Climate change considered as flooding hits Cambodia

The wet season had come and gone with almost no rain.  Despite the best efforts of the farmers from Tralach commune, in Takeo province’s Traing district, widespread crop failures two years ago brought the community to the economic, and dietary, brink.

Rice paddies were parched beyond salvaging, said Oxfam spokesperson Brian Lund in a recent interview, adding that the dried mud was nearly too hot to stand on.

“Usually [the farmers] harvest the rice barefoot, but that year, for the first time, they had to wear shoes,” he said.

This week, farmers in Kratie province are facing the opposite problem.

Severe flooding in 30 communes across the province has inundated more than 1,000 hectares of transplanted rice seedlings, threatening damage to this year’s crop, said provincial governor Kham Phoeun
last week. As the government evacuated families and cattle to higher ground, many residents were concerned that this year’s harvest would be wasted.

The Cambodian Red Cross has donated food aid and sleeping supplies to evacuated families, but the flooding has cut off roads and, as of yesterday, at least one person had drowned in the rising water.

According to a statement from the Ministry of Water Resources, heavier-than-normal rainfall over the upper Mekong in Laos and Thailand has caused flooding downstream in Cambodia.     

While both limited in geographic scope, the 2009 drought in Takeo province and the current crises in Kratie may represent two premonitory pieces in a larger climatic puzzle.

Worldwide, greenhouse gas emissions are spurring changes in the earth’s climate, leading to temperature increases and more erratic weather patterns.  In Cambodia, rice cultivation relies on a predictable annual cycle of monsoon rains and dry seasons, and significant crop loss due to the occurrence of floods and drought is quite common.

Although Brian Lund warned that no single weather event, however severe and unprecedented, can be taken as proof of climate change, concerns are mounting.

Cambodia is preparing to deliver its second national communication to the United Nations Framework Convention on Climate Change. The report, essentially a progress update on national attempts to deal with climate change, has yet to be finalised but preliminary findings released in March 2010 suggest that Cambodia will face significant shifts in rainfall patterns, with potentially dire consequences for rice yields.

The study was conducted by the Ministry of Environment with support from the Global Environmental Facility and the United Nations Development Programme. UNDP Program Analyst Kalyan Keo summed up the predictions of the UNFCCC study succinctly: “The dry season will get drier and longer. The wet season will get shorter with more intense monsoons.”

Brian Lund, whose organisation Oxfam keeps tabs on food security in Cambodia, believes the country is experiencing “a trend towards increased variability in the growing season rainfall, either late starts or interruptions, possibly related to climate change.” He added that parts of the Kingdom might also experience “more intense flooding events.”  

Too little rain means the growing season is shortened or interrupted, leaving farmers with too narrow a window to plant and harvest a full crop, said Brian Lund. Too much rain can also cause problems, flooding rice fields and killing the crop if it remains inundated for more than about eight days.

Experts agree that implicit in any climate change predictions is a degree of uncertainty resultant from the sheer number and complexity of variables being measured. Still, as Oxfam regional communications officer Soleak Seang explained: “In an agricultural sector that thrives on climatic predictability, increased unpredictability will always have a negative impact on farmers.”

Gunilla Wingqvist, an economist at the University of Gothenburg in Sweden who helped conduct an environmental and climate change policy brief for Cambodia in 2009, wrote in a recent email that “Cambodia is … very vulnerable [to climate change] due to its low adaptive capacity and dependence on climate sensitive livelihoods”.

Tin Ponlok, project coordinator at the Ministry of Environment’s climate change office, corroborated her conclusion, pointing out that 80 percent of Cambodians are reliant on agriculture for their livelihoods.

With predictable rainfall providing the essential foundation of the Kingdom’s food security, fluctuations wrought by climate change may leave many Cambodians scrambling for answers as traditional sources of food grow increasingly unreliable. Less than a third of the land under rice cultivation receives any form of irrigation, according to the government’s National Strategic Development Plan Update published in 2009.

Photo by: Heng Chivoan

People walk through floodwaters in Kandal province.

The Ministry of Environment’s 115-page National Adaptation Programme of Action to Climate Change places a high priority on projects aimed at bolstering the nation’s agricultural sector against the harms of shifting weather patterns.

But in the almost five years since the plan was published, very few of its proposed projects have been implemented. More than US$200 million would be required to fully implement NAPA, said the Ministry’s Tin Ponlok, adding that, as of this year, less than $10 million in funding had been allotted to the programme, most of it from international sources.

