Thursday, November 25, 2010

SIM cards as status symbols

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Photo by: Sreng Meng Srun
SIM cards on display. Special phone numbers are becoming increasingly popular as status symbols in Cambodia.

The rich people, they need something special to show they have money and power.


CELL phone numbers are becoming a sign of social status in Cambodia, and a new firm aims to collect on the trend by offering SIM cards for up to thousands of dollars.

KhmerSim.com’s Managing Director Kong Piseth said demand for SIM cards with  “lucky” or “VIP” numbers was coming primarily from the Kingdom’s businessmen, who were keen to portray their wealth.

“The rich people, they need something special to show they have money and power,” he said.

What constitutes a “VIP” or “lucky” number depends on the customer. Some prefer numbers that are easy to remember, but it is repeating digits in particular that often demand serious cash.

Its website offered several Star-Cell numbers – such as 098 79 7777 begin_of_the_skype_highlighting              098 79 7777      end_of_the_skype_highlighting – for US$2,830, and a selection of Mobitel numbers for $1,530, including 017 43 7777 begin_of_the_skype_highlighting              017 43 7777      end_of_the_skype_highlighting.

On the other end of the spectrum, Smart’s 010 82 0003 begin_of_the_skype_highlighting              010 82 0003      end_of_the_skype_highlighting was on offer from KhmerSim.com for $10.

“So far we have not sold any in the thousands, but we have sold some that cost $200 or $300,” he said late last week.

Although the company is only a few months old, it claims to have already sold “hundreds” of SIM cards.With five employees, it is planning to begin contacting high-powered businessmen directly to expand sales.

KhmerSim.com acts as a middleman for “dealers” who obtain the SIMs, said Kong Piseth – though he declined to reveal the identity of the dealers, calling it a company secret.

Gary Foo, marketing manager at mobile provider Hello, said some SIMs sell for considerable amounts of money.

“The price to pay for special numbers does go sky-high sometimes,” he wrote last week.

Consumers have come to see certain numbers as a means to demonstrate their individual social status, with the more expensive the number conferring the owner’s social standing.

Repeating numbers or easy to remember digits are very popular, he said, but added there was also a cultural component to what constituted special numbers, particularly with Chinese influence.

The number eight represents prosperity in Chinese culture, and often shows up in “lucky” numbers, according to Gary Foo.

Some numbers also have meanings attached to them in Chinese languages, such as 118, which combines to mean “everyday prosperity” in Cantonese.

Piseth Kong said there were another two or three Cambodian websites in the same business as KhmerSim.com, but competition was likely to grow further over time.

He claimed Metfone was the most popular SIM requested from the company, with Mobitel coming in second and Beeline rounding out at a close third.

The most expensive number on rival site KhmerSimCard.com displayed yesterday was 015 888 848 begin_of_the_skype_highlighting              015 888 848      end_of_the_skype_highlighting, which was on offer for $980.

(source from the phnompenhpost newspaper,Thursday, 25 November 2010 15:01 Jeremy Mullins)

Housing projects on rise in capital

THE value of Phnom Penh housing investments approved by the government from January to October has risen more than 10 percent, compared to the same period of last year.

According to figures released by the Ministry of Land Management, Urban Planning and Construction yesterday, 250 construction projects – consisting of 2,710 new villas and flats - worth an estimated US$197 million were approved from January to October this year.

This compares with 249 construction projects, worth $179 million, approved in the first nine months of 2009 – an increased in value of 10.1 percent.

Lao Tip Seiha, director of the department of construction at the Ministry of Land Management, Urban Planning and Construction, said yesterday that the residential development market in Phnom Penh was in recovery.

“We approved a lot of construction projects from local and international investors such as factories, entertainment centres, hotels, apartments, commercial and residential buildings,” he said.  “It is a good sign, even thought the world economic crisis is still affecting the construction sector. We strongly believe it will see a step-by-step recovery this year.”

Lao Tip Seiha added that current construction is yet to fulfill Phnom Penh’s ever increasing demand for housing.

Around 10,000 new families come to the city each year, he said, and Phnom Penh needs to promote housing investment, especially to provide for the poor.

“According to the housing development policy for 2010 to 2030, we must build about 1.2 million homes nationwide,” he said.

According to a report released by the National Valuers Association of Cambodia last week, land prices for commercial and residential property decreased slightly during the third quarter of this year.
(source from the phnompenhpost newspaper,Monday, 22 November 2010 19:13 Soeun Say)

Market heats up for Pop Ice maker

IT is a common question asked by many at the Kingdom’s restaurants and bars – is the ice safe to consume?
Poor quality ice, made with suspect water and using unhygienic handling measures, often leads to illness such as stomachaches, undermining trust in the product, according to Khim Nary, owner of Pop Ice Enterprise ice manufacturers.

Although patrons at the Kingdom’s eateries often skip out on ice cubes, suffering the results of lukewarm sodas and unpleasantly warm beers, Pop Ice aims at producing quality ice to cool consumers’ drinks.

Pop Ice claims to be the first ice factory recognised by the Ministry of Industry, Mines and Energy for the quality of its ice, meeting hygiene guidelines laid out to protect consumers’ safety.

“We have the ability to make ice at the standard used in Vietnam and Thailand,” she said.

Still a small-scale enterprise, presently with nine employees earning US$50 to $60 per month plus accommodation and food, it first opened its doors in 1990 in Phnom Penh’s Toul Kork district.

