No.14 (January 12, 2020)

Market Industry Trends

Firm set to launch 150MW solar power plants in Kingdom. Jinkosolar Holding Co Ltd has announced it is to supply photovoltaic panels for three solar power plants in Cambodia with a combined capacity of 150MW. Cheetah solar panels will be installed at two photovoltaic power stations in Pursat province’s Krakor district, with capacities of 60MW and 30MW. The third plant, with a capacity of 60MW, will be located in the central province of Kampong Chhnang. The three solar parks will be built in line with the government’s efforts to meet the country’s growing energy demand. Ministry of Mines and Energy spokesman Victor Jona told The Post. He estimated that the solar panels for the three projects were worth some $1million. “These projects are planned to be completed by the end of this year.”At the presentation of Cambodia’s 2020 energy vision last July, Electricite du Cambodge (EdC) director-general Keo Rattanak said Cambodia will expand solar energy investment by 12 % by the end of this year, and increase it to 20% over the next three years. He said the power generated would be used to meet increasing electricity demands in the industrial and commercial sectors. “We want to set up solar power plants in many locations. We believe solar power will provide lower prices.” Meanwhile, a $58 million 60MW solar power plant – a collaboration between JinkoSolar and SchneiTec Group – is under construction in Kampong Speu province. Electricity demand in the Kingdom is expected to increase from 1.5GW to 2.3GW this year, with it reaching 2.8GW next year. In January 2018, Cambodia issued new rules for the integration of solar power. The Kingdom’s electricity demands are currently covered by hydroelectricity and coal power, accounting for around 48% and 47% of generation, respectively. Jona said 150MW of electricity from the Don Sahong Dam in Laos was connected to Cambodia’s national grid on January 7, 2020. (Phnom Penh Post.)

Acleda Bank set to hold three-day listing event. Acleda Bank Plc (Acleda Bank) is to hold a three-day event to inform potential investors of the commercial bank’s viability ahead of its listing on the Cambodia Securities Exchange (CSX) later this year. Acleda Bank received principal approval after a Securities Exchange Commission of Cambodia (SECC) review, laying the foundations for CSX listing by late first quarter or early second quarter of this year. It became the first commercial bank to receive principle approval for its initial public offering (IPO), while Phnom Penh Commercial Bank Plc (PPCBank) was the first South Korean commercial bank to achieve the same benchmark. Acleda Bank executive vice-president Buth Bunsayha told The Post on that the bank will hold the event on January 10, 15 and 18, with it “a good opportunity to meet the public and investors”. She said it would allow Acleda Bank to begin its book-building process to determine demand. CSX total market capitalisation could triple with the Acleda Bank IPO, he added. According to the SECC, market capitalisation increased 157 per cent to $800.39 million last year. There are currently five firms listed and trading securities on the CSX, while three financial institutions are listed on the exchange’s corporate bond market. The number of investors increased to 22,338, with 17 per cent of them foreign. Average trading volume was 1,750,502 shares per month, equal to $4,221,490 per month. (Phnom Penh Post.)

PAS revenue shoots up 17.5% last year. The total revenue of Cambodia Securities Exchange (CSX)-listed Sihanoukville Autonomous Port (PAS) shot up by 17.5% last year, indicating strong growth in its year-on-year business performance. An annual report from the Ministry of Public Works and Transport released on Wednesday said the Port’s total revenue reached some $80 million last year, an increase of 17.5% compared to some $68 million in 2018. Jong Weon Ha, a marketing strategist and CSX’s chief operating officer said PAS’ growth will provide a positive impact to the port’s securities trading and will attract more investors. The ministry’s report also said the number of containers handled at the port also increased by 17 per cent, reaching a total of 633,099 twenty-foot equivalent units (TEU) by the end of last year compared to 541,228 TEUs in 2018. Total tonnage handled by the ports also increased by 22.6% and reached more than 6.5 million tons compared to some 5.8 million tons in 2018, while the total number of vessels to call at the port rose 15.5% at 1,661 units compared to 1,451 unit in 2018. (Phnom Penh Post.)

Cassava exports grow 27% last year. Cambodia exported 3.29 million tonnes of cassava in 2019, up 27% from 2018’s 2.59 million tonnes, a report of the responsible ministry said. The Minister of Agriculture, Forestry and Fisheries Veng Sakhon wrote via Facebook that the Kingdom’s export of agricultural products reached more than 6.93 million tonnes, which he estimated to be worth more than $1.9 billion. Battambang provincial Department of Agriculture, Forestry and Fisheries official Heng Seth told The Post on Thursday that cassava was grown on 112,543ha in the province last year, producing more than 2.8 million tonnes. “Farmers have currently harvested around 40 per cent of total cassava planted. The price of cassava in the province was around 270 riel [$6.6 cents] per kilogramme early this year,” Seth said. A UN Development Programme report said a public investment package of some $296 million is needed for the development of the Kingdom’s cassava sector, citing a lack of focus on domestic processing. The report said Cambodia’s main cassava export destinations are Thailand, Vietnam, China, the Netherlands, the Czech Republic, Canada, Italy, India and Pakistan. Ministry of Commerce data shows that Cambodian cassava exports were worth $17.8 million in 2017, but fell to $12.6 million in 2018. (Phnom Penh Post.)

Corn industry maintains hope for rebound amid plummeted prices. Total corn exports dropped by more than 40 per cent on 2018 due to last year’s drought and pest damage, industry insiders said. Ministry of Agriculture, Forestry and Fisheries data showed that last year the Kingdom exported 119,993 tonnes of red corn – down 41.23 per cent on 2018’s 204,184 tonnes. The exports were mostly to Thailand, Vietnam and Taiwan, according to the data. Corn grower Sok Leng told The Post from Battambang province’s Sampov Loun district that her harvests had halved from 2018 – down to slightly more than 10 tonnes last year from more than 20 tonnes. “Some farmers gave up on the crop last year due to the sharp decrease in yield and prices,” she said. However, she said she continued to grow the crop as she was hopeful of a rebound this year. Most of the Kingdom’s red corn is grown Battambang, Pailin, Kampong Cham and Tbong Khmum provinces. The crop is planted biannually, with the first harvest taking place from late June to August and the second from late October to December.

