions.

The small-scale lenders also credit the boost in Cambodia’s agro-industry for declining non-performing loans rates.

“We see that political stability and our economy are offering a strong climate for opening businesses or enlarging the businesses, leading to more demand for loans,” said Sathapana Microfinance Chief Executive Officer Bun Mony. “We don’t have any major challenges, as our performance has improved after being hard hit by the crisis.”

The MFI’s lending totalled $51 million to 4,900 borrowers at the end of June, whiles its NPL rate declined to 0.7 percent from 0.9 percent at the end of December 2010.

The firm’s deposits had also increased to about $10 million by the end of June. Sathapana was the first MFI to receive a deposit licence from the National Bank of Cambodia in 2009.

MFIs contribute significantly to the country’s macroeconomic stability, particularly by increasing rural income via lending, said Cambodian Economic Association President Chan Sophal

“It is quite necessary for our people to have access to more fund via MFIs while our economy is growing,” he said.

NPL rates had dropped over the past several years, leaving the industry in a much better situation, he said.

However, he added the industry needs to improve its human resources in order to develop further. Cambodia’s other large MFIs expressed similar optimism about the industry.

Hattha Kaksekar Limited has seen a 35 percent increase in loans and a 60 percent increase in deposits over the first six months of 2011 to $56 million and $9 million respectively, said its General Director Hout Ieng Tong.

“I think our economy has bounced back,” he said, adding the MFI was seeing particular activity in tourism and agriculture. Growth in deposits came through Hattha Kaksekar efforts to offer higher interest rates than many, he said.

Prasac CEO and President Sim Senacheert wrote that its loan portfolio had increased by about 63 percent in the first half compared year on year, totalled $122 million. Its NPL rate had also decreased to 0.8 percent, from 1.44 percent at the point last year, though he added more could be done to mobilise savings at the MFI.

Maxima Mikorheranhvatho MFI has seen its total loans increase by about 10 percent over the past six months, said CEO Uong King Seng. Source: the phnom penh post

Property sector recovery highlighted

2011-07-30T22:06:00.000+07:00

THE Kingdom’s property sector is beginning to emerge from the global financial crisis, but could further improve with the implementation of anti-corruption laws and enforcement of property rights, according to industry experts.

Although the sector is some ways off the pre-crisis peaks experienced in 2007, the number of transactions are on pace for a 10 percent increase this year on 2009, said Cambodian Valuers Association President Sung Bonna.

“Cambodia’s real estate market remains on track for a robust recovery and we expect foreign investment to continue to be a key driver of growth for the sector in 2011,” he said at the 17th annual ASEAN Valuers Association seminar held in Siem Reap on Friday.

Government tax revenue from property related transactions surged 60 percent from US$12.2 million in 2009 to $19.5 million the following year, according to the Ministry of Urban Planning and Construction figures presented by Sung Bonna at the seminar.

However, some impediments remain to the sector’s growth, such as corruption and poor enforcement of property rights still remain, he added.

“The government have tried to work very hard [to enforce property rights], and it’s improving by the year, but they need to collaborate with the private sector to improve the law,” he said.

With the formation of the anti-corruption law and the launch of the Cambodia Securities Exchange, Sung Bonna said he expects improving legislation within the Cambodian property market to draw further foreign investment.

Asian Development Bank officials echoed claims anti-corruption laws was likely to strengthen Cambodia’s investment climate and enhance confidence among the business community.

“The new anti-corruption law plays an important role in improving public sector governance and therefore, reducing corruption in Cambodia,” ADB External Relations Coordinator Sothea Ros said.

Phnom Penh-based property agents also expect increases in foreign investment with improvements to the regulatory environment.

“When investors consider whether or not to invest funds in any country, the degree of transparency is a key factor in their decision-making process,” CBRE Cambodia Chartered Surveyor Ryan O’Sullivan said.

“The perception of land expropriation needs to change so that land owners feel secure in their land purchases.” Source: the phnom penh post

Silver screen setting up

2011-07-30T20:52:00.000+07:00

SABAY Company is set to open a cinema in Sorya Mall on August 4, aiming to become the second cinema in as many months to show licenced films in the Kingdom, Sabay Chief Commercial Officer Abhaya said yesterday.