NGOs and other organisations have stepped in to try to secure the Kingdom’s agricultural future.  Oxfam is pursuing a system of rice intensification, a modified form of rice cultivation which produces faster-growing crops that are more resistant to destruction by the extreme weather events, said Brian Lund. The system has the potential to boost rice yields to as much 4.1 tonnes per hectare, 1.4 tonnes per hectare above the current national average, he added.  So far 110,000 families have taken part in the project, and that number is growing.

Oxfam has also spearheaded a microfinance program which allows rural farming communities to pool their savings and distribute small loans to mitigate emergencies, a financial safety net which may become increasingly necessary as climate change puts rural livelihoods at risk. Lund emphasised that: “The adaptations most likely to succeed are those that come from the community itself.”

The UNDP, meanwhile, is conducting a pilot project to restore and maintain the nation’s irrigation networks.  The project aims to equip local villagers with the skills and resources to maintain nearby irrigation works, providing for a more sustainable system of water delivery.  It also hopes to develop a handful of “practical techniques and guidelines” for climate-proofing existing irrigation networks.

Kalyan Keo pointed to how, in many provinces, increased flooding has caused soil erosion, blocking the flow of water through canals. Problems such as these can be solved cheaply and easily by planting trees or building cement skirts around ditches, she said.

Through cooperation with several other NGO partners, the UNDP has also overseen the establishment of the Cambodia Climate Change Alliance which gives grants to various government ministries to implement adaptation programmes.  The Alliance focuses especially on strengthening the capacity of the National Climate Change Committee, a governmental body established in 2006, and which now counts Prime Minister Hun Sen as any honourary chair, to coordinate the activities of all ministries with regards to issues of climate change. 

Despite the blitzkrieg of food security and climate change adaptation initiatives from the non-profit sector, many challenges remain. Low public awareness of climate change and methods for adaptation, lack of a comprehensive policy and legal framework to address climate change, as well as insufficient funding and political will have all been cited as road blocks to securing Cambodia’s agricultural sector against climate change.  As Oxfam’s Brian Lund put it:“There’s a lot of work to be done.”  The Ministry of Environment’s Tin Ponlok took a slightly more optimistic view, contending that “relatively speaking we have made very good progress with regards to resources available to us,” although he too added that “many challenges lie ahead”.

While Cambodian policy-makers try to mobilise in defence of the Kingdom’s food security, the farmers in Tralach commune are feeling the heat.

By July, none had begun transplanting their rice crops, a process which normally begins in June.

Chhuokroth Sin, a 50-year-old resident of the commune, said last month: “[We] haven’t gotten enough rain this year either.”


Source from : The PhnomPenh Post newspaper, 

MONDAY, 15 AUGUST 2011 15:02

DANIEL SHERRELL

Making a mark in the microfinance fray

SONATRA Microfinance Institution is a new entrant into Cambodia’s very competitive MFI sector. Director Sorn Sokna spoke with The Post’s May Kunmakara about the challenges his company faces as it tries to carve out a niche for itself in that space, as well as the opportunities he sees going forward. 

Sorn Sokna, director of Sonatra Microfinance Institution, speaks to reporters at the company’s office in Phnom Penh on Friday. Photo by: Hong Menea

Tell me the history of Sonatra and why you decided to launch this business? 
Sonatra was licensed by the National Bank of Cambodia in January as part of joint venture with a Japanese investor. But they hold only a small portion of shares, 15 percent. We’re majority local-owned.

In addition, with the cooperation of our Japanese shareholder we received additional loans of around US$50 million from both Japan and Singapore so as to increase our loan capacity. We want to be a strong microfinance institution in Cambodia.

We’re well aware that many small and medium-sized enterprises are facing a fund shortage. I think we can help them to improve their businesses, as well as farmers. In fact, I think our MFI provides much easier access to loans than banks.

What sectors do you focus on? Who are your target clients?
Of course, we don’t focus on any specific sectors. Economic circumstances will dictate which customers seek out loans, though we do tend to serve farmers and SMEs.

How has Sonatra taken shape since you began operations? 
We see huge demand for loans from farmers and SMEs as our economy continues to get better. We want to offer even more loans to them, but we are still at the initial stages of our development. Still, we plan to take advantage of the growing market by increasingly extending loans to entrepreneurs who are willing to improve their businesses.

What is the competition in the industry like at the moment? 
There’s a lot of tough competition right now given the number of players in the industry, especially those with many years of experience. However, I do hope that what we can do now is strengthen our capacity and clients’ confident in our services. We think we can do that. We see our business as being on a very good track.

What is Sonatra’s strategy to attract customers given the tough industry competition?
We’re still quite new in the industry, so we have not done to much promote our business since getting licensed. However, we think going forward that we’re ready to compete with the more experience MFIs. We will offer customers lower interest rates than our competitors. And we plan to capitalise on the huge loan-growth demand we’re seeing in the agricultural sector. We have a partner in pharmaceutical industry as well.

