Biweekly News Collection

No.17 (Oct 5, 2020)

MARKET INDUSTRY TRENDS

FIFTY-NINE COMMUNITIES ENTER AGRI-CONTRACTING. Fifty-nine communities have signed agriculture production contracts for agro-industrial crops and organic rice with four companies in a bid to boost production and secure export market. The communities are based in Takeo, Kampong Speu, Kampot, Kampong Chhnang, Mondulkiri, Preah Vihear, Banteay Meanchey, and Siem Reap provinces. The signatory companies are Cambodian Agriculture Cooperative Corporation Plc, Amru Rice (Cambodia) Co Ltd, Signatures of Asia Co Ltd and Bayon Heritage Holding Group Co Ltd.  The communities are obliged to supply organic paddy 30,000 tonnes, organic cassava 26,000 tonnes, Kampong Speu palm sugar 100 tonnes, pepper 50 tonnes. These contracts will greatly do their share in driving the rice trade in Cambodia especially organic rice. They also underpin the policy to shore up Cambodia’s rice exports, provide a forum for stakeholders in agriculture sector – centered on rice – and will represent a model program for rice millers, exporters and farming communities.There is a remarkable increase in number of agricultural production contracts in Cambodia from 62 in 2017, to 90 in 2018 and 498 in 2019. The number of contracts shoot up to 701 in 2020 cover various products such as rice, cassava, pepper, palm sugar, vegetables, cashew nuts, corn, mung beans, free range poultry and pigs. (Phnom Penh Post).

MOU ON COOPERATION TO PROMOTE FINANCIAL TECHNOLOGY SYSTEM IN CAMBODIA SIGNED. Techo Startup Centre (TSC), under the Ministry of Economy and Finance and the Association of Banks in Cambodia (ABC) signed a memorandum of understanding on cooperation to promote financial technology system in Cambodia. The MOU aims to promote financial technology (FinTech) sectors in support of Cambodia’s digital economy. The MOU will enable ABC to work together with TSC in the Fourth Industrial Revolution in Cambodia’s digital economy plan through supporting, strengthening and expanding new startups. (Phnom Penh Post).

SME BANK COMES UP SHORT ON LOANS. The Ministry of Economy and Finance wants to ease loan requirements for small and medium-sized enterprises (SMEs) from the State-owned Small and Medium Enterprise Bank of Cambodia (SME Bank) and offer more financial resources to boost production after it reviewed the existing loan application process for local SMEs. and found that many [loan requirements] are not eligible. SME Bank, with $100 million in government assets for loans, had a soft launch in April in conjunction with the ministry’s “SME Co-Financing Scheme 2020” (SCFS) – a joint venture between SME bank and a number of financial institutions. According to President of Federation of Associations for Small and Medium Enterprise of Cambodia (FASMEC) Te Taingpor, most SMEs are already too far in debt to other financial institutions, leaving them without enough collateral to seek additional funds from SME Bank. In June the SME bank has allocated about 10% of its total capital to SMEs and it is expected that the full $100 million will be released by the end of the year. Currently, there are 33 financial institutions involved in the SCFS – SME Bank, 23 commercial banks, 2 specialized banks, 5 microfinance deposit-taking institutions (MDIs) and 2 microfinance institutions (MFIs). SMEs can borrow up to $200,000 for working capital and $300,000 for investment capital with low interest rate capped at 7% per annum and a repayment period of seven years. Till September 2020, SME Bank has disbursed $63million of approved $67.5 loan amount for around 532 loan projects. The SME Bank of Cambodia provides better and affordable access to financing for SMEs in the key priority sectors such as food manufacturing and processing, manufacturing of local consumption goods, waste recycling and production of goods for the tourism sector, manufacturing of finished products, spare parts or assembly parts to supply other manufactures, research and development associated with information and technology or the supply of IT-based services and, enterprises located in SME cluster zones & enterprises and development of these cluster zone. The loan amount for SCFS is $100 million which made up of $50 million from the SME Bank of Cambodia and the remaining $50 million from the Participating Financial Institutions (PFIs). (Phnom Penh Post and Khmer Times).

