Biweekly News Collection No.17

No.17 (Oct 5, 2020)

MARKET INDUSTRY TRENDS

FIFTY-NINE COMMUNITIES ENTER AGRI-CONTRACTING. Fifty-nine communities have signed agriculture production contracts for agro-industrial crops and organic rice with four companies in a bid to boost production and secure export market. The communities are based in Takeo, Kampong Speu, Kampot, Kampong Chhnang, Mondulkiri, Preah Vihear, Banteay Meanchey, and Siem Reap provinces. The signatory companies are Cambodian Agriculture Cooperative Corporation Plc, Amru Rice (Cambodia) Co Ltd, Signatures of Asia Co Ltd and Bayon Heritage Holding Group Co Ltd.  The communities are obliged to supply organic paddy 30,000 tonnes, organic cassava 26,000 tonnes, Kampong Speu palm sugar 100 tonnes, pepper 50 tonnes. These contracts will greatly do their share in driving the rice trade in Cambodia especially organic rice. They also underpin the policy to shore up Cambodia’s rice exports, provide a forum for stakeholders in agriculture sector – centered on rice – and will represent a model program for rice millers, exporters and farming communities.There is a remarkable increase in number of agricultural production contracts in Cambodia from 62 in 2017, to 90 in 2018 and 498 in 2019. The number of contracts shoot up to 701 in 2020 cover various products such as rice, cassava, pepper, palm sugar, vegetables, cashew nuts, corn, mung beans, free range poultry and pigs. (Phnom Penh Post).

MOU ON COOPERATION TO PROMOTE FINANCIAL TECHNOLOGY SYSTEM IN CAMBODIA SIGNED. Techo Startup Centre (TSC), under the Ministry of Economy and Finance and the Association of Banks in Cambodia (ABC) signed a memorandum of understanding on cooperation to promote financial technology system in Cambodia. The MOU aims to promote financial technology (FinTech) sectors in support of Cambodia’s digital economy. The MOU will enable ABC to work together with TSC in the Fourth Industrial Revolution in Cambodia’s digital economy plan through supporting, strengthening and expanding new startups. (Phnom Penh Post).

SME BANK COMES UP SHORT ON LOANS. The Ministry of Economy and Finance wants to ease loan requirements for small and medium-sized enterprises (SMEs) from the State-owned Small and Medium Enterprise Bank of Cambodia (SME Bank) and offer more financial resources to boost production after it reviewed the existing loan application process for local SMEs. and found that many [loan requirements] are not eligible. SME Bank, with $100 million in government assets for loans, had a soft launch in April in conjunction with the ministry’s “SME Co-Financing Scheme 2020” (SCFS) – a joint venture between SME bank and a number of financial institutions. According to President of Federation of Associations for Small and Medium Enterprise of Cambodia (FASMEC) Te Taingpor, most SMEs are already too far in debt to other financial institutions, leaving them without enough collateral to seek additional funds from SME Bank. In June the SME bank has allocated about 10% of its total capital to SMEs and it is expected that the full $100 million will be released by the end of the year. Currently, there are 33 financial institutions involved in the SCFS – SME Bank, 23 commercial banks, 2 specialized banks, 5 microfinance deposit-taking institutions (MDIs) and 2 microfinance institutions (MFIs). SMEs can borrow up to $200,000 for working capital and $300,000 for investment capital with low interest rate capped at 7% per annum and a repayment period of seven years. Till September 2020, SME Bank has disbursed $63million of approved $67.5 loan amount for around 532 loan projects. The SME Bank of Cambodia provides better and affordable access to financing for SMEs in the key priority sectors such as food manufacturing and processing, manufacturing of local consumption goods, waste recycling and production of goods for the tourism sector, manufacturing of finished products, spare parts or assembly parts to supply other manufactures, research and development associated with information and technology or the supply of IT-based services and, enterprises located in SME cluster zones & enterprises and development of these cluster zone. The loan amount for SCFS is $100 million which made up of $50 million from the SME Bank of Cambodia and the remaining $50 million from the Participating Financial Institutions (PFIs). (Phnom Penh Post and Khmer Times).