So we will loan to customers who want to buy medicine or seek treatment at medical clinics. Also, we will give students who are unable to pay for school a chance to pursue their studies by offering loans for them to attend the Financial Institute of Cambodia.

How does the average Cambodian view the idea of taking and paying back loans? 
I think people clearly understand the process. That’s especially true compared to years ago when a lot of MFIs struggled with a general lack of knowledge about how loans worked. Now people are taking these loans to help grow their businesses, and they will repay the loans in full.

What are the opportunities and challenges facing MFIs right now? 
The recovering economy gives us lots of opportunities to grow in the industry because there are many new businesses being started. They need more and more money to better their operations, especially in the agriculture sector. 

However, there are challenges, too. We really don’t know if our customers put the money we loan them to good use. So Sonatra now offers a service to help these companies come up with business plans that allow them to get the most effective and efficient outcome from the loans they take.

Cambodia’s sinking higher education system

That development in Cambodia is lagging behind much of the world is not a claim but a fact. While there are real signs of progress toward many of the UN’s Millennium Development Goals, which set minimum standards for health and education to be met by 2015, others have been adjusted down. Regardless, the indicators themselves convey the reality that Cambodians are striving for a quality of life that was achieved decades ago by many developed countries, and is now taken for granted by most of the modern world.

Cambodia is still struggling to even approach true equality between boys and girls in primary-level enrollment, a ratio that was achieved by most European countries early in the 20th century. In fact, in 2007, Cambodia was yet to reach 90 percent (meaning that there are nine girls enrolled for every 10 boys), while the world as a whole had a ratio of 96 percent.

The importance of Cambodia’s faltering education system is mounting. Up to 70 percent of the Kingdom’s population could be considered youth, and it is this part of the population that will inherit the responsibility of lifting Cambodia onto the international stage. In order to do this with respectability, the young leaders who will soon become the face of Cambodia need to have an education fit for their task. They will require a comprehensive academic experience of the sort that simply does not exist for the vast majority of Cambodians today.

While raising the Kingdom’s ailing education sector won’t be easy to execute, there is a fairly simple first step to bringing life back to Cambodian academia, and that is investing more federal funds in schools and educational institutions. Sure to follow will be qualified, responsible and aspiring educators who will be the cornerstone of future development in society and a more diverse and robust economy.

According to the most recent summary report on education, youth and sport, there are 91 higher education institutions (34 and 57 private), located in 18 provinces and Phnom Penh. Compared with 20 years ago, when these figures were effectively 0, this seems like a healthy higher education system.

However, if we take a serious look at what is actually being offered in the buildings of these “universities”, it is easy to see that, more often than not, it is not what a modern academic would recognise as post-secondary education. This is the greatest stumbling block on the path to producing capable human resources in the Kingdom. These business institutions use the guise of academics to attract tuition money, and as such they count success in terms of the bottom line, ignoring the service of schooling they purport to provide and the country so desperately needs. 

What the country is left with is a rapidly expanding quantity of graduates, with much slower rises in the quality of youth entering the workforce. With no real qualifications being passed on with their degree, even the best-intentioned graduates often have little to offer in terms of moving the country closer to global legitimacy.

Some higher educational institutions have very good policies on paper (like the government they work under), but this rarely results in good practice. Uniformly, cheating is not allowed in exams, but it still happens and students continue to resort to this sort of behaviour, believing it to be a legitimate strategy for scholastic success.

Higher education institutions call themselves centres of research, but often lack adequate bandwidth, computer terminals, subscriptions to academic journals, up to date laboratories or any of the other expensive, but essential, tools for today’s top students around the world. 

Internships, which are seen as an integral part of professional preparation in any sector, have yet to be built in to the curriculum at most schools and career counselors or academic planners, essential resources for any student lost between high school and adulthood, are virtually non-existent. 

While it is easy for the government to plead poverty when pressed on the widespread failing of higher education in the Kingdom, they make a different statement each year when the national budget is debated, and passed, with education receiving a much too small slice of the fiscal pie. The call from the capital is loud and clear. They don’t care about education. 

Less than 10 percent of 2011 federal spending will go to education, US$223 million of the total $2.4 billion budget. A quick sampling of the world shows just how pathetic this is. Mexico, whose fight against drug lords is costing billions in security spending and draining the tourism industry, uses 24.3 percent of its budget on education spending. Iran, a country facing rampant unemployment comparable to Cambodia, spends 17.7 percent of its allocated budget on education. South Africa, whose population is suffering from HIV/AIDS at the highest rate in the world, is still able to spend 18.5 percent of its budget on schools. Even Russia, which regularly faces international criticism for being a failed state run by a small group of oligarchs, easily beats Cambodia’s education spending with 11.5 percent of their budget flowing into academia. 

