When a 100-metre-long section of a Phnom Penh garment factory crumpled in on itself like a cheap pup tent, Sen Sok district officials promised an investigation. …
The results of that investigation, which was to have taken place more than a year ago, in March 2012, were never made public, and officials at the time refused to release the names of those who owned the land the building sat on or the firm responsible for its construction. …
As one long-time real estate consultant put it: “It’s really waiting for the disasters to happen.”
Yesterday morning, on the sidelines of a conference on national industrial relations, a Ministry of Labor official reiterated Social Affairs Minister Ith Sam Heng promise to inspect all of Cambodia’s factories. …
According to the consultant, foreign construction companies who are accustomed to high levels of oversight often maintain those standards when operating in Cambodia. …
“You may have a system in place, you may have a procedure in place, but it may all be hollow. It may just be a show,” he continued. “So even if there is a department in the construction department or the ministry – at the minute there isn’t one – but even if there is one, it’s hard to tell how this country really enforces all that construction safety.”
Van Thol, vice president of the Building and Wood Workers Trade Union Federation of Cambodia (BWTUC), said that while he believes there are inspectors, he doesn’t necessarily believe they do their job. …
“Licensed construction companies are hired by a factory to do its construction, but those licensed firms rent out other, smaller, unlicensed construction firms to build it, and they don’t really follow the standards,” he said. …
The Arbitration Council, an independent body that resolves labor disputes in Cambodia’s garment sector, celebrated its 10th anniversary yesterday, though officials expressed concern that funding for the body was due to run out in March next year.
Oum Mean, secretary of state at the Ministry of Labor, said the Arbitration Council currently receives all its funding from the World Bank’s good governance project and that more funds are needed to ensure the body–which has resolved nearly 1,500 industrial disputes, survives. …
Speaking after the conference, Mr. Mean said it was not the responsibility of the government to fund the body but that of the Arbitration Council itself. …
In the 10 years since funding for the International Labor Organization helped establish the Arbitration Council, it has resolved nearly 1,500 industrial disputes involving more than 600,00 workers. It also claims an 80 percent success rate in preventing strikes during negotiations.
Cambodian migrant workers sent home $256 million last year, according to a report from a U.N. agency and the World Bank, which was released in Bangkok yesterday.
The report from the bank and Rome-based International Fund for Agriculture Development (IFAD), titled Sending Money Home to Asia, found that migrants from Asia sent a total of $260 billion in international remittances in 2012. …
“[B]ut high [bank] fees and limited financial services outside of urban areas are reducing the benefits of those remittances for millions of rural residents,” says a joint statement accompanying the report.
The report does not specifically outline how serious these problems are in Cambodia, which received $256 million, or 1.8 percent of gross domestic product (GDP), in remittances last year. Workers sending money home are charged on average 5.59 percent on remittances to Cambodia, the report says. ….
But the report notes Cambodia’s high saturation of microfinance institutions (MFIs) in the provinces means that rural access to remittances is likely better than elsewhere.
MFI’s account for 26 percent of transfers to Cambodia, but the costs for these transfers average 10 percent of the amount being sent, the report says. …
Moeun Tola, head of the labor program at the Community Legal Education Center, said many migrant workers, especially those working in Thailand send money back through informal channels, which would not be included in the report. …
On May 13, we ran an interview with London-based NGO Global Witness accusing the Deutsche Bank and the International Finance Corporation of financing two Vietnamese rubber companies that are allegedly involved in land grabs in Cambodia and Laos. …
We asked both banks for a response and invited them on to the show to explain their positions. Both declined to be interviewed but sent these statements:
Michael West, Managing Director / Head of Communications, Asia Pacific [Deutsche Bank]:
“Deutsche Bank does not provide financing to Hoang Anh Gia Lai Group (HAGL), Dong Phu Rubber or Vietnam Rubber Group (VRG). The DWS fund shares referred to are held on behalf of investors. Deutsche Bank provides clerical trustee services to HAGL which is a listed company as it does to thousands of publicly listed companies globally.”