CAMBODIA, SINGAPORE STUDY LOGISTICS HUB SET FOR CAPITAL. Cambodia and Singapore are jointly studying the draft framework agreement on the development of the Phnom Penh Logistics Centre (PPLC). This development plan is in accordance with government’s logistic master plan which located on 98 hectares land area at the west of Phnom Penh International Airport. A meeting between relevant institutions from both countries was held to gathered opinion and ensure that the agreement provides acceptable comprehensive legal framework to all parties. The PPLC project will enhance the efficiency of transportation sector and increase export capacity resulting in country’s economy growth. An early stage feasibility study of the project is completed and shown that the project is economically viable and would benefit both private and public sectors. A comprehensive feasibility study will be conducted with the funding support by Asian Development Bank after the Ministry of Economy and Finance gives the green line on the existing feasibility study submitted by the Ministry of Public Work and Transport. PPLC locates in a strategic advantage as it lies between Sihanoukville Port and the Poipet rail line on the border with Thailand as well is near the NR 3, NR4 and the Phnom Penh Special Economic Zone. World Bank report (2014) shown that the Kingdom’s export costs were 30% higher than those of neighboring countries. In 2016, the Japan International Cooperation Agency estimated that Cambodia charges its exporters higher than its neighboring countries amounting to $540 per twenty-foot equivalent units (TEU-inexact unit of cargo capacity), compared to $200 per TEU in Thailand, and $250 per TEU in Vietnam. (Phnom Penh Post).

MARKET DEALS

SCGP COMING OUT WITH IPO TO RAISE $1.4B ON BANGKOK EXCHANGE. Bangkok-based SCG Packaging (SCGP), a subsidiary of Siam Cement (SCC), will launch an initial public offering (IPO) to raise approximately 45 billion baht ($1.4 billion) of capital. The IPO share price is between 33.5 baht and 35 baht, accounting for price to earnings ratio of 23 times. Investors are allowed to request IPO share subscription from 28 Sep to 07 November. SCGP will not sell more than 1.12 billion IPO shares (equivalent to 26.5% of company stock). The firm may allocate another 169.1 million over allotted shares.  The shares of SCGP are considered as large capital shares listed in Stock Exchange of Thailand’s SET50 Index with firm’s market capitalization of 140 billion baht after IPO sales. (Phnom Penh Post)

WEIBO PERENT SINA SET TO DELIST NASDAQ STOCKS IN $2.6 BILLION DEAL. As the tension between China and the US are ongoing, the biggest Chinese internet corporation Sina, the parent company of the country’s vast Twitter-like Weibo platform plans to delist its US shares and go private, making it the latest mainland firm to withdraw from Wall Street. Sina will cease trading on the tech-rich Nasdaq exchange – where it has traded since 2000 – since its board agreed to a merger with a group run by its CEO that values the firm at $2.59 billion. The number of Chinese companies delisted from the US or opted for secondary keep growing due to conflict between the two superpowers. The US. is considering plans to impose stricter rules on firms listed in the country to open up their audit papers to US accountants, which could lead to Chinese companies forced out and push them towards Hong Kong or Shanghai stock exchange. (Phnom Penh Post).

MACRO-ECONOMY

WORLD BANK REVISES CAMBODIA GROWTH FORECAST TO -2%. The World Bank has revised its 2020 growth forecast for Cambodia to -2%. In May, the expected growth forecast by World Bank set the figure at between -1% and -2.9%. The report noted government fiscal intervention is unprecedented amounting to 5% of gross domestic product (GDP) and the authorities must prepare an effective post Covid-19 economic recovery plan. The pandemic has severely hit Cambodia’s key growth drivers in 2020, which had contributed more than 70% of growth and 39% of total employment in 2019 as some of large development projects which relies heavily on foreign investment were put on hold. Cambodia’s tourism and hospitality sector have collapse due to travel restrictions and lockdowns in which international travel fell by 64.5% within the first half of 2020. The global demand shock has also significantly weakened Cambodia’s manufacturing export sector. Export of garment, travel goods and footwear products fell by 7.2% while import of raw materials used in these industries sank by 85.4% in the first half of 2020, reflecting shrink in domestic demand. Earlier, the Asian Development Bank (ADB) has also revised its 2020 growth forecast for Cambodia to drop from earlier projection of -5.5% to -4%. (Phnom Penh Post).

CDC OKAYS 10 PROJECTS WORTH $34 MILLION IN SEPTEMBER. The Council for the Development of Cambodia (CDC) has approved 10 projects recently with total capital investment of $34.52 million which are expected to create more than 6,000 jobs.

