Aeon Mall’s vision explained

Costing more than $200 million, the four-storey Aeon Mall in Phnom Penh, set to open  in July 2014, is being hailed as Cambodia’s biggest shopping complex. Makoto Yajima, managing director of Aeon Mall Cambodia, talked to Mak Lawrence Li about the project.

What makes this project stand out among similar ventures in  in Phnom Penh?

The shape of our mall is in a “Two Anchors with one Mall” format, which consist of two or more large-scale anchor stores connected with a mall area occupied by specialty stores. While other facilities in Cambodia are mainly in tall buildings, ours is long on the site which is quite different. Our mall includes a huge cinema complex and a brand new bowling centre, which is comfortable and exciting for customers to visit.

Why come to Cambodia now?

The economic growth is rapid here in Phnom Penh, and it is also a dynamic market with such a huge younger generation. There is no special reason for the timing. Time is now for us, and from now on we will do our best for Cambodia.

What does Aeon Mall bring to Cambodia?

A new style of shopping is coming here. Citizens, especially for the younger generations, always seek new fashion, services and amusement facilities. What we want them to realise is that shopping can indeed combine with entertainment, all together as a whole in one place. We would also like to offer three things: high quality products, excellent services and adequate parking space. Many malls in the city do not consist of enough parking spaces, but we do and there will be 1,400 for cars and 1,800 for motorbikes.

What are your marketing strategies? Any targeted customers or income groups?

We call it the ‘one-stop solution’. Four aspects: shopping, community, entertainment and ecology. Customers can fulfill all their needs here. And the location we choose is located very near to the city centre so people can get here easily, which is already another strategy. We are very confident we will be competitive because of our services provided. Every citizen in Phnom Penh will be our target; we offer high quality products and services with affordable prices.

What do you want to accomplish in the long term?

Our primary aim is to introduce our brand to citizens, letting them know about the unique styles of Aeon. The second thing is training up local staff with Aeon Mall standards, which is ‘serving with hospitality’. We have looked at some of the shopping situations here and staff used to eat or sleep inside the stores, they don’t pay much care to the customers. We want all our customers to enjoy proper services and staff will also be confident in serving clients.

How about volume and spending? Any estimates or predictions?

Regarding sales or revenue, it is hard for us to disclose at the moment but we hope for up to 10 million visitors at the mall in the first year.

What are your future plans in Cambodia?

We will consider opening two or three malls in Phnom Penh, if the first one is successful enough. We want to stick as the closest retailing company in every place for serving our customers, and the Aeon Mall Cambodia Company would want to
become a local enterprise eventually.

How would you foresee malls developing in Cambodia?

There will be more and more competitors and I think it is good news for us. Keen competition means fast growth and the customers will have more choices too.

By Mak Lawrence Li│14 June 2013│The Phnom Penh Post

Advertisements

Labor shortage, rising wages top concerns in GMS development

Bangkok ( The Nation/ ANN) — Participants at a seminar in Bangkok yesterday raised concerns over labor shortages and how to share resources in the growing economy of the Greater Mekong Sub-region.

The labor market in the GMS was one of the topics at “GMS and the Asean Economic Community: Convergence, Opportunity and Challenges”, a seminar arranged by Euromoney Conferences.

The GMS consists of Cambodia, Laos, Myanmar, Thailand, Vietnam, and China’s Yunnan province.

The participants agreed that the sub-region was an attractive market for trade and investment ahead of the AEC, and the economies of the riparian countries were improving as a result.

However, labor shortages might become a barrier to business competitiveness, said Virasak Sutanthavibul, senior executive vice president of Bangkok Bank.

Virasak said the GMS was the place for businesses that want low costs, citing Cambodia as an example.

The shortage of labor, however, is a more serious issue for Thailand than other countries in the GMS because it is no longer considered a low-wage market, so many labor-intensive businesses have shifted to Cambodia.

Thai businesses should seriously think about mechanizing their production because they cannot rely on workers from neighboring countries, he said.

