Long-overdue Consolidation of the Kingdom’s Mobile Telecoms Market May Have Operators Feeling Hopeful, but Challenges Remain
April 15th, 2013, Southeast Asia Globe, Banking & Finance, Business & Commercial Development, Debt Servicing, Domestic Investment, Economics, Foreign Investment, Industry, Telecommunications
After years of immersion in a vicious price war, battle weary and capital-haemorrhaging [sic] mobile operators in Cambodia’s oversaturated telecommunications sector may finally have reason to breathe a sigh of relief; 2013 might be cited as the year the tide turned. …
Tarred by legal threats, unfair competition practices, trash-talking in the media and engagement in cripplingly expensive advertising campaigns, the industry’s ugly side has reared its head on several occasions since the market started overcrowding in 2006. Yet recent and long overdue consolidations in the market have some chief executives trading their swords for confetti, handshakes and electric-light breakdancers.
With over five million subscribers, Smart is now the second-largest operator in the country behind Metfone, owned by Viettel, a military-backed Vietnamese-owned telecommunications firm. Smart plans to expand its network and operational coverage throughout Cambodia and reinvigorate investors to develop infrastructure, says [Thomas] Hundt. [CEO of the repackaged brand ‘Smart’]. All the while the merger removes interconnection fees between Hello and Smart mobile users – a blessing in a market that operators claim is under-regulated and where complaints have been filed against companies that have not paid interconnection fees. …
With the industry reduced to six active operators, experts and mobile operators agree that the two developments have birthed new life into a market that, until now, has sustained multimillion-dollar losses each year. Revenues from phone usage in the Kingdom remain low, while an infant smartphone culture yields limited capital from data plans. …
The merger followed hot on the heels of Thaicom’s announcement that its lawsuit-laden subsidiary Mfone, which had been operating in Cambodia for two decades, was insolvent. …
“I think that this had to happen… The market can now begin to move at a level with more sustainable competition finally, and in the long term we won’t see any more of these crazy price wars,” said Marc Einstein, an independent telecom analyst. “I think in a market the size of Cambodia, in terms of population and GDP [gross domestic product], you can only have three, maybe four operators for the sector to be sustainable.”…
“I would say that because of the initial rush of entrants, the equipment was improved substantially, but… now quality is definitely toward the bottom compared to Thailand or Vietnam,” Einstein said. …
At first, services improved. But as huge promotions became the industry standard, the price of a domestic call dropped to just $0.01 per minute, far below Thailand’s $0.05 to $0.06 per minute and around $0.15 per minute paid in Hong Kong. …
“The problem is that, even at six players, there is still going to be a price war at a high level of competition,” said Dimitry Bushik, chief commercial officer at Excell, one of Cambodia’s mobile operators. …
Philip Heijmans
http://sea-globe.com/united-we-stand/
Monitoring for Nothing: Is the ILO’s ‘Better Factories’ programme failing the Kingdom’s garment workers?
April 9th, 2013, Southeast Asia Globe, Business & Commercial Development, Garment Industry, Industry, International Relations, Labor, Social Concerns, Textiles
The United Nations in Cambodia has taken a beating in recent months. The UN-backed Khmer Rouge tribunal has been plagued by high-profile resignations and accusations of political interference. Elsewhere human rights activists have criticised the UN’s failure to take a firm stance against an increasingly intolerant government.
In February, the international body took another punch when academics from Stanford University attacked one of its flagship programmes in Cambodia. In conjunction with experts from the Worker Rights Consortium (WRC), the academics openly questioned Better Factories Cambodia (BFC) – a much-lauded UN monitoring and reporting initiative launched in 2001 to improve working conditions in the Kingdom’s garment industry – in a report titled Monitoring in the Dark. …
“Cambodia is internationally branded as a sweatshop-free country thanks to BFC’s inspections, but the impact of the programme on workers’ well-being is far from glorious,” said Bent Gehrt, WRC’s Southeast Asia field director and co-author of the report. “While all neighbouring countries have witnessed important wage raises without any ‘Better Factories’ programme, real wages in the Cambodian garment sector have fallen by 16.6% over the past decade. Workers are poorer today than they were ten years ago, and the vast majority is now employed on short-term contracts. Impoverishment and job insecurity pushed them to accept excessive overtime in factories where basic health and security standards are often not even met. Under such circumstances, no one should wonder why mass faintings have become daily news in Cambodian newspapers.” …
Is the UN monitoring body toothless when faced with labour rights violations? “That’s the whole farce of the system as it is currently designed,” said David Welsh, Cambodia country director of the American Centre for International Labour Solidarity (ACILS), a US non-profit organisation supporting trade unions in developing countries. “BFC inspectors do a pretty good job at highlighting abuses in factories, but no one is obligated to take any action following their reports. BFC is just a monitoring programme with zero ability to enforce any decision. That is its mandate and deception is therefore huge for those who expect it to go beyond that.” …
Frédéric Janssens
http://sea-globe.com/monitoring-for-nothing/
Covering Cambodia
March 15th, 2013, Southeast Asia Globe, Business & Commercial Development, Industry, News Source
With the number of cars on Cambodia’s roads growing at a consistent pace, high-end automotive distributors are jockeying for a foothold in the market, but they are not the only ones who stand to benefit from Cambodia’s splurge on cars. Working on the sidelines, the Kingdom’s small field of insurance firms is turning a quiet profit in a once dormant industry.