With its two ice-making machines presently operating at about half their total capacity of 10 tonnes per day, Khim Nary said the goal was to sell quality ice sold at strong prices, but Cambodians had to get used to trusting domestically produced ice in order to boost sales.

“The Ministry of Industry and GTZ helped us organise our products to become a model to the industry – but we are still improving,” she said.

Dang Heng, business service coordinator for private sector promotion at GTZ, said earlier this month that there were 650 ice and drinking water enterprises in Cambodia, but only 5 percent met GTZ’s quality standards.

Khim Nary has called for improved professional skills to further the products’ quality – such as keeping ice at lower temperatures for longer amounts of time to prevent melting, when the product is sold on to customers.

“We need more professional skills and advice from the government and NGOs to improve our business,” she said. As a wholesaler, Pop Ice vends its wares at supermarkets, restaurants, clubs, shops and hotels in Phnom Penh.

The firm currently produces some 3,000 to 4,000 kilogrammes of ice per day, fetching between 150 and 200 riel per kilogramme. The ice is made on demand, as it is costly to store for longer periods, she says.

Khim Nary called for lower electricity and water costs in a bid to boost sales and allow it to keep more ice in stock.

Electricity costs are one of the main expenses of the company, she says. It also purchases 600 to 1,000 cubic metres of water per month from the Phnom Penh Water Supply Authority.

High interest rates for loans had also proved a barrier to expanding the business, she said.

The economic downturn had hit ice orders, with current business levels just returning to par compared with pre-crisis levels.

“We lost a lot of clients,” said Khim Nary. “Clubs and karaoke bars closed because of the world economic crisis.”

Competition is growing fiercely in the domestic ice industry, with new manufacturers opening their doors every year.

“The number of ice makers is increasing – it’s a very difficult market to sell in,” she said. The firm aims to compete by forming strong ties with customers and competitive pricing, but particularly by strengthening the quality of its brand so that it can be trusted by Cambodians in search of a cool drink.

Friday, November 19, 2010

Kingdom’s biodiesel plans on hold as jatropha disappears

NTC Jacam Energy has halted plans to produce biodiesel because of a lack of raw materials, particularly jatropha, according to the firm’s chairman.

The firm had planned to more than triple its production to 2,000 litres of biodiesel per day earlier this year, but a lack of jatropha on the local marketplace had forced the company to stop, Chheuy Sophors said.

“We suspended our biofuel production due to a lack of raw materials. Some

farmers who used to grow this crop have stopped,” he said.

The firm had invested US$400,000 to build the biodiesel plant in Kampong Speu province.

It had previously purchased jatropha seeds from farmers in Kampong Speu, Battambang, and Banteay Meanchey provices at a processing cost of between 600 and 800 riel per kilogram.

Jatropha is a quick-growing tropical plant. Its seeds can be crushed to process biodiesel, which could fetch some 3,200 riel per litre, the firm said.

NTC Jacam Energy had recently spent $50,000 to grow jatropha on 500 hectares in Kampong Speu and Koh Kong province, which could provide the future materials required for production, according to Chheuy Sophors.

“We hope the company will receive about 3,000 tonnes of seeds per year with this project so we can produce biofuel in the future,” he said.

Producing 1 kilogram of biodiesel required three times the amount of unprocessed jatropha seed, he said. It would require 6 tonnes of seed per day to meet its original production goal of 2,000 litres.

Chhe Pich, deputy chief of Kampong Speu Provincial Office of Agriculture, Forestry and Fishery said yesterday farmers in Aural and Samraong districts had formerly grown plenty of jatropha, but poor yields had forced many to change to other crops. A United Nations Food and Agricultural Organisation report issued earlier this year claimed the crop has the potential to produce a large amount of energy, compared to the area required to grow it.
(source from the phnompenhpost newspaper,Tuesday, 16 November 2010 15:01 Chun Sophal)

Necessity trumps value for mobile provider mergers

LONG-AWAITED consolidation within Cambodia’s bloated mobile phone market suggests companies will have to make the difficult choice of taking on assets they don’t really need in a bid survive.

Reported talks between Star-Cell and Smart Mobile could lead to the first merger.

But what value can these companies derive from each other?

In terms of infrastructure, Star-Cell would gain almost nothing from the tie-up because Smart Mobile does not offer any new coverage, according to footprint maps provided by both companies.



The main motivation behind tie up plans is surely survival ... success will depend on ... retaining subscribers.


Smart would benefit from Star-Cell coverage in new areas including Samlot near Pailin, Koh Kong City, Pursat along with areas of the northeast where it currently has no infrastructure at all in Banlung, the capital of Ratanakkiri and Stung Treng.

However, if the two companies agree to a merger then dozens of towers will become redundant.

Were the two companies to join under one operating licence then the other would become obsolete, an asset whose value is unknown given the lack of transparency in the market.

Whatever the value, there would be little opportunity to sell off the spare licence as no company in their right mind would decide to launch in Cambodia given the high level of competition.

The two companies would also have to make critical decisions on how to move forward under one banner.

In Phnom Penh at least, Smart Mobile has a much more visible presence while Star-Cell has already effectively admitted its brand is worthless when parent firm TeliaSonera announced last month the firm has “no goodwill” towards its operations in the Kingdom.

But then Star-Cell has more subscribers, according to official government data, and a wider coverage area. Which brand should be chosen following the merger?

The main motivation behind tie-up plans is surely survival, so whether or not the merger could be successful will depend on the extent to which the resultant joint-venture can retain subscribers.

