Officials see industry as key to FTA benefits

Phnom Penh Post 02/03/2010

SEZs vital for growth ahead of full free-trade agreement: experts

Photo by: Heng Chivoan

A sign advertises engineering, construction and security services on Friday at Tai Seng SEZ in Bavet on the border with Vietnam.

The important thing [for Cambodia] is to get foreign money to foster its domestic industry."

JAKARTA. FOREIGN investment in Cambodia’s Special Economic Zones (SEZs) is vital if Cambodia is to benefit from free trade with China, say senior ASEAN officials.

On January 1, the ASEAN-China Free Trade Area was created, reducing the vast majority of trade tariffs between founding ASEAN members and China to zero percent.

Cambodia, Vietnam, Laos and Myanmar, as new members, must reduce their tariffs on certain goods to 5 percent and have until 2015 to eliminate the tariffs completely.

“The important thing [for Cambodia] is to get foreign money to foster its domestic industry. SEZ development in Cambodia is a potential way to produce exports for China,” Hidetoshi Nishimura, executive director of the Economic Research Institute for ASEAN and East Asia, said at his office in Jakarta on Thursday.

Cambodian exports to China are dwarfed by imports to the Kingdom, and foreign investment in the nation has plummeted due to the global economic crisis.

According to the Hong Kong Trade Development Council (HKTDC), trade volume between Cambodia and China was US$480 million in 2009. Of that, only $13 million consisted of Cambodian exports to China, mostly agricultural products.

According to Cambodia’s central bank, foreign direct investment flows into Cambodia declined 35.2 percent to $514.7 million in 2009, from $794.7 million in 2008.

S Pushpanathan, deputy secretary general for the ASEAN Economic Community, said that for Cambodia to attract more foreign direct investment the country must have clear and transparent investment laws and a mechanism for business-dispute resolution.

“These are factors that investors think about before they put their money in a country,” he said.

He added that as labour costs in Cambodia are cheap, Chinese investors will be attracted to investment in the garment and textile industries here.

The business community seems united in regarding sucessful SEZs as important factors in the Kingdom’s economic development.

Yuji Imamura, Japan International Cooperation Agency’s advisor in charge of investment environment improvement at the Council for the Development of Cambodia, wrote in an email Monday: “For investors, SEZs are where there is basic infrastructure is in place. It is hard work for them to set up their factories outside SEZ areas.”

He added that so far eight of Cambodia’s 21 SEZs are in operation. Around 40 companies are manufacturing garments, textiles, shoes and consumer goods within the zones.

Imamura added that in the future, international investors will see Cambodia as an alternative to investment in Vietnam, as labour costs in the Kingdom’s neighbour have risen.

Chan Nora, secretary of state for the commerce ministry, said Monday that it is clear that SEZs will be a positive attraction for foreign investors as trade facilitation, such as import and export paperwork, is easier inside the zones.

Hirosi Uematsu, managing director of Phnom Penh Special Economic Zone, wrote in an e-mail on Monday that since the start of this year, three foreign companies – an animal feed company from China, a Philippine snack food firm and an Indian food-processing company – have signed up to build factories, bringing the number of companies operating in the zone to 17. ADDITIONAL REPORTING BY SOEUN SAY

Chinese company picked to boost capital's port capacity

Phnom Penh Post 22/01/2010

Upgrade to be funded by already approved loan from Beijing

Photo by: HENG CHIVOAN

Phnom Penh Port is set for a makeover following a newly signed deal with Shanghai Co, according to the head of the port Hei Bavy.CHINESE company Shanghai Co has been selected by the government to develop infrastructure at Phnom Penh Autonomous Port (PPAP).

Hei Bavy, director general of PPAP, told the Post Wednesday that the business has been awarded the rights to develop the port from the Cambodian government. It is set to start the project this March and due to finish 30 months later.

The scheme will be funded by a US$30 million Chinese loan, announced by the government in October.

In its first stage, Shanghai will equip the 59-year-old port with modern goods-lifting equipment and build a new port for storing containers in a deep-water area. This will be situated on the Mekong River, in Kien Svay district, 20 kilometres east of Phnom Penh.

“We hope more ... containers will be shipped through Phnom Penh Autonomous Port because of this development project,” said Hei Bavy.

It is hoped that after development the port will be able to load from 120,000 to 300,000 standard containers of goods per year, he added. At present, it is able to load a maximum of 50,000 to 60,000 per year.

In 2009, PPAP shipped only 43,500 standard containers of freight, a drop of 7.44 percent compared with 2008, due to the global economic crisis.