Revenues generated from automotive insurance premiums grew 23.88% to $5.18m through the first nine months of 2012 compared to the same period last year, according to data from the General Insurance Association of Cambodia (GIAC). …
Philip Heijmans
http://sea-globe.com/covering-cambodia/
Sweet Prospects
March 13th, 2013, Southeast Asia Globe, Agriculture & Agri-business, Agro-Industry, Business & Commercial Development, Domestic Investment, News Source, Trade
The sugar palm is a national symbol for Cambodia. Harvested by the country’s poor for centuries, no part of the palm tree goes to waste in a process that fashions the tree into a range of products. The durable and strong leaves are weaved into baskets, the sap is collected and processed into a nutritious sugar and, to this day, villagers from local communities come together to use the wood from the tree’s bark to build homes for families in need.
Given palm sugar’s usefulness, it did not take long for businessmen and agriculture experts to see the potential of the product. Following Cambodia’s accession to the World Trade Organisation in 2004, palm sugar grown in Kampong Speu province was awarded Geographic Indicator status in 2010, putting it on the shortlist of the world’s best quality goods. …
Philip Heijmans
http://sea-globe.com/sweet-prospects/
The drugs don’t work: Despite the best efforts of the authorities, producers of fake medicines are making a killing in Cambodia
March 11th, 2013, Southeast Asia Globe, Business & Commercial Development, Industry, International Relations, pharmaceuticals, Production, Social Concerns
“Counterfeit medicine kills, while real medicine heals.” This was the simple but apt message selected just over a year ago for a poster campaign in Cambodia that aimed to raise awareness of the risks of counterfeit medications, as part of a government crackdown on the illicit trade.
Record seizures of counterfeit medications in the country followed. On September 24, 2012, police appropriated more than two tonnes of dangerous medicines in Phnom Penh and arrested a pharmacy owner. A week later, three tonnes of counterfeit and expired medicines were discovered at warehouses in the capital’s Chamkarmon district – the largest counterfeit drug haul recorded in the country. …
“Approximately 20% of the antimalarial medicines in Cambodia do not work. Many are fakes – sold because patients are not aware of the dangers. Additionally, most antimalarials make legitimate companies only a small revenue, so the companies don’t protect those brands as closely as they might more valuable products,” [economist Roger Bate] added. …
Sacha Passi
http://sea-globe.com/the-drugs-dont-work/
A smooth ride?
March 8th, 2013, Southeast Asia Globe, Business & Commercial Development, Foreign Investment, Imports, Industry, Infrastructure, News Source, Trade
It’s not a claim every country can make, but Cambodia builds its own cars. A country known for its low-skilled workforce, the Kingdom exceeded expectations with its January release of the Angkor Car, a mini-electric vehicle able to get up to 300 kilometres per charge. …
The tendency to buy high-end automobiles is also on the rise, growing 27% in 2011 compared to the year before, according to the World Bank.
Reputable brands are lining up to enter the market: the first authorised BMW showroom broke ground in Phnom Penh in December, while banners plastered around the capital are teasers for the arrival of Mazda vehicles later this year.
In good news for distributors, 2012 was a record-breaking year for a number of car brands. Toyota Cambodia reportedly sold 800 units, up from 500 in 2011, while Ford recorded 15% growth in sales. …
Philip Heijmans
http://sea-globe.com/a-smooth-ride-2/
Chugging along- The rehabilitation of the Kingdom’s railways is essential to boosting regional economic ties, but the mammoth project needs to pick up speed
November 14th, 2012, Southeast Asia Globe, Business & Commercial Development, Construction, Foreign Investment, Industry, Infrastructure, International Relations, Technical Assistance
A glance around Battambang’s dilapidated train station reveals the monumental task it will be to complete the Cambodian segment of the ‘iron silk road’, which will connect Southeast Asia to Europe by rail for the first time. Cows graze between missing rails in front of the station building, whose clock eternally shows 8:02. The last train was seen about five years ago, which is just as well for the locals growing their vegetables between the tracks. Looking further down country, the last train to traverse the southern line took 28 days to cover 256km thanks to a string of derailments and other problems. …
Mark Andrews
http://sea-globe.com/chugging-along/
Hunters and Hunted
September 27th, 2012, Southeast Asia Globe, Environment & Natural Resources, Forests, Protected Areas, Social Concerns, Timber/Wood
… Unable to effectively police the Cardamoms alone, the Cambodian government partners itself with several international NGOs. The forests directly north of Highway 48 arc patrolled with the help of Wildlife Alliance.