Legend cinema began showing primarily Hollywood movies in City Mall last month, but Sabay is aiming to offer patrons a more diverse range of international and independent films, he said yesterday.

“We don’t want to compete with the other cinema, as the market is still very small. However, we will show a number of Hollywood films alongside Asian blockbusters and independent films from around the
world.”

Sabay received the green light to construct the theatre three months ago, at the same location as an existing cinema, and will comprise three screens, including one 3D.

The first movie to be screened will be the Chinese film Wu Xia, a hit at this year’s Cannes Film Festival.

“We wanted the premiere to be a little different, a taste of things to come, and what is better than this highly successful Chinese export,” Abhaya said.

The second film set to be shown is Captain America: The First Avenger, which opened to US audiences last weekend.

The Cineplex will be only the second cinema nationwide to show legitimately distributed films, said Michael Chai, director of Sabay theatre’s distributor Westec Media Limited.

“I’m really happy. It’s great to see another cinema in Phnom Penh going down the legal path and with the right attitude.”

He added that he expects further Hollywood cinemas to open in the capital and is looking forward to the evolution of Cambodia’s film industry.

“The launch of these cinemas will evoke more companies’ interest in the idea of opening Hollywood-style cinemas and we are more than happy to advise them,” Chai said.

Tickets prices will start at $4, matching Legend Cinema, however, some industry experts doubt there will be many local filmgoers at first, given the Kingdom’s piracy culture and the lack of disposable income.

Although the recent emergence of new cinemas is a step in the right direction, it will be difficult to regularly attract people to the big screen when copied DVDs are widely available, Martin Robinson, co-founder of The Flicks Community Movie House, said last month.

“It’s unlikely that Cambodian families will pay $4 each to go to the movies when they can stay at home and watch a film that costs around $1,” he said. Source: the Phnom Penh Post

ANZ Royal sees yuan role

2011-07-22T20:48:00.002+07:00

ANZ Royal Bank aims to play a larger role in handling transactions in renminibi, as China’s currency becomes increasingly prevalent, company officials said yesterday.

Cambodia’s fourth largest bank made its pitch yesterday, claiming domestic businesses could cut up to 5 percent from some import costs if they pay their Chinese suppliers in renminbi.

The Chinese government has introduced incentives to increase usage of the renminbi, or yuan, including tax rebates of between 15 percent and 18 percent for exporters that bill their customers in yuan.

As a result, Cambodian businesses that choose to pay in yuan may be able to negotiate better prices with their Chinese suppliers, said ANZ Royal Markets Manager Khiev Sophina said.

“I think it’s a big opportunity for Cambodia’s businesses given the country’s trade flows with China,” he said at an ANZ client seminar in Phnom Penh.

Khiev Sophina said Chinese exporters pay not only taxes to the Chinese government but also hedging costs to protect against currency fluctuations between the yuan and dollar, which is the typical settlement currency for Cambodian businessmen.

China’s exporters therefore could save as much as 20 percent if their Kingdom-based clients paid in yuan, he said. Khiev Sophina reckoned the savings could provide those clients some bargaining leverage and possibly bring their costs down.

ANZ Royal will soon launch a service to facilitate these payments, he said. The bank and its relevant customers will agree on an exchange rate for the US dollar and yuan for a set period of time, with ANZ handling any fluctuation of that rate in the market during the period. He expects it will take some months before domestic businesses are able to coordinate with their Chinese partners to begin the process.

ANZ Royal will profit by buying yuan from ANZ Singapore and selling them at a higher rate to clients, he said.

In a presentation yesterday to clients, Khiev Sophina said bilateral trade between China and Cambodia reached US$1.12 billion in 2010, up 41.5 percent from the year before. About 70,000 businesses in China presently qualify for the tax rebates.

ANZ Royal Bank CEO Stephen Higgins said the growing proliferation of yuan and the devaluation of the dollar give Cambodian businesses more reason to consider settling bills in the Chinese currency.

Over time, he expects the dollar to lose its stature as the world’s predominant currency while the yuan ascends in importance.

“Globally it’s going to be far more influential and prominent,” he said of the yuan. Source: the phnom penh post

Beer girl exploitation revealed

2011-07-22T20:47:00.000+07:00

A SOON-to-be-released report on the working conditions faced by the country’s estimated 4,000 beer-promotion women, or beer girls, paints a disturbing picture of industry-tolerated exploitation that forces women to chose between indulging disrespectful and sometimes dangerous customers and supporting themselves and their impoverished, mostly rural, families.