Hei Bavy predicted that the shipment of freight at PPAP this year might reach 60,000 containers, due to a predicted increase in rice exports and some other agricultural products.

“I believe that Cambodia will continue to develop in the future. There will be bigger demand for produce, which means transportation services will need to expand too,” Hei Bavy said.

Last week, Chan Nora, secretary of state of the Ministry of Commerce, predicted that business in Cambodia would improve this year because large amounts of agricultural products like rice, corn and rubber had been reserved for export.

HK bourse expert points to IPO opportunies

Phnom Penh Post 22/01/2010

CAMBODIA’S new stock market will benefit companies and help them bring in extra capital for expansion, a Hong Kong expert said in a Thursday seminar.

Referring to securities markets and the private sector, Alec Yiu Wa Tsui, former CEO of Hong Kong Stock Exchange and former chairman of Hong Kong Finance Institute, said: “Newly listed companies will bring in new capital, win prestige, attract professional management, and earn more business opportunities.”

However, the former CEO said that there are burdens for companies that wish to become listed on the exchange. He named the cost of an initial public offering (IPO), the possibility of corporate restructuring before an IPO, and continued need for compliance with listing requirements – such as regular financial reporting and ac hoc disclosure of sensitive information – as factors.

“However with risk comes opportunity,” he explained.

The Kingdom’s first stock exchange is due to launch at the end of this year, after its implementation was delayed.

Sorn Sokna, chairman of the newly founded Financial Institute of Cambodia, said that a number of Cambodian companies already have a transparent and effective corporate culture, which means they have the potential to engage in the stock exchange.

“However, these companies have shown great reluctance in engaging with the securities market, primarily due to a lack of clear understanding in the ways they could participate,” he added.

Keat Chhon, finance minister and chairman of Securities and Exchange Commission of Cambodia, said the most important factor from the government’s side is that the bourse becomes a transparent, effective, just, sustainable, and investor-protective force in the economy.

OZ gold estimate at latest drill due in Q1

Phnom Penh Post 22/01/2010

MEASUREMENTS to estimate gold resources at Okvau, in Mondulkiri province, are set to be finalised by mining company OZ Minerals in the first quarter of 2010.

According to the company’s fourth-quarter report released Thursday, structural and geological modelling at the gold deposit have recently been completed, and resource calculations are now under way.

The company hopes to outline an initial inferred resource by the first quarter of 2010, as part of its “new discovery” programme, the report added.

The modelling followed a 5,800-metre drilling programme to test previously unidentified gold mineralisation at Okvau.

Last month, a spokesman for OZ Minerals told the Post it aims to identify at least 2 million ounces of gold at its Cambodian concessions by the end of this year.

Surface sampling and geophysical analysis is ongoing at the four other areas being explored by the company.

The areas, located close to Okvau, are Oput, Area 6, Granite Hill and Area 1. “These prospects are currently being, or will be, drill-tested in 2010 to ascertain the district-scale potential in the Okvau region,” Thursday’s report said.

Australian-based OZ Minerals outperformed its estimates in the last quarter of 2009, according to the figures released. Copper and gold production exceeded expectations at its Primrose Hill site in Australia.

The company mined 36,497 tonnes of copper and 30,526 ounces of gold during the period.

OZ Minerals recently refocused on gold and copper mining in Australia and Southeast Asia following the June sale of US$1.35 billion of its zinc mines to China Minmetals Non-Ferrous Metals Co.

Mong Riththy fires up 'clean' charcoal brand

Phnom Penh Post 20/01/2010

MONG Riththy Group is preparing to put “cleaner” charcoal on the domestic market after a US$10 million investment, its president told the Post Tuesday.

In the coming two weeks, the company is set to introduce between 250 and 1,000 tonnes of Acacia charcoal on the domestic market each month at a price of 1,200 riels (US$0.30) per kilogram, said Mong Riththy.

The special charcoal is thought to be cleaner than the domestic charcoal used normally, as it burns at a high heat and does not produce as much smoke as other varieties.

It has been produced using wood from Acacia trees planted in 2005 on 3,200 hectares of land in the Keo Phos area of Stueng Hav district, Preah Sihanouk province, Mong Riththy said.

“We hope that our company will be successful in putting its clean charcoal into the market because the product is easy to use, burns well, and does not affect the health of users,” he explained Tuesday.

He added that a grinding plant and 50 charcoal kilns have been built to process the wood, which is mixed with palm oil shells to produce the charcoal.

Mong Riththy said he hopes to encourage people to grow Acacia trees to avoid cutting down the Kingdom’s natural forests. One hectare of the crop, which takes five years to mature, could earn about $500 per year, he added.