Here things look more promising. At the end of the first half of this year, the two firms had a combined 850,000 subscribers, according to government data. Only Mobitel and Metfone have more.

If Star-Cell and Smart Mobile can retain this subscriber base after merging, they would propel themselves into third position in the market, a share which would surely guarantee their safety in Cambodia.

But that is a big if, given the fickle nature of mobile phone users here, and overall the merger would surely represent a huge waste in terms of asset usage.
(source from the phnompenhpost newspaper, Friday, 19 November 2010 15:01 Steve Finch)

Southern Gold plans share issue on ASX

MINER Southern Gold has announced plans to raise up to A$4.5 million (US$4.4 million) through share issues to fund its activities in Australia and Cambodia. The firm is exploring on seven tenements in Mondulkiri, Ratanakkiri and Kratie provinces.

It plans some 5,000 metres of test drilling as well as 12 kilometres of trenching at five prospects to be completed in Cambodia by February 2011, according to a presentation from the firm. Southern Gold claims to be pursuing “early mover advantage” in the Kingdom.

The firm has announced two share placements in filings to the Australian Securities Exchange. The first is an A$3 million placement to institutions and the wholesale market, at A$0.068 a share for 44.2 million shares.

The second is an offering to its existing shareholders, which it claims could raise a maximum of A$1.5 million before closing on December 3. Its shares closed on the Australian Securities Exchange yesterday at A$0.072 each.

Japan Oil, Gas and Metals National Corporation could earn up to 51 percent interest on two Southern Gold Cambodia projects, depending on the level of funding it commits.

It had spent $3.3 million to date, and committed another $1.2 million for the 2010 to 2011 period, the firm said.

Southern Gold joins a number of miners active in the Kingdom who have recently announced share offerings. Brighton Minerals began trading at the beginning of November on the ASX. Liberty Mining, has announced plans to conduct a float on the exchange early next year. It holds a number of concessions in northeastern and northwestern Cambodia. The firm’s Managing Director Richard Stanger has said the large number of miners conducting offerings was largely coincidental, though high gold prices also made the offerings potentially more lucrative.
(source from the phnompenhpost newspaper, Friday, 19 November 2010 15:01 Jeremy Mullins)

Rural rules: Agriculture reforms on the table

THE Ministry of Agriculture, Forestry and Fisheries has begun finalising a draft law which will prohibit imports of low quality agricultural products – including some chemical fertilisers and pesticides – in order to boost farming yields.

“After the law comes into effect, we will be better able to control the quality of imports, in the interest of both farmers and traders,” according to Sokhan Rithykun, director at the Department of Agriculture.

After receiving the ministry’s ascent, the law would be sent to the Council of Ministers for approval, he said.

The draft law calls for a ban of low-quality agricultural materials from being imported to the Kingdom, according to a copy obtained by The Post. Presently, the quality of some imported products, such as chemical pesticides and fertilisers, were not effectively managed, according to Yang Saing Koma, director at the Cambodian Centre for Study and Development in Agriculture.

“That’s why we support this draft – we hope it will enable farmers to access higher quality imports,” he said.

An Sam Un, a representative for farmers in Svay Rieng, said the current uncontrolled use of low-quality chemical pesticides and fertilisers seriously affected rice production.
(source from the phnompenhpost newspaper,Friday, 19 November 2010 15:01 Chun Sophal)

Union Commercial sees its deposits soar

DEPOSITS at the Union Commercial Bank increased more than 50 percent over the first nine months of the year, according to chairman Yum Sui Sang.

Some US$159 million had been deposited with the bank by the end of September, from $106 million at the beginning of the year, he said yesterday at the launch of the bank's new branch near Phnom Penh’s Olympic stadium.

The bank – which was the Kingdom’s seventh largest lender last year, according to National Bank of Cambodia statistics – had also extended $74 million in loans at the end of the third quarter. This marks a 19.3 percent increase from $62 million at the start of the year.

Its new Olympic branch represents UCB's fifth in the Kingdom.

Meanwhile, Deputy Governor of the National Bank of Cambodia Neav Chanthana said deposits at the Kingdom’s 28 commercial banks had increased more than 20 percent in the first nine months.

Speaking to The Post at the opening of the new branch, she added that developing a sound financial sector and banking system required the utmost trust from customers and investors.

“This definitely reflects the key success of the bank, as well as building confidence in the Cambodian banking system,” she said yesterday.

According to the NBC’s annual supervisory report, total deposits in the Kingdom grew 32 percent to $3.3 billion in 2009 compared to a year earlier.
(sourece from the phnompenhpost newspaper,Thursday, 18 November 2010 15:00 May Kunmakara)

Rice seed project to start early next year

THE United Nations Food and Agriculture Organisation is supporting the Cambodian government in motivating private companies to produce rice seed.

FAO official Tim K Ekin told a seminar on agro-business, held at the Phnom Penh Hotel this week, that a program to study rice seed production in Cambodia will begin early next year, with the aim of boosting domestic seed production.

It is hoped the project, funded by the European Union, will help private firms to provide “pure” rice seed, rather than hybrid types.

According to Ekin, the move would enable farmers to increase yields by approximately 15 percent.

He said: “We are calling for private companies to get involved in pure rice seed production. If there is no involvement from the private sector, Cambodia will face difficulties when increasing production.”

Srun Sokhom, deputy director of the Ministry of Agriculture, Forestry and Fishery, said further sector engagement would be good for farmers.

