Positive outlook for Cambodia's economy

Chan Sophal, president of the Cambodia Economic Association (CEA), talks to the i’s Deputy Business Editor May Kunmakara about Cambodia’s economic performance this year and the effect of the global economy during the International Monetary Fund and World Bank Annual Meeting in Tokyo.

How do you see Cambodia’s economic performance up to now?
Well, I do agree with some international financial institutions such as the IMF, World Bank and the ADB as well as the government’s projections of 6.5 to 7 per cent on Cambodia’s growth projections for 2012. However, I would like to point out this figure is a projection for the average growth. The highest projection is between 9 to 10 per cent. 

We can easily achieve this average rate via our opening economy with the opportunity to export to foreign countries, the flow of foreign direct investments coming in due to the amount of land to be cultivated or developed and our cheap labour force. We also notice participation from the private sector contributes to the surge to boost economic growth.

Frankly, if the government can improve more policy, Cambodia can achieve the higher growth rates starting from 10 per cent or even higher. But, we’re a bit late in improving and restructuring the policies leading to an average growth of between 6 to 7 per cent. 

Why is government a bit late in improving their policies for achieving sustainable economic growth?
There are two things to say. First is the physical issue regarding development of infrastructure, our transportation costs, electricity costs and the high production costs that are still high compared to our neighbours. The second issue is the institutional and regulation framework. 

There’s a lot of work to be done. We still see corruption and a slow implementation of the laws. What is important is that the public service is still limited due to low government officials’ salaries which leads to low morale making them ineffective workers.  

These are things the government should concentrate on if they want to achieve an equitable and sustainable economic growth which can benefit all and not just a specific group. 

What are the main factors for the country’s economic growth? 
We see four main pillars of economic growth: garment export, agriculture, tourism and construction. They are improving due to the space we have for growth. In the agricultural sector, we’ve got huge potential for development because we’ve got plenty of farming land to attract more investors to come although our irrigation does not cover all agricultural areas. 

The construction and real-estate sector is also on the surge. We see that as a potential area for growth of the economy. 

We have a lot of demand for building developments, for office space and housing. At the same time, the tourism sector has big potential for economic growth as we have a lot of cultural and eco-tourism sites – especially Angkor Wat temple to attract not only tourists in the region but also from the West. 

The garment sector is still the main manufacturing industry to induce more investment flow because the government gives investors a lot of incentives. At the same time, the industry also enjoys a lot of foreign markets with duty free and quota free on the exports. 

Despite this, exports have decreased this year due to the slowdown of the economy in the United States and the European countries. However, the demand is still there. 

How do you feel about the inflationary rate?
I don’t have much concern over the inflationary rate. Actually, we take around 5 per cent annually that is not of concern. Why do we have a low inflation rate while some of our neighbours are high? The thing is that we got an open economy with a free flow of goods. 

This year, we see our inflation is very low which is around 3.6 per cent because some of our main importing countries also have low inflation rates. 

You have joined many meetings during the IFM-World Bank Annual meetings here. Can you foresee the effect of the spillover from the West’s economy to our economy? 
The global economy projection is very low due to the Euro zone crisis so that definitely affects our exports such as garments and agricultural products such as milled rice, rice paddy, cassava and corn are also dependent on the foreign markets. 

But, if we take a look the production capacity, we’ve got an increase, especially agricultural production. 

If based on what they projected about food prices being high in the upcoming years, I do believe that some of our producers will profit. 

This will attract more and more investment flow.

Source from Phnom Penh Post, 

Thursday, 11 October 2012

 May Kunmakara

International Business Chamber moves to Phnom Penh Tower

Members of the International Business Chamber of Cambodia pose for a group photograph at the company’s office in Phnom Penh yesterday. Photograph: Pha Lina/Phnom Penh Post

The International Business Chamber of Cambodia opened a new office yesterday on the 12th floor of the Phnom Penh Tower.

IBC Chairman Brett Sciaroni said the move demonstrated a trend of business associations giving more visibility and presence for companies that operate in Cambodia. 

“This is one more indication of the professionalisation of business associations in Cambodia,” he said.

“As the IBC has increased its range of activities and its commitment to the public-private dialogue process in Cambodia, we needed more staff and facilities. Phnom Penh Tower is a leading address in Phnom Penh. We chose this location to show the significance of the IBC as a leading business association and we’re not the only business association that’s located here,” he said.

IBC executive committee member John Brinsden said the location reflected what the members deserved.

“This is a dream come true and the reason is the IBC over many years has had loyal members and we on the executive committee felt very concerned that we weren’t really giving our members the prestigious location and facilities they deserved.”

The IBC has more than 80 members, organised by company, and the people who attend are representative of those member companies, including many global brand names.

“This is something we’ve been thinking about for a long time: a prestigious office to serve our members. We provide our members and potential investors in Cambodia with a chance to meet in one place. 

We’re here with an address; we’re in the yellow pages. Visiting foreign investors, people having a look around Cambodia can come and talk to our staff and get some basic information and contacts they can use,” Brinsden said. 

IBC Vice Chairman In Channy, CEO of ACLEDA Bank, said the new location was a place where members could meet and get information. The IBC’s new executive director, Audrey Tugendhat, who runs the office on a day-to-day basis, said members of the public could visit and receive updates on the IBC social events calendar.

“For instance at the next regular general meeting which will take place at lunchtime on July 4 atRaffles Hotel, our members can bring potential candidates for membership.”

Phnom Penh Water Supply Authority shuffle no surprise

Officials and securities firms yesterday showed little distress at the imminent retirement of Ek Sonn Chan, the man credited with straightening out and preparing the capital’s public water utility for its initial public offering in April.

A letter from the Ministry of Industry, Mines and Energy (MIME) obtained yesterday by the Post said the Phnom Penh Water Supply Authority general director will leave his position on July 1 after a nearly 20-year tenure. 

Sim Sitha, the director of Sihanouk Water Supply, will replace him.

One insider compared the changing of the guard at PPWSA to the death of Apple’s Steve Jobs.

“All changes here will slightly impact the price of the company. You know that when Steve Jobs passed away, it had some impact on the price of Apple. So I think it’s the same here. I would say the fundamentals of PPWSA are very good so the price will be going up and the investors will understand,” said Min Kyoung-hoon, deputy director general of the Cambodia Securities Exchange.

“It might have an impact [on PPWSA’s share price] or it might not.”

The MIME letter, signed by minister Suy Sem, painted the general director-designate as a highly trained, multilingual professional. It also said the move was necessary to ensure the success of the company.

Svay Hay, director of Acleda Brokerage Firms, said Ek Sonn Chan’s replacement was a matter of age, and would enhance PPWSA’s productivity.

“The change will not cause any crisis or problem. It’s regarding the old age of the general director. This does not only happen in government institutions, but also in private companies. They still set the age for retirement,” he said.

Ek Sonn Chan is in his early 60s. He will become an under secretary of state at the ministry, according to the letter.

The shuffle, which insiders said would be officially announced today, did not represent internal conflict within the company and the ministry, Tan Sokchea, an official at the ministry’s clean water department, said yesterday.

“It’s not relevant to any kind of corruption. Normally, when we come to the age of retirement, we should follow because now the government is really strict about that,” he said.

Tan Sokchea also recognised Ek Sonn Chan’s contribution to the company. “Frankly speaking, he possessed excellent leadership.” 
(source from Phnom Penh Post, 

Friday, 29 June 2012

May Kunmakara)