Delta Electronics (Thailand), one of the world’s leading producers of power supplies and electronic components, plans to expand to Cambodia and Myanmar, the Bangkok Post reported on Wednesday.
“There is no indication of a specific timeframe for the expansion, but the company sees these countries . . . as distributing channels of supply chain to other Asian and European countries,” the report said.
Asian Development Bank deputy country director Peter Brimble said, while he cannot speak for Delta about their reasons for moving to Cambodia, generally “regional automotive and electronics firms are looking to expand and spread their operational risk, including firms based in Thailand.” …
Cambodia is considering offering sovereign bonds to raise more revenue for the national budget and move away from its dependence on overseas aid, a senior central bank official said Sunday.
National Bank of Cambodia director-general Nguon Sokha said the Ministry of Economy and Finance was currently looking at other countries’ experiences with bond markets and was seeking outside help to issue the government’s first bonds.
By issuing sovereign bonds governments can raise money from international investors that are usually paid back with interest at the end of a fixed term. …
Ms. Sokha said there was no set date for when the bonds might be issued, but officials were working on the plan with help from the Asian Development Bank (ADB) and members of the Asean+3 group, which includes China, Japan and South Korea. …
Cambodia is set to graduate this year or next to a lower middle-income country but still qualifies for overseas development assistance and concessional loans from international institutions.
“For long term financing, we cannot really survive on development assistance,” Ms. Sokha said. …
Although Cambodia does not currently issue sovereign bonds, it has been assessed recently by credit rating agencies. The most recent assessment by Moody’s gave the country a stable but high-risk “B2” rating, which means Cambodia is deemed to have “very low economic resiliency.”
Corruption, a weak judicial system and the potential for complicity with human and labour rights abuses are key risks for firms looking to invest in Cambodia, a new report [by Maplecroft, a UK-based global risk and strategic consulting firm] analysing investment risk in the Kingdom says. …
According to the report, Cambodia presents “extreme” risks in its business environment, labour rights and protection, and climate change vulnerability, with “high” risks for civil and political rights, its macroeconomic environment, poverty and human development, and the regulatory framework.
But Peter Brimble, deputy Cambodia country director at the Asian Development Bank, said business indexes of this kind need to be carefully interpreted. …
“The recent very rapid inflow of Japanese investors into Cambodia perhaps indicates that certain elements of such indexes may not reflect the reality on the ground, “Japanese investors are known to be sensitive to governance and transparency, and have shown their confidence by voting with their investment dollars,” he said. …
Countries in the Greater Mekong Sub-region can save US$14 billion over the next 20 years if they integrate their power transmission systems, according to a senior official from the Asian Development Bank.
A regional power grid connection would enable countries with hydro-power plants to export energy to other countries, saving up to US$700 million a year by reducing fossil fuel imports, the Bank says in its report on Asia’s Energy Challenge, released earlier this month. …
At present, countries in the region use different resources to generate electricity. Some, such as Thailand, Vietnam and Cambodia, rely on natural gas and imported fossil fuel, while others such as China and Laos harness hydro-power. …
Cambodia’s construction sector is facing a massive labor shortage due to a recent boom in construction projects throughout the country and workers migrating en masse to Thailand in search of higher wages.
In 2012, the construction sector expanded rapidly with the total value of approved projects totaling $2.11 billion, a 72 percent increase on the previous year’s figures, according to data from the Ministry of Land Management. …
But construction companies are in some cases having to wait months while they search for an able work force and economics say, will have to increase wages if they are to compete with jobs on offer over the border in Thailand. …
Peter Brimble, senior country economist for the Asian Development Bank, said that the construction sector is steadily planning a big role in Cambodia’s economy, which is expected to grow by at least 7.2 percent this year. Cambodia’s construction currently accounts for 6 percent of GDP and the International Monetary Fund said in January that Cambodia’s construction sector “is picking up thanks to the real estate rebound, in part fueled by rapid credit growth.” …
The Kingdom’s tax revenues increased by more than 20 per cent in the first quarter of 2012 compared with the same period last year.
Officials said the rise reflects an influx of new buinesses and investments. Opposition lawmakers, however, claim that the numbers are still far below what they should be.
According to data from the General Department of Taxation, the country’s total tax revenues amount to $193.01 million – up from last year by 22.9 per cent. Revenues from income tax increased by 18.51 per cent, taxes on businesses by 24.51 per cent and value-added tax (VAT) by 34.27 per cent. …
Cambodia’s economic growth is forecast at 7.2 percent in 2013, picking up to 7.5 percent next year as recovery in Europe and the United States takes hold, according to the Asian Development Bank’s annual economic outlook released on Tuesday.