• Global Asia Apparel (Cambodia) Co Ltd – $3million
• Sinodex Garment (Cambodia) Co Ltd – $3million for production of garments.
• Good Plus (Cambodia) Manufacture Co Ltd – $2.7million for production of face masks.
• GCH International Trade Co Ltd – $3.2million for bag production.
• Logwood Apparel Co Ltd – $2.7million for medical apparel and face masks.
• Biao Xin Sheng Packaging and Printing Co Ltd – $1million for bicycle stickers, offset printing and packaging material manufacturing.
• Leadone International Co Ltd – $2.8million for the plastic and artificial leather production.
• New Phoenix Development Industry Co Ltd – $9million for light bulb and lamp parts manufacturing.
• Simple Packaging Product Co Ltd – $2.12million for cardboard and packaging materials.
• Jin Xinsheng (Cambodia) Co Ltd – $5million for offset printing, adhesive tape and thread manufacturing.

The tendency of foreign investment in Cambodia appears to shifting away from textiles and garments and getting into the position to capitalize on the benefits of the Cambodia-China bilateral free trade agreement from next year. (Phnom Penh Post).

SIX MILLION TONS OF AGRICULTURAL PRODUCTS EXPORTED IN FIRST NINE MONTHS. Cambodia exported a total of 5.8 million tons of agriculture products to foreign markets during the first nine month of this year, despite the global COVID-19 crisis. Report from Ministry of Agriculture, Forestry, and Fisheries shows that the exported agricultural products included rice, cassava, cashew nuts, corn, fresh banana, pomelos, mangos, pepper, chilies, and so on. Cambodia’s main agricultural products exported in the mentioned period include 488,775 tons of rice, 1,780,496 tons of fresh cassava, 1,202,644 tons of dry cassava, 12,000 tons of cassava starch, 204,208 tons of cashew nuts, almost 200,000 tons of corn, about 235,000 tons of fresh bananas, approximately 63,000 tons of fresh mangos, over 55,000 tons of chili, and more than 4,000 tons for pepper. Major markets for Cambodia’s agricultural products include China, EU, ASEAN countries, India, Japan, Korea, Russia, Australia and some other countries. (Phnom Penh Post).

FTA WITH MONGLIA UNDER STUDY. Cambodia government is studying the possibility of a bilateral free trade agreement (FTA) with Mongolia. The agreement is under discussion and negotiation between Ministry of Commerce secretary of state and the bilateral working group in order to exchange views on the concept note concerning an FTA feasibility study. The FTA feasibility study will assist the implementation of Cambodia’s trade integration policy and strategy to diversify trade partners regionally and globally. Currently, Ministry of Commerce is negotiating an FTA with South Korean and studying the possibility of establishing similar deals with the Eurasian Economic Union (EAEU) bloc, which comprises Armenia, Belarus, Kazakhstan, Kyrgyzstan and Russia. In addition, the government is also looking at the possibility of establishing agreements with India, Australia, the US, Canada, the UK, New Zealand and Japan. A diverse investment and trade opportunities play a crucial role in post Covid-19 economy restoration. (Phnom Penh Post).

No.16 (May 10, 2020)

Market Industry Trends

[1] The state-owned Small and Medium Enterprise Bank of Cambodia (SME Bank) has expanded its capital from $100 million to nearly $150 million. The additional capital was jointly funded by 33 banks and microfinance institutions (MFIs), of which Prince Bank Plc provided $10 million and Vattanac Bank Plc $20 million. Small and medium-sized enterprises (SMEs) can borrow $200,000 for working capital and $300,000 for investment capital from the bank, at a 7 % annual interest rate and a payback period of not more than four years, said the Ministry of Economy and Finance. Although the SME Bank is currently unable to provide services to its customers, SMEs can apply for a loan from its 33 participating institutions (Phnom Penh Post)

[2] Pestech (Cambodia) Ltd (PCL), a subsidiary of Malaysia-based Pestech International Bhd, plans to list an initial public offering (IPO) on the nascent Cambodia Securities Exchange (CSX) this year to build the company’s operations and reputation in the Kingdom. PCL has clinched three electricity infrastructure contracts to date in the Kingdom – the 230kV/500kV Sihanoukville-Bek Chan (Phnom Penh) transmission line, the 115kV Siem Reap-Oddar Meanchey transmission line and the 230kV Kampong Cham-Kratie transmission line. The paperwork is being finalised and the IPO is pending final approval. The main objective of the IPO is not to raise funds but to raise PCL’s profile. CSX confirmed that PCL is set to list on the bourse soon. (Phnom Penh Post)