CAMBODIA, SINGAPORE STUDY LOGISTICS HUB SET FOR CAPITAL. Cambodia and Singapore are jointly studying the draft framework agreement on the development of the Phnom Penh Logistics Centre (PPLC). This development plan is in accordance with government’s logistic master plan which located on 98 hectares land area at the west of Phnom Penh International Airport. A meeting between relevant institutions from both countries was held to gathered opinion and ensure that the agreement provides acceptable comprehensive legal framework to all parties. The PPLC project will enhance the efficiency of transportation sector and increase export capacity resulting in country’s economy growth. An early stage feasibility study of the project is completed and shown that the project is economically viable and would benefit both private and public sectors. A comprehensive feasibility study will be conducted with the funding support by Asian Development Bank after the Ministry of Economy and Finance gives the green line on the existing feasibility study submitted by the Ministry of Public Work and Transport. PPLC locates in a strategic advantage as it lies between Sihanoukville Port and the Poipet rail line on the border with Thailand as well is near the NR 3, NR4 and the Phnom Penh Special Economic Zone. World Bank report (2014) shown that the Kingdom’s export costs were 30% higher than those of neighboring countries. In 2016, the Japan International Cooperation Agency estimated that Cambodia charges its exporters higher than its neighboring countries amounting to $540 per twenty-foot equivalent units (TEU-inexact unit of cargo capacity), compared to $200 per TEU in Thailand, and $250 per TEU in Vietnam. (Phnom Penh Post).

MARKET DEALS

SCGP COMING OUT WITH IPO TO RAISE $1.4B ON BANGKOK EXCHANGE. Bangkok-based SCG Packaging (SCGP), a subsidiary of Siam Cement (SCC), will launch an initial public offering (IPO) to raise approximately 45 billion baht ($1.4 billion) of capital. The IPO share price is between 33.5 baht and 35 baht, accounting for price to earnings ratio of 23 times. Investors are allowed to request IPO share subscription from 28 Sep to 07 November. SCGP will not sell more than 1.12 billion IPO shares (equivalent to 26.5% of company stock). The firm may allocate another 169.1 million over allotted shares.  The shares of SCGP are considered as large capital shares listed in Stock Exchange of Thailand’s SET50 Index with firm’s market capitalization of 140 billion baht after IPO sales. (Phnom Penh Post)

WEIBO PERENT SINA SET TO DELIST NASDAQ STOCKS IN $2.6 BILLION DEAL. As the tension between China and the US are ongoing, the biggest Chinese internet corporation Sina, the parent company of the country’s vast Twitter-like Weibo platform plans to delist its US shares and go private, making it the latest mainland firm to withdraw from Wall Street. Sina will cease trading on the tech-rich Nasdaq exchange – where it has traded since 2000 – since its board agreed to a merger with a group run by its CEO that values the firm at $2.59 billion. The number of Chinese companies delisted from the US or opted for secondary keep growing due to conflict between the two superpowers. The US. is considering plans to impose stricter rules on firms listed in the country to open up their audit papers to US accountants, which could lead to Chinese companies forced out and push them towards Hong Kong or Shanghai stock exchange. (Phnom Penh Post).

MACRO-ECONOMY

WORLD BANK REVISES CAMBODIA GROWTH FORECAST TO -2%. The World Bank has revised its 2020 growth forecast for Cambodia to -2%. In May, the expected growth forecast by World Bank set the figure at between -1% and -2.9%. The report noted government fiscal intervention is unprecedented amounting to 5% of gross domestic product (GDP) and the authorities must prepare an effective post Covid-19 economic recovery plan. The pandemic has severely hit Cambodia’s key growth drivers in 2020, which had contributed more than 70% of growth and 39% of total employment in 2019 as some of large development projects which relies heavily on foreign investment were put on hold. Cambodia’s tourism and hospitality sector have collapse due to travel restrictions and lockdowns in which international travel fell by 64.5% within the first half of 2020. The global demand shock has also significantly weakened Cambodia’s manufacturing export sector. Export of garment, travel goods and footwear products fell by 7.2% while import of raw materials used in these industries sank by 85.4% in the first half of 2020, reflecting shrink in domestic demand. Earlier, the Asian Development Bank (ADB) has also revised its 2020 growth forecast for Cambodia to drop from earlier projection of -5.5% to -4%. (Phnom Penh Post).