Hannfried von Hindenburg, Head of Communications for IFC in East Asia and the Pacific:
“IFC, a member of the World Bank Group, works with financial intermediaries, such as funds, because they can contribute to inclusive and sustainable financial markets that are essential to eradicating poverty and job creation. …
IFC will carefully study the findings of the Global Witness research and taking this research into consideration is part of our ongoing monitoring of our investments in Dragon Capital and VEIL.”
A Vietnamese rubber tycoon has rejected accusations by Global Witness, a group that campaigns on resource issues, that it was involved in a land grabbing crisis in Southeast Asia.
Doan Nguyen Duc, the chairman of Hoang Anh Gia Lai (HAGL) Group, told Vietnamese media the information provided by London-based Global Witness in its report was total fabrication. …
According to the report, the two firms have caused widespread evictions, illegal logging and food insecurity in the countries. …
It alleges the IFC invested US$14.95 million in a Vietnamese fund that holds 5 percent equity in HAGL, while Deutsche Bank owns some $4.5-million-worth of HAGL shares. Deutsche Bank is also said to have 1.2-million shares in a subsidiary company of VRG amounting to more than $3 million.
As news of the accusation spread in Vietnam, HAGL shares fall around 6 percent to VND21,400 on Tuesday.
Duc lost VND436.25 billion (US$20.83 million) on over 311 million shares, nearly half the company’s shares, he holds.
After the accusations were made public, HAGL released a statement confirming that the company’s subsidiaries invested in rubber plantations in each country but the firm “denies seizing land, illegally exploiting wood and other corruption behaviors in Laos and Cambodia.” …
In the wake of a new report from environmental rights group Global Witness rebuking the World Bank’s International Finance Corporation (IFC) and Deutsche Bank for investing in rubber plantations accused of illegal logging and forced evictions, both institutions have denied responsibility and deflected the blame elsewhere.
But the investments targeted in the new report are not the first projects for which both the IFC and Deutsche Bank have received criticism in Cambodia.
Local NGOs filed a complaint with the IFC’s compliance ombudsman in 2009 on behalf of 79 families worried that the expansion of Sihanoukville airport was moving forward without their consultation or guarantees of compensation should they be evicted.
Since 2003, the IFC has helped finance Cambodia Airports, which is owned by French construction giant Vinci Group, for projects involving runway expansions at Phnom Penh and Sihanoukville airports.
In July, 387 families living along the outskirts of the Phnom Penh International Airport were served with eviction letters due to expansion plans to the runway. The families insist they have legal tenure to their homes, but the government disagrees and has refused their demands for compensation.
Though the evictions have yet to take place, families have been told by local authorities that the eviction will take place. It was not known yesterday if the ombudsman is monitoring the Phnom Penh airport expansion plan. …
According to Equitable Cambodia, a land rights NGO, Deutsche Bank through DWS [Vietnam Fund] was also invested in KSL—a Thai firm that owns two sugar plantations in Cambodia, which are accused of causing the eviction of hundreds of local villagers. DWS divested from KSL in 2011. …
The World Bank has warned that the rapid growth of lending by Cambodia’s Banks is still a concern, despite a recent slow-down in credit disbursals.
“Credit growth, which has been driven largely by wholesale and retail financing, and starting in 2011 agriculture financing, has eased to 29.2 percent (year on year) in January 2013,” the bank said in an economic update sent out on Friday.
The annualized rate of lending growth was 34 percent in December and as high as 34.6 percent in January 2012, the bank said.
The high rate of growth had raised concerns of overheating from international financial institutions, and led the National Bank of Cambodia to raise the reserve requirement imposed on Banks from 12 to 12.5 percent in September. …
[The World Bank] also noted that Cambodia’s trade deficit in 2012 was 11.5 percent, up from 8.7 percent in 2001, due to rising fuel imports and construction materials being brought in for large hydropower projects.
However, this was cancelled out by a jump in foreign direct investment, which reached $1.5 billion last year.