“Laos is not a source of labor because of the low population, while workers in Cambodia often strike. Therefore, Myanmar is the choice for Thai business, but Myanmar is developing, and once it has become a developed country, Thailand might be unable to rely on workers from Myanmar.”

He said the bank had attempted to encourage small and medium-sized enterprises to use more machines in the production process.

“Many SMEs are injecting capital into mechanization, which will fuel loan growth of financial institutions as well,” he said.

Neav Chanthana, deputy governor of the National Bank of Cambodia, noted that the free movement of labor might be a barrier for businesses’ competitiveness as companies might not be able to secure workers. Further, the slow growth of the younger population in some countries in the GMS was another challenge to the growth of the sub-region.

“Cross-border trade in the GMS means businesses have connectivity, but we have to monitor closely the conflict [for river resources] between the lower and upper Mekong countries,” she said.

Narongchai Akrasanee, former minister of commerce and member of the Bank of Thailand’s Monetary Policy Committee, said 40 per cent of the water in the Mekong River came from China and the rest from rainfall in Laos and Thailand.

“It could be a big challenge for the GMS on how to share the resources, and it might take time to reach a conclusion,” he said. – See more at: http://www.thecambodiaherald.com/cambodia/detail/1?page=13&token=NDdkMjY1N2RiOTM#sthash.3ZIynL8k.dpuf

Monetary and fiscal policies go their separate ways

Vietnam has been mostly relying on the monetary policies in regulating the national economy, while the fiscal policy has been ignored. (VIETNAMNET)

According to the Governor of the State Bank Nguyen Van Binh, by the end of May 2013, the outstanding loans had increased very slightly by 2.98 percent in comparison with the end of 2012. Of this, the dong outstanding loans had increased by 5.48 percent and foreign currency loans decreased by 8.41 percent.

As such, the lending interest rates have reduced by 2-4 percent in comparison with the beginning of the year, while the new loans’ interest rates are now equal to the rates applied in 2005-2006 and even lower than that in 2007. However, despite the sharp falls, the credit growth rate remains very modest. While commercial banks have continuously launched low-cost credit packages, businesses still keep silent and don’t intend to borrow money for the investment.

Bankers have affirmed that they have slashed the lending interest rates to the lowest possible levels.

Meanwhile, Binh said that the margin between the deposit and the lending interest rates has decreased to 3.03 percent, and if deducing the provisions against risks, the gap would be 1,93 percent only, much lower than the 2.33 percent seen at the end of 2012.

Binh said this was one of the reasons which led to the sharp falls of the credit institutions’ profits in 2012 and the first months of 2013.

Experts have been pointed out that the monetary policy has been abused, while the fiscal policy has not been used to stimulate the national economy. In other words, the monetary and fiscal policies have been going their separate ways, while they should strive to one thing.

Dr. Le Xuan Nghia, Head of the BDI, a business development research institute, said he and his colleagues have carried out a business survey and found out that businesses nowadays only strive to short term business plans, while they do not think of long term business strategies.

In 2009, when the government launched the interest rate subsidy package, under which the lending interest rate was lowered to 6.5 percent per annum, a lot of businesses believed that the government would stabilize the interest rate for a long term. With the confidence, they injected their money in developing their business and expanding the production.

However, just after some disbursement fits, the interest rate suddenly soared to 20 percent per annum. A lot of businesses merely got bankrupt, while their new production lines were left unused, because they could not bear such the sky high interest rates.

Businesses, which have lost confidence on the interest rate policy, have decided that they should strive for short term profits only.

A good monetary policy should not only try to increase the money supply to pave the way for the interest rates to go down. More importantly, it should strive to a stable monetary policy,” Nghia commented.

Only when the inflation rate, exchange rate and interest rate are stabilized, will businesses be able to think of their long term business plans and feel secure to make investment.

“No one can do business well, if the inflation rate goes up to 15-20 percent and down to 5-6 percent so regularly,” Nghia maintained.

He has blamed this on the abuse of the monetary policy in dealing with the problems, while the fiscal policy has been the“outsider.”