A draft of the report, produced by Care Cambodia and the Solidarity Association of Beer Promoters in Cambodia, comprises first-person accounts and data based on interviews with 245 women over the first six months of this year. The report shows that attempted rape, threats, physical abuse and verbal harassment are not only widespread but tolerated by the owners of establishments. The women are paid by the company that brews the particular brand they are selling.

The report confirms other recent research that suggests highly publicised steps taken to improve working conditions for beer sellers since 2006 have fallen far short of the claims brewers have trumpeted.

Association president Seang Seng said she and her colleagues decided to produce the booklet because most people reacted with disbelief to descriptions of the conditions they worked under.

“He pulled a gun and pointed it at my head and asked me, ‘you go or not?’” one of the women recounts in the booklet. Another describes having to deal with a group of men who refused to pay unless they received sex. The establishment’s owner sought a compromise. Such negotiations usually favour the customers, the woman explained.

In the first half of this year, 121 of the 245 beer promotion girls surveyed reported experiencing derogatory behaviour from customers, such as obscene gestures and verbal abuse. Eighty-seven reported inappropriate touching, such as having their bottom’s slapped or their breasts grabbed.

Fourteen experienced physical violence, including being slapped, burnt with a cigarette or hit with a bottle. Thirty-four were either verbally or physically threatened, often to leave with or have sex with a customer or group.

During interviews with beer sellers conducted by The Post yesterday, most said customers regarded them as sex workers.

Chhum Sereyleak, 21, said that during the three years she has been selling beer, customers often became insulting when she refused to have sex with them. Often the rejected suitors would pinch her before leaving, saying “Who do you think you are? You’re just a beer girl,” she explained.

Seang Seng said that some brewers, especially Tiger and Heineken, treat their promoters better than others do.

Labour Ministry Secretary of State Prak Chantha said owners of nightclubs and beer gardens should treat their beer sellers like their own children. They should prevent customers from “raping, threatening, abusing and harassing them”, he said.

All men do not look down on women who sell beer, he said, adding that the job is as socially acceptable as any other. source: the phnom penh post

The Riel Deal: Risky deals may cost

2011-07-19T15:32:00.000+07:00

WHILE the opening of the Cambodia Securities Exchange garnered the most attention on Monday, another project in Canadia Tower’s shadow also saw its official start: the Boeung Kak lake development.

The fact the CSX launched with no companies ready to trade illustrates the problems entrenched in Cambodian business, namely the lack of transparency and accountability. Although the exchange does hold the possibility that it could eventually deliver that transparency, and boost confidence in the Kingdom among foreign investors.

But Boeung Kak shows much more the inherent flaws of the Kingdom’s race to development, and how progress is often sacrificed in the name of profit and personal gain.

The project, of course, is being run by Shukaku Inc, a company owned by Cambodian People’s Party Senator Lao Meng Khin. Shukaku holds a 99-year lease to develop the 133-hectare area, and will do so in a joint venture with China’s Inner Mongolia Erdos Hung Jun Investment Co.

Boeung Kak’s development does not come without collateral damage, though. Thousands of area residents have been forcibly evicted to make way for the construction that began on Monday. Protests over those evictions have turned violent. And residents claim they are being denied adequate compensation.

No doubt all eyes have been watching these events play out, most especially potential investors eyeing Cambodia. The implications of how the Boeung Kak deal came to be can’t be lost on them: that the local government granted another government official a concession, and the very people most affected by it lack any viable recourse.

Lao Meng Khin recently was at the heart of another government-to-government deal that raised eyebrows as well. The National Assembly last month voted to guarantee payments by state-owned Electricité du Cambodge to his energy company, Cambodia International Investment Development Group Co Ltd, a joint venture with a separate Chinese firm.

The vote, which could be worth millions of dollars to the JV, was hailed by Minister of Economy and Finance Keat Chhon. Observers, though, and rightly so, called into question the transparency of the operation, as well as the impact Lao Meng Khin’s Sihanoukville coal-fired plant could have on the local environment.