The government has won an arbitration case in a World Bank court, successfully countering a $300 million claim made by a U.S based company over a failed power plant project dating back to 1996.
According to a statement from the Council of Ministers’ Press and Quick Reaction Unit released on Saturday, the claims made by the Cambodian Power Company (CPC) “have been dismissed in their entirety by an arbitral tribunal established under the auspices of the International Center for the Settlement of Investment Disputes (ICSID).”
CPC, which is a subsidiary of Delaware-based Beacon Hill Associates Inc., accused the government and state-owned power company Electricite du Cambodge (EdC) of breaching agreements signed in 1996 “for the financing, construction and operation of a 60 [megawatt] electric power plant in Phnom Penh,” the statement says.
The company claimed damages of nearly $300 million over the power plant venture- the value of which was estimated at $74 million- in Russei Keo district, which never came to fruition. …
The March 1996 deal- which made Beacon Hill associates the biggest American investor at the time- fell apart just three months after it was signed in a ceremony attended by then-Second Prime Minister Hun Sen. …
Cambodia’s banking industry recorded a slight increase in lending in the first two months of this year after a sharp rise last year, according to a consolidated data provided by the National Bank of Cambodia (NBC) on Saturday.
The data showed that the kingdom’s 33 commercial banks had lent a total of 5.99 billion U.S. dollars to customers by the end of February this year, up 1.7 percent from 5.89 billion U.S. dollars at the end of December last year, the report said.
It added that 32 percent of the loans went to wholesale and retail trade, 10 percent to agriculture, 9 percent to manufacturing, 8 percent to construction, 6 percent to hotels and restaurants, 6 percent to mortgages and the remaining percentage went to financial institutions, real estate and personal borrowing. …
By the end of February this year, the NBC said that the banks received 6.25 billion U.S. dollars, up 1 percent from 6.19 billion U.S. dollars at the end of last year.
Cambodia has the population of about 14.5 million. Its banking sector has been serving about 1.6 million borrowers and 1.9 million depositors, according to the NBC.
More than a week after the World Bank blacklisted a Canadian construction firm over bribes allegedly paid in Cambodia and Bangladesh, it was still unclear Thursday whether the government, or the national anticorruption body, are investigating the allegations.
SNC-Lavalin Inc. was banned from World Bank contracts for 10 years after a unit at the bank that investigates corruption found misconduct relating to a bridge building project in Bangladesh and a $5 million contract to build a national control center for state-owned power company Electricite du Cambodge. …
The contract was part of the World Bank’s Rural Electrification and Transmission project, which was overseen by the Ministry of Industry, Mines and Energy.
Despite the World Bank announcing the Montreal based firm’s debarment on April 17, little has been said about the bribery allegation in Cambodia . …
Preap Kok, executive director of Transparency International Cambodia, said that the ACU [Anti-Corruption Unit], though it has the authority to do so, tends not to investigate cases unless a complaint is filed directly with it, even if allegations are published in the media. …
In September, the ACU said it had investigated about 30 percent of the 800 or so cases it had received in the first nine months of 2012. …
Cambodian export values increased more than 21 per cent in the first quarter of this year compared with the same period last year, and officials said the rise was a positive sign for the Kingdom’s economic growth. …
According to the Ministry of Commerce’s export data obtained by the Post yesterday, exports reached over $1.65 billion in the first three month period this year, up from the goods exported during the same period last year, up from the goods exported during the same period last year, valued at $1.36 billion. …
The World Bank recently predicted that Cambodia’s GDP growth would reach 7.0 per cent for this year, up 0.3 percentage points from its last projection in December. …
Internet search giant Google on Friday launched a new service that for the first time allows users to instantly translate Khmer script into other languages.
Khmer is the most recent addition to the 66-strong collection of languages between which words, sentences or whole websites can be translated back and forth in the Google Translate service, which can present the results as script or phonetically. Regional languages Lao, Vietnamese and Thai are all already available on the service.