The government is not wholly responsible of course. The private institutions (most of which are owned by power brokers who also hold an official position in the government) are also to blame for luring students to their buildings, which they call universities, and failing to make good on their end of the deal. They too can save face by claiming to be short on funding, but if that is the problem, perhaps the best option is shutting the doors before teenagers and their mostly middle-class families fork over hundreds of dollars hoping for future returns that will never be realised.

But, of course, the government is also responsible for oversight of the private sector, so regardless of who is steering the country’s hollow private universities (there are some good ones out there, just not many), the buck stops with the regulatory boards and watchdog agencies, overseen by the council of ministers and education ministry, which have received millions in the past few years to bring accountability to a university network that is run not by educators but by backroom brokers and businessmen, who were most likely subject to the same copycat education, if they had the luxury of formal schooling at all, that they are now profiting from. 

If Cambodia’s government truly wants to set up the Kingdom for a better future, it will happen in classrooms where students are taught to be critical thinkers and innovative, productive members of society. Counting the number of degrees handed out in the hollow halls that label themselves as universities means nothing. Cambodia’s government needs to lead the way in improving the country’s attitude and ethics around education. First by giving schools enough money to provide the essentials of a modern-day education and then by raising teacher salaries so that education can actually be a career choice, rather than the last resort. 

Education drives progress in all parts of society. The government must begin to refuel Cambodia’s empty tank or it will suck its own people dry.

(source from phnompenhpost newspaper, 

WEDNESDAY, 20 APRIL 2011 15:01

 TIVEA KOAM AND COLIN MEYN) 

Helicopters Cambodia purchased

Photo Supplied

A helicopter sporting the branding of Helicopters New Zealand sits on the tarmac.

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Hopefully it will result in an upgrade of our business

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A Canadian firm announced it will buy the parent company of Helicopters Cambodia for US$126 million, a move one company official hoped would result in an upgrade of the business.

Canadian Helicopters Ltd, a wholly owned subsidiary of Canadian Helicopters Group, negotiated a deal during last week with the ailing South Canterbury Finance for its Helicopters New Zealand subsidiary, which included its subordinate business Helicopters Cambodia.

Kevin Treloar, General Manager at Helicopters Cambodia, applauded the deal, saying his company now had access to CHL’s broad base of equipment and expertise, which included 122 helicopters and a flight training school.

That in turn could help to improve Helicopters Cambodia’s operations, he said.

“We’ll be exploring any opportunity, and hopefully it will result in an upgrade of our business,” he said, but adding that it’s “too early to tell” how those upgrades may play out.

Treloar also pointed to the “very positive synergies between the two groups,” namely their complementary seasonal operations and extensive histories as utility helicopter services companies.

CHL operates in Canada mainly between May and October, but now the company will extend its business throughout the year thanks to HNZ, which has bases in Australia, New Zealand, Cambodia and Laos, he said.

Both companies have been flying at least 50 years, according to their websites.

Canadian Helicopters President and Chief Executive Officer Don Wall called the acquisition a “transformational investment” for his company.

“Acquiring HNZ will assist in providing greater stability as it extends the arm of CHL’s existing operations in Canada, the United States and Afghanistan,” where it supports United States efforts there, he said in a statement.

“HNZ … will be a significant part of CHL’s growth plan as we look to the future,” he said.

HNZ owns 33 helicopters and serves a number of industries, including oil, mining exploration and tourism. In the twelve months ending December 31, 2010, the company earned NZ$28 million (US$22.1 million) before interest, taxes, depreciation and amortisation, according to a statement from CHL.

The sale comes as South Canterbury Finance sells assets as part of a receivership set up by the New Zealand government, which brokered a US$1.26 billion bailout for the lender back in August.

According to a statement from McGrathNicol, receivers of South Canterbury, CHL was selected “through a competitive sale process” that started after the receivership was established.
(source from Phnompenhpost newspaper, 

WEDNESDAY, 20 APRIL 2011 15:01

 TOM BRENNAN) 

At the time the receivership was announced, Kevin Treloar said his company was unaffected.

Yesterday, he reiterated that point, saying that beyond the potential benefits of the deal he sees no downside for Helicopters Cambodia.

“It’s basically business as usual,” he said.