But Mong Reththy, Chairman of Mong Reththy Group, a large agricultural company, said that producing pure rice seed was not easy.

He warned that such projects required participation from technicians.
(source from the phnompenhpost newspaper, Thursday, 18 November 2010 15:00 Chun Sophal)

Money matters: City water signs deal with bank

ACLEDA Bank inked a deal yesterday to allow users of its mobile banking service to make payments to the Phnom Penh Water Supply Authority.

The bank has conducted a similar service with Electricite de Cambodge since August 2009, according to its President and Chief Executive Officer In Channy.

“It’s another great achievement,” he said in a press release.

The bank also launched its ACLEDA Unity mobile banking service in July.

Ek Sonn Chan, head of the water supply authority, said: “The use of the commercial banking system to manage payment transactions for water supply is designed to enhance the financial accountability of PPWSA.”

The authority is one of at least two state-owned firms set to float on the Cambodian stock exchange, when it launches next July. 
(source from the phnompenhpost newspaper,Thursday, 18 November 2010 15:00 Jeremy Mullins)

Smart Mobile in Star-Cell merger talks, qb claims

SMART Mobile is in talks to merge with rival provider Star-Cell, according to the head of rival company qb.

“We understand Smart is in discussions over a proposed merger [with Star-Cell],” said Alan Sinfield, qb’s chief executive officer, yesterday.

Mobile operator qb had also eyed Star-Cell, he said, but had proposed a 100-percent purchase rather than a merger.

“If we are unsuccessful, or even if we are successful, we will pursue other acquisitions or mergers,” he said.

Star-Cell had been widely viewed as being on the market in recent months. Its Sweden-based owner TeliaSonera AB announced it had “written down” its value by more than US$100 million late last month, claiming “no goodwill” in a market it said was characterised by fierce competition and high churn rates.

Star-Cell was the seventh largest of the Kingdom’s nine mobile operators, with 503,000 active subscribers at the end of September, TeliaSonera said in its third quarter results.

According to research by The Post, the companies behind Smart and Star-Cell – Cyprus-based Timeturns Holdings and TeliaSonera respectively – already cooperate in other markets.

Star-Cell first launched in Cambodia in October 2007, according to the industry body GSMA. It was 100 percent acquired by TeliaSonera in September 2008.

That deal also saw TeliaSonera acquire 80 percent of Spice Nepal. Timeturns is the founder and part owner of Spice Nepal, according to the firm.

It claims to have begun operating Spice Nepal in 2005 as the first privately owned mobile provider in the country, on its website.

Smart Mobile Chief Executive Officer Thomas Hundt declined to comment on the claim yesterday.

Officials from Star-Cell had told The Post to contact TeliaSonera representatives, who claimed to be “unable to comment”.

Ministry of Posts and Telecommunications Director General Mao Chakrya was unavailable and other ministry officials declined to discuss the alleged merger.

Earlier this year, Alan Sinfield targeted extending qb’s coverage to 100 percent of Cambodia’s population by the end of 2010.

“It’s going to be hard to achieve but certainly that’s our main goal,” he said, though he declined to disclose the cost of the expansion or the number of towers targeted.
(source from the phnompenhpost newspaper, Thursday, 18 November 2010 15:00 Jeremy Mullins)

Malaysian bank CIMB launches today

A FOURTH Malaysia bank – CIMB – is set to launch in Cambodia today, bringing the number of banks operating in the Kingdom to 29.

Government officials and bankers alike said yesterday the new entry demonstrated the soundness and strength of Cambodia’s financial sector.

“They clearly know about the potential and progress of our economy and they are confident in the sector – that’s why they have invested here. We welcome any new investment,” said Director General of the National Bank of Cambodia, Tal Nay Im, yesterday.

In Channy, president and CEO of ACLEDA Bank, also welcomed the investment, stating:  “This emphasises that they trust in our banking regulations and systems, as well as the growth of our economy.”

Dieter Billmeier, vice president and advisor to Canadia bank, wrote in an email to The Post that CIMB was a well known, respected and experienced Asian bank that could bring its expertise to the Kingdom. But he warned it may be entering an “overbanked” Cambodian market.

Increased competition, according to In Channy, could benefit the man on the street.

“If CIMB can bring new products and services, they will make the existing [banks] to try to improve the quality of their products. Customers will enjoy more banking products and services [such as loans] with lower interest rates,” he said.

Tal Nay Im added that new banking products and technological expertise could encourage more people to use banks.

“The numbers of people in the population using banking service and products are still low. But the new banks opening will attract them,” she said.

Pok Vivilay, assistant to vice president of CIMB, declined to comment yesterday. The bank’s first branch will open on the corner Norodom Boulevard and Street 118, in Phnom Penh.
(source from the phnompenhpost newspaper,Friday, 19 November 2010 15:01 May Kunmakara)

Tuesday, November 16, 2010

Maybank, OSK deal reported

MAYBANK saw its outstanding loans in Cambodia decline 11 percent quarter on quarter, the bank said, as reports surfaced that it was keen to buy fellow Kingdom operator OSK Holdings.

Maybank’s outstanding portfolio in the Kingdom stood at 240 million ringgit (US$77 million) at the end of September, down from 271 million ringgit at the end of June, according to results published late last week.
Earlier this month, Maybank

Country Head Jubely Pa told The Post that in the year to date its total assets in the Kingdom had however risen more than “8 percent” year on year to $137 million.