Government officials welcomed the move to produce cleaner fuel.

Ty Sokun, director general of the Department of Forestry Administration, said Tuesday that people throughout the country cut down around 3.5 million tonnes of wood to use as cooking charcoal each year.

According to a report from the Department of Forest Administration, 70 percent of the firewood people use to cook in Cambodia is cut from natural forest. The other 30 percent is cut from fruit trees.

“We believe that it is a good idea to produce clean charcoal because it will help reduce the demand for firewood from natural forests,” said Ty Sokun.

Falling prices in December capped a year of deflation

Phnom Penh Post 201/01/2010

Consumer prices fell 0.7pc, but rise in fuel costs will prompt inflation in 2010

Photo by: PHA LINA

A vendor sells seafood this month at a Phnom Penh market. Falling food prices prompted overall deflation in Cambodia last year.

The continued month-on-month fall [in CPI] is more surprising."

CAMBODIA experienced full-year consumer price index (CPI) deflation of 0.7 percent in 2009, San Sy Than, director general of the National Institute of Statistics (NIS), said Tuesday.

December CPI capped an unusual year for price trends in the Kingdom, as the index fell 0.1 percent month-on-month but jumped 5.3 percent in December on prices a year earlier due to the low base at the end of 2008 – when the global economic crisis began to affect Cambodia, analysts said.

The rate matched a December projection by the International Monetary Fund (IMF), which foresaw a 5 percent annual rise in prices year on year, “mainly as base effects from sharp declines in commodity prices fall out of the consumer price index”.

Still, overall inflation was sharply down on 2008, when prices rose in August and September at rates above 20 percent and the economy boomed, at least for the first three quarters.

Food prices – which dropped 1 percent – were again at the centre of the continued month-on-month fall in prices in December, the third month in a row that CPI declined, according to new NIS figures.

Planned airport rally sparks alarm

Bangkok Post 20/01/2010

Business leaders and analysts offered dire warnings yesterday about the economic impact if airport operations are once again held hostage to Thailand's ongoing political soap opera.

Stocks fall 1.39% on fears of new blockade

Thai stocks fell 1.39% yesterday amid reports that red-shirted supporters of former premier Thaksin Shinawatra could rally at Suvarnabhumi Airport.

Spokesmen for the United Front for Democracy against Dictatorship, a group led by pro-Thaksin supporters, insist that the rally, tentatively planned for next week, would not disrupt airport operations or interfere with passengers.

But concern spread quickly that the rally could turn into a repeat of November and December 2008, when Suvarnabhumi Airport was closed for eight days by the yellow-shirted People's Alliance for Democracy, which forced the resignation of the government led by the People Power Party, the successor to Thaksin's Thai Rak Thai.

Satit Rungkasiri, the director-general of the Finance Ministry's Fiscal Policy Office, warned that an airport closure would be akin to "national suicide".

Toyota, Honda show off their new hybrids

The Japan Times Online 13/01/2010

DETROIT (AP) Toyota unveiled a new hybrid concept car that is smaller than the Prius and geared toward younger buyers, part of the company's hybrid and alternative-fuel lineup, which will be expanding over the coming years.

Hybrid hip: Honda Motor Co.'s CR-Z, a two-seat hybrid due to launch this summer, is displayed Monday at the North American International Auto Show in Detroit along with Toyota Motor Corp.'s FT-CH (below), a hybrid concept. KYODO, AP PHOTO

The automaker showed off the FT-CH compact at the North American International Auto Show in Detroit on Monday and confirmed it plans to expand the Prius from a single model to a family of hybrids.

The FT-CH could be sold under the Prius name, Toyota said.

The plan to broaden the Prius lineup is a sign of its success and of buyers' loyalty to them. The Prius, which debuted in the U.S. in 2000, has long been America's top-selling hybrid and was the best-selling vehicle overall in Japan last year.

"The strategy is still taking shape and obviously it will require additional models to qualify as a family," said Jim Lentz, president of Toyota Motor Sales USA, a division of Toyota Motor Corp.

Prius models would be marketed together to save on advertising costs, as there could be up to three of them. It costs more than $100 million to launch a model name and win buyer recognition, he said.

"It's much more efficient to market 300,000 or 400,000 vehicles under one brand name than it is to spend the dollars to market two or three model names," he said.

Toyota said the two-door FT-CH, 55 cm shorter than the Prius, is lighter and more fuel-efficient. Its styling, inspired by 8-bit video games popular during the 1980s, is intended to appeal to younger buyers.

The FT-CH, as a concept vehicle, has no official sales or production schedule.