Royal Group receives right to launch first Cambodia satellite

ROYAL Group received a concession to launch Cambodia’s first satellite into orbit, creating what the company sees as another integral step forward for the ASEAN economy, officials said yesterday.

Cambodian Satellite 1 is set to launch in the first quarter of 2013, and cost between US$250 million and $350 million to build and put in orbit, serving phone, television and other multimedia customers, Royal Group Chairman Kith Meng said yesterday.

“It’s trade in the sky rather than trade on the ground,” he said, adding the satellite will benefit ASEAN as a whole, as member states will be able to lease satellite services from the Kingdom, further driving the region’s economy.

The satellite is set to be launched by Royal Group subsidiary Royal Blue Skies, after receiving the concession from the Ministry of Posts and Telecommunications on Wednesday.

Kith Meng said the government is “fully supporting” the project, adding Prime Minister Hun Sen had lent his approval to the efforts.

Royal Group Chief Financial Officer Mark Hanna said that country-to-country business was part of the company’s overall plan for the satellite.

There will be a huge demand for bandwidth coming out of Asia in the future, driven by high-definition television and the internet, and the added capacity via satellite will help meet that demand, he said.

The firm plans to first sell services into the Cambodian market, and then branch out into Indonesia, Thailand, Vietnam, Malaysia and other ASEAN nations.

“We see it as very positive for the future, but it’s going to take time,” he said.

The satellite’s launch was touted as an important development for Cambodia.

“It gives the country security over its international transmission, communications and everything. So it is very, very important for the country,” Mark Hanna said.

Kith Meng declined to provide details of the satellite itself citing security reasons, but he did confirm that Royal Group was working with a number of manufacturers to build it.

The potential costs would depend upon the final build, he said, adding that Royal Group is working with different sources to generate the necessary financing. A second announcement will be made once that process is complete.

Kith Meng said the satellite will offer Cambodia some autonomy, allowing the Kingdom to operate its own satellite rather than lease services from other providers.

And with Thailand and Vietnam having their own, and Laos intending to launch one, there’s no reason for Cambodia to not have one as well, he said.

“I think it’s the right time for Cambodia to shoot its own satellite in … orbit,” he said.

“It’s good for Cambodia as a nation that we have the ability to launch the satellite. Not just for [Royal Group] but also for the country,” he continued. “And we should all be proud of that.”

Minister of Post and Telecommunications So Khun confirmed yesterday that the concession had been granted, but declined to discuss the matter further. ADDITIONAL REPORTING BY THET SAMBATH
(source from Phnompenhpost, ROYAL Group received a concession to launch Cambodia’s first satellite into orbit, creating what the company sees as another integral step forward for the ASEAN economy, officials said yesterday. 

Cambodian Satellite 1 is set to launch in the first quarter of 2013, and cost between US$250 million and $350 million to build and put in orbit, serving phone, television and other multimedia customers, Royal Group Chairman Kith Meng said yesterday.

“It’s trade in the sky rather than trade on the ground,” he said, adding the satellite will benefit ASEAN as a whole, as member states will be able to lease satellite services from the Kingdom, further driving the region’s economy.

The satellite is set to be launched by Royal Group subsidiary Royal Blue Skies, after receiving the concession from the Ministry of Posts and Telecommunications on Wednesday.

Kith Meng said the government is “fully supporting” the project, adding Prime Minister Hun Sen had lent his approval to the efforts.

Royal Group Chief Financial Officer Mark Hanna said that country-to-country business was part of the company’s overall plan for the satellite.

There will be a huge demand for bandwidth coming out of Asia in the future, driven by high-definition television and the internet, and the added capacity via satellite will help meet that demand, he said.

The firm plans to first sell services into the Cambodian market, and then branch out into Indonesia, Thailand, Vietnam, Malaysia and other ASEAN nations.

“We see it as very positive for the future, but it’s going to take time,” he said.

The satellite’s launch was touted as an important development for Cambodia.

“It gives the country security over its international transmission, communications and everything. So it is very, very important for the country,” Mark Hanna said.

Kith Meng declined to provide details of the satellite itself citing security reasons, but he did confirm that Royal Group was working with a number of manufacturers to build it.

The potential costs would depend upon the final build, he said, adding that Royal Group is working with different sources to generate the necessary financing. A second announcement will be made once that process is complete.

Kith Meng said the satellite will offer Cambodia some autonomy, allowing the Kingdom to operate its own satellite rather than lease services from other providers.

And with Thailand and Vietnam having their own, and Laos intending to launch one, there’s no reason for Cambodia to not have one as well, he said.

“I think it’s the right time for Cambodia to shoot its own satellite in … orbit,” he said.