[3] Despite the regional and global stock market slump caused by the Covid-19 pandemic, the Kingdom’s leading microfinance institution Prasac Microfinance Institution Ltd (Prasac) on May 5, officially listed a corporate bond on the Cambodia Securities Exchange (CSX). Prasac issued 1,272,000 shares for the public offering with a total issue amount of 127.2 billion riel ($31.8 million). The coupon rate for the corporate bonds is 7.5 % per annum with a three-year maturity (semi-annual payment). The bond is fully guaranteed by the Credit Guarantee and Investment Facility, a trust fund from the Japanese-led Asian Development Bank.(Phnom Penh Post)

[4] The Cambodia Rice Federation (CRF) has asked the Ministry of Economy and Finance to disburse an additional $30 million through the state-owned Agricultural and Rural Development Bank (ARDB). This comes as it prepares to purchase about one million tonnes of paddy during the upcoming harvest season. In a meeting with Minister Aun Pornmoniroth last week, the CRF asked to increase the budget dedicated to helping the sector by $30 million from the current $50 million, which would bring its available funds to $200 million. The additional budget package from government would be ready for the harvest season, and that it would improve the efficiency of stockpiles and prevent rice prices from falling. “By our estimates, paddy output in the coming season will be between 800,000 and one million tonnes, so we need the additional $30 million through the ARDB to provide rice millers the chance to purchase farmers’ entire stocks.” ARDB director-general Kao Thach said he had not yet received an official request from the CRF. (Phnom Penh Post)

 [5] The Covid-19 pandemic sweeping the globe has ground Kampot’s pepper market to a halt as exports stall and about 40% of farmers have stopped caring for their crops. Kampot Pepper Promotion Association (KPPA) told that the demand for Kampot pepper has dwindled due to the spread of Covid-19. Farmers have been forced to store their pepper products in hopes that European and US markets, the largest markets for Kampot pepper, resume their orders once the pandemic has passed. Even the local tourism sector, which accounts for 30 per cent of the pepper market, has completely stalled. The pepper harvest, which runs from January 1 to June 30, has yielded around 100 tonnes so far this year, a slight decrease from the 120 tonnes harvested last year. The Kingdom exported 78 tonnes of Kampot pepper last year. Prices currently stand at $15 per kilogramme of black pepper, $25 per kilogramme of red pepper and $28 per kilogramme of white pepper, he said. In 2010, the World Trade Organisation granted Kampot pepper geographical indication (GI) status, which increases its market value and prevents other entities from replicating it. The crop currently covers a cultivation area of 250ha, exclusively in Kampot and Kep provinces. KPPA’s membership has grown from 387 families and 21 distributors in 2017 to 440 families and 38 distributors this year. (Phnom Penh Post)

[6] Cambodia imported more than 1.2 million tonnes of agricultural fertilisers and chemical pesticides in 2019, up more than nine per cent from 1.1 million tonnes in 2018, said a report from the Ministry of Agriculture, Forestry and Fisheries.Of that, more than 1.14 million tonnes were fertilisers and 81,097 tonnes were chemical pesticides, it said. The Kingdom imports more than 90,000 tonnes per month of about 2,600 types of fertilisers and pesticides to serve the agricultural sector. Chiv Por Hor, the chairman of Poipet-based Chiv Por Hor Import Export Co Ltd, his company asked the ministry to import 6,000 tonnes per year, but imported just more than 3,000 tonnes last year.“My company sells a lot from May to August, which is farmers’ growing season,” he said. The company imports hydrolysed protein-based organic nitrogen fertilisers from Thailand and distributes them in the Kingdom under the CPH brand with a golden gaur logo. Meanwhile, an anonymous employee at a Japanese fertiliser company, said his company imports an average of 2,000 tonnes of fertilisers a year to distribute to farmers in Cambodia. However, he said, a number of counterfeit agricultural fertiliser products have made it into circulation and have taken a heavy toll on the market. The ministry has granted pesticide/fertiliser registration certificates to 235 companies and pesticide/fertiliser import and export certificates to 226 companies nationwide. There are 107 agricultural fertiliser importers and 61 pesticide importers in the Kingdom, as well as 58 companies that import both. (Phnom Penh Post)

Market Deals

[7] Two Japanese renewable energy producers, Aura Green Energy Co and solar panel system provider WWB Corp have teamed up to build a hybrid power plant generation business in the Kingdom by next year, aiming to secure a stable power supply, Japan News Agency (NNA) reported on May 4. The joint venture will use solar panels – produced by WWB Corp in Vietnam – along with rice husks supplied from a rice mill of Angkor Kasekam Roongroeung Co Ltd, a major local rice producer in Kandal province, an Aura Green Energy spokeswoman told NNA. The project will reportedly cost 400 million yen ($3.8 million), with a total output capacity of 1.5MW. The plant will supply power to the rice mill, with any surplus power to be sold to the national grid or a local power company, she said. (Phnom Penh Post)