CDC OKAYS 10 PROJECTS WORTH $34 MILLION IN SEPTEMBER. The Council for the Development of Cambodia (CDC) has approved 10 projects recently with total capital investment of $34.52 million which are expected to create more than 6,000 jobs.

  • Global Asia Apparel (Cambodia) Co Ltd – $3million
  • Sinodex Garment (Cambodia) Co Ltd – $3million for production of garments.
  • Good Plus (Cambodia) Manufacture Co Ltd – $2.7million for production of face masks.
  • GCH International Trade Co Ltd – $3.2million for bag production.
  • Logwood Apparel Co Ltd – $2.7million for medical apparel and face masks.
  • Biao Xin Sheng Packaging and Printing Co Ltd – $1million for bicycle stickers, offset printing and packaging material manufacturing.
  • Leadone International Co Ltd – $2.8million for the plastic and artificial leather production.
  • New Phoenix Development Industry Co Ltd – $9million for light bulb and lamp parts manufacturing.
  • Simple Packaging Product Co Ltd – $2.12million for cardboard and packaging materials.
  • Jin Xinsheng (Cambodia) Co Ltd – $5million for offset printing, adhesive tape and thread manufacturing.

The tendency of foreign investment in Cambodia appears to shifting away from textiles and garments and getting into the position to capitalize on the benefits of the Cambodia-China bilateral free trade agreement from next year. (Phnom Penh Post).

SIX MILLION TONS OF AGRICULTURAL PRODUCTS EXPORTED IN FIRST NINE MONTHS. Cambodia exported a total of 5.8 million tons of agriculture products to foreign markets during the first nine month of this year, despite the global COVID-19 crisis. Report from Ministry of Agriculture, Forestry, and Fisheries shows that the exported agricultural products included rice, cassava, cashew nuts, corn, fresh banana, pomelos, mangos, pepper, chilies, and so on. Cambodia’s main agricultural products exported in the mentioned period include 488,775 tons of rice, 1,780,496 tons of fresh cassava, 1,202,644 tons of dry cassava, 12,000 tons of cassava starch, 204,208 tons of cashew nuts, almost 200,000 tons of corn, about 235,000 tons of fresh bananas, approximately 63,000 tons of fresh mangos, over 55,000 tons of chili, and more than 4,000 tons for pepper. Major markets for Cambodia’s agricultural products include China, EU, ASEAN countries, India, Japan, Korea, Russia, Australia and some other countries. (Phnom Penh Post).

FTA WITH MONGLIA UNDER STUDY. Cambodia government is studying the possibility of a bilateral free trade agreement (FTA) with Mongolia. The agreement is under discussion and negotiation between Ministry of Commerce secretary of state and the bilateral working group in order to exchange views on the concept note concerning an FTA feasibility study. The FTA feasibility study will assist the implementation of Cambodia’s trade integration policy and strategy to diversify trade partners regionally and globally. Currently, Ministry of Commerce is negotiating an FTA with South Korean and studying the possibility of establishing similar deals with the Eurasian Economic Union (EAEU) bloc, which comprises Armenia, Belarus, Kazakhstan, Kyrgyzstan and Russia. In addition, the government is also looking at the possibility of establishing agreements with India, Australia, the US, Canada, the UK, New Zealand and Japan. A diverse investment and trade opportunities play a crucial role in post Covid-19 economy restoration. (Phnom Penh Post).

Related Posts

Biweekly News Collection No.19

No.19 (Oct 28, 2020) Market trends Telecom operators have their licenses revoked. The Ministry of Post and Telecommunication has decided to susp...

Biweekly News Collection No.18

No.18 (Oct 16, 2020) Market Industry Trends Rubber export is up but prices still remain elastic. Cambodia exported 179,621 tons of rubber in the...

Biweekly News Collection No.16

No.16 (May 10, 2020) Market Industry Trends [1] The state-owned Small and Medium Enterprise Bank of Cambodia (SME Bank) has expanded its capital...

Leave A Reply