One has to wonder if either of these Lao Meng Khin ventures would ever satisfy the Securities and Exchange Commission of Cambodia’s requirements for listing on the CSX. Because if the companies involved in some of the Kingdom’s largest development projects are not suitable for public trading, then what does that say about the future of the exchange?

The Cambodian government’s pitch for investing in the Kingdom is well known: political stability, low-cost labour, untapped natural resources and a favourable regulatory environment.

But these kinds of deals may frighten off the very investment it so desperately seeks to attract. Source: the phnom penh post

Mobile merger plans

2011-07-19T15:30:00.000+07:00

DIGITAL Star Media is in talks to acquire mobile operator Excell for an undisclosed amount, a move which is expected to bring some long-awaited consolidation to the Kingdom’s overcrowded telecommunications sector by month’s end.

Digital Star, which operates under its Emaxx brand and has announced plans to operate a fourth-generation mobile service by next year, aims to acquire Excell, the smallest of Cambodia’s eight mobile operators and the only one to employ CDMA2000 technology, company officials said yesterday.

Ministry of Posts and Telecommunications statistics show more than 99 percent of domestic mobile subscribers use GSM technology, but Digital Star Chief Operating Officer Frank May said CDMA allows for a faster transition to 4G, among other advantages, which will be crucial as data services grow in popularity.

“Data is growing exponentially,” he said. “So it is a good acquisition from our point of view.”

Digital Star is conducting due diligence, and “the final acquisition will be completed by the end of the month”, he added. He declined to specify the price of the deal, citing a non-disclosure agreement.

May said Digital Star will obtain Excell’s 28 cellphone towers and will continue expanding the network and its capabilities going forward. Partly through tower-sharing agreements, Digital Star aims for a presence in all 24 provinces by mid-2012, he said.

He touted what he saw as the numerous advantages of CDMA, including a longer signal reach than GSM. May said CMDA, which is used in bellwether markets like the US and China, is more cost effective when upgrading to or expanding 4G service as well.

May cited the development of Cambodia’s telecom industry as integral to attracting much-needed foreign investment to the country. Digital Star’s efforts to grow the Kingdom’s 4G capability were aiding that pursuit, he said.

“Things are on the move and changing in Cambodia. And they’re changing for the better.”

Others in the industry said they doubted May’s claims about the viability of CDMA2000, though.

Hello Chief Executive Officer Simon Perkins hailed the planned acquisition as a good thing for the crowded mobile sector, but questioned whether CDMA would gain traction in Cambodia.

CMDA technology does not use SIM cards, and Cambodian mobile users are well known to hold multiple SIMs at any given time, he said, adding there were fewer CDMA handsets available given the global predominance of GSM.

CDMA “just doesn’t have the scale to make sense for use from a consumer point of view”, Perkins said.

Still, he said CMDA could offer a viable strategy for a company focused largely on data services. Regardless, the adoption of 4G technology was still some ways off, and present 3G speeds were more than adequate for domestic consumers, he said.

“I’m not going to lose any sleep about having to build 4G networks for another five to 10 years,” he said.

Another rival, qb CEO Alan Sinfield, claimed GSM was a much more versatile technology, adding that in the battle between CDMA2000 and GSM for market supremacy, GSM had come out on top.

Therefore, it made little sense to him to buy a CDMA company, even if to expand a network.

“Let’s not even debate it. Game over. CDMA lost,” he said.

However, May claimed his strategy was competitive and that Digital Star would outlast many peers as consolidation in Cambodia’s mobile market plays out. “Whoever’s left standing, we will be one of them,” he said.

Excell Chief Executive Officer Biloliddin Salakhiddin uulu declined to comment yesterday. Source: the phnom penh post

Thai telcos warned on towers in Cambodia

2011-07-19T14:57:00.000+07:00

THE Ministry of Posts and Telecommunications has ordered Thai telecom companies to halt unauthorised operations inside the Cambodian border, according to an announcement.

Several unnamed Thai mobile service providers have constructed towers inside the Cambodian border without authorisation, said Ministry Secretary of State Sarak Khan.

“Illegal use will impact [Cambodian] profits, if local people continue to use their service,” he said late last week.

