It has been a busy year – from the EU announcement that it is considering revoking Cambodia’s Everything-but-arms (EBA) status to the issuance of the country’s first corporate bond, 2018 has been a rollercoaster in terms of trade and business developments.
Phnom Penh’s new $1.5b airport gets green light
The construction of a new airport in Kandal province’s Takhmao was announced early in the year. The project, a 4F-class airport, is a joint venture between the Overseas Cambodia Investment Corporation (OCIC) and the State Secretariat of Civil Aviation (SSCA). It will come at a cost of $1.5 billion, with $1.1 billion coming from overseas banking institutions, and the OCIC contributing $280 million. The remaining $120 million will come from public funds. The airport will be used mostly for long-haul flights.
Three Cambodian cities named among the cleanest in Asean
Three Cambodian cities – Battambang, Kep and Siem Reap – received the Asean clean tourism award at the Asean Tourism Forum 2018, held in Chiang Mai, Thailand, in January. The distinction places the Cambodian cities in an exclusive 23-member group of the cleanest cities in the Asean region, and is proof that they adhere to Asean’s standards for city cleanliness.
Funds collect $4 million for development of telecom sector
The Capacity Building, Research and Development Fund in T-ICT sector (R&D Fund) and the Universal Service Obligation Fund (USO Fund) were able to raise more than $4 million that will be used to finance the deployment of telecom network infrastructure in rural areas and improve ICT capabilities in the Kingdom. This was achieved despite very few telecommunications companies fulfilling their obligation towards the telecom funds, which were established last year.
EU considers tariffs on Cambodian rice
In March, the European Commission launched an investigation to see if imports of semi-milled and milled Indica rice from Cambodia and Myanmar resulted in serious difficulties to EU producers of similar or competing products. In December, a vote on whether to impose tariffs on Cambodian and Burmese rice was held, with EU members failing to come to a consensus. As a result, the European Commission was task with issuing a final decision on the subject by early January 2019. The EU is looking at imposing tariffs over the next three years: 175 euros ($199.5) per ton during the first year, 150 euros ($171) in the second year, and 125 euros ($142.5) in the last.
Grab seals ride-share deal with Uber
Singapore-based ride sharing company Grab announced the acquisition of Uber’s Southeast Asian operations, taking over the American rival’s operations and assets in Cambodia, Indonesia, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam. As part of the acquisition, Uber will take a 27.5 percent stake in Grab and Uber CEO Dara Khosrowshahi will join Grab’s board. Grab said the deal will integrate Uber’s ride sharing and food delivery business in the region into Grab’s multi-modal transportation and fintech platform. It will also help improve and expand the GrabFood app, which, in turn, will increase the number of users of the GrabPay mobile wallet and support the company’s growing financial services platform.
Tech centre promises STEM growth
Construction of the ICT Innovation Centre (IIC) began in April. The centre, which will take 18 months to complete, seeks to fill gaps in students’ academic and professional development, particularly for R&D, innovation and the promotion of entrepreneurial and startup culture. Construction of the building is being funded through the national R&D Fund, with the cost estimated at $4 million.
Airport train gives inaugural ride
The new shuttle service connecting the railway station on Monivong Boulevard to Phnom Penh’s airport came into service in April, offering free-of-charge service to passengers until November. The double headed train, which consists on one carriage, can transport 60 passengers at a time, and can cover the distance between the city centre and the airport, about 10 kilometres, in less than 30 minutes.
Cambodia and Bangladesh discuss trade, direct flights
The commerce ministers of both countries met in Phnom Penh in April and discussed the apparently failed agreement to send one million tonnes of Cambodian rice to Bangladesh, as well as the creation of a direct flight between Phnom Penh and Dhaka, the Bangladeshi capital. Cambodia and Bangladesh committed to updating the terms of their 2006 trade agreement, among other initiatives to enhance trade ties.
With regards to the 2017 purchasing agreement to sell one million tonnes of Cambodian rice to Bangladesh, Cambodian Minister Pan Sorasak said that it had run into some technical difficulties, but that there is still time to fulfill the terms, as the shipments were supposed to take place between 2017 and 2022.
Moody’s says Cambodia’s economic outlook stable
In May, rating agency Moody renewed Cambodia’s B2 credit rating, a decision based on the Kingdom’s stable outlook and expected solid economic growth, but warned investors of a possible downturn in business activity as a result of this year’s general election.
Property sector buoyant
Real estate sector insiders in May dismissed the possibility of a downturn in the industry due to political instability, arguing that the outlook for the property market remains strong. Minister of Land Management Chea Sophara said that month that the July national elections would have no significant effect on growth in the property sector.
Stores banned from selling herbicides
Following the deaths of 13 people in Kratie from toxic run-off poisoning, the Ministry of Agriculture in June issued a statement announcing that it is illegal to sell herbicides in the Kingdom, and instructing officials from provincial agricultural departments to visit agricultural supply stores to ensure the substance is not available for purchase.
Riding buses made easy with new e-payment card
Phnom Penh’s Autonomous Bus Transportation Authority and Wing Specialized Bank announced a partnership in June, the result of which is the City Bus Card. The card enables electronic payments for the city’s eight existing bus lines. There are now two types of cards, each selling for $1. Green cards are for general customers, who can top up at any bus station in the city. Blue cards, meanwhile, are for students, the elderly, monks, factory workers, people with disabilities, and children shorter than one metre in height. With blue cards, users have access to 180 free rides per top up.
