Jan 30, 2008

Cambodian FM hails Cambodia-China ties

The Cambodia-China relations have been increasingly strengthened and promoted both in scope and depth, bringing greater benefit to both peoples, said Cambodian Deputy Prime Minister and Minister of Foreign Affairs and International Cooperation Hor Namhong in a recent written interview with Xinhua.

During the past 50 years, Cambodian former king Norodom Sihanouk, King Norodom Sihamoni and Prime Minister Hun Sen, together with successive leaders of China, have nurtured very close friendship and fruitful multi-faceted cooperation in many fields between the two countries, he said.

By celebrating the 50th anniversary of the establishment of diplomatic ties of the two countries, which falls on July 19 this year, both countries aim to enhance their traditional bonds of amity and good collaboration, he said.

To achieve the goal, a number of exchange programs are being organized in various fields such as economy, culture, education and tourism, he said.

It is expected that these programs will result in greater understanding and closer friendship between the peoples in the two countries, increasing exchange of tourists, expanding trade and investment and scoring more dynamic economic cooperation, he added.

Hor Namhong's written interview was done in the eve of Chinese Foreign Minister Yang Jiechi's visit to the kingdom on Wednesday.

Cambodia established diplomatic ties with China on July 19, 1958.


Jan 29, 2008

Cambodia's biggest hydropower dams serious threats to people

The construction of Cambodia's first and second biggest hydropower dams pose serious threats to eco-systems and the livelihood of thousands people in southwest of the country, an environmental conservationist report said Monday.

Under an aid package of $600 million(Bt18.6 billion) from China, Cambodia is constructing the Kamchay Dam with an installed capacity of 180 Megawatts (MW) the biggest in Cambodia in the southwestern Kampot Province and the 120 MW Stung Atay Dam in Pursat Province.

The Kamchay Dam developed by China's largest hydropower developer, Sinohydro Corporation, is located wholly within the Bokor National Park and will flood 2,000 hectares of protected forest, according to a research report by the US-based conservationist International Rivers.

The project, to be completed by 2010, denied access to nontimber forest products to local residents, for whom many is an important source of income, and potentially a negative impact on a local tourist resort downstream of the dam, it said.

The Stung Atay, constructed by Yunnan Corporation for International Techno Economic cooperation, will be completed by 2012. The dam will flood a substantial area of the Central Cardamom Protect Forest, the report said.

"Cambodia's free flowing rivers and abundant natural resources are invaluable assets, the health of which are vital to the wellbeing of Cambodia's rural population," said Carl Middleton, Mekong Program Coordinator with International Rivers.

"Poorly conceived hydropower development could irreparably damage these resources and undermine Cambodia's sustainable development."

At present, only 20 percent of households in Cambodia have access to electricity. It is expected that the soaring demand for electricity will increase to more than 900 from the 212 MW in 2002.

The government has many hydropower projects under feasibility study, including the Sambor Dam to be built in the mainstream of the Mekong River in Kratie Province with a capacity of 465 or 3500 MW depending on the design and size of the reservoir.

The Sambor Dam, if built, would block major fish migrations and could decimate the income of tens of thousands of subsistence and commercial fishers. The dam also threatens the habitat for the endangered Irrawaddy Dolphin, around which a thriving local tourism industry has grown.
The Ministry of Industry, Mine and Energy estimated the country has the potential to generate approximately 10,000 M, of which more than 50 percent will come from the Mekong mainstream.

Cambodian Foreign Minister Hor Namhong told an investment conference in Tokyo recently that his country has a great potential to generate electricity supplies for the region. Apart from Laos, Cambodia could be the "battery of Asia", he said.

The report recommends that Cambodia adopts international best practices in electricity planning, including the findings of the World Commission on Dams, which is widely recognised to be the international standard for energy and water planning.

"Cambodia has many choices for meeting our electricity needs including renewable and decentralised energy options that must be explored," said Ngy San, Deputy Executive Director with the NGO Forum on Cambodia.