According to a report published by Malaysia’s The Edge Financial Daily last week, Maybank has been keen to acquire OSK Holdings – the parent company of OSK Indochina, which was approved as an underwriter for the planned Cambodian stock exchange late last month.

But on Thursday, OSK Holdings released a statement to Kuala Lumpur stock exchange saying it has not entered into any “serious” talks on a takeover.

“The company has not entered into any serious or exclusive negotiations with any party with regards to any form of equity or strategic partnerships,” it said in a statement.

It added it continued to seek opportunities “in line with our mission to serve our clients better and enhance our shareholders value”.

Maybank declined to comment on whether it was in talks with OSK, but said it “continuously seeks and assesses various propositions and opportunities” that would bolster its ambition to be a regional financial services leader.

Global profits at Maybank – Malaysia’s largest lender, which has been operating in Cambodia since 1993 – rose 17 percent for the most recent quarter, the filing on Friday showed.

“We expect our performance for the financial year ending June 30, 2011, to be better than last year,” Maybank Chief Executive Officer Abdul Wahid Omar said in a statement.

“This quarter’s results continue to bear testimony to the group-wide transformation efforts we have embarked on since 2008.”

Net income rose to 1.03 billion ringgit or 14.53 sen a share, for the quarter, from 881.8 million ringgit, or 12.46 sen, a year ago, the lender said. That was helped by higher interest rates and increased contributions from its Indonesian unit following earlier losses.

During the last two years,  Maybank in Cambodia has expanded.

It now has eight branches operational in Phnom Penh, Sihanoukville, Siem Reap, Battambang and Kampong Cham. Maybank plans to open two more branches in the year to come.

Bourse finds first home

The first home of Cambodia’s new stock exchange has been confirmed as Phnom Penh’s tallest building, Canadia Tower.

“We have already agreed for the home stock market to be on the tower’s 25th and 26th floor — it will open soon,” Canadia Bank President Pung Khiev Ser told The Post.

As the tower celebrated its first birthday, Pung Khiev Ser said that preparations were underway to host the bourse, with wiring for a computer network set to be installed.

Earlier this year, the business community voiced growing concerns that little progress had been made for the bourse building outlined for Phnom Penh’s US$2 billion Camko City.

Yesterday, Camko City official Kheng Ser, who is assistant team project manager for developer World City Company, confirmed that construction of the stock exchange had yet to start.
“I don’t know exactly when building will start – it depends on both sides [Camko City and the Ministry of Economy and Finance],” he said.

Hong Sok Hour, director general of the Cambodian Securities Exchange, said yesterday official finalisation of deal was expected “soon”, adding the bourse’s Canadia Tower home was “just the temporary office”.

Inpyo Lee, project director of Korean Exchange, which holds 45 percent stake in the CSX, said he would follow the government’s decision regarding its home. “Your government has a deal with Canadia Tower – we just have to follow up,” he said.

The exchange is set to launch next July “at any cost”, according to a government statement.
(source from the phnompenh post newspaper, Monday, 15 November 2010 21:41 Soeun Say and May Kunmakara)

Mobitel gets NBC reprieve

MOBITEL’S Cellcard Cash programme has been given until February to fully comply with National Bank of Cambodia regulations, according to Central Bank Director General Tal Nay Im.

The money transfer service – which is run by Cambodia’s largest mobile phone provider– has until early next year to apply for a licence and formally partner with a bank, she said.

“We have given them some time,” she said yesterday.

Cellcard Cash was launched in September without oversight from the National Bank of Cambodia.

The bank issued a prakas or edict on August 17 requiring third-party processors to comply with its rules.

Several company officials could not be reached for comment yesterday, but Operations Manager Kay Lot has previously told The Post that Mobitel did not consider the programme banking.

The programme had been launched with a grant from the GSM Association’s US$5 million Mobile Money for the Unbanked program, which is largely funded by the Bill and Melinda Gates Foundation.

Last month, the MMUprogram confirmed that it had suspend all grants payments to Mobitel, but added that Mobitel was working with the NBC to develop the appropriate regulatory framework and secure a formal licence in a statement.

“To this end, the two parties have agreed to suspend the payment of further grant monies until the GSMA MMU Fund Panel is satisfied that [Mobitel] has secured all necessary regulatory approvals,” it said in a statement.

“GSMA encourages dialogue between mobile money providers and regulators, however regulation is a matter for the government in each country in which such services are developed,” the statement said.
(source from the phnompenhpost newspaper, Tuesday, 16 November 2010 15:01 Jeremy Mullins)

Without preemptive PR, new bourse could sink

THE uncertainty surrounding the stock listing of Sihanoukville Port reflects the dilemma facing Cambodia’s new exchange and serves as a reminder that a successful launch is as much about PR as it is preparations.

In June, port CEO Luu Kim Chhum told The Post the facility’s accounts had not yet been audited by an international firm. But more worrying is the lack of transparency and uncertainty over the issue when potential investors in Cambodia’s first IPOs will be looking for the exact opposite in a country still considered a high-risk frontier market.

Given the most successful stock exchanges are an exercise in investor confidence and overall operational transparency, Sihanoukville Port is already failing the first test, with help from the government.
Ultimately, the government decides when it comes to the new exchange – as shown by Luu Kim Chhum’s deference to the authorities on all questions of timing and preparations related to the IPO.

The best course of action now would therefore be to clarify what is going on. If Sihanoukville Port is not absolutely ready to list by mid-2011 then it should not do so. Question marks around the IPO would simply undermine what will likely be jittery confidence surrounding the exchange.