“It’s good for Cambodia as a nation that we have the ability to launch the satellite. Not just for [Royal Group] but also for the country,” he continued. “And we should all be proud of that.”

Minister of Post and Telecommunications So Khun confirmed yesterday that the concession had been granted, but declined to discuss the matter further. ADDITIONAL REPORTING BY THET SAMBATH

(source from phnompenhpost newspaper, 

MONDAY, 18 APRIL 2011 15:00

 TOM BRENNAN)

Technology develops within banking sector

Photo by: Pha Lina

Chipphal Ouk, business development manager for IDG ASEAN, speaks about ITC development during a press conference yesterday. Banks in the Kingdom are increasing their use of technology.

THE domestic banking industry is making increased use of Information and Communication Technology, though usage lags behind many international counterparts, experts said at a conference yesterday.

National Bank of Cambodia officials said the domestic banking and finance sector is becoming increasingly developed, adding ICT will play an important role particularly in developing the stock exchange, payments systems, and credit bureaus.

“These areas require specific technological platforms in order to make functions operational,” said NBC Banking Supervision Department director general Pal Buy Bonnang at the third Banking and Microfinance Cambodia Conference held at Phnom Penh’s Intercontinental Hotel yesterday.

“The role of stakeholders particularly in ICT development is a high priority. Although we are not the experts, the NBC is strongly supportive of the development and contribution from the private sector.”

Domestic banking companies have made increased use of technology in recent years. ACLEDA Bank launched its Unity mobile phone banking service last year. ANZ Royal, meanwhile, has offered internet banking in Cambodia since 2005, according to chief executive officer Stephen Higgins.

Canadia Bank vice president Dieter Billmeier said on conference sidelines that his bank was also interested in launching internet banking.

“We are working on that, and we hope that it will be starting in 2012. Not only an accounting system, but real internet banking,” he said.

The number of internet subscriptions has increased rapidly in Cambodia, according to statistics compiled by the Ministry of Posts and Telecommunications. Cambodia had 173,675 internet subscribers in 2010, an increase on 29,589 a year earlier, statistics last month showed.

Spreading banking services via ICT is also imperative to plugging Cambodia into the global economy, according to Chun Vat, secretary general of the National Information Communications Technology Development Authority.

“To modernise and drive innovation in the banking and financing sector, we need to deploy ICT effectively to harness greater productivity, integration and convenience,” he said.

Increased use of technology meant bankers would better be able to respond to market changes, he said.

International Data Group business development manager Chipphal Ouk said technology usage at Cambodia’s banking sector was increasing at a fast pace, especially through the presence of large international banks.

Cambodia has the potential to quickly reach international standards of ICT usage in its banking system, as much of the required technology was readily available, he said.
(source PhnomPenh post, Friday, 25 February 2011 15:02 May Kunmakara) 

Financial sector still offering low property impetus

IN most economies, increased lending of around 30 to 40 percent among major banks would usually point to a positive knock-on effect in the property sector.

But despite a huge rise in loans in 2010 reported last week by major lenders including ACLEDA Bank and Canadia Bank, little of this extra financing appears to have been channeled into Cambodia’s still struggling property sector which saw land values slide a further 15 percent last year, representatives from the National Valuers Association of Cambodia said last week.

Although the likes of ANZ Royal Bank began to “start pushing” mortgages again around the end of the first quarter last year, following a freeze during the worst of the economic crisis, still the extent of financing available for property remains limited. This means the sector has not benefitted from the strong rebound by the financial sector last year.

Lenders such as ACLEDA still only offer up to 70 percent of financing on a home in Cambodia, less than in more developed economies, and often the maximum term is only up to 10 years.

Canadia Bank, for example, still only advertises mortgages for up to eight years.

Therefore much of the property sector in the Kingdom remains under-reliant on lenders, a factor that has delayed prospects of a recovery for what is the last major segment of the economy to rebound from the slump in 2009.

Given the problems many banks experienced as a direct result of property, which in many cases led to spiraling rates of bad debt, it is unsurprising the financial industry in Cambodia has looked at the sector with trepidation.

The likes of Canadia Bank quickly found themselves overexposed to the slumping property market in the first quarter of 2009 and will be careful not to suffer the same fate again.

This is no bad thing. The Cambodian property market was badly overheated by the end of 2008 so financial sector caution in the future can help prevent a repeat of over speculation.

In the short-term though that means the property sector looks set to continue to miss out on much of the returning optimism witnessed in many other parts of the economy which remain far more attractive to lenders.

With property prices apparently hitting a trough, now is a perfect time to enter the market in Cambodia, particularly with the added recent incentive of legal foreign ownership.

