Weekly news round-up / Week 45
Political (Cambodia-Specific)
- KemSokha Ousted as National Assembly VP 31-10-15
On Friday 30th October, in a vote that was boycotted by the CNRP, deputy opposition leader KemSokha has been removed as vice president of the National Assembly. All 68 CPP lawmakers voted to remove Mr. Sokha from his position. The vote came four days after two CNRP lawmakers were attacked outside the Assembly during a protest led by a CPP-affiliated youth group demanding that Mr. Sokha resign his parliamentary post. The vote was pushed to the top of Friday’s agenda as 63 CPP lawmakers, claiming to be responding to the demands of their constituents, had signed a petition calling for a vote to remove Mr. Sokha.
The CNRP boycotted the vote which they said was unconstitutional – the Kingdom’s Constitution only lays out provisions for the replacement of the Assembly president or vice president—by a majority vote of the Assembly—in case of a resignation or death.
- Races hung out to dry 31-10-15
Prime Minister Hun Sen has announced the cancellation of the Water Festival boat races due to low water levels caused by this year’s droughts. Noting that areas along the river lack adequate water to farm rice, the PM ordered the Ministry of Economy and Finance to reallocate the festival’s budget to buy fuel to operate water pumps that would irrigate dry rice fields.
The motivations behind the cancellation have been questioned by some political observers, who suggest that heightened political tensions may have influenced the government’s thinking. Last week witnessed the beating of two opposition politicians outside the National Assembly and the subsequent ousting of National Assembly vice president and CNRP deputy head KemSokha. The Water Festival traditionally draws large crowds in Phnom Penh which the government may be keen to avoid. A government spokesman denied that the KemSokha case had anything to do with the Water Festival cancellation.
- ‘Pitfalls ahead’ for web freedom, report finds 03-11-15
The Freedom on the Net 2015 report, released by American watchdog organization Freedom House, has found Cambodia to be ‘partly free’ when it comes to internet freedoms but warned that new programs regulating telecommunications, online expression and cybercrime threaten the relative freedom it currently enjoys.
The report highlights a still-unapproved telecommunications law drafted in 2014 that would impose sweeping controls on the sector for the purposes of “effective security, national stability and public order”, potentially leaving the door open for censorship. Last year also saw the announcement of a Ministry of Information program aimed at restricting the online publishing of “immoral content”. Observers also fear that a new anti-cybercrime department created by the Interior Ministry this September may herald a crackdown on online expression.
On a positive note, the report praises Cambodians’ access to “unbiased information” from web and social media-based news sources, though Freedom House’s separate Freedom of the Press report for this year rated the Kingdom’s overall press environment “not free”.
Infrastructure, Development and Core Industries
- Chinese Auto Group Plans Factory Here 01-11-15
China-based Guangzhou Automobile Group is awaiting approval from the Cambodian government to set up a manufacturing facility in Cambodia to serve as a base for exports of parts and vehicles to the rest of ASEAN. The government is prioritizing manufacturing for its growth strategy to promote diversification, structural change and improve competitiveness, according to a report on its Industrial Development Policy (IDP).
The group already has a showroom in Phnom Penh and sold around 20 vehicles here last year. Toyota’s country manager reported a 20% growth in sales during the first ten months of the year.
According to the Council for Development of Cambodia, total committed investment in the first 10 months of this year was about $3.3 billion, with China being the number two source of FDI.
- Energy Forum Promotes Renewables Through Regulation 03-11-15
Teams of regulators from Cambodia, Laos, Thailand, Vietnam and the USA are conducting a workshop in Phnom Penh this week to coordinate on regional energy policy. Delegates will address how to “integrate” renewable energy sources like solar and wind into the grid without disrupting access for residents and how to allocate costs for projects that benefit multiple countries.
In the Lower Mekong region, electricity demand is expected to increase 5 percent annually. To keep up, Cambodia and its neighbors are attempting to transform their electricity production while at the same time meeting climate-friendly targets.
Last month, the member states of the Association of Southeast Asian Nations agreed to a target of producing 23 percent of electricity through renewable energy by 2020. Currently, 90 percent of Cambodia’s domestic electricity is imported from neighboring countries.
- Number of Registered Cambodian Brands Surging, Officials say 03-11-15
This year has seen significant increases in the number of brands registered with the Ministry of Commerce, which now sits at about 50,000. A majority of brands are foreign-owned from USA or Japan, whilst Cambodian-owned brand account for around 30%.
Economist SreyChanthy highlighted pending regional integration through the ASEAN Economic Community as one of the reasons behind the rapid growth – businesses are rushing to register their brands in order to protect them from being accused of duplicating brands that exist in other countries and to ensure that they comply with intellectual property rights.
Cambodia’s accession to the Madrid Protocol came into effect in June 2015, providing Cambodian brand owners the potential to protect their products through one international application covering more than 110 countries.
- Mills busy as new rice crop rolls in 04-11-15
Cambodian rice exports rebounded in October after August and September had seen lower exports than the same periods in 2014 caused by delayed rainy-season planting. The fragrant rice crop was harvested last month and the premium jasmine rice crop is expected in November, which will give the export numbers a further boost.
For the first 10 months of the year, Cambodia shipped out around 410,000 tonnes of rice, up 34 per cent year-on-year, largely due to the completion of a Chinese rice quota earlier in the year. Total exports of around 500,000 tonnes can be expected for 2015.
The government’s 2010 goal of exporting 1 million tonnes of rice annually by 2015 will be missed, predominantly due to lack of investment in warehousing facilities and high electricity and transportation costs.
- Garment Exports Still ‘Solid’ Amid Raises: ILO 04-11-15
Garment exports over the first half of the year hit $3 billion, growing 12.7 percent over the same period last year. That’s even better than the 10.2 percent year-on-year growth the industry saw in the first half of 2014, despite an unusually high 28 percent hike in the minimum wage for garment workers that took effect this past January.
ILO country director Maurizio Bussi commented: “There were fears in the past that minimum wage rises would cause the industry to falter … The data shows that the sector continued to perform quite well—Cambodia’s market share of garment and footwear exports has continued to rise in recent years. Of course, this positive experience from the past minimum wage increases does not guarantee that future increases will necessarily be as benign for the industry,”
Whilst 1 factory closed, 30 new factories opened during the first six months of this year, an additional $152 million worth of investments in the industry were approved, and an extra 42,000 jobs were created.
- Government to revamp porous tax code 06-11-15
Leaked documents obtained by the Phnom Penh Post reveal plans by The Royal Government to scrap the General Department of Taxation’s ‘estimated regime’ and bring all businesses under one formal taxation system.
The estimated-tax regime applies only to sole proprietorships that fall below a certain threshold on revenue from the sale of goods or services. It was designed as a means of bringing in some tax revenue from a largely untaxed business community but has now come to be seen as inefficient, requiring up to 60% of tax officials’ time but contributing less only around 0.5% of total tax revenues.
The estimated regime is seen as unfair by businesses operating within the formal ‘real regime’ – the real regime requires taxpayers to file monthly and annual tax returns, be open to tax audits, and charge value added tax (VAT), which is not required in the estimated regime.
The document did not detail the timeframe within which the reforms should be implemented.
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