The port has faced a number of uncertainties recently including the debate over whether the new rail network would connect to the facility. Ultimately it will, but the ambiguity afflicting such a key element in the port’s future success was certainly not helpful as part of overall preparations.

This all points to Cambodia’s inexperience in thinking of how uncertainty is viewed from outside a company, the key to good public relations when the investor is all-important. There is little doubt that Sihanoukville Port is making a successful rebound following a difficult 2009. Plans are to develop the nearby special economic zone and Luu Kim Chhum said previously he had already sought potential Japanese investors for the zone and the port.  Also, the port is scheduled to add a facility for the delivery of oil by 2014. There are plans to deepen the draft, which would allow bigger ships to enter.

These are all huge positives for growth that potential investors will view as a guarantee that Cambodia’s largest port means business. However, a rushed IPO could undermine investor appetite from the outset.

The best way to make sure the IPO launch is steady is to think about preemptive PR. Anything less and the port’s buoyant plans for the future could sink not only itself but the whole of the exchange.
(Source from the phnompenhpost Newspaper, Monday, 15 November 2010 15:00 Steve Finch)

Saturday, November 13, 2010

Mfone affected by baht's power

MFONE faces a “price war” and intense competition among the Kingdom’s nine mobile operators, according to results from parent company Thaicom, released yesterday.

The mobile provider now claims 569,472 Cambodian subscribers, a 30.2 percent decline on 815,363 for the third quarter 2009. Mfonwe was pegged as the third largest provider in Cambodia in statistics from June, with 782,073 active subscribers, according to data complied by the Ministry of Posts and Telecommunications.

Revenues suffered at the provider during the most recent quarter. Thaicom claimed a loss of 102 million baht (US$3.5 million) in the Kingdom, compared with a loss of 25.3 million baht in the same quarter last year. Currency fluctuations in the most recent quarter hit its Cambodian revenues as Mfone reports its domestic revenues in US dollars, which are then converted to baht for reporting statements, Thaicom says.

“The appreciation of the baht [against the dollar] has caused lower revenue from the telephone business in Cambodia,” it said.

But drops in electricity costs and interconnect charges, as well as the baht’s appreciation, had decreased total costs. Thaicom holds 51 percent of Shenington Investments, which operates Mfone.
(source from the phnompenh post newspaper, Friday, 12 November 2010 15:00 Jeremy Mullins)

Exchange uncertainty


IN DATES The road towards the exchange
May 2006
Officials from Cambodia and South Korea sign a memorandum of understanding to launch the Kingdom’s first stock exchange by December 2009.
September 2009
Three state-owned enterprises, including the Phnom Penh Water Supply Authority, Telecom Cambodia, and Sihanoukville Autonomous Port, are ordered to prepare for public offerings on the bourse.
November 2009
Developers from World City sign an agreement with government officials to build a US$6 million building to house the exchange at Phnom Penh’s Camko City. The exchange’s launch is pushed back until December 2010.
July 2010
A further delay towards launching the exchange is announced by Finance Ministry officials. The Stock Exchange of Cambodia is set to launch in July 2011 “at any cost.“
November 2010
Ministry of Economy and Finance officials leave Sihanoukville Port out of a list of state-run companies set to list, saying there would be a future announcement on the matter.

GOVERNMENT officials declined to name Sihanoukville Autonomous Port as one of three state-owned firms set to list on the Cambodian Stock Exchange yesterday, raising questions over its floatation.

In September 2009, three state-owned firms – Phnom Penh Water Supply Authority, Telecom Cambodia, and the port – were ordered by the government to list on the planned bourse.

But yesterday, Aun Porn Moniroth, secretary of state at the Ministry of Economy and Finance, said the three state-owned enterprises were the Water Supply Authority, Telecom Cambodia, and “another state-owned enterprise which will be appointed later by the Royal Government of Cambodia”.

Ministry of Economy and Finance Secretary of State Hang Chuon Naron, speaking at a press conference, also said the third state-owned company to list would be the subject of a future announcement.

“At this time I cannot say exactly what the company is,” he said yesterday.

“The third company actually needs time – we don’t have an exact time as to when it’s going to be.”

Sihanoukville Port Authority Director General Lou Kim Chhun told The Post yesterday he was not aware of the exact situation regarding its listing, adding he was not an expert on the exchange.

“We always comply with the government’s decision because we are under their supervision,” he said.

The port had enough capital already for further development, he added.

Yesterday, Tong Yang Securities and its Cambodian subsidiary were announced as financial advisors to the Ministry of Economy and Finance.

Tong Yang will help prepare the state-owned firms for listing on the exchange.

“I would like to encourage Tong Yang Securities and Tong Yang Securities (Cambodia) Plc to continue scrutinising any potential issues and giving advice to the Ministry of Economy and Finance so that this project is executed in a smooth, highly effective and efficient manner,” said Aun Porn Moniroth.

The firm had signed an agreement on December 28, 2008, to act as financial advisor to the Ministry of Economy and Finance – which oversees the stock exchange – without charge.

It was also approved as one of seven underwriters for the bourse earlier this month.

Tong Yang Chief Executive Officer You Joon-ryeol welcomed the announcement, adding the firm was well equipped to handle floats by the state-owned firms.

“Tong Yang is committed to delivering the best possible results, by using our comprehensive knowledge and expertise to carry out successful IPOs,” he said.

“Furthermore, as a leading financial institution in Korea, we will continue to play our part in laying a firm foundation for the upcoming stock market and its continued growth.”