New $6m terminal opens in Poipet in bid to boost tourism

Phnom Penh Post 08/01/2010

POIPET’S new US$6.5 million International Passenger Terminal opened for business this week and could bolster the Kingdom’s tourist industry, its director told the Post Thursday.

The 3,000-square-metre building – containing five restaurants, a money exchange and an office and built beside National Road 5, about 8 kilometres from the Poipet border checkpoint with Thailand in Banteay Meanchey province, was officially opened on Monday.

Travellers will be charged $1 to enter the terminal, from where they can arrange visas and catch taxis and buses.

It has been built with government approval to relieve pressure from the bustling nearby checkpoint, which sees around 5,000 people cross per day.

Va Chhouda, managing director of Sou Ching Investment Co Ltd, the company that built the centre, said Thursday it was necessary to build an international-standard terminal near the border.

“Tourists get stuck at the noisy border every day. But we want to attract tourists to come to stay in Cambodia for a long time.

“This is why we have created a place where we can provide good services to them,” he said.

Travellers can be picked up by bus from the checkpoint to visit the terminal, which has its own parking and space for 1,000 customers.

Trade with South Korea rebounds

Phnom Penh Post 07/01/2010

BILATERAL trade with South Korea bounced back in November after plummeting over the first 10 months of 2009, official figures released Wednesday show.

Trade with South Korea climbed 16.6 percent during the month to US$24 million, though Cambodia maintained a significant trade deficit with its larger trade partner, according to figures from the Korea Trade-Investment Promotion Agency (KOTRA).

KOTRA Deputy Director General Lee Hyoung Seok said he hoped the increase in trade augured well for 2010.

“Hopefully trade will increase further this year because the Cambodian economy is getting better and better,” he said. “I hope and believe demand for products will increase.”

Cambodia exported $1 million worth of products to the East Asian nation, up 55 percent from $711,738 in November 2008, just after the global economic downturn kicked in.

Omani firm in talks to buy local lobsters

Phnom Penh Post  06/01/2010

AN OMAN company could import up to 300,000 juvenile river lobsters from Cambodia in a trade deal set to boost local production.

Haing Leap, deputy director of the Department of Fish and Farming Development at the Ministry of Agriculture, Forestry and Fisheries, said an Omani company is negotiating with the department to buy the young freshwater lobsters to raise them for sale in the Middle East.

The first step of the deal will see the business taking 5,000 young river creatures, at a cost of US$0.07 each, to test their development in Oman.

The government hopes that the Kingdom’s farmers will build more lobster-rearing stations if they secure sales of baby crustaceans. “If the plan is carried out successfully, it will help boost the breeding of young freshwater lobsters in Cambodia,” he said.

Khiev Sam, a lobster breeder at a station in Takeo province’s Tram Kak district, said: “This is good news. If we are able to sell our young lobsters overseas, we will have a bigger market.”

Few local farmers raise lobsters in Cambodia and breeding programs are limited, prompting the Japanese government in 2005 to donate $5 million to support a five-year lobster rearing project. At present, 70 farmers have joined force to build river lobster breeding stations.

Rubber investment urged as global prices hit records

Phnom Penh Post 06/01/2010

Government says it will ‘welcome’ any investor that wants to plant rubber as prices soar on signs of global recovery

(Picture A Thai worker stacks rubber sheets ready for shipment. Global prices for rubbber have soared in recent months on expectation of increased demand. BLOOMBERG)

There is high demand for rubber on the global market, so we need more investment in the sector."

The government is urging more investment in rubber plantations in Cambodia to take advantage of high prices on global markets.

Ly Phalla, director general of the General Department of Rubber under the Ministry of Agriculture, Forestry and Fisheries, said rubber was now fetching around $2,800 per tonne, up from $1,000 per tonne early last year.

“There is high demand for rubber on the global market, so we need more investment in the sector. Whoever wants to plant, we welcome them,” he said, adding that investment in rubber plantations has no negative impact on local farmers.

Silk village struggles to survive

Phnom Penh Post 06/01/2010

Weavers say their livelihood is disappearing due to high costs.

Van Chan Thoeu weaves among the last of her silk creations Tuesday at Lvea Krom village, Koh Dach in Kandal province. The 48-year-old widow says she will be the latest silk weaver in the village to shut up shop next month.

About 80 percent of silk makers in Koh Dach commune have shut down their silk weaving businesses."

WEAVERS in one of Cambodia’s most famous silk villages say they face severe food shortages after the price of raw silk traded to the Kandal community doubled within a year.

Representatives from leading silk organisations and residents of Lvea Krom village, Koh Dach, in Mok Kampol district, Kandal province, estimate that up to 80 percent of weavers have ceased work after the tradition became unprofitable.