NBC injects 238b riel into local banks through LPCO
The National Bank of Cambodia disbursed more than 238 billion riel, about $58.5 million, during the first half of the year through its liquidity-providing collateralised operation (LPCO). The LPCO mechanism aims to boost the country’s riel liquidity by providing credit in the local currency to commercial banks and microfinance institutions.
According to NBC’s latest report, riel liquidity provided through LPCO during the first six months of the year was 2.6 times higher than during the same period last year. Interest rates ranged between 2.6 to 3.07 percent, with about 282 billion yet to reach maturity. Eight financial institutions took advantage of the LPCO during the first half of the year, double the amount than during 2017’s first half.
Despite election uncertainty, exports achieve solid growth
Exports of garment and footwear products achieved solid growth during the first half of the year, expanding by 9.3 percent and reaching $3.7 billion in value. According to figures from the Ministry of Commerce, textile shipments to the European Union grew by 10.66, achieving a total value of more than 1.6 billion, while those to the United States rose by 10.73 percent and were worth $858 million. The growth in export activity was achieved despite warnings from the EU and the US – the Kingdom’s main trade partners – that they would annul Cambodia’s preferential trade status if the human rights situation in the country fails to improve.Kampot’s seaport breaks ground
Construction of a much-awaited seaport in the coastal province of Kampot began in August, with insiders saying the upcoming harbour will boost maritime transportation with Vietnam and Thailand and bolster the local tourism industry and the national economy.
China-Cambodia joint venture invest $32 million in banana farms
Following a deal earlier in August between Cambodia and China that effectively enabled shipments of Cambodian bananas to the Chinese market, Longmate Agricuture Co, a joint-venture between Cambodian and Chinese investors, announced an investment of $32 million to grow bananas. The plantation is located on 1,000 hectares of land in Kampot’s Chhouk district.
In December, the company announced that it will conduct a test shipment of bananas to the Chinese market next month, which will be followed by the company’s first official shipment to China in February. The Longmate farm is capable of producing 30,000 tonnes of bananas a year.
Electronic data interchange to launch at ports in 2021
The Japan International Cooperation Agency (JICA) announced in August that its project to install electronic data interchange systems in Cambodian ports will be completed by April 2021. The project will enable EDI in the Kingdom’s main ports, improving scheduling, speeding up procedures and reducing paperwork, particularly in customs clearance. It will cost $14 million.
Cambodia, Vietnam to boost border trade
Following an increase in trade volume between the countries, Cambodia and Vietnam in September agreed to boost their bilateral trade figures to $5 billion by accelerating work on a border trade agreement.
EBA trade status in peril
Following a warning in July over Cambodia’s election results and the deteriorating situation of human rights in the country, the EU begun the process of withdrawing the Everything-but-arms (EBA) status with the start of a six-month review. Following the announcement, the European Chamber of Commerce in Cambodia (EuroCham) sent a letter to the bloc warning that the withdrawal of the scheme is likely to cause long-term negative effects in Cambodia and undermine years of effective advocacy work.
However, Garment Manufacturers Association in Cambodia (GMAC) deputy secretary-general Kaing Monika, in an interview with Khmer Times, downplayed the importance of losing the trade status, saying that “is not such a serious problem, unlike what we have been reading recently.” He said Cambodian must continue engaging in dialogue with the EU to ensure a solution satisfactory to both parties is reached.
Poipet Airport gets official approval
A project to build Poipet’s first airport was greenlighted by the government, with total investment estimated at $40 to $50 million. The new airport will be built on more than 100 hectares in Banteay Meanchey’s Poipet, in the border with Thailand, aiming to capitalise on the rising number of tourists in a province that is industrialising quickly.
Malys Angkor crowned world’s best rice
Cambodian premium fragrant rice, Malys Angkor, won the ‘World’s Best Rice Award’ – the fourth achievement it earned for Cambodia, after landing second in the last three years. The award ceremony took place in Hanoi, Vietnam, during the 10th TRT World Rice Conference 2018, held on October 10-12.
National budget to increase by 11.4 pct
The National Assembly last month unanimously approved the national budget for 2019, which will be 11.4 percent higher than this year’s, amounting to $6.7 billion. According to the draft of the Financial Management Law for 2019, the government aims to collect $4.8 billion in revenue, with $4.2 billion coming from taxes. It plans to borrow about $1.4 billion from development partners and international institutions.
Oxfam’s blockchain-based project gets official launch
Oxfam launched in November its blockchain-based project BlocRice, which aims to increase farmers bargaining power in negotiations with buyers and digitally connect every actor in the supply chain. Its goal is to ensure farmers can sell their products at a higher price.
Cambodian airports reach 10 million passengers milestone
The number of travellers passing through one of the three international airports in the Kingdom has reached 10 million, a milestone that was celebrated this month with a ceremony in the capital’s airport.
Dam in Sesan begins operations
The Lower Sesan II Dam, an $800 million project, was officially launched in December after more than four years of construction. A joint venture of China’s Hydrolancang International Energy, local firm Royal Group, and Vietnam’s EVNI, the dam is Cambodia’s biggest power-generation infrastructure, and will account for 20 percent of the country’s output.
HKL issues first-ever bond
Microfinance institution Hattha Kaksekar Limited (HKL), the third largest microlender in Cambodia, became the first firm to list its corporate bonds on the Cambodia Securities Exchange (CSX) in December. The company issued 1.2 million bonds worth 120 billion riels ($30 million). The bond will last three years starting Nov 14, with an interest rate of 8.5 percent per annum.