Beginning in 2002 with two ranger stations, Wildlife Alliance now operates six outposts in the Southern Cardamoms- a 680,000-hectare area known as the Southwest Elephant Corridor. With a mandate to enforce Cambodia’s Forestry Law (2002), each station is manned by a Wildlife Alliance station advisor, a Cambodian station assistant advisor, two Forestry Administration officials (Cambodia’s forestry Administration, or FA, technically oversees all Wildlife Alliance ranger station) and ten armed Royal Gendarmerie of Cambodia military policemen (MPs).
Wildlife Alliance builds maintains and outfits its own stations. In addition to this, it provides its FA officials and MPs, with allowances, bonuses and per diem payments that can equal as much as five times their meagre government salaries. According to Wildlife Alliance CEO Suwanna Gauntlett, providing forest rangers with attractive wages is the first step to overcoming corruption. …
Wildlife Alliance’s conservation efforts in the southern Cardamom Mountains are multipronged. In addition to pioneering reforestation and environmental education programmers, it operates Community Based Ecotourism (CBET) projects in the communes of Trapeang Roung and Chi Phat to provide loggers and poachers with alternative (and legal) sources of income. …
“It is tiring to only work on the surface,” Eduard Lefter, Wildlife Alliance’s Southern Cardamoms Forest Protection Programmer Technical Advisor, says. But by making the illegal wildlife and timber trades unprofitable through constant ambushes, raids and seizures, Lefter hopes to convince traders to pursue different lines of work. …
With so much at stake, illegal wildlife and timber traders employ a system of bribery, intimidation and violence to secure their business interests. Paid informants dot the landscape around the Stung Proat station, notifying the rangers’ every move. Rangers have been known to take bribe for information, while others have been brutally attacked while off-duty.
Wildlife Alliance’s few paid collaborators live in a state of fear. One such collaborator, Hong note disappeared without a trace after providing information that led to the seizure of a $10.000 ocean-going boar loaded with $15.000 worth of rosewood. “It is very difficult for us to find information,” Hong say. “Sometimes they are killed.” …
The Bottom Line
September 26th, 2012, Southeast Asia Globe, Economics, Exports, Garment Industry, Industry, Production, Social Concerns
Clashes between garment workers and the local manufacturing industry came to a head in February when three women were shot while protesting for increased bonuses outside their workplace. It was almost five more months before manufacturers and governing bodies agreed to raise the earning potential of a 350,000-strong workforce who each earn a monthly wage of $61, plus bonuses.
As of September 1, the monthly pay package will be adjusted to include additional bonuses of $10 – an extra $3 for employees who complete 26 eight-hour days a month, plus $7 for transport and accommodation – raising potential earnings to $83 per month.
“Regrettably the increase is too small to make any change to the conditions that workers face,” Bent Gehrt, from Worker Rights Consortium, said. “While the industry is booming in Cambodia, workers’ livelihoods have worsened. The new bonus is less than what is already being provided at several factories, so many workers will not see an increase at all.” …
While the local garment industry grew by 33% in 2011, with exports to the US contributing more than $2 billion to the sector and accounting for more than half of the sector’s yearly takings, so too did the number of garment worker strikes. “Workers need to earn enough to survive, provide and save for the future, but policies that ignore market forces rarely work out well,” Robertson said. “Both labour and factories need to consider the potential adverse effects strife has on the investors’ point of view. Buyers may consider labour strife to increase risk, and most buyers and investors prefer to avoid risk.”
Caution: Work Ahead
August 16th, 2011, Southeast Asia Globe, Banking & Finance, Business & Commercial Development, Economics
Émile Coué was a French psychologist who introduced a method of self-improvement based on optimistic autosuggestion. “Every day, in every way, I’m getting better and better,” was his mantra. He died in 1926 and probably never visited Cambodia, but his spirit has been hovering over the four-year-long preparation for the Cambodia Securities Exchange (CSX). Read more
(Philippe Beco)
http://www.sea-globe.com/Business/caution-work-ahead.html