Divon Lan, a project manager in Google’s next wave emerging countries division, who worked on the new service, said the launch had been timed as a gift to Cambodians in the week of Khmer New Year. …
According to the World Bank’s last estimate, the number of Internet users in Cambodia was less than 450,000 in 2011. But the number is likely to have grown since then with the expansion of mobile Internet services.
A bribery investigation by the World Bank has discovered misconduct by a major Canadian construction firm that was awarded a $5 million contract to help expand access to electricity in rural Cambodia, the bank said. …
In December 2009, SNC-Lavalin announced that it has been awarded an 18-month contract worth $5 million to design and build a national control center and energy management system in Phnom Penh for state-owned power company Electricite du Cambodge (EdC) as part of the donor-funded project.
Referring to both the company’s operations in Bangladesh and Cambodia, the World Bank statement says, “SNC-Lavalin’s misconduct involved a conspiracy to pay bribes and misrepresentations when bidding for Bank-financed contracts in violation of the World Bank’s procurement guidelines.” …
Keo Rotanak, director-general of EdC, declined to comment. However, Chea Sun Hel, director of EdC’s distribution unit, said that the national control center – which is the operational hub for the national grid – had been completed. …
The implementation of the Rural Electrification and Transmission Project – which ran from 2003 to 2012 and cost a total of nearly $68 million – was the responsibility of the Ministry of Industry, Mines and Energy.
The World Bank upgraded Monday its GDP growth forecast for Cambodia to 7.0 percent for this year, up 0.3 of a percentage point from its last projection in December.
“In Cambodia, a likely stabilization in high-income country conditions should support further improvements in garment production and exports,” the bank said in explaining the upgrade. …
Cambodia’s growth last year, estimated at 7.3 percent, was “faster than expected,” the update said, adding that it was “bolstered by the strong performance of agriculture, construction and tourism and a recovery in garments.”
In a separate statement, World Bank East Asia and Pacific Vice President Axel van Trotsenburg said the region accounted for about 40 percent of global growth last year. …
Going by the World Bank’s method of grouping nation states by their wealth, Cambodia this year could become a lower-middle income country.
Not satisfied, however, with this graduation—a feat in itself from Cambodia’s position of extreme poverty just two decades ago when gross domestic product (GDP) per capita was $240—the government is already eyeing the next milestone. ..
If this happens, Cambodia could gain membership to the International Bank for Reconstruction and Development, a branch of the World Bank, and give the government access to more capital. As a low-income country, Cambodia has only had access to concessional loans from the World Bank’s International Development Association. …
Government estimates predict that by 2030, Cambodia’s population will have reached 18.4 million, meaning that to achieve an upper-middle income GDP per capita, the total size of the economy would need to top $74 billion.
This would mean the economy multiplying more than five times in 18 years—from its 2012 size of $14.25 billion—and would require GDP growth of more than 9.5 percent annually over the period. …
The World Bank is under pressure to review some of its policies around the world to ensure that in countries like Cambodia it is not funding the wrong projects.
In a discussion at George Washington University this week, panelists said the World Bank is needed for international challenges of land tenure and food security. …
A $28-million World Bank project for land titles in 2006 failed to give land titles to villagers at Boeung Kak. But Tep Vanny, an activist for evicted residents in that development project, said the Bank’s announcement to freeze aid in 2011 was effective in moving government policy.
Following the funding freeze, Prime Minister Hun Sen announced he would set aside more than 12 hectares for resettlement on the 133-hectare development. However, that land has not been fully given up to former residents. Critics fault local authorities for the failure. …
Not enough priority is given to research in Cambodia, threatening its long term development, economists and other experts say.
Larry Strange, executive director of the Cambodian Development Research Institute, says the country cannot plan for major reform, build its economy, or reduce poverty without proper analysis of its ongoing challenges. …
The low quality of Cambodia’s educational institutions, especially in higher education, along with limited investment in them, are also factors, Strange said. …
Cambodia’s investment in research is so low that it is not ranked by the World Bank. But according to government statistics, about 275 post-graduate students, about 2.2 percent, are currently studying research and development. This includes research in economics, agriculture, the environment and good governance.
