Weekly news round-up / Week 50

Political (Cambodia-Specific)

Coverage of Cambodia’s political scene within international press - opinion piece by Ou Virak, president of the Future Forum in Phnom Penh, published in the New York Times. Written for those unfamiliar with Cambodian politics, describes major political events since the 2013 election (CPP’s narrow victory, subsequent CNRP boycott and demonstrations, January 2014 protester deaths, summer 2014 deal and ‘culture of dialogue’, October 26 beating of CNRP parliamentarians and arrest warrant against Sam Rainsy).
Ou Virak claims that the CPP’s actions demonstrate anxiety about their prospects for the 2018 general election. Sees demographic shifts as favorable to the CNRP - the Cambodians who mobilized in 2013 still want change, especially the young. In 2013, approximately 3.5 million young Cambodians were eligible to vote, out of a total of 9.5 million eligible voters, and the proportion is predicted to be higher in 2018.
Raises major policy issues – reeling in vested interests, penalizing corruption, encouraging small businesses, substantive electoral reform, depoliticizing the judiciary, the police and the military. Whilst critical of the government, is also critical of the opposition: “the political elite seems increasingly out of touch with the electorate, and serious policy thinking is falling by the wayside. Hun Sen is too busy inventing various bogeymen to divert the Cambodian public’s attention from the corruption, corporate pillaging and human rights abuses occurring on his watch. Sam Rainsy still seems to prefer playing at activist-in-exile than work at becoming a leader-in-waiting.”

A report in the Diplomat highlights two recent surveys on emerging media trends within Cambodia.
A study by the Asia Foundation monitored Cambodia’s leading Facebook pages which, as in other countries, are used predominantly by young people. The study tracked pages of seven media groups, three government agencies, the ruling Cambodian People’s Party (CPP), the Cambodian National People’s Party (CNRP), Prime Minister Hun Sen and opposition leader Sam Rainsy. VOA Khmer service was by far the most popular page with 2.2 million likes, shares and comments. Opposition leader Sam Rainsy was second with 1.67 million hits followed by the newspaper Post Khmer – which has a heavy emphasis on crime reporting – with 1.45 million. The study found Sam Rainsy to have 37% more likers than Prime Minister Hun Sen but saw the PM’s likes growing at a faster pace that would see him overtake the opposition leader by 2017 if current growth rates were sustained. Both parties ranked significantly behind their respective leaders, indicating that the elections are being fought more along the personality lines of Hun Sen and Sam Rainsy as opposed to party policies.
Another part of the Asia Foundation’s report focused on the most common topics that Cambodians would post about, with incidents of crime being the most common concern followed by the Khmer Rouge tribunal, corruption, illegal logging, education, and health.
A Reporters Without Borders study with the Cambodia Center for Independent Media found nine out of 10 Khmers have never read a newspaper and that television still retained its massive influence over Cambodian life through TV stations owned and controlled by Hun Sen’s family and CPP interests. 96% regularly watch television whilst 39% are connected to the internet. However, social media is becoming an increasingly important source of news for Cambodian people. 

The release of the anticipated draft petroleum law – expected by the end of this year – has been postponed until several technical issues are clarified, according to the Ministry of Mines and Energy. Whilst 80% complete, certain areas need further legal and technical research including whether or not to establish a national petroleum company (which would require a large amount of funding from the national budget) and how revenues from the industry should be allocated to maximize benefit to the nation.
Cambodia has 25 offshore and oil exploration blocks: 19 are onshore and six are offshore. Two are currently being explored. In August 2014, Singapore-based KrisEnergy acquired Chevron Cambodia’s 30 per cent stake in Block A, a 709-square-kilometre site in the Gulf of Thailand. Chevron had spent more than 10 years studying the feasiblity of extracting oil from the block. KrisEnergy has said that it can produce 10,000 barrels of oil per day from the block.

Europe, European Businesses, EuroCham Members

Khmer Times coverage of EuroCham’s breakfast briefing with His Excellency Dr. Om Yentieng, senior minister and president of the Anti-Corruption Unit (ACU). His Excellency highlighted three main ‘weapons’ that the ACU is using the fight corruption – education, prevention and investigation. He also called upon the private sector to make their contribution to the battle, being steadfast in their own compliance, refusing to pay bribes, educating staff and keeping proper documentation.
Blaise Killian, advocacy manager Euro Cham, highlighted how such gatherings are important to help the private sector understand how to engage with the ACU, with whom EuroCham signed a Memorandum of Understanding in July 2015. “The results after the MoU need to be clearly understood by Eurocham members to appreciate the advantages of such anMoU with the ACU. In the first phase we disseminate the information with our members, and encourage them to cooperate with ACU,”.
Phreap Kol, executive director of Transparency International Cambodia, highlighted the potential that direct collaboration between ACU and businesses can have upon the Cambodian investment environment: “The ACU’s willingness to work directly with the private sector is an important step forward. We hope that this interaction will lead to more efficient measures towards private sector corruption as well as to improve the ease of doing business in Cambodia.”