The ministry had been aware of the situation for some time, though it had not acted because the quality of coverage had otherwise not been strong in certain areas of Koh Kong, Battambang, Preah Vihear, Banteay Meancheay and Oddar Meancheay provinces, he claimed.

“[Cambodian telecoms firms’] services fees are now cheaper than the [Thai telecom firms] as we have nationwide cable coverage. Particularly landline phones, which are available at a cheaper tariff than them,” he said.

The firms had charged domestic Thai rates for the calls in Cambodia to numbers in the same area, he added.

Sarak Khan said the ministry had sent out inspectors in cooperating with provincial officials to deal with the issue.

“We have not set out a deadline for [the telcos] to pull out yet,” he said. “We will wait to see the result from our officials after they conduct investigations before we take any measures.”

Last month, Minister of Posts and Telecommunications So Khun said Cambodia’s ICT sector has developed strongly in the past few years. Source: the phnom Penh post

Stock exchange launches

2011-07-11T16:47:00.000+07:00

THE Cambodian Securities Exchange officially launches today after years of planning and delays, though insiders said yesterday stock trading isn’t expected until the end of the year.

However, government officials, investors and academics applauded the launch, saying it would advance transparency in the country and offer a new path for economic growth.

The bourse was a joint venture between the Cambodian government and the Korea Exchange, which hold 55 percent and 45 percent of the CSX, respectively. The two sides have been working on the project since 2007.

Hwang DBS Commercial Bank country head Han Peng Kwang touted the exchange’s potential for both domestic firms and investors.

“It is good for local companies because now they can issue stocks as a way of raising funds to expand their business. It is cheaper than taking a loan from a bank,” he said.

“And local investors will have other investment alternatives, as they normally buy property or put their money in the bank,” he added.

Han Peng Kwang also noted that the banking industry and stock exchange usually work together “in order to push up the overall capital market of the country”.

At the same time, Asia Cambodia Law Firm President Seng Vuoch Hun said the CSX could catalyse much-needed standards of accounting in Cambodia.

“It will be a driving force to build transparency and proper financial reporting. It will especially urge companies to pay taxes and respect the law,” she said. She also cautioned about protecting new investors, as the idea of an exchange is new to the country.

“Regular investors will feel the most impact if the market doesn’t operate properly or regulations are not clearly implemented. The government should think about their safety,” she said.

Panasastra University finance lecturer Sam Visoth shared those sentiments, warning about potential downside of a strong regulatory framework not being in place.

“If it is not seriously carried out, there will big dangers to investors, mostly small investors,” he said.

Nguon Sokha, director general and spokeswoman at National Bank of Cambodia, admitted the government still has some work to do to strengthen the country’s securities industry. However, she hoped experienced market players would help ease the transition.

“I do hope the market will operate smoothly thanks to the new securities firms, which have years of experience in other countries. They will bring their skills and experience to develop the new industry in our country,” she said.

The Securities and Exchange Commission of Cambodia so far has licensed 15 private companies to serve as underwriters, dealers, brokers and financial advisors for the CSX.

Some of the companies are subsidiaries of larger firms operating in more developed markets such as Japan and South Korea. SECC Director General Ming Bankosal told reporters last week that three state-owned companies will issue shares on the bourse when trading eventually begins: Telecom Cambodia and Phnom Penh Water Supply.

“I think that it will take until the end of the year before stocks start trading,” he said.

Some private companies and other state-owned companies also have shown an interest in going public, he added. Source: The Phnom Penh Post

Broker opens ahead of CSX launch date

2011-07-08T23:06:00.000+07:00

DESIGNATED broker Sonatra Securities inaugurated its operations yesterday ahead of the Cambodian Securities Exchange launch next week.

Sonatra Securities is one of four firms licensed by the Securities and Exchange Commission of Cambodia to act as brokers, meaning it can buy and sell shares on behalf of clients for a fee.

Sonatra chief executive Sorn Sokna said the launch of the firm was a reflection of the government’s efforts to launch the exchange.

“I firmly believe that Cambodia’s securities market will spur the country’s economic growth, promoting the country into the global community as well as ASEAN,” he said.

Minister of Economy and Finance and SECC chairman Keat Chhon said at Sonatra’s launch yesterday that brokers played a role that was vital to the exchange’s operation.