The key test this year will be the extent to which the financial sector is willing to back returning buyers.

Sihanoukville port will float

Japanses-owned SBI Phnom Penh Securities has been selected as underwriter for the Initial Public Offering of Sihanoukville Autonomous Port, though the timing of its listing on Cambodia’s new stock exchange has yet to be revealed.
The port’s listing is “scheduled after the stock exchange becomes operational”, an SBI press release stated today.
The agreement to prepare the state-owned company’s IPO, signed between Ministry of Economy and Finance secretary of state Aun Porn Moniroth and SBI Holdings executive officer and director Kenji Hirai on Monday, emphasised the government’s commitment towards launching the exchange, a government release said.
SBI Phnom Penh Securities was also chosen as an advisor to the ministry, serving in the role along with Tong Yang Securities of Korea, which is the selected underwriter for two other state-owned firms set to list on the exchange – Telecom Cambodia and the Phnom Penh Water Supply Authority.
SBI Phnom Penh is also one of seven underwriters approved for the Cambodian stock exchange which is set to launch in July “at any cost” after being twice-delayed, according to officials.
Today, the director of SBI Phnom Penh Securities, Jeremy Ha, confirmed the deal but declined to discuss the preparations in further detail.
“We have signed an agreement to be financial advisor to the Ministry of Economy and Finance, including preparing an IPO for Sihanoukville port,” he said.
He declined to comment on a possible date for the port’s listing.
“[Cambodia] is a new market, so it’s a bit complicated,” he said.
Sihanoukville Autonomous Port director general Lou Kim Chhun said today the port was preparing for a float, adding it had generated net profits of about US$3 million last year.
“We are readying IPO preparations. We are preparing step by step,” he said.
Figures obtained from the port last month claimed $28.4 million in revenues during 2010, a 13 percent increase on $25.15 million the year previous.
The port has previously received support from Japan.
It has obtained $30 million in soft loans from the Japanese government to help develop a Special Economic Zone on 70 hectares of land near its site.
Work at the site is slated finish at the end of this year.
Over the last 12 months, the listing of Sihanoukville port on the CSX has been uncertain. Last year, the Ministry of Economy and Finance signed an agreement with Korean-owned Tong Yang Securities to handle the other two state-owned enterprises set to list.
But at the time of the announcement, government officials did not name Sihanoukville port as one of the three firms to list, despite it already having been publicly tipped for the exchange.
Instead officials said “another state-owned enterprise which will be appointed later by the Royal Government of Cambodia”, casting doubt on whether the port was to be selected to list on the exchange.
Progress has since been made towards opening the exchange but some issues – such as what currency listings will be allowed in – remain undecided.
Earlier this month, officials at Telecom Cambodia said its shares may not be tradable on the exchange until the end of this year.
(source PPP newspaper, Tuesday, 22 February 2011 19:38 May Kunmakara)

qb boosts network speed

Mobile operator qb claims to have increased its network nationwide to “3.75G” speeds, and is looking to introduce 2G service, according to chief executive officer Alan Sinfield.

“We’re looking to improve our footprint by providing quality data and voice on a national level,” he said yesterday.

The company has increased its network’s speeds to 14.4 megabits per second after a previous run at 7.2 megabits per second, he said.

Sinfield did not reveal the cost of the upgrade, but said it involved “a fair amount of investment.”

The project had been completed last month, and involved upgrading software and improving backhaul connections.

The faster speeds were available on its network – including in the capital as well as cities such as Battambang and Siem Reap and along major roads, he said.

The firm presently holds a 3G licence but no 2G licence, according to a Ministry of Posts and Telecommunications presentation from last month.

Sinfield said qb was looking at ways to provide 2G services as well.

“We’re working on a number of scenarios to provide 2G to our subscribers,” he said yesterday, while not elaborating further.

(source from the phnompenh post newspaper, Friday, 18 February 2011 15:01 Jeremy Mullins)

Smart set to offer WiMAX internet

SMART Mobile is in the testing phase to launch WiMAX at “practically 4G” speeds on its network, its chief executive officer Thomas Hundt said.

WiMAX is a method of “last mile” internet delivery, where the internet is accessed using wireless technology.  The technology – to be accessed by computers  only – is likely to be the first of its kind launched in Cambodia, said Hundt.

He declined to reveal a pricing plan yesterday, but said that the service would be available from a USB dongle as well as a portable modem.

Speeds will reach 40 megabits per second.

The service could be used at home, but also can be operated  from a computer from places such as cafes – provided it is within range of the WiMAX signal.

“At the end of the day for the users, what matters is the user experience.

