Weekly news round-up / Week 46

Political (Cambodia-Specific)

Cambodians have been closely watching the election in Myanmar and decisive victory of Aung San Suu Kyi’s National League for Democracy (NLD). Political commentator Ok Serei Sopheak told Phnom Penh Post how “Everyone in Cambodia is following the election … On Facebook, a lot of the youths are talking about it. It’s the primary news that has been commented on.”
Cambodia’s main opposition party the CNRP has been seeking to draw parallels between the NLD’s journey and their own, with opposition leader Sam Rainsy telling Phnom Penh Post that “The wind of freedom that is blowing throughout the world will also reach Cambodia in the near future,”.
The CPP also congratulated the NLD, with a spokesman saying that “We congratulate the victory of the real patriotic democratic party of Myanmar and we respect the Myanmar people’s resolve throughout the election,” before going on to say that the CNRP did not have the same ‘democratic spirit’ of working genuinely in the interests of the people.

Europe, European Businesses, EuroCham Members

B2B Cambodia Q+A session with Okhna Sear Rithy, chairman of Kerry Worldbridge Logistics Ltd., a EuroCham member and the team behind the Kerry Wordbridge Special Economic Zone (KWB SEZ) outside of Phnom Penh.
One of the zone’s key competitive advantages is that it has a 20-hectare Customs Bonded Warehouse Zone, allowing companies to store dutiable goods without payment of import duties. Okhna Sear Rithy points out that trade between Thailand and Vietnam frequently transits through Singapore despite Cambodia’s more convenient geographic location, and a system of bonded warehouses could help Cambodia become a logistics hub for the region.
Okhna Sear Rithy recognizes less developed infrastructure, the skills gap and corruption as logistical challenges for companies operating in Cambodia though recognizes the efforts of the Royal Government to improve upon these issues, giving the example of the now-up-and-running ASYCUDA system that allows many customs procedures to be completed online so as to reduce face-to-face transactions and enhance transparency.
Preparing for ASEAN Economic Community, he suggests that logistics companies in Cambodia need to improve quality so as to meet international standards and should consider partnerships with larger companies to maximize economic efficiency.

Infrastructure, Development and Core Industries 

Upon the expiry of a profit-sharing arrangement with Sokimex Group, which has managed the ticketing of the Angkor Wat Archeological Park for the past 17 years, the Royal Government has announced that it will be taking full control of the ticketing process from 2016.
A government spokesman commented that whereas the government had not had capacity to invest in the site when first forming an agreement with Sokimex in 1999, but the time had now come to take over and maximize the revenue collected for the state from the park.
A public institution co-managed by the Ministry of Tourism and Ministry of Finance and Economics will be set up to take over ticketing in January.
According to figures from the Apsara Authority this week, which manages the ancient temple complex, foreign visitors in the first 10 months of this year increased 2 per cent to 1.67 million, while revenue for the period rose 0.6 per cent to $47,681,080.

On Sunday 8th November Prime Minister Hun Sen took to Facebook to warn companies against “colluding with bad officials” to illegally construct buildings on public parks and sidewalks, ordering those that have already done so to dismantle them immediately. His comments come after he personally inspected the ongoing expansion of NagaWorld and ordered parts of the structure to be dismantled for extending beyond its approved boundaries.
The post stated that “If the building is built on a public place, the authorities and involved ministries have to take responsibility. For the private company, it has to stick to the law and it must not construct the building beyond what the law permits by colluding with bad officials, or else they will be punished,”.

A report released by the World Energy Council (WEC) has ranked Cambodia poorly in terms of energy security, energy equity (ability to provide affordable energy to the population) and environmental sustainability. Cambodia’s continued reliance on imported fuel was a major factor behind the low ranking.
However, a Ministry of Commerce spokesman said that the report’s findings were not a major cause of concern: “[The economy] is not affected when we import more fuel … It means we have more factories because factories use electricity …Whatever the source of the fuel, when we use more energy, it is a sign of industrial development.”

Property Plus profile of Sihanoukville as a tourist destination. Airport arrivals were up significantly in the first 8 months of the year (35,882 arrivals, up 140% year-on-year). The airport now operates flights from South Korea, Singapore and China as well as daily flights to and from Siem Reap. In total over 1 million people visited the province from January-August 2015, though increasing numbers of tourists pass through Sihanoukville only to access nearby islands.
Numbers dip significantly during the rainy season and the article comments on the need for a greater variety  of attractions to ensure tourists all year round. There is a growing amount of Chinese and ASEAN investment in the property sector, with integrated hotel-casinos aimed at Chinese visitors being a particular growth sector. There are now 15 licensed casinos in Sihanoukville plus 5 pending approval. Cambodia Hotel Association President Luu Meng has welcomed the investment, saying that “It’s always good to see construction going on and it’s a good indication there will [be] even more development because more than a year ago Sihanoukville was so empty.”
Whilst the gambling industry has a lot of economic potential for Cambodia it is also tainted with a reputation for murkiness. There was a high-profile armed attack on a casino in Sihanoukville earlier in the year whilst casinos in the border towns of Bavet and Poipet have been dogged by stories of kidnapping and extortion. Cambodia doesn’t have the capacity to implement anti-money laundering programs to the same extent as other countries which makes it vulnerable to organized crime.
The article also details a number of major investments in the condominium market, within which the first major large projects are aiming to bring international standards to the city and break a long spell of inactivity and relatively flat land prices. There is also increased interest in Otres Two from higher-end resorts.

Cambodia Daily piece looking at how foreign aid given to Cambodia is likely to be affected by reaching the UNDP’s ‘lower-middle income’ country status.
A report released by the Cooperation Committee for Cambodia (CCC) in September noted that while the country’s graduation from low-income status is already shifting its major source of development finance from grants to concessional loans, the absolute level of foreign support was unlikely to change immediately. Some donors will avoid retrenching in order to support Cambodia’s transition, whilst there are likely to be further funding opportunities from China and the China-led Asian Infrastructure Investment Bank.
While questions remain about how effectively foreign assistance is being used, the government has recognized the pressing need to build the country’s internal funding capacity. The Government’s ‘Revenue Mobilization Strategy’ has improved tax collection and the World Bank has recognized progress made by a Public Financial Management Reform Program aimed at increasing the effectiveness of state spending.
The government is hoping to increase the level of FDI which represented around 10% of GDP last year (compared to aid revenues of 8%). Donors such as Asian Development Bank are now starting to move away from direct financing of public projects towards programs that enhance public-private partnerships.

Annual Platinum Partners

Annual Gold Partners

Founding Chambers & National Chapters