by Supalak G Khundee
The Nation

Boom time hits Cambodia, but not all are smiling

By Ed Cropley

PHNOM PENH (Reuters) - After decades of war and upheaval, including the Khmer Rouge "Killing Fields," Cambodia is enjoying an unprecedented boom, its economy expanding at around 10 percent annually for the last five years. But the breakneck growth, fuelled mainly by garment manufacturing, tourism and real estate development, is turning its once-sleepy capital into a building site and forcing many ordinary Khmers from their homes.
"I will move only when they pay me enough to find another place to live," said 49-year-old Ngay Tun, a fisherwoman living on Boeung Kak, a 120 hectare (300 acre) city-centre lake about to be drained and filled in to make way for a housing project.
"I worry about it every day, that they are going to come suddenly in the night to kick us out," she said, paddling a small wooden boat through floating banks of morning glory.
While the outlook for the garment industry and tourism appears solid -- especially while the U.S. dollar, Cambodia's de facto currency, continues to fall -- the same cannot be said for real estate, where prices are spiraling to dizzy heights.
Figures from Bonna Realty, a leading estate agent, suggest the price of prime Phnom Penh land doubled last year to $3,000/sq m -- compared to less than $500 in 2000.
By contrast, land in Bangkok's downtown Silom district is $5,000/sq m, while Ho Chi Minh City, the hub of neighboring Vietnam's red-hot economy, prices can be as high as $15,000.
"There is a debate about whether there's already a bubble," World Bank country economist Stephane Guimbert said.
"On the one hand, clearly the market was very depressed until a couple of years ago because there was little security and stability. But on the other hand, it's surprising that prices are increasing so fast," he said. In one of the first signs of overheating, annual price inflation has spiked to more than 9 percent in the last year, almost double its level in the preceding five years, and anecdotal evidence points to big upward pressure on wages.

At the top of the market, prices are being driven by huge foreign-funded ventures such as "Gold Tower 42," a $300 million South Korean apartment block which, at 42 storeys, will be three times higher than Phnom Penh's current tallest building.
Even though it will not be ready until 2012, Cambodia's super-rich are already snapping up some of the 360 units on offer at $2,150 a sq m, only a shade cheaper than Ho Chi Minh City.
But such prestige projects are the tip of the iceberg, and foreign funding accounts for only a fraction of the boom, analysts say.
The domestic financial services industry is growing fast -- private sector lending by Cambodia's 20-odd banks grew 60 percent last year -- but remains too small to be funding projects to the tune of hundreds of millions of dollars.
Instead, analysts say, much of the funding is Cambodian cash stuffed into mattresses, locked up in gold, or squirreled away in anonymous offshore bank accounts for years.
"There are a lot of people in this town who are fantastically wealthy," said Trent Eddy, director of Phnom Penh-based Emerging Markets Consulting. "The banks are not doing mortgage lending for the sort of stuff that's driving up prices."
The most popular theory on the streets of Phnom Penh is that a global banking clean-up after the September 11, 2001 attacks smoked out billions of dirty Cambodian dollars sitting quietly in bank accounts in Singapore, which encouraged its repatriation.
With few other investment options, and a steadily improving regulatory and legal framework -- not to mention political stability under ex-Khmer Rouge strongman Hun Sen -- real estate is the obvious choice for the prodigal loot, so the theory goes.

Even though the economy remains one of Asia's smallest, with a GDP of around $6.5 billion, the hype is such that international portfolio investors have been looking into setting up domestic real estate funds, mainly in the hotel sector.
U.S. property services firm CB Richard Ellis is also hoping to get in on the action with the opening of a Phnom Penh office in the next few months.
The prospect of revenues from off-shore oil and gas by 2010 reaffirms the view of outsiders that the economy is only heading in one direction, and that rapid urbanization and demand for better housing from Cambodia's 13 million people must follow.
The clearest example is another South Korean venture, a $2 billion "new town" called Camko City taking shape on the northern outskirts of Phnom Penh.
"They are targeting primarily the Cambodians. There's very little accommodation in Phnom Penh, but demand is growing," said Lee Sangkwang, commercial attache at the South Korean embassy. "It's kind of pioneering."
The changes, however, are not coming without costs.
The city's infrastructure, already in a dilapidated state after nearly three decades of civil war, is creaking under the weight of the expansion, with roads clogged by traffic, leaking sewers, and frequent floods and power blackouts.
Critics also point to a lack of transparency and vision in urban planning -- despite assurances from Mayor Kep Chuktema that he "listens to the views of all stakeholders."
Social tensions are also emerging, with many city centre communities living in fear of eviction and pop songs lamenting the growing obsession with property speculation and the desire to make a quick buck.
"Now, the war in Cambodia is over land," said tuk-tuk driver Ros Sopheak.
(Editing by Michael Battye and Megan Goldin)

Jan 25, 2008

Cambodia to get first skyscraper

Cambodian officials have attended the official sales launch of the first-ever skyscraper in the capital, Phnom Penh.

The twin towers are to be 42 storeys high - almost three times higher than the current tallest building.

It is the first of three skyscrapers planned in the capital, where the skyline has been kept low - in part to avoid overshadowing royal palaces.

But the government has encouraged the new buildings as symbols of Cambodia's development after decades of conflict.