Bank to join growing group from Taiwan

Taiwan-based Shanghai Commercial & Savings Bank Ltd plans to open a representative office in Cambodia, joining an increasing number of Taiwanese banks and garment industry investors in the Kingdom.

National Bank of Cambodia director-general Nguon Sokha said yesterday that the Taipei-based privately held bank had preliminary or “in-principle” approval on May 31.

Some banks establish representative offices to test the waters before making a decision on opening an actual branch. The point is to “gather information about the Cambodian economy . . . they observe the performance, [but it is] for their own use”, she said.

Shanghai Commercial & Savings would enter a crowded sector, behind other Taiwanese-based financial intuitions. Hua Nan Commercial Bank said last month that it would open a branch in Cambodia, hoping to capitalise on the country’s high number of Taiwanese investors and high interest rates.

Cambodia has “many Taiwanese companies, especially in the shoe and garment industry”, senior manager of the bank’s international banking department, Chris Lee, told the Post last month.

In September 2011, Taiwan’s Mega International Commercial Bank opened a local branch, followed by the March  2013 entry of Taiwan Cooperative Bank. That same month, Taiwan’s E Sun Commercial Bank announced plans to acquire a 70 per cent stake in Cambodia’s Union Commercial Bank for nearly $70 million.

Shanghai Commercial & Savings did not immediately respond to a request for comment. The bank’s website says that regulators in Taiwan approved the Cambodia office in January.

A share of Taiwanese investment in Cambodia flows into the garment industry. Taiwanese-owned Sabrina Garment factory, which supplies Nike, fired hundreds of workers on Saturday following violent protests and the arrest of unionists.

Taiwanese-owned garment factories Grand Twins International (Cambodia) Plc and TY Fashion are expected to become the first foreign-owned companies to list on Cambodia’s stock exchange.

By Anne Renzenbrink and May Kunmakara │13 June 2013│The Phnom Penh Post

KBZ Bank insurance subsidiary to go public

Myanmar’s leading bank, Kanbawza Group of Companies (KBZ Group) has decided to make its recently launched subsidiary, IKBZ Insurance Company into a public firm within coming three months, according to the managing director of IKBZ Insurance.

Myanmar has just permitted private firms to offer insurance services for the first time in more than 50 years. Five private companies including IKBZ Insurance Co Ltd were approved on May 25. In the past, the state-owned Myanmar Insurance was the only insurance service provider in Myanmar.

“Since the very beginning, we intended to form a public company for the business. However, we started as a private firm due to legal constraints and other difficulties. We aim for our insurance business to reach the international standards,” said Nyo Myint, Managing Director of IKBZ Insurance.

Myanmar is planning to launch a first ever stock exchange in 2015 allowing KBZ Group’s subsidiaries, including IKBZ Insurance, to be listed locally. Other major subsidiaries of KBZ Group include Myanmar Airways International, Air KBZ and Kanbawza Bank.

“Turning our subsidiaries into public companies will contribute to the successful operation of the upcoming stock exchange, as it will offer viable shares attracting people to invest their money in the stock market,” Nyo Myint said.

Cambodia eyes to become region’s prominent gems, jewelry market

PHNOM PENH, June 13 (Xinhua) — Cambodia has eyed to become a precious stone and jewelry hub in Southeast Asia region in the near future, Minister of Commerce Cham Prasidh said Thursday.

Speaking at the opening of the 5th international gems and jewelry fair here, the minister said that with the fast growing market of over 14 million populations, Cambodia has emerged as one of the most attractive and fastest growing economies in the region.

“Gems and jewelry industry apart from being one of the key trade promotional areas of Cambodia, it is also an industry playing important roles for tourist attractions,” he said.

“Gems and jewelry fairs have been positioned as the most important sourcing platforms in Cambodia, and the country plans to be the prominent gem and jewelry market supplier in Southeast Asia region in the near future.”