[8] Malaysia-listed Gunung Capital Bhd, an investment holding company involved primarily in chartering out land-based transportation assets, is looking to acquire a 20 % stake in a Cambodian financial institution. Malaysian media outlet Bernama reported on May 6, that the management of the company has been invited by promoters of a yet-to-be-issued, fully fledged commercial banking licence in Cambodia to evaluate a proposal to participate in. It said the company management is currently in advanced discussions regarding the allowable equity participation in financial institutions. The parties are also in advanced discussions on other qualitative and quantitative requirements, such as governance issues, imposed by the relevant authorities in the Kingdom on foreign equity participation. (Phnom Penh Post)

Rules and regulations

[9] The government will set up a National Commission for Consumer Protection to implement the Consumer Protection Act, which is aimed at promoting integrity in competition and trade. The Law on Consumer Protection was introduced on November 2, 2019 and contains 11 chapters and 51 articles. The purpose of the law, according to proponents, is to determine the measures and mechanisms that contribute to an improved trade environment and protects the rights and interests of consumers. The law applies to all entities doing business, whether for profit or non-profit, including sales of goods, services or real estate, unless otherwise noted exempt by other regulations. (Phnom Penh Post)

Macro-economy

[10] Cambodia exported more than $1.6 billion worth of goods to the US in the first three months of this year, a sharp 42.29 % year-on-year increase from $1.1 billion, said a US Census Bureau report. The Kingdom’s imports amounted to $85.1 million, down 30 % from $122.1 million last year, the data shows. A prolonged health emergency in the US would significant disrupt the flow of goods. The Garment Manufacturers Association in Cambodia (GMAC) has again called on global brand companies, retailers and traders to be responsible in their purchasing decisions – to accept goods that have been delivered and to not retract orders or renegotiate their terms. This comes after mounting suspensions of US and European orders forced 180 factories to shut down and 60 more to downsize, threatening the livelihoods of more than 150,000 workers, GMAC said in a letter. Cambodian exports to the US were worth about $5.362 billion last year, up 40% from 2018’s $3.818 billion, US Department of Commerce data shows. Imports rose 15% to $513.4 million last year from 2018’s $445.8 million. The US remains Cambodia’s largest trading partner and export market. Cambodia is currently the US’ 66th largest goods trading partner with $4.3 billion in total bilateral goods trade during 2018. US imports of agricultural products from Cambodia totalled $24 million in 2018. The US imported mostly rice and rubber. (Phnom Penh Post)

[11] Minister of Economy and Finance Aun Pornmoniroth has called on the private sector and government to work hand-in-hand to sustain the Kingdom’s economic growth as the Covid-19 pandemic grips the regional and world economies, and disrupts production and global demand. Speaking at a meeting with the private sector in late April, Pornmoniroth said shrinking regional and global growth, coupled with travel restrictions and limited effective measures implemented in response to the outbreak threaten the survival of businesses in the Kingdom’s key sectors. Cambodia Chamber of Commerce vice-president Lim Heng said that in response to the crisis, the government has taken a proactive approach to support affected sectors such as garments, tourism, transport and small and medium-sized enterprises (SMEs). In mid-March, a fiscal stimulus plan of $800 million to $2 billion, equivalent to seven per cent of the gross domestic product (GDP), was announced to ease the overarching effects of the coronavirus in six months to a year. On April 7, Prime Minister Hun Sen announced that all workers employed by suspended factories should receive $70 per month – $30 from the employer and $40 from the government. On April 4, the fully state-owned Small and Medium Enterprise Bank of Cambodia (SME Bank) launched with initial capital of $100 million to provide financing for SMEs. On March 16, the state-owned Agricultural and Rural Development Bank (ARDB) launched a $50 million fund to increase access to credit for SMEs in the local agricultural sector. A recent simulation done by Asian Development Bank (ADB) revealed that in a best-case scenario on the back of a months-long travel ban and the sharp decline in domestic demand due to the outbreak, Cambodia could face a 1.15 per cent impact to its total GDP amounting to $283.3 million. If the outbreak lasts for six months, up to $711.4 million could be hived off the GDP. Even grimmer, ADB said a hypothetical worse case situation shows a nearly $1 billion economic loss in the event that Cambodia experiences an outbreak of its own beyond six months. (Phnom Penh Post)