Claiming to be the first securities firm in Cambodia when it launched four years ago, You Joon-ryeol said Tong Yang was committed to the Cambodian economy and its new capital market development plan.

He added that the inaugural listings of the state-owned firms were vital for the success of the Cambodia Stock Exchange, and predicted it would become a milestone in the country’s capital market development.

Other approved underwriters said the government could appoint more firms to help the launch.

Lim Loong Seng, country head of OSK Indochina Bank – which has been approved as one of the Kingdom’s seven underwriters – said:  “Of course we would like to be selected, but it’s up to the government to decide – they can appoint anybody – one or two or three underwriters.”

Indochina sales up for Carlsberg

CARLSBERG – 50 percent owner of the brewery behind Angkor beer – claimed strong sales in Cambodia over the first nine months of the year, in a third-quarter update that came in below most analysts’ expectations yesterday.

Organic volumes increased by 23 percent in Cambodia, Laos and Vietnam during the first nine months, compared to the same period 2009, according to the results from the Danish firm.

“The growth was strong across all three markets,” it said.

Carlsberg claimed sales in its Indochina region increased at a faster rate than the overall regional beer market.

Sihanoukville-based Cambrew Ltd – 50 percent owned by Carlsberg – claims 26 percent market share in the Kingdom, and is the brewer of Angkor, Bayon, and Klang beers in Cambodia, among others.

Although Carlsberg saw strong growth in Indochina and other parts of Asia, it claimed “challenging” conditions in its Northern and Western European markets Net income was 1.95 billion Danish krone [US$363 million] in the third quarter, the company said in a statement.

That missed the 2.17 billion krone average estimate of 18 analysts surveyed by Bloomberg.

“Looking forward, we will be impacted by rising input costs and will therefore have to increase sales prices,” chief executive officer Joergen Buhl Rasmussen said in the statement. ADDITIONAL REPORTING BY BLOOMBER

SMEs call for interest rate change

Tough loan requirements and high interest rates were hindering growth among the Kingdom’s small and medium enterprises, some entrepreneurs said yesterday.

Banks generally accept only buildings and land in Cambodia as collateral, restricting capital available for businesses to expand, according to Te Taingpor, co-chair of the manufacturing and SME working group.

Speaking yesterday at the national forum between financial institutions and SMEs, he called on financial institutions to widen their definition of collateral needed to secure loans.
“Banks should evaluate the practical business situation facing each firm,” he said.

He suggested that movable assets such as vehicles or machinery should also be considered as collateral.

Cambodia has 320,123 SMEs employing 1.4 million people, he said at yesterday’s forum, which was attended by representatives of some 50 financial institutions and 300 SMEs.
Limits to loan length and high interest rates were also cited by Te Taingpor as impediments to obtaining financing to expand smaller business.

“Financial institutions should extend the limit for long term loans to SMEs from five to ten years, with interest rates below 10 percent per annum,” he said.

Heng Heang, president of Phnom Penh’s SME Association, claimed there was a large gap in the interest rates offered to large and small businesses.

“The banks lend to big companies at low interzest rates of 8 or 9 percent, while to SMEs the rates are from 18 to 24 percent per annum,” he said.

“We do not demand the interest rates to be as low as big enterprises, but the gap should not be quite so wide.”

But representatives from some of Cambodia’s smaller lenders said yesterday there were minimum interest rates they could not feasibly charge.

Sim Senacheert, general manager at Prasac microfinance institution, said it was impossible to offer interest rates below 10 percent on small loans.

“Some 80 percent of the portfolios at Cambodian MFIs are borrowed from foreign creditors, at rates of up to 10 percent interest per annum,” he said.

“And we have to add in operation costs of another 10 percent.”

The average interest rate MFIs charge is between 19.2 percent and 36 percent per year, depending on loan sizes and risk assessment, he added.

Meanwhile, larger firms received cheaper loans because they had more confidence from lenders, according to National Bank of Cambodia officials.

“Big companies have proper financial statements, paperwork and collateral, so the risk is low and banks trust those firms,” said Chea Serey, director at the NBC’s Banking Supervision Department.

“SMEs may not meet those requirements, so bankers set higher interest rates for them to prevent risks,” she said.

It was also challenging for banks to accept moveable assets as collateral for loans, she added.

Most of the money banks lend out was from depositors. Fixed assets, such as land and houses, were necessary to ensure that money was secure when lending, which is only fair to depositors, she said.

Minister of Industry, Mines and Energy Suy Sem encouraged financial institutions to grant more loans to SMEs at the forum yesterday.

Smaller firms played crucial roles in job creation and in generating revenue for low-income earnings, he said, but some 90 percent of SMEs used their own money or borrowed from families and friends to operate.

