Cambodian garment export up nearly 20 pct in 1st half

The garment industry, Cambodia’s largest income earner, reported 2.51 billion US dollars in export value in the first six months of this year, a 19.5 percent rise from $2.1 billion over the same period last year, the figures of the Commerce Ministry showed Wednesday.

Cambodian apparels are mostly sold to the United States and European countries, with some to Canada, Japan, South Korea and China.

The figures said that from January to June this year, the garment exports to the United States were valued at $1.02 billion, up 10 percent year-on-year. The exports to the European nations were 862 million dollars worth, up 27 percent, and the exports to other countries were $629 million, up 27 percent. (XINHUA)

“Our garment products are mainly reliant on the US and European markets, so our export growth demonstrates better economic situations in those countries,” Khuon Savuth, an official at the Commerce Ministry’s Import-Export Inspection and Fraud Repression Department, said Wednesday.

According to the figures, garment export accounted for 80 percent of the country’s total exports.

The industry is comprised of about 500 factories with some 510, 600 workers. A worker’s monthly minimum wage is 80 dollars.

In 2012, the impoverished Southeast Asian nation earned 4.6 billion dollars from garment exports.

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Deposits and loans increase

Deposit and loans at major commercial banks have continued to climb over the first half of this year, industry officials say. Grant Knuckey, chief executive officer of ANZ Royal Bank, said yesterday that ANZ continues to see strong growth in trade finance led by the agricultural sector. He added that from January until the end of June, loans and deposits at ANZ Royal were up 13 per cent compared with the same period a year ago. “The commercial banking sector has had continued strong volume growth in the first half of 2013, but there has certainly been margin compression.” Knuckey said, referring to the fact that while the volume is up, profit margins have been smaller due to competition and the need to lower rates. Knuckey said he expects “a pick-up in activity towards the last quarter of 2013 based on both seasonality and post-election expenditure and re-stocking.” Acleda, the leading bank in Cambodia, disbursed $1.39 billion in loans at the end of June this year, up 22.6 per cent from the first half of last year. Deposits at the bank grew 20 per cent year-on-year to reach $1.59 billion at the end of June. So Phonnary, executive vice president of Acleda Bank, said that loans to micro, small and medium enterprises (MSME) are major contributors to the growth, followed by loans in agricultural activities, which increased 34.6 per cent at the first half of this year compared with the same period in 2011. “Acleda Bank loans and deposits are growing and the market trend is still good for the second semester,” Phonnary said. Union Commercial Bank (UCB), is also seeing increases in the first six months of 2013. According to Yum Sui Sang, general manger of UCB, at the end of June, loans $200 million and deposits stood at $271 million, representing a 44 per cent bump and a 24 per cent bump, respectively, from the first six months of 2012. “We see more and more people are coming to invest in Cambodia. We have not only Cambodian clients but also foreign investors,” Yum said yesterday. The most recent data from the National Bank of Cambodia (NBC) revealed that loans provided by all Cambodian commercial banks reached about $6.14 billion, and deposits made at all commercial banks reached about $6.39 billion at the end of March this year versus the same period in 2012.

Tue, 16 July 2013 – Hor Kimsay

Foreign investment rises 73 pct

A mid global economic fragility, foreign direct investment (FDI) in Cambodia grew a whopping 73 per cent in 2012 from the year before, a huge increase helping to fuel a record-setting amount of money pouring into least developed countries, according to the United Nations Conference on Trade and Development.

Released at the end of last week, the UN group’s World Investment Report says that FDI in Cambodia reached almost $1.6 billion in 2012, compared with $902 million in 2011, an increase largely credited to businesses looking to invest in the inexpensive, labour-intensive garment and manufacturing industries, as well as rising production costs outside of Cambodia.

Regionally, Southeast Asia saw a two per cent rise in FDI inflows, reaching $111 billion. And for the first time, the report noted that developing economies absorbed more FDI – accounting for 52 per cent globally – than developed nations.

Cambodia, the Democratic Republic of the Congo, Liberia, Mauritania, Mozambique and Uganda drove much of the growth that amounted to a global FDI in least developed nations of $26 billion, according to the UN tally.

“[Countries such as Cambodia, Myanmar and Vietnam] are the emerging bright spots of the subregion, particularly for labour-intensive FDI and value chain activities,” the report said.

According to the UN, foreign direct investment in Myanmar totaled $2,2 billion in 2012, a 1.96 per cent increase compared to 2011. Vietnam FDI reached $8,4 billion last year, a 12.6 per cent increase compared to the previous year.

The UN refers to FDI as “an investment made to acquire lasting interest in enterprises operating outside of the economy of the investor”.

Chan Sophal, president of the Cambodian Economic Association, said yesterday that FDI sources, other than the garment industry and manufacturing, include  agriculture and tourism.

“If the increase is true . . . I think it’s due to the good potential for investment in Cambodia,” he said. “In manufacturing, electronics, agriculture, tourism, in every sector, there are many opportunities for investment.”

It doesn’t take long to find the projects. Last December saw the ground-breaking ceremony of the Aeon Mall in Phnom Penh. The 68,000 square metre building worth $205 million is being built by Japan-based AEON Group.

Japan, alongside China and South Korea, is one of the top investors in Cambodia.

The UN report, subtitled Global Value Chains: Investment and Trade for Development, also said countries are increasingly considering “how to position and promote themselves” as locations for global value chain activities, “either in a segment or part of the chain or the entire chain”.

Against the background of Delta Electronics (Thailand)’s plans to expand to Cambodia, Asian Development Bank Deputy Country Director Peter Brimble told the Post in May that firms expanding operations in Cambodia are the same firms that moved to Thailand some 20 to 25 years ago and are producing the same products.

He said this was contributing “to the increasing diversification of the Cambodian economy, and reflects the rapidly improving business climate here”.

Attracting labour-intensive FDI is driven by “continued intraregional restructuring”, the report said, adding that companies who relocated primarily produced clothes and footwear in China and Taiwan, where labour costs are about three times as high compared with Cambodia.

Many economists agree, however, that a lack of skilled labour and high electricity costs, especially in the manufacturing sector, are still challenges investors face in Cambodia.

The glowing picture also stands in stark contrast to a Cambodia Country Risk Report released in April by UK-based global risk and strategic consulting firm Maplecroft, which compared Cambodia negatively with Vietnam and Thailand in most risk indices. Poor business practices, heavy bureaucracy and corruption were listed as stumbling blocks undermining a government otherwise sympathetic to foreign investors.

By Anne Renzenbrink  │1 July 2013│The Phnom Penh Post

 

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

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

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