No.15 (February 24, 2020)

Market Industry Trends

Rubber Export Increases 17%. Cambodia exported 27,445 tons of rubber worth $40 million in the first month of 2020, up 17% compared to the same period in 2019, according to the Ministry of Agriculture, Forestry and Fisheries official Khuon Phalla. The [rubber] production also increased last month. An increase in global demand was the main driver of the industry’s growth, as China remains the largest market for the Kingdom’s rubber. The average price last month was $1,433 per ton, up $207 from December. (Phnom Penh Post)

Collective Noodle Brand Gets Backing from Ministry. The Ministry of Commerce has called on more local businesses to join the Phnom Penh Kuyteav collective business system, which was created by the Cambodian Chefs Association to promote local products under the brand. A collective business system is an organisation composed of businesses, merchants and professionals from the same industry or geographical region. It typically pools resources, shares information and provides other benefits for its members. (Phnom Penh Post)

Cambodia Benefits from Japanese Tech. Minister of Economy and Finance Aun Pornmoniroth has encouraged the Japanese-owned Kirirom Institute of Technology to seek more Japanese technology companies to aid the establishment of the Eco-Technology Park at the Kirirom resort in Kampong Speu province. The park aims to develop human resources in order to materialise the government’s vision to transform into a digital economy and digital government. Pornmoniroth said Cambodia has been implementing a Friendly Business Environment policy to attract more foreign investors by making them feel confident and secure with their investments. A2A Town and the Kirirom Institute of Cambodia should work with the newly-established Decho Startup Centre to seek new innovations and establish start-up programmes, he said. (Phnom Penh Post)

Organic Vegetable Retailer Unveils QR Code Scheme for Origin Sources. Organic vegetable retailer Natural Agriculture Village has introduced QR codes on its product packaging, which will allow consumers to see where their produce comes from. According to Natural Agriculture Village president Bun Sieng, who is also a member of local distributor Green Gold, their suppliers produce safe vegetables and follow Good Agricultural Practice (GAP) guidelines. Their produce will bear QR codes provided by her company and be registered with the provincial departments of agriculture. The departments of agriculture have issued GAP certificates to 42 farmers in eight provinces, including Kandal, Battambang, Pursat, Siem Reap, Tbong Khmum, Kampong Chhnang, Prey Veng and Banteay Meanchey. Green Gold supplies an average of between 300 and 400kg of vegetables per day on the market. The company has signed an agreement with some of those farmers, pledging to buy vegetables from them at a price of around 2,000 riel [$0.50] per kilogramme. More than 400 farmers have signed on with Green Gold, which distributes produce to Lucky Supermarket, Makro Cambodia, Aeon Mall Phnom Penh and local markets such as Central Market, Doeum Kor market, Phsar Depot market and Russian market. Cambodians consume 500 tons of vegetables per day, at a daily cost of between $200,000 and $300,000, data from the Cambodian Centre for Study and Development in Agriculture shows. The Kingdom is also estimated to import fruits and vegetables worth more than $300 million annually. (Phnom Penh Post)

PPC Bank Posts Net Profit of $17.4 Million, Up 40.5%. Phnom Penh Commercial Bank’s (PPC Bank’s) net profit last year rose 40.5% to $17.4 million [compared with 2018], the company announced. Total loans were $630 million, up 24.1% compared to 2018. The growth has slowed down due to capital regulation and high competition in the commercial bank industry and it is significant that the bank managed to pull off a strong profit by expanding its customer network and fortifying digital services. The bank said it lowered costs by delivering local capital instead of bringing them from South Korea. According to NBC as of the second quarter of 2019, there were 45 commercial banks, 15 specialised banks, and 81 microfinance institutions, of which seven are microfinance deposit-taking institutions (MDIs). It said there were also 254 rural credit operators, 15 leasing companies and 16 payment service providers. (Phnom Penh Post)

Koreans Eying Bank IPO. Korean investors are looking forward to investing in the local stock market as it prepares to welcome Acleda Bank Plc into its main board. With Acleda Bank, one of the largest banks in the Kingdom, scheduled to go public in upcoming weeks, hundreds of Korean businesspeople and investors joined a seminar in Phnom Penh on Wednesday entitled ‘Acleda Bank Plc is going IPO’. (Phnom Penh Post)