As of September, there were 28 commercial banks, six specialised banks, 23 MFIs, and 27 foreign-credit operators in Cambodia, according to NBC deputy governor Ouk Maly.
(source from the phnompenh post newspaper, Wednesday, 10 November 2010 20:04 Nguon Sovan and May Kunmakara)

Wednesday, November 3, 2010

Floods ‘not a threat to rice goal’

Cambodia is on track to exceed its rice-production targets for 2010 despite torrential rain and flash flooding that inundated large parts of the country last month.
Speaking on the sidelines of a rural development forum in Phnom Penh, Agriculture Minister Chan Sarun said he was “optimistic” this year’s output of paddy would top last year’s total by about 70,000 hectares.
“I am pleased to say that although Cambodia has been affected by the floods recently, it has not affected our rice,” he said.
“Instead, the number of our rice products will be higher than last year because we have been planting more rice fields than we planned to.”
He said the ministry had originally planned to plant roughly 2.28 million hectares of rice fields, but had actually planted 2.39 million hectares.
Flooding, which began on October 10, affected about 70,000 hectares of rice fields and destroyed 6,000 in 13 cities and provinces, he said, citing a preliminary report received by his ministry.
Yang Saing Koma, president of the Cambodian Centre for Study and Development in Agriculture, said the effect of the flooding on this year’s rice crop had been small.
“I think that the floods have not seriously affected Cambodia’s rice paddy,” he said.
“ So I agreed with the Minister of Agriculture that rice will be good and its production will increase this year.”
Keo Vy, director of the National Committee for Disaster Management, said unofficial statistics indicated that 4,553 hectares of additional crops – including cassava, sesame and soybeans – had been affected, and that some 10,000 hectares of rice fields had been destroyed, a figure higher than that offered by Chan Sarun.

He added that the report including the statistics had not been finalised.

In addition to crops, the floods had affected 30,355 homes, and six people had died, he said.

A total of nine deaths have been recorded unofficially.
(source from the phnompenh post newspaper, Tuesday, 02 November 2010 20:50 Buth Reaksmey Kongkea)

Licences granted for Kingdom’s bourse

Fifteen companies have been officially granted licences by the Securities and Exchange Commission of Cambodia to act for the Kingdom’s first stock exchange.
Commission chairman and Economy and Finance Minister Keat Chhon said granting the licences was a key step towards the bourse, scheduled to launch in July next year “at any cost”.
The 15 companies were selected from a shortlist of 22 applicants compiled by the SECC in March. The number of permits granted reflects the initial requirements of the Cambodia Stock Exchange, according to Keat Chhon.
Commentators have expressed conflicting views on whether an appropriate number of licences had been granted, while others have voiced concerns over the readiness of the twice-delayed exchange.
Nguon Meng Tech, director general of the Cambodia Chamber of Commerce, said that while the number of licences granted was reasonable, the timeframe for the stock market to launch was too hurried.
“The government could open the stock market if they commit to opening it, but I think there would be no listed firms because of a lack of public confidence and knowledge among local investors” at the launch date, he said.

“It will need at least another three years to launch the stock market in Cambodia.”

Han Kyung-tae, chief representative of Korean-owned Tong Yang Securities Inc-Cambodia,  said that the number of licences had been “expected”.

“But it will be tougher competitions for us as there are up to seven underwriters at the first stage,” he said.

Project Manager Inpyo Lee, a representative of the exchange’s minority owner, Korean Exchange, said: “The number [of licences] is more than my expectation.” He declined to comment on what he felt would be an appropriate number of pemits for the beginning stages of the stock market.

Other players contemplated ways to aid the launch of the exchange.

The concept of a stock exchange was still a new one for Cambodia, said Pung Kheav Se, president of Canadia Bank, which owns approved underwriter CANA Securities Limited.

He said the licensed firms had a duty to educate people about the market.

“Even our bank, we don’t have any experience with this task, but we have employed an expert from Singapore,” he said. “If we don’t start [the exchange], we won’t know the way to go,” he added.

Three state-owned enterprises have been ordered by the government to prepare themselves for listing on the bourse: Sihanoukville Autonomous Port, Phnom Penh Water Supply Authority and Telecom Cambodia.

“We may try to approach the three firms for IPO preparation,” said Pung Kheav Se.

Keat Chhon said that SECC officials were reviewing and evaluating application documents for market operators, transfer and paying agents, and accountants.
 
(source from the phnompenh post newspaper, Tuesday, 02 November 2010 19:37 Nguon Sovan)

Parking fees hit Phnom Penh

A Malaysian company has begun administering fees to motorists parking along a stretch of Monivong Boulevard, marking the first step of an initiative that is set to be expanded citywide in a bid to combat congestion and reclaim pavement for pedestrians.
Moeung Sophan, deputy director of the municipal Department of Public Works and Transport, said the paid parking scheme had begun on Monday and was in effect from Street 217, or Charles de Gaulle Boulevard, to Street 120, near Central Market.
“It is in order to create good public order and to avoid traffic congestion,” he said.
He said the scheme called for motorbike drivers to pay 500 riels, wheres car drivers would be charged 1,000 riels (US$0.25) for one hour and 500 riels for every additional hour.
An announcement issued by City Hall on October 25 said the administration of parking fees would be handled by the Cambodia office of Edisijuta Pte Ltd, a Malaysian firm.
Moeung Sophan said the company had five years to implement the scheme, during which time it would be expanded along Kampuchea Krom and Sihanouk boulevards.
The Post was unable to contact Edisijuta yesterday.
The October 25 announcement also said that municipal officials were “spiritually hopeful that with understanding and good cooperation from local people and authorities we can contribute to making the capital have better security and order”.
Some business owners affected by the first phase of the initiative yesterday expressed concern that it would deter customers.
Lu Meng, the owner of a Café Sentiment branch on Monivong, said he had been informed of the parking fees about one month ago, Cand that workers had since been busy demarcating parking spaces and pavements.
“In front of my shop it is the public sidewalk, so it is for the city officials to do what they want, but my guests will have to pay the city officials for parking,” he said. “There will be an effect.”

(source from the phnompenh post newspaper,Wednesday, 03 November 2010 12:25 Chhay Channyda)

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