The United States and Europe are the largest purchasers of Cambodia-made garment and footwear products. …
The report noted that net foreign direct investment (FDI) inflows into Cambodia surged by an estimated 75 percent in 2012, to 1.5 billion U.S. dollars, funding new industries including automotive parts, electronics, and processing of agricultural products, as well as diversifying garment production into higher- value products and tourism into new areas. …
Tiffany & Company is quietly building a diamond-polishing factory in Cambodia, a country popularly associated more with killing fields and land mines than baubles.
Some of Japan’s biggest manufacturers are also rushing to set up operations in Phnom Penh to make wiring harnesses for cars and touch screens and vibration motors for cellphones. European companies are not far behind, making dance shoes and microfiber sleeves for sunglasses. …
Foreign investment in China nonetheless slipped 3.5 percent last year, after rising every year since 1980 except 1999, during the Asian financial crisis, and 2009, during the global financial crisis. Still, at $119.7 billion, foreign investment in China continues to dwarf investment elsewhere.
By comparison, investment in Cambodia rose to $1.5 billion. But last year was the first time since comparable recordkeeping began in the 1970s that Cambodia received more foreign investment per person than China. …
Strikes this winter temporarily crippled numerous Taiwanese-owned garment factories in eastern Cambodia producing simple garments like bathing suits after Japanese factories moved in to make more sophisticated products like business suits and gloves — and offered higher pay and benefits. …
The State Railway of Thailand (SRT) will call an e-auction on April 10 on work to renovate damaged tracks connecting Thailand with Cambodia at the Aranyaprathet-Poipet crossing, Transport Minister Chadchat Suttipan said on Tuesday. …
The railway agency estimated the project will cost 2.8 billion baht. It will include rehabilitation of the six kilometres of tracks from Aranyaprathet station to Klong Luek, opposite Poipet district in Cambodia, and improvement of the existing tracks from Klong Sip Kao station to Aranyaprathet.
A bridge between Klong Luek and Poipet must be improved, and negotiations will take place with Cambodia on possible cost-sharing of the construction, the minister added. …
The one-metre gauge tracks will connect with the Cambodian railway to Phnom Penh and onward to Ho Chi Minh City, Vietnam.
Cambodia is improving its 337km line from Phnom Penh to Poipet, expected to be completed some time between next year and 2015, according to the Phnom Penh Post.
The project is financed by a loan from the Asian Development Bank, and also includes the 256km line linking Phnom Penh and Sihanoukville. The line was reopened in December last year.
Japan-based Terra Motors Corporation viewed Cambodia as a potential market for its electric tuk-tuk, the company’s general manager of overseas sales said yesterday.
“We’re thinking of entering the Cambodian market as well. But at this moment, there are no concrete plans. [We] just hope to enter,” Kota Kandori told the Post. …
According to Kandori, Terra Motors is thinking of selling the electric trike for about $3,000. …
Vorn Pao, president of the Independent Democracy of Informal Economy Association, said that at $3,000 a unit, he was doubtful that Cambodian tuk-tuk drivers would be able to afford the high-tech tricycle. …
The Asian Development Bank has refused to release a critical study on the impacts its $141.6 million railway project is having on thousands of Cambodian families because disclosure of the report could hurt its relationship with the government, an ADB spokeswoman said.
Raising concerns about the ADB’s decision to bury the report‘s findings, housing rights groups released a statement yesterday criticizing the banks lack of transparency and public accountability. …
After having its initial request for access to the report denied, Inclusive Development International (IDI) appealed to the ADB’s Public Disclosure Advisory Committee on February 16. The ADB committee informed IDI that its appeal has also been rejected on Friday.
“ADB has long recognized that transparency and accountability are essential to development effectiveness and ADB’s ability to achieve its vision of an Asia and Pacific free of poverty,” ADB spokeswoman Ann Quon said in the letter.
But releasing Dr. Cernea’s findings on the rail project, Ms. Quon said, would further delay a project that is already behind schedule and over budget, damage the ADB’s long term relationship with the government, and “compromise the integrity of the of ADB’s deliberative decision-making process.” …
Both the ADB and the Australian government’s foreign aid arm co-funding the project, AusAid, have sold the railway’s rebirth as a key of bringing down the cost of transport and doing business across the country.
They have also placed the responsibility for the roughly 1,200 families the project will ultimately see evicted on the government, while pledging extra money to help the families supplement their diminished incomes after eviction. …
The Ministry of Commerce and bank officials announced yesterday that they will hold a meeting next month aimed at better facilitating rice millers’ access to credit.
The move is part of the Asian Development Bank’s Climate Resilient Rice Commercialization Sector Development program to address food security and rice commercialisation, funded with a US$55,000 Asian Development Fund loan.