Regulator Touts Achievements of Local Stock Market. The Cambodia Securities Exchange (CSX) continues to go from strength to strength, with the average trading value growing nearly five-fold from 2018 to 2019 to surpass $157,000, the latest report from the market regulator shows. The Securities and Exchange Commission of Cambodia (SECC) issued a report highlighting some of the achievements of the local bourse in its eight-year history. By the end of last year, CSX had attracted 22,446 investors, raising nearly $151 million for all five companies in the main board and the three companies that have issued bonds, the report shows. (Phnom Penh Post)

Dual Currency Payment System Launched. Cambodia’s Acleda Bank Plc and Thailand’s Siam Commercial Bank Pcl (SCB) have teamed up to launch an innovative payment system that will allow customers to pay in either country using their own currency. The system uses QR codes to allow customers to conduct cashless transactions. The move comes after the National Bank of Cambodia (NBC) signed a memorandum of understanding with the Bank of Thailand on cooperation in financial innovation and payment systems. The agreement aimed to create an ‘Interoperable QR Payment’ system to promote the use of the Cambodian riel and the Thai baht. NBC selected three local banks to participate in the new cross-border payment service – Acleda Bank, Foreign Trade Bank of Cambodia and Cambodian Commercial Bank Ltd. Acleda Bank, Cambodia’s largest locally-owned bank, and SCB launched the new cross-border, QR code-based payment system, which will help Cambodia and Thailand achieve their goal of attaining $15 billion in two-way trade in 2020. Recent data from the Thai Embassy in Cambodia shows that two-way trade was worth about $9 billion last year, an increase of 7.14 per cent from 2018. (Phnom Penh Post)

Market Deals

Singapore Company Eyeing Business Opportunities in Kampong Speu. Singapore-based company PLMP Holding Pte Ltd has expressed its intention to invest in various sectors in Kampong Speu province, despite the EU’s partial withdrawal of its Everything But Arms (EBA) scheme, provincial governor Vei Samnang said. The company currently owns 115ha in the province’s Kong Pisei district and with its huge capital investment, is eyeing the construction sector and has expressed its interest in establishing special economic zones (SEZs), fruit packaging plants and steel mills. Improved political stability, a vast young labour force and well-organised infrastructure make the province an attractive option for investment.(Phnom Penh Post)

Two Japanese Firms Move into Internet Banking. Two Japanese firms will team up to provide internet banking services in the Kingdom. Recycling firm ReNet Japan Group Inc and Soramitsu Holdings AG, a Japanese venture based in Switzerland, are set to launch their service by spring next year at the earliest, ReNet Japan said in a statement. The two firms will set up a joint operation in the Kingdom by April, with ReNet Japan holding an 80% stake and Soramitsu the rest. The group plans to develop a credit-scoring system by combining the payment data of Soramitsu and the loan data of ReNet Japan. Soramitsu developed “Project Bakong” – essentially a quasi-form of a central bank digital currency (CBDC) – for the National Bank of Cambodia (NBC) and has been testing it in a live and confined environment since July 18. The blockchain-based, peer-to-peer payment and money transfer platform will be launched in the next few months, NBC director-general Chea Serey told The Post last month. So far, she said, the scheme already has the support of 11 banks, with many more expected to join soon. Serey described the system as “the national payment gateway for Cambodia”.(Phnom Penh Post)

South Korea’s Woori Bank Merges Cambodian Units. South Korea’s leading Woori Bank on Sunday announced that it has officially merged its two subsidiaries in Cambodia – WB Finance Co Ltd and Woori Finance (Cambodia) Plc. The new company – dubbed “WB Finance” – is part of Woori Bank’s plans for business expansion in the Kingdom’s crowded financial sector. The merge comes after the two institutions received approval from the National Bank of Cambodia (NBC) and the Ministry of Commerce. The new institution is currently the Kingdom’s fifth largest savings bank, which “in the mid- to long-term, will become a commercial bank offering comprehensive financial services in Cambodia. WB Finance will integrate several financial products and services including savings, loans, mobile banking and money transfers. Customers’ accounts at Woori Finance have been transferred to WB Finance under the same terms and conditions. (Phnom Penh Post)