Although Gold Tower 42 is some way from completion, the launch of its show apartment and sales office attracted government ministers and overseas ambassadors.

The BBC's Guy De Launey, in Phnom Penh, said the launch gave a taste of the shape of things to come.

He said the solid, imposing, gold-faced structure would stand out from its neighbours on Norodom Boulevard - an area of yellow-washed, wooden-shuttered French colonial-era buildings.

But Phnom Penh is in the middle of a real-estate boom - and some residents hope that building up will bring the price of homes down.

"It's more affordable for people wanting to stay in town, and I think it's good. It's secure and they have all the facilities," one resident said.

But other locals worry about the effect tall buildings will have on the city's character

"The original Phnom Penh city [was developed to] be horizontal, not vertical," one resident said.

South Korean companies are building Gold Tower 42 and another even taller skyscraper near the Mekong River.


Jan 23, 2008

Cambodia, South Korea Joint Stock Exchange in 2009

Cambodia has posted annual economic growth of 11% over the past three years.

By . Agence France-Presse

Jan. 23, 2008 -- Cambodia, on Jan. 22, signed an agreement with representatives from South Korea's stock exchange operator to establish Cambodia's first stock market in 2009, officials said. The memorandum of understanding makes formal the planned joint venture between Cambodia and the Korea Exchange (KRX), Asia's fourth-largest bourse operator.

The Cambodian government will own a 51% share in the new exchange, with KRX holding 49%, said Aun Pon Monirath, secretary of state with Cambodia's finance ministry. "Both sides are now looking for a location and training people to work," he said after a signing ceremony with KRX.

While still one of the world's poorest countries, Cambodia has emerged from decades of conflict as one of the region's rising economies. It has posted annual economic growth averaging 11% over the past three years on the back of strong garment and tourism sectors. But Cambodia remains a largely cash-only economy and a high degree of mistrust keeps many people hoarding their money at home instead of using banks.

Last September parliament approved the law setting out the rules and regulations by which private and state enterprises can issue stocks and bonds. Despite concerns from opposition lawmakers over the independence of the new commission, Finance Minister Keat Chhon said at the time the law is up to international standards. But he acknowledged that many challenges remain -- particularly creating the infrastructure for the market and a computer system to manage trading.

Copyright Agence France-Presse, 2008

Jan 16, 2008

Cambodia opens first big cement plant

Reuters - Monday, January 14

A construction boom fuelled by billions of dollars of foreign investment, much of it South Korean, has helped push annual economic growth to nearly 10 percent. (Reporting by Dara Rith; Writing by Ek Madra; Editing by Ed Cropley) - KAMPOT, Cambodia, Jan 14 - Cambodia's first major cement plant, a $93 million joint venture with Thailand's Siam Cement , opened on Monday, another symbol of the war-scarred southeast Asian's nation rapid economic development.

The factory, in the coastal province of Kampot, is expected to produce 960,000 tonnes of cement this year, reducing Cambodia's reliance on imported materials for the construction boom reshaping its capital, Phnom Penh.

Siam Cement and top Cambodian building firm Khaou Chuly Group said their joint venture, Kampot Cement Co., should be producing double that quantity in 2009 and 2010.

At the factory's opening ceremony, Prime Minister Hun Sen said Cambodia had been importing between two and five million tonnes of cement each year to meet soaring demand and needed to start making its own.

"We need more cement," he said.

After decades of civil war, including the Khmer Rouge "Killing Fields" of the 1970s, Cambodia's economy has taken off in the last three years, due mainly to rapid expansion of its tourism and garment industries.

A construction boom fuelled by billions of dollars of foreign investment, much of it South Korean, has helped push annual economic growth to nearly 10 percent. (Reporting by Dara Rith; Writing by Ek Madra; Editing by Ed Cropley)

Jan 12, 2008

Rubber group to expand plantation in Cambodia

Four subsidiaries of the Vietnam Rubber Group (VRG) will plant a combined acreage of 4,100 ha of rubber in Cambodia this year.

The plan was announced at a conference of the VRG held in Phnom Penh on January 9 to discuss measures to speed up rubber cultivation in Cambodia under an agreement between the two governments.

So far, six companies under the VRG have been allocated over 22,000 ha of land in Cambodia to grow rubber trees. Of them, Phu Rieng and Tan Binh companies have so far put 270 ha under rubber trees, generating many jobs for local people.

However, the companies complained of the costly land reclamation due to poor soil, a lack of skilled workers, materials and machines and delays from import procedures.