A walk down the main street of Lvea Krom reveals empty looms in nearly every home. Some are being used as make-shift washing racks, ending generations of Cambodian textile production.

Vietnam Fights Rising Sea Levels, Protects Economic Growth

VOA News Vietnam Fights Rising Sea Levels, Protects Economic Growth

Farmers try to adjust to the effects of climate change

Vietnam is one of the world's fastest growing economies. But the country is also experiencing the effects of climate change. Scientists say parts of the country would be inundated within 40 years because of rising sea levels. The community in Ca Mau province grapples with the threat to its environment and livelihood.

Vietnam's economy grew by 8.5 percent in 2007 and is expected to expand by 6.5 percent this year, despite the global slowdown

The country's young population, a key factor in its economic rise, is visible in Ca Mau, the southernmost province.

This coastal region sits mostly less than a meter above the sea, and many people depend on shrimp breeding and rice growing. And they are learning just how bad the damage from coastal erosion and rising ocean waters can be.

They used to live where those poles are some years ago, says this resident.

"Every year it erodes little by little," Vhan Thn Thanh said. He is deputy director of Ca Mau's Natural Resources and Environment Department. "And the erosion here happened four years ago. Until now, the erosion is about 40 or 50 meters," he added.

"The problem along the coasts was coastal erosion and loss of coastal land, shorelines. That to some degree can be attributed to sea level rise," Dr. Anond Snidvongs said.

Khon Kaen plant set to go online in January

CAMBODIA’S first sugar plant will begin producing unrefined “brown” sugar for export to European markets early next year, an official of Thailand’s Khon Kaen Sugar Industry Public Company said Thursday.

“We plan to begin shipping sugar to European markets in May,” said Korn Posayanond, Khon Kaen’s research and business-development manager.

The firm grows sugarcane on 20,000 hectares in Sre Ambel district of Koh Kong province, and is wrapping up construction on a processing plant ahead of an official launch planned for January 25.

It will be several years before the plant is able to produce refined “white” sugar, said Korn, adding that “for now, about 25,000 tonnes of unrefined sugar will be produced annually for the EU”.

In three years the firm plans to be operating at a planned full capacity of 60,000 tonnes per year, he said.

Interest rates likely to hike in December

Ninemsn RBA likely to lift rate in Decemeber

The Reserve Bank of Australia (RBA) is likely to make history on Tuesday by lifting interest rates for a third straight month, economists say.

After more data showing Australia has avoided the worst of the downturn, 13 of the 14 economists surveyed by AAP expect the central bank to lift the cash rate by 25 basis points to 3.75 per cent on December 1, following two 25 basis point moves in October and November.

If it does, it will be the first time the bank has lifted interest rates three months in a row since it started announcing the rises in January 1990.

"The cash rate at 3.5 per cent is way too expansionary on an economy that won't experience the worst outcomes (of the global financial crisis)," Commonwealth Bank senior economist Michael Workman said.

In a sign the Australian economy was doing better than other western nations, Mr Workman said recent jobs data indicated unemployment would peak at 6.5 per cent.

That's below revised Treasury forecasts for the jobless rate to hit 6.75 per cent by late 2010.

In May, Treasury was forecasting an unemployment rate peak of 8.5 per cent.

Recent Australian Bureau of Statistics (ABS) data shows total employment rose by 24,500 to 10.832 million in October, seasonally adjusted, after it shot up by 40,600 in September.

The unemployment rate has hovered around 5.8 per cent in recent months and briefly dipped to 5.7 per cent in September.

Dollar forecast to peak at $US1.03

News Yahoo

The already overvalued Australian dollar will reach parity with the US dollar in the next six to 12 months and peak at about $US1.02-03, a currency strategist says.

State Street Global Advisers head of currency management Collin Crownover says the unit is already overvalued by about 20 per cent and that the figure would stretch out to 30 per cent if it reached the $US1.03 mark.

"I think we'll see about a 10 per cent appreciation from where we are now," the London-based Dr Crownover said in Sydney on Friday.

"At that point, certain dynamics come into play and that becomes an extreme overvaluation.

"Even though Australia has a much better growth profile than the rest of the G10 right now, people at that level might take pause and say even though the growth is a lot better, that's pretty rich, relevant to the valuations used for investments into Australia."

Asked whether he felt the Australian dollar would remain at parity for long he said: "Perhaps not.

"We do think it will reach parity within the next six to 12 months.

"Then the Australian dollar becomes 30 per cent overvalued and historically that's been a point at which we see significant imbalances and it's much more likely to be corrected."