Transport Minister Unveils New Port for Preah Sihanouk Province. With assistance from Japan, the government is planning to build a new container seaport in Preah Sihanouk province, Minister of Public Works and Transport Sun Chanthol revealed on Friday. Speaking at a press conference, he said a 14.5m deep port will soon be built in the southern province with the financial assistance of the Japanese International Cooperation Agency (JICA). “We will be able to ship directly without having to stop at Singapore or Hong Kong,” he said. The ministry’s General Directorate of Logistics director Chheang Pich told The Post that the project is now underway after JICA recently completed the study. Sihanoukville Autonomous Port (PAS) director-general Lou Kim Chhun in a previous interview said the new port will cost around $203 million. (Phnom Penh Post)

Rules and regulations

CXS to Change Trading Method. The daily price limit for buying shares at the local stock market through the negotiated trading method (NTM) has been set at 10% of the previous closing price. According to a sub-decree issued last week by the market regulator, starting Monday (Feb.24), transactions negotiated through NTM have a daily price limit of 10% of the previous closing price. The purpose of the amendment is to “protect investors and the market from unfair trading”, said the sub-decree. Trading at the Cambodia Securities Exchange (CSX) is conducted via two methods – the auction trading method (ATM) and NTM. ATM is for investors who lack a counterparty. NTM, on the other hand, allows a pair of investors to place and execute their confidential orders in a single large transaction after successful negotiation on the conditions of the transaction. NTM was officially launched in the CSX in January 2018. Six transactions (equaling 14,864,114 shares) have so far been executed through this method. (Phnom Penh Post)

Macro-economy

Moody’s Revised Prediction on Cambodian Economic Growth 2020. Moody’s Investors Service Inc has maintained its forecast for Cambodia’s real gross domestic product growth for 2020 at a moderate 5.5%. This is underpinned by the European Commission’s (EC’s) recent decision to suspended one-fifth of the Everything But Arms (EBA) scheme awarded to the Kingdom, and the potential adverse effects on tourism and spending incurred from the outbreak of Covid-19 – the disease caused by a new strain of Coronavirus, Moody’s said. It also maintained Cambodia’s credit rating at B2 with stable outlook. The global credit ratings agency’s 2020 projection is disparately conservative compared to the Kingdom’s 6.5% forecast, Asian Development Bank’s 6.8% and the World Bank’s “slightly below seven per cent” expansion. All three revised their forecasts earlier this year with the EBA predicament in mind. Coupled with the partial suspension, Cambodia’s growing minimum monthly wages will weigh against its competitiveness, which will diminish its attractiveness as a production base and will deter new foreign direct investment (FDI), Moody’s said. (Phnom Penh Post)

Migrant Remittances Total $2.8B in 2019. Cambodia migrant workers last year sent $2.8 billion back home in remittances, according to the latest report by the Ministry of Labour and Vocational Training. Speaking at an annual gathering last week, Minister Ith Sam Heng said the ministry continues to manage the employment and labour markets, which comprise of around 10 million workers. Of those, around 1.28 million are working abroad. Srun Theareach, a Cambodian working in a factory in Japan, told The Post on Sunday that he sent his family in Stung Treng province around $500 a month. The 32-year-old migrant says he has been working in Japan for more than two years, earning about $1,300 a month. “Due to the money I sent home, my family, who are farmers, enjoy a better life and have been able to expand our house.” (Phnom Penh Post)

GDT Says Revenues Up 15% in January. The General Department of Taxation (GDT) collected about 956.76 billion riel ($239.19 million) in tax revenue in January, up 14.74% compared to the same period last year. This is a positive step towards its target of collecting more than $2.885 billion by year’s end, the GDT said in a statement on Monday. GDT director-general Kong Vibol said in the statement that his department achieved remarkable growth last month. However, he called on his officials to gauge the direct and indirect impact of Covid-19 on the Kingdom’s economy. (Phnom Penh Post)

Meng: FTA with China Will Help Us Forget EBA. The loss of trade preferences in Europe would be more than offset if Cambodia manages to enter a free trade agreement (FTA) with China, said Cambodian Chamber of Commerce (CCC) president Kith Meng. Meng. Landing an FTA with the second-largest economy in the world will boost all sectors of economic activity in the Kingdom, allowing Cambodians to finally forget the losses incurred by the EU’s recent decision to partially withdraw the Everything But Arms (EBA) scheme. He was speaking at the Cambodia Customs Forum, an event organised by CCC in collaboration with the General Department of Customs and Excise of Cambodia (GDCE). (Phnom Penh Post)

Electricity Tariffs. The government will invest some $50 million to reduce electricity tariffs by $0.01 per kilowatt-hour for the industrial and agricultural sectors from this month, Ministry of Mines and Energy senior official Victor Jona said on Sunday. (Phnom Penh Post)

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