Ho Chi Minh City’s EVN to become digital business. Ho Chi Minh City, Vietnam’s electricity sector has set a target to become a digital business by adopting key technologies such as big data, Internet of Things and artificial intelligence (AI) to improve the local power system. Electricity of HCM City (EVNHCMC) deputy director-general Nguyen Duy Quoc Viet said: “Technology has drastically changed the power industry. The group is applying advanced technologies to improve production and business activities, enhance labour productivity and reduce costs.” It has adopted state-of-the-art equipment and technologies in power system management and operations, including implementation of hydrological forecasting software, remote controls, and unmanned substations in 110kV-220kV grid systems, he said. The group is also striving to ensure adequate power supply for socio-economic development and environmental protection. (Phnom Penh Post.)

Market Deals

Prince Bank offering perks to companies listed on CSX. The Cambodian Securities Exchange (CSX) and Prince Bank Plc have reached a cooperation agreement for the latter to offer loans and fixed deposit rates for companies listed on the bourse. Prince Bank becomes the third commercial bank to provide the special package for listed firms after Canadia Bank and Bank of Investment and Development of Cambodia launched the services last March. (Phnom Penh Post.)

SECC and MKE Group ink MoU to develop capital market. Securities Exchange Commission of Cambodia (SECC) and Maybank Kim Eng Group (MKE Group) will cooperate to build strong regulatory frameworks and a sound ecosystem to attract more investors and develop the capital market in Cambodia. The MoU is about Cooperation and Technical Assistance Framework between the two. MKE Group, within which is also Maybank Kim Eng Securities, is an award-winning stock and derivatives brokerage firm with over 40 years of experience in Asia. (Phnom Penh Post.)

Macro-economy

Cambodia attracts US$3.6bil FDI in 2019, 43% from China. Cambodia attracted foreign direct investment (FDI) worth nearly US$3.6bil in 2019, up 12% year-on-year, an English-language daily reported on Friday (Jan 10). 43% of last year’s FDI came from China, as 11% from South Korea, 7% from Vietnam, 6% from Singapore, 6% from Japan, and the rest from other nations. The report of NBC forecast that the inflow of FDI into the country will rise 10% in 2020, reaching US$3.9bil. (Cambodia Daily).

Cambodians seeking to invest more abroad. Cambodia’s outward direct investment declined 13.45% during the first nine months of 2019 compared to the same period in 2018, the National Bank of Cambodia’s (NBC) Balance of Payments Statistics Bulletin said on Monday. The report said the investment capital reached $81.38 million during the period – down from $94.03 million year-on-year. However, the capital was worth more than $29.89 million in the third quarter, up 11.98% from $26.69 million in 2018’s third quarter, it said. The report did not identify the countries in which Cambodia invests. In 2018, Cambodian outward direct investment was worth more than $122.9 million, up 7.73% from 2017’s $114.08 million, NBC data shows. Cambodia Chamber of Commerce vice-president Lim Heng said on Thursday that Cambodia’s outward direct investment has increased concurrently with foreign direct investment (FDI) in the Kingdom. Cambodia mainly invests abroad in sectors such as finance, real estate, and construction, and the export-import of goods said Heng. “As far as I know, besides the Lao and Myanmar financial sectors that Cambodians currently invest in, more of the Kingdom’s investors are planning to put money in China’s construction sector,” he said. With an open economy and gradual growth, Heng expressed optimism that Cambodian investments abroad will continue to grow, especially in recently booming economies. “Cambodia also encourages its investors to invest abroad,” he said. Though Cambodians mainly invest in Laos, Vietnam, Thailand, Myanmar, and China, he said, they are seeking investment opportunities in other countries such as Nepal and Bangladesh. (Phnom Penh Post.)

VN Worker shortage a boom for Kingdom’s furniture industry. A shortage of workers in Vietnam – a huge beneficiary of the US trade war with China – is getting severe that some furniture makers are now scouting Cambodia and Bangladesh for factories, said the CEO of Haverty Furniture Co, Clarence Smith. Smith told Bloomberg on Thursday that labour rates in Vietnam are rising and workers are getting increasingly scarce. Haverty Furniture uses Asian factories to make its company-branded products. Even though Asian suppliers continue to source much of the timber they use from the Appalachian region of the US, the manufacturing of wood furniture “is not coming back to the US”, Smith said. Bringing manufacturing jobs back to the US was one of the Trump administration’s stated goals in imposing tariffs on Chinese-made goods. For now, most of the disruption is behind them even if the first phase of the US-China trade deal will keep the 25% tariffs on Chinese-made furniture in place, Smith said. (Phnom Penh Post.)

Vietnam gov’t mulls slashing procedures for starting business. Vietnam is strongly considering cutting the procedures needed to start a business this year in an effort to improve the country’s business climate. This was stressed at a Government Office meeting on Jan 6 to discuss solutions to improve the country’s ranking for starting a business evaluated by the World Bank’s Ease of Doing Business report. Government Resolution No 2 issued on January 1 sets a target for Vietnam to jump up 10-15 spots in the ranking. Vietnam ranked 115th out of 190 economies in facilitating business establishment indicators in 2019, falling 11 spots from 2018, with eight procedures in total. The Government Office plans to submit a proposal to the prime minister to cut the number of procedures by half. (Phnom Penh Post).

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