“And what the users want is internet,” he said yesterday.

The firm – which had its merger with Star-Cell approved earlier this month - intends to launch the service in Phnom Penh at the end of the first or beginning of the second quarter.

It will also be available in Siem Reap and Battambang..

The same type of WiMAX is currently operated in Malaysia by Packet One Networks, and had proven successful, he said.

Smart held its first live test of the system during the ASEAN Tourism Forum on Koh Pich last week, with “excellent” results, according to Hundt.

(source from the phnompenhpost newspaper,Thursday, 27 January 2011 15:01 Jeremy Mullins)

Opinion split over currency

THE Securities and Exchange Commission of Cambodia is set to make a decision “soon” on what currency firms will use to list on the exchange, after holding a public consultation on its choices.

Some 200 attendees attended a consultation at the capital’s Phnom Penh Hotel on Friday to voice opinions for CSX listings in dollars, riel, or both currencies.

“After we receive some input, we will have a meeting with Keat Chhon, chairman of the SECC, for approval,” said Ming Bankosal, director general of the SECC.

“It won’t take a long time to decide – it will happen very soon.”

The exchange is set to launch in July, after being twice postponed.

During the meeting, opinions were mixed. Several government officials voiced support for the riel, while private sector stakeholders generally came out in support of the dollar.

Ming Bankosal said Cambodia was keenly aware of the lessons of the 1997 Asian financial crisis, which had destabilised regional economies following the collapse of the Thai baht.

“The government wants to support our currency sovereignty for the country – we have the monetary authority to manage our currency,” he said. “Our policy is to strengthen the use of the Khmer riel.”

However, a survey posted on the SECC’s website saw support split between the three currency options. Some 32 percent of respondents had called for use of the dollar, 21.5 percent supported the riel, and 28.5 percent said they would prefer listings in both currencies. The remaining respondents had chosen “neutral”.

Phan Ying Tong, country head of the Kingdom’s largest bank Cambodia Public Bank, said on conference sidelines that the bank would support the government’s choice, adding there were many factors besides currency risk to consider.

“Every investor has their own risk portfolio - how much they want to expose to Asia and this country or others – they don’t only look at the currency. They look at your compliance, good governance, professionalism, reputation. These are all the important factors,” he said.

Meanwhile, Han Kyung-tae, managing director of approved underwriter Tong Yang Securities Cambodia, said he supported initial listings in dollars.

“We should start with the US dollar first, and then with long term planning we can develop the local currency and the economy,” he said.

The firm’s parent company Tong Yang Securities had previous experienced currency risk first-hand, he said, adding it had suffered significant losses in Vietnam “purely because of the depreciation of the Vietnamese dong in this market – not because of the Vietnamese economy”.

He said the government would likely face risks if they chose the riel rather than the dollar. “If they [the SECC] prepare for handling these risks, then they can consider the riel,” he added.

French Mobitel talks 'less advanced'

FRANCE Telecom SA’s talks on acquisitions in Iraq and Cambodia are progressing, and the company may enter Algeria as it expands further into emerging markets, Chief Executive Officer Stephane Richard said.

Talks on a possible deal for a stake in Cambodia’s Mobitel are “less advanced” than those on buying part of Iraq’s Korek Telecom, Richard told reporters in Paris yesterday.

The CEO, who took over last March, is looking to orient France Telecom toward fast-growing countries in Africa, the Middle East and Southeast Asia to offset stagnant revenue at home. He has pledged to spend as much as 7 billion euros (US$9.2 billion) on emerging-market deals by 2015 as part of a plan to double revenue from those countries.

France’s largest phone company is monitoring developments in Algeria, where it could seek a presence either through existing operator Djezzy or other means, Richard said.

France Telecom shares yesterday rose 0.2 percent to 15.98 euros in Paris, valuing the company at about 42.3 billion euros.

In Iraq, France Telecom may take a minority stake in Korek along with “a financial partner” also active in logistics, and with whom the Paris-based company has already cooperated elsewhere, the executive said. He declined to identify the investor.

France Telecom has invested in Kenya with Alcazar Capital Ltd, a Dubai-based private equity firm spun off from Agility Logistics in 2009.

In 2007, Alcazar provided Korek with a $250- million convertible loan. Entering Iraq would expand France Telecom’s influence into the heart of the Middle East, adding to expansion last year into Morocco and Tunisia. 

Royal Group Chairman Kith Meng did not discuss the state of Mobitel negotiations when contacted by reporters yesterday.  BLOOMBERG/ADDITIONAL REPORTING JEREMY MULLINS
(source from the phnompenh post, Friday, 07 January 2011 15:00 Post Staff)