Mao Thora, secretary of state at the Ministry of Commerce, told the Post millers will see additional loans if they can demonstrate a sufficient level of stocked paddy rice. …
ADB plans to strengthen the rice value chain, improve legal and regulatory framework in agricultural land management, and enhance paddy production through improved irrigation efficiency as well as establishing post-harvesting facilities and crop insurance pilots.
Cambodia officially launched the long-awaited National Arbitration Center (NAC) on Monday, aiming at enhancing business environment and attracting more local and foreign investors.
Speaking at the launching ceremony, Minister of Commerce Cham Prasidh said the government is committed to improving and enhancing Cambodia’s business environment and investment climate for both domestic and foreign investors. …
A CPP lawmaker said yesterday the government has signed 13 payment guarantees to companies constructing coal-fired power plants and hydropower dams in the country, a move that an Asian Development Bank (ADB) official reiterated was risky for the country’s fiscal future.
CPP lawmaker Cheam Yeap said the most recent payment guarantee approved by the National Assembly last Friday on the $781 million Lower Sesan 2 dam project in Stung Treng province is typical when any major company makes an investment in an energy project. …
“It is the government’s obligation to do a guaranteed payment for investment companies whenever Electricite du Cambodge [EdC] [might] miss a payment or don’t pay the bill,” Mr. Yeap said. …
The government’s guaranteed bailout of major infrastructure projects, such as the future 400-megawatt hydropower dam in Stung Treng province, requires a thorough assessment of forecasted risks – a capacity which the government currently does not possess, an Asian Development Bank (ADB) official said yesterday.
Speaking on the sidelines of the 2013 Cambodia Outlook conference in Phnom Penh, Eric Sidgwick, country director of ADB, declined to comment directly on the $781 million Lower Sesan 2 dam, but said that in regards to public-private partnership projects, he would advise for the government to start small in terms of projects and risks. …
Customs procedures are being examined in a time-release study to identify issues that can affect Cambodia’s trade competitiveness. According to experts, the study is an important tool to improve the Kingdom’s investment climate. …
The study will be conducted and organised by the GDCE with support from the Asian Development Bank (ADB) and World Customer Organisation. Results are expected in May. …
Investment in Cambodia from overseas surged by at least 44 percent last year, according to an estimate from the central bank, despite figures suggesting a reduction in the overall flow of foreign currency into Southeast Asian economies.
Nguon Sokha, director-general of the National Bank of Cambodia, said that foreign direct investment (FDI) in the country was thought to have reached at least $1.3 billion in 2012, based on early indicators. …
“[The 2012 figure] is an underestimate,” Ms. Sokha added. “We will have to revise it up, but I’m not sure by how much.” …
Cambodia’s inflation rate fell to an annual three per cent last year, down from 4.9 per cent a year earlier, according to data from the National Bank of Cambodia released in late January.
Chea Chanto, the bank’s governor, told an annual meeting in late January that Cambodia’s economy had performed very well last year because of controlled exchange rates and prices of food and goods. …
“The stability of food prices and the riel currency is a big contribution to the economy,” Chanto said. …
“We have really stable prices for food and meat, as we can produce more — that’s why the inflation rate is really low, and we have no concern because it is manageable,” he told the Post, adding that the price of food had dropped from the second quarter of last year.
Chanto said the Kingdom’s currency had appreciated about 1.7 per cent against the greenback compared with 2011 and the gross official reserve had reached $3.7 billion, which could insure imports for about four and a half months. …
China’s transition from export-led to domestic-led growth, combined with the rising costs of production, could provide opportunities for Cambodian growth and diversity, analysts say.
Faisal Ahmed, the IMF representative for Cambodia, said the Kingdom was already experiencing an increase in trade activity as a result of China’s economic shift.
“China’s rebalancing can boost demand of Cambodian exports of not only commodities but also labour-intensive manufacturing, in part supported by rising wages in China,” Ahmed said. …
“In Cambodia, I expect the increased FDI inflows will build the capacity to support greater exports of higher value-added products, including garments, auto parts and electronics, in later years as the EU and US markets recover.”
Hiroshi Suzuki, chief economist and CEO of the Business Research Institute for Cambodia, believes Chinese investment at a time of European and US slowdown has the potential to expand Cambodia’s trade partners. …
More creative thinking is needed to restore trust in Cambodian products, but intense competition from foreign investment has the potential to stifle local innovation, industry experts say.
A survey of more than 600 Cambodian consumers undertaken by Thai Market Research Company Envirosell found that Cambodian consumers prefer Western products to those made in neighbouring Laos and Myanmar.
Laurent Notin, general manager of Indochina Research, said the survey was not a revelation. “I am not surprised that they say Cambodians prefer Western products, as Western products come with high perceptions of quality,” he said. …