“It is the pride of Cambodia, having a Cambodian-owned firm participate in the process and the development of the securities market from the beginning,” he said.

The CSX would offer another source of funding for companies operating in Cambodia, Keat Chhon said.

“The securities market will be operating smoothly, successfully and fruitfully in the short term, although it needs quality, skill and professionalism from all the components of the market [to succeed],” he said.

The other firms licensed as brokers on the exchange by the Securities and Exchange Commission of Cambodia are ACLEDA Securities, Cambodia Capital Securities and CAB Securities.

The Cambodia Securities Exchange is set to be launched next week, after twice being delayed.

Three state-owned companies have been tapped to list, although officials from the Phnom Penh Water Supply Authority, Telecom Cambodia and the Sihanoukville Autonomous Port have said they will not be ready until later this year.

Several private companies are also said to be considering listing on the exchange.

Source: the Phnom Penh Post

Chinese tourists tough to capture

2011-07-02T20:12:00.000+07:00

A YEAR ago, Allison Angkor Hotel was temporarily laying off employees between May and July, Cambodia’s slow tourist season. This year, however, the hotel on National Road 6 in Siem Reap is fully staffed due to a sharp increase in Chinese guests.

“During these months, it’s kind of quiet for Western tourists. In 2009 and 2010, we had to make staff take mandatory leave. But because of Chinese tourists this year, we didn’t have to do that,” Allison’s General Manager Kousoum Kina said.

With nearly 100,000 Chinese visiting the Kingdom during the first five months of the year, Chinese visitors are increasing rapidly, currently third in total number of tourists behind Vietnam and Korea, according to statistics from the Ministry of Tourism.

The 33 percent year-over-year growth in Chinese tourists far outpaces inbound tourists from comparable neighbouring countries. Korean tourist numbers grew by 20 percent in the first five months of the year compared to the year before, while Vietnamese tourists, increased by about 16 percent, according to the statistics.

Tourism Minister Thong Khon said he projects the Kingdom will see 200,000 total Chinese visitors in 2011, or year-over-year growth of about 40 percent.

However, industry insiders say the economic impact from the growth of Chinese tourists has presently been confined largely to well-connected businesses in Siem Reap.

Cambodian insiders say up to 90 percent of Chinese tourists travel in tour groups, visiting only the hotels and restaurants to which their guides take them.

For hotels with inroads into the market, the effect can be lucrative. Chinese tour groups are taking up to 40 rooms in the Allison Angkor Hotel per visit this season, Kousoum Kina said.
Some hotels with traditionally Western customer bases are finding the Chinese market challenging, Roman Cornillet, sales and marketing manager at the Himawari Hotel in Phnom Penh, said.

“It’s kind of difficult to penetrate this market,” he said.

“Chinese tourists come with a Chinese travel agency. They want to stay at Chinese hotels and eat at Chinese restaurants. They want to be with people who speak Chinese.”

The Angkor Riviera Hotel in Siem Reap has seen large increases in Chinese tourists since the end of last year, Assistant Manager Tang Ros Sok said. Fostering good relations with Chinese tour operators has been essential for luring Chinese customers, he said.

“If there’s no cooperation with the tour guides, then no Chinese guests will come. They are hard to find,” Tang Ros Sok said.

The City River Hotel, located in the same area as the Angkor Riviera Hotel, has seen almost no Chinese guests this year, Manager Paul Sreng said. Guests at the City River Hotel are primarily European and the hotel does not have contacts with Chinese tour operators, he added.

With an increasingly affluent middle class in China, experts say Chinese tourism in the region will see dramatic increases during the next two decades.

“The potential for growth is huge, vast,” Tim Winter, a senior research fellow at the Centre for Cultural Research at the University of Western Sydney, said.

“In less than 15 years’ time, China will be producing around 100 million outbound tourists – numbers that the world hasn’t seen before.”

Regional tourism now dominates the Cambodian market, Winter said. While 10 years ago the majority of travellers in the Kingdom were from Europe and North America, 75 percent of today’s inbound tourists are from within the region, he said.

More than 230,000 Vietnamese tourists visited Cambodia in the first five months of the year, according to statistics from the Ministry of Tourism. But Vietnamese spend less compared to their Chinese counterparts, said Wei Jiming, manager of the Wood House Chinese Restaurant in Siem Reap.