He said with the many tax preferential or tax-free treatments extended to Cambodia as one of the Least Developed Countries by many developed nations including the United States, gems and jewelry traders around the region might move their bases to Cambodia to take advantages of their reduced tariffs on imports.

Besides, he said, Cambodia was admitted as a member of the Kimberley Process on November 30, 2012 in Washington D.C., the United States.

The Kimberley Process (KP) is a joint governments, industry and civil society initiative to stem the flow of conflict diamonds– rough diamonds used by rebel movements to finance wars against legitimate governments. As of November 2012, the KP has 54 participants, representing 80 countries and regions, according to its website.

“As a member of the Kimberley Process, Cambodia will be able to obtain significant advantages to win legal trust in such industry, and be able to attract major investors to establish diamond-cutting factories in Cambodia,” Cham Prasidh said.

He said the gem and jewelry industry would create tens of thousands of jobs for the people, enabling them to acquire specific skills in cutting diamonds, as well as opening Cambodian market to the European Community, the United States and in other countries.

The impoverished country launched its first gem and jewelry laboratory in May last year under the joint venture with the London-based Intertek Company.

The laboratory is a venue to provide quality assurances, product testing, inspection and certification to ensure that all jewelry products sold in Cambodia are of specified quality and standard.

The 4-day fair, opened on Thursday at the Diamond Island Exhibition Center, brought together 78 exhibitors, mostly from Cambodia, Thailand, China’s Hong Kong, and Singapore, Cham Prasidh said.

An exhibitor from Hong Kong said the fair was a good opportunity for his company to seek new customers in Cambodia.

“This is the first time our company displays gem and diamond products here. There are a lot people coming here and they know a lot of jewelry. Hopefully, we can meet some new customers,” Isipro Ibasco, manager of Christelle Limited, told Xinhua.

Local exhibitors said the fair was a chance to promote their shops and also helped the government in promoting gem and jewelry industry.

“My company has joined such event every year, and I hope that the sales this year will be better than that of last year,” San Cheng Hak, manager of Cheng Hak Gems and Diamonds Co., said. “At our shop, all jewelry products are made in Cambodia, but some precious stones and diamonds are imported.”

Garment IPO may arrive in time for polls

After the listing of Taiwanese-owned garment company Grand Twins International (Cambodia) Plc on the Kingdom’s stock exchange was delayed indefinitely, its underwriter said yesterday that the firm hopes to list before the national elections in late July.

According to the underwriter, Phnom Penh Securities (PPS) Plc, negotiations between the company and the Securities Exchange Commission of Cambodia (SECC) over the initial public offering price are finished by now and “we hope [they can list] before the election…We still have a lot to do. We’ll try our best.”

In February, the Post reported that Grand Twins International said it intends to list on the Cambodia Securities Exchange (CSX) in March. PPS said then that the company would offer 12 million shares at $0.25 a share.

PPS said Grand Twins had “negotiated with the SECC about the IPO price, the listing price”, which was “higher than the SECC agreed”, adding that they have now agreed on a price, but declined revealing the amount.

According to an active market participant of the CSX, the existing status regarding Grand Twins International “is more of an administrative and compliance matter that the underwriter is trying to complete for documentation”.

“The timeline to list very much depends on the completion of the required documentation, if the documents are ready and can be approved by SECC before election, it will be listed before election, otherwise the listing will need to be postponed to after election,” the person familiar with the matter said.

Ming Ban Kosal, director-general of the SECC did not reply to an email yesterday.

The Post reported in March that state-owned fixed-line company Telecom Cambodia’s plan to join the CSX had been postponed indefinitely due to poor financial performance.

On Monday, Lou Kim Chhun, director general of Sihanoukville deep sea port, told the Post that the company is still working with an underwriter, SBI Phnom Penh Securities, on its IPO.

“We made a lot of progress on the project. Everything is going smoothly now,” he said, without offering a timeframe . “We have not set the exact time yet. But we will try our best to get it as fast as we can.”

By Anne Renzenbrink and May Kunmakara │5 June 2013│The Phnom Penh Post