Mak Ngoy, general director of the higher education department at the Ministry of Education, said that despite low government investment, it is committed to pushing for more research, and that funding has increased in recent years. That includes a World Bank project of $3.2 million to improve higher education and fund 31 research proposals from students in public and private universities. …
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. …
In Washington today, attendees of the World Bank’s Annual Conference on Land and Poverty will hear a flattering account of Prime Minister Hun Sen’s ambitious project to furnish nearly half a million Cambodian families with new private land titles just in time for July’s national elections.
But in a small village in rural Kompong Chhnang province, local farmers are among a growing list of communities worried that the project is cheating them of their land rights.
According to the villagers and officials in Rolea Ba’ier district, two separate survey teams showed up in Kraing Leav village earlier this month only days apart to measure the same 45 hectares of rice paddy being tended by 76 families.
The first team of provincial cadastral officials were there on April 2 and 3 to measure land on behalf of the families.
The next day, another team of cadastral officials showed up with student volunteers, who are part of the prime minister’s titling project, to measure the land on behalf of Moul Engly, a local businessman that villagers accuse of trying to steal their land.
Villagers say the student volunteers had measured the land for Mr. Engly despite a decision by Supreme Court awarding the land to the villagers in November.
Provincial counsellor Dunoung Chantra… said the student volunteers should not have come to measure the land for Mr. Engly.
“Local authorities should not have done this by working with the student volunteers to measure the land in favour of the businessman since the villagers do have legal right to the land,” he said.
Mr. Chantra said he would take up the villagers’ case with the government at national level. …
Philippe Laurent became secretary-general of Cambodia Airports in May 2008. He was one of six senior executives in charge of the country’s international airports in Phnom Penh, Siem Reap and the little-used facility in Sihanoukville. …
Mr. Laurent is now carrying out a one-man campaign against Cambodia Airports in Cambodia and in France, where Vinci, the company’s major stakeholder, is headquartered. He has lobbied French politicians, the press, and financial regulators. He is doing the same in Cambodia, telling his story to anyone who will listen. …
Cambodia Airports is 70 percent owned by Vinci Group, Europe’s largest construction company, and 30 percent by Muhibbah Masteron (Cambodia). Muhibbah Masteron is 70 percent owned by Malaysia conglomerate Muhibbah Engineering Berhad and 30 percent owned by two Cambodian businessmen, Kong Triv and Hann Khieng. …
Cambodia Airports earns revenues of about $100 million every year through a $25 service charge for every passenger that passes through the airport, as well as landing fees, aircraft cleaning fees, parking tickets, cargo related business, storage facilities, and leasing floor space to airline companies, fuel supply companies and the airport’s catering business. It also earns money from commercial shops inside and outside of terminal buildings. …
“My colleagues and I have worked for several years to try and assassinate the unethical environment of these businesses, but to no avail. We have just discovered a short time ago that we were in a money laundering machine for the management of the group at an international level between the following countries: Cambodia, Malaysia and France,” Mr. Laurent told the senators. …
Cambodia Airports refuted all of Mr. Laurent’s allegations “with the highest firmness.”
“Regarding Philippe Laurent’s allegations, we referred the case to the head office, especially Vinci’s ethical committee and an investigation has been performed. The ethical committee has concluded that the specific allegation raised by Philippe Laurent is without merit,” Khek Norinda, communications director of Cambodia Airports, said in an e-mail. …
With Cambodia Airport’s contract to run for another 27 years, and with tourism the one area of the Cambodian economy assured to see massive growth in that time, and with French and Malaysian companies winning associated lucrative contracts, homegrown business resentment would seem an obvious backdrop to the business environment and Mr. Laurent’s campaign. …
As it transpired, Bouygues settled their dispute out of court with Mr. Laurent for a sum of money that he would not disclose for this article.