Participants agreed on several measures to accelerate the planting, including looking for local supply of materials and equipment and training local labourers. (VNA)

Jan 10, 2008

S&P Gives Credit Rating to Cambodia Bank

Thursday January 10, 3:21 am ET
By Ker Munthit, Associated Press Writer

Standard & Poor's Gives First Credit Rating to Cambodian Micro-Credit Bank

PHNOM PENH, Cambodia (AP) -- Standard & Poor's gave its first credit rating to a Cambodian bank Thursday, saying the country's banking industry is poised to benefit from strong growth but is still fragmented and lacks financial depth.

The rating agency also said it has decided to categorize Cambodia's banking industry in terms of risk assessment in the tenth and lowest group, on par with Bolivia, Jamaica, Ukraine and Venezuela.

It assigned Acleda Bank Plc., Cambodia's third-largest bank, a B+/B credit rating. B+ is four levels below investment grade.

"The rating on Acleda reflects the bank's adequate balance sheet strength and satisfactory asset quality, although these strengths are partially offset by the underdeveloped operating environment and poor legal infrastructure in Cambodia," Ivan Tan, Standard & Poor's credit analyst, said in a statement.

Acleda, the country's largest micro-creditor, has the country's largest network with 176 branches, mainly in the rural areas.

The bank's reported asset quality and profitability are good, "underpinned by its healthy interest margins of 19.9 percent in August 2007," the statement said.

But it added an upgrade of rating for the bank will hinge upon its ability to maintain good asset quality along with stabilization of its loan portfolio, and an upgrade in Cambodia's sovereign rating, also B+.

In a separate statement, S&P said it has put Cambodia's banking sector in the tenth and lowest group on its Banking Industry Country Risk Assessment scale. The scale classifies countries into 10 groups, with the strongest banking systems in Group One.

The Cambodian banking system remains "fragmented and lacks financial depth with poor access to credit," despite good economic prospects and political stability, it said.

"There are a wide variety of structural distortions that prevent the optimization of financial intermediation by banks in Cambodia," it said, adding that deficiencies include inadequate legal framework for secured transactions, developing institutional framework and poor disclosure standards.

"As Cambodia transitions to a market economy and credit growth picks up, its main challenge is to rectify these deficiencies," S&P said.

Jan 1, 2008

Local paper highlights Top 10 Economic News of Cambodia in 2007

Major local Chinese-language newspaper the Commercial News here on Monday highlighted the Top 10 Economic News of Cambodia in 2007 and outlined the robust pulse of the kingdom's economic vibration.

On top of the chart was the signing of the single visa agreement between Cambodia and Thailand on Dec. 17, which allowed foreign tourists from a third country to visit the two countries with a single visa and thus promoted more foreign tourists to visit both countries.

Second, Cambodia re-opened its Sihanoukville International airport on Jan. 15, after more than 20 years of hiatus, in order to perfect its air traffic network and attract more travelers to the seaport city.

Third, the kingdom started to construct its National Road No. 8on March 15, which, upon its completion, will improve the country's road network and provide more choices for its outgoing people.

Fourth, the National Assembly on Dec. 3 approved the government accounts settlement for 2005, which had 89.2 million U.S. dollars in surplus and confirmed its successful economic reform.

Fifth, the Special Economic Zone of Sihanoukville began to be constructed in 2007 with the participation of Chinese investors. The project aimed to provide full-scale business service for export-oriented factories and companies.

Sixth, real estate prices in Phnom Penh surged drastically in 2007, as it inhabitants increased by 3.2 percent on annual basis and foreign investment rushed in to share the country's foreseeable economic boom in the near future.

Seventh, Cambodian has become the sixth largest garment exporter in the world. The industry created job opportunities for about 0.5 million Cambodians and generated some 0.3 billion U.S. dollars of monthly payment for the employees.

Eighth, maiden direct flight between Europe and Cambodia was made on Dec. 7, which would bring more tourists to the kingdom.

Ninth, agricultural exports flourished in 2007, as palm oil, peanuts, rice, pepper and other rural products became ever more popular in the international markets.

Finally, luxury real estate project the Longqing Resort in Kandal province was demolished on July 31, as it expanded its land illegally and in effect constituted menace to the safety of the capital city.

Earlier in November, the Asia Development Bank put Cambodia's economic growth rate for the current year at 9.5 percent and nine percent in 2008, while the Cambodian government gave a conservative estimation of seven percent both in 2007 and 2008.

In addition, the latest World Bank (WB) East Asia and Pacific Update said in November that despite slight decline, Cambodia's economic outlook for 2008 will remain strong overall, with its growth rate dropping from 9.5 percent in 2007 to 7.5 percent in 2008.

According to official figures, the economic growth rate of the kingdom in the past three years averaged 11 percent, by which the government said that macro-economic stability has been realized out of decades of war and turmoil.