“There are lots of Vietnamese tourists in this city, but they don’t spend like the Chinese do,” he said.

“The future of tourism here is from mainland China. The people in Beijing and Shanghai already have enough money. And there are so many of them.”

Rapid growth in Chinese disposable income is translating into larger bills in Siem Reap restaurants and hotels, Wei Jiming said.

China’s per capita GDP was about US $7,400 in 2010, a 10-percent increase over the previous year, according to the International Monetary Fund. Vietnam’s 2010 per capita GDP was US $3,100, with an increase of about six percent.

A politically stable Cambodia, coupled with China-oriented promotion accounts for the increasing numbers, Minister Thong Khon said on Tuesday.

“We did a good job advertising to Chinese and were successful during our exhibit at the Shanghai World Expo last year,” he said.

Charter flights from a growing number of Chinese cities have made Cambodia an easy travel destination, Thong Khon added. Chinese cities such as Chengdu, Beijing, Shanghai, Guangzhou and Nanjing have direct flights to either Phnom Penh or Siem Reap.

Cambodia’s burgeoning Chinese tourism market is largely concentrated in Siem Reap. Hotel and restaurant operators in Phnom Penh said they haven’t seen the same increases in Chinese tourists this year.

Huang Rujiang, manager of Yi Pin Xiang Sichuanese Restaurant on the capital’s Monivong Boulevard, said he has seen an increase in Chinese businesspeople, but not tourists.

“There’s nothing that Chinese want to see in Phnom Penh. That’s all in Siem Reap,” he said.

“The environment here is similar to some Chinese cities. There’s no reason for them [Chinese tourists] to travel here.”

Phnom Penh’s various genocidal museums, such as Tuol Sleng and the Killing Fields, are not appealing to Chinese travellers, Huang Rujiang added. Source: The Phnom Penh Post

Mobile phone revenues per user to decline

2011-07-02T19:59:00.000+07:00

Revenues per user in Cambodia’s mobile phone sector will drop sharply over the next five years, according to global research and consultancy firm Frost & Sullivan.

The company said the average revenue per user – ARPU, a key metric for the industry – would fall to US$3.68 in 2016 from $5.14 last year, as more and more lower-income Cambodians adopted the technology and increased competition drove down revenues.

“The indication is that things will get worse,” Marc Einstein, Frost & Sullivan’s industry manager for information and communications technologies in the Asia-Pacific, said.

“Profitability growth declines over time in this industry.”

Einstein said the trend could be one catalyst for consolidation in the sector, as less-profitable firms sought to merge with stronger competitors.

He noted that Frost & Sullivan’s figures were based on average revenue per SIM card, and not per person.

As many Cambodians use more than one SIM card, Einstein estimated the true ARPU figure might be 1.25 to 1.5 times higher than his listed projections.

Mobitel chief executive David Spriggs said ARPUs tended to decline as a company’s customer base grew, although this was usually offset by the overall growth of the market.

Spriggs agreed with Einstein, however, that intense pricing competition in the sector, as well as the specific demographic of new customers coming on line, had been the catalysts for ARPU declines in many markets. “It’s normal in markets where the penetration is driven by reaching out to lower-income customers that the average will go down,” he said.

Companies could be forced to consolidate, cut their costs or stabilise their pricing strategies in order to remain profitable in an environment with declining ARPUs, Spriggs said.

Hello Axiata marketing director Rozy Laxana agreed that average revenues per user would decline.

“Promotion-driven campaigns to attract new acquisit-ions and increase market share in a highly competitive marketplace will result in ARPUs declining further, fuelling the multi-SIM phenomenon to an even greater extent,” Laxana said.

She predicted Cambodia’s mobile operators would face higher churn rates and an increased cost of acquiring customers, leading to lower ARPUs across the board.

As a result, operators might find it more difficult to invest in new products and services, which could affect Cambodian consumers as a whole, she said.

Laxana said she expected local operators would look to the mobile-data area for new revenue streams.

Richer content and an increasingly tech-savvy consumer base had served to fuel growth in that part of the business, she said.

“This trend is also beginning to gain traction in Cambodia. At Hello, we have seen a tremendous uptake in our mobile data and BlackBerry services during the past year,” Laxana said. Source: The Phnom Penh Post