On Saturday 12th December the first authorised showroom and service centre for premium Italian motorcycle brand Ducati will open in Phnom Penh. General manager Christina Tan commented to Phnom Penh Post that there were already a number of Ducati superbikes on the road in Cambodia and that the company sees excellent growth potential here. As in the automobile industry, authorized importers have to compete with the grey market but Ms. Tan feels that the provision of warrantees and of aftermarket services by qualified and trained technicians will help to draw customers towards the authorized dealership. She stated that, at present, Ducati will have no direct competitors in Cambodia as their motorcycle range is of higher capacity than anything else available in the market.

Infrastructure, Development and Core Industries

China’s largest heavy machinery manufacturer, CITIC Heavy Industries, has been awarded a $262 million contract to build a cement factory in the southwestern province of Kampot, according to an official at the Ministry of Mines and Energy.
The factory is being built for Chip MongInsee Cement Corporation, a joint venture between Chip Mong Group (Cambodia) and Siam City Cement (Thailand). The factory will produce 1.5m tonnes per year of cement for the local market creating jobs, diversifying the industrial base and reducing reliance on imports.

Increased investment flows and cross-border exchange of skilled labour as part of the ASEAN Economic Community is expected to provide a boost to Cambodia’s tourism sector, seeing more tourist inflows and creating more tourism-related jobs.
However, there is concern that Cambodia is not fully prepared to fill these prospective job vacancies – creating more skilled jobs within tourism will only benefit Cambodians if there is sufficient investment in improving service standards and the training of tourism professionals. Otherwise, tourism-related businesses may look to Thailand or Vietnam to fill skilled vacancies.
Carrol Sahaidak-Beaver, director of the Cambodian Hotel Association, highlights the need for more facilities that offer accredited vocational training to ASEAN standards. She also discussed the need for shift in perception of the tourism sector amongst young people, some of whom see it only as a ‘last resort’ with little prospect of upward mobility.

The Ministry of Commerce launched its online business registration portal as planned on December 7th. The new, paperless system enables prospective businesses to search for a company name, upload shareholder and board of directors’ information and pay the registration fees online, as opposed to the old system where representatives had to physically go to the ministry to complete registration procedures – a time-consuming process that also created opportunities for corruption.
According to Commerce Minister Sun Chanthol, this will cut the typical time taken to register a business from 5-7 days to just one hour. The online registration system cost $750,000 and was developed by Foster Moore International, the same software registry company that developed an online registry for New Zealand, which led all countries in the World Bank’s Doing Business 2016 report in terms of speed of starting a business.
Of the 50,000 businesses registered under the old system, The Commerce Ministry has asked all registered enterprises to fill in their details in the online system by March next year, or face a fine.
A separate automated online system for issuing certificate of origin (CO) documents will be rolled out in January.

Following a Memorandum of Understanding signed between the Ministry of Agriculture and South Korean counterparts on 8th October 2015, Cambodian mango farmers will be able to export to South Korea provided that they can fulfill quality requirements. Cambodia’s mangoes are priced lower than those from neighboring countries and are popular amongst consumers, creating high potential for export. MongReththy, an agro-industrial conglomerate and a leading Cambodian mango exporter, exports around 500 to 600 tonnes per year and expects this to increase with this new deal.
According to the Ministry of Agriculture, Cambodia had 65,251 hectares of mango plantations in 2014. Local producers currently export to China, France, Malaysia, Singapore, Thailand and Vietnam. 

A route going through Prey Veng and SvayRieng provinces has been settled upon for a planned $2.5 billion high-speed toll road from Phnom Penh to the Vietnamese border in Bavet. With support from JICA ( the Japanese development agency) and an adjoining road to be built by Vietnam from Bavet to Ho Chi Minh City, the project is intended to lower trucking fees by up to 50% and cut travel time between the two cities to just 2.5 hours. This is a long term project with projected completion in 2033.

From January until November of this year, investment in the construction sector mounted to $2.96 billion, marking a 27 per cent increase compared to the same time span in 2014, according to new data released by the Ministry of Land Management, Urban Planning and Construction (MLMUPC). Of that total amount, $1.5 billion, or around 54 per cent, is invested in buildings ranging from 10 to 55 storeys (mostly condos and apartments).
Sung Bonna, director of Bonna Realty Group, said that the recent growth of real estate investment over the last year happened due to the oversupply of real estate in China, Hong Kong and Singapore, thus resulting in the relocation of investors who see Cambodia as a new market that can draw substantial profits. He suggested that similar levels of investment are taking place in Vietnam and Myanmar but it feels bigger in a small country like Cambodia. 

During the first 11 months of 2015 Cambodia has exported 450,000 tons of rice, representing a 36% year-on-year increase despite harvests being affected by drought this year.
Despite the high growth figures, total exports do fall far short of the Royal Government’s target of 1 million tons per year by 2015, Song Saran, president of exporter Amru Rice, suggested that such a target would not be met without more access to financing. “We ask for government assistance to give some loans to rice exporting companies to expand their productivity and to be able to purchase more rice to stock for our warehouses to process … currently we lack sufficient warehouse storage space, crop dryers, and rice millers.”
Hun Lak, vice president of the Cambodia Rice Federation (CFR), echoed the sentiment that the most important thing is to have more capital to purchase rice to stock in warehouses for export after harvest. At present, many farmers sell directly to brokers in neighboring countries.

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