Biweekly News Collection No.20

NO.20 (NOV 13, 2020)


NBC LAUNCHES BAKONG INTER-BANK PLATFORM. The National Bank of Cambodia (NBC) has recently launched an inter-bank mobile payment platform known as the “Bakong System”. The primary objectives of the system are enabling payments between banks and financial institutions, improving the efficiency and safety of the payment system, boosting financial inclusion, and promoting cashless payments in the local currency. Online payments and other alternative options for banking transactions such as deposits, withdrawal, sending, and receiving by e-wallet also can be made through the system. Bakong system will modernize the payment system in Cambodia and facilitate transactions in the financial sector. The total number of Bakong partners currently stands at 18 including 16 bank and financial institution partners, and 2 payment service providers. According to NBC director-general Chea Serey, 24 additional institutions have been granted membership in principle and are preparing to review the technicalities involved in connecting to the system. (Phnom Penh Post)

US GOV’T FINANCE AGENCY OKAYS $50 MILLION LOAN TO HATTHA BANK. The US International Development Finance Corporation (DFC) has approved a $50 million to the newly transformed Hattha Bank Plc to expand micro-lending to women and micro, small and medium-sized enterprises (MSMEs) in Cambodia, especially in rural areas. The loan will create access to financing and capital funding that is not very accessible for those who are most vulnerable in the country. The given loan is one of the nine investments approved by the DFC board of directors, which worth more than $2.5 billion. These projects aim to advance the development and help stabilize communities in Africa, Latin America, and emerging markets across the globe. (Phnom Penh Post)

RICE EXPORTS HINDERED BY A NUMBER OF FACTORS. Cambodia exported 536,305 tons of milled rice in the first ten months of 2020 according to the Ministry of Agriculture. The average rice export of Cambodia is estimated at 600,000 tons per year, which is low compare to the neighboring countries. Vietnam, the third biggest global exporter is expected to export around 6.5 million tons to 6.7 million tons of rice while Thailand is expected to export 5 million tons of rice. The main challenges of rice production in Cambodia are high production and logistic cost. Poor irrigation systems and the lack of infrastructure in the rural area have contributed to the high cost of production and limit the ability to compete with the neighboring countries. The infrastructures to support the production chain, logistics, and transportation are being developed and it is anticipated that rice processing and transportation costs will be cheaper after the infrastructure is fully developed. Cambodia is ranked number 4 in ASEAN countries as a rice exporter which is behind Myanmar as the third exporter in the bloc. (Khmer Times)

GEMSTONE, JEWELRY EXPORTS ROCKET 718.6% IN THE FIRST EIGHT MONTHS. Cambodia exported $2.22 billion worth of gemstones and jewelry to international market in the first eight months of this year, a 716.8% rise from $418.29 million in the same period last year, reported by the Ministry of Economy and Finance. Singapore was Cambodia’s largest export market, Thailand and the US ranked second and third respectively. The report measured exports of natural or cultured pearls, precious or semi-precious stones, metals, precious metals, imitation jewelry and coins. (Phnom Penh Post)

MORE THAN HALF OF STOCKS NOW BELOW FLOAT PRICE. The Cambodia Securities Exchange (CSX), its regulator, licensed underwriters, and investors have shown concerns regarding the trading stock price of four out of seven listed companies, which have now fallen below their initial public offering price (IPO). Grand Twins International (Cambodia) Plc (GTI) traded at 69% below its IPO, Phnom Penh SEZ Plc (PPSP) traded at 35% below its IPO, Phnom Penh Water Supply Authority (PPWSA) traded at 8% below its IPO and Pestech (Cambodia) Plc (PEPC) also traded at 8% below its IPO. The drop in stock price does not always indicate poor business performance. Based on the published financial report, PPWSA and PEPC still managed to gain profit despite the impact of COVID-19. (Phnom Penh Post)


RUI LI CAMBODIA ENTERS BANKING SCENE. The Chinese-owned Rui Li (Cambodia) Bank Plc has officially launched its operations in Phnom Penh to enter into the growing financial sector of Cambodia. The company received commercial banking license from National Bank of Cambodia on 20 October 2020. Under commercial banking business operation, the bank will provide services such as public deposits, credit, currency exchange, payment services, local and foreign currency transactions. (Phnom Penh Post)


BILATERAL TRADE WITH THE US STAYS STRONG. Two-way trade between Cambodia and the US has remained strong even during the COVID-19 pandemic. According to statistics from the US Census Bureau, from January to September the bilateral trade reached more than $5 billion, an increase of 16% compared with the same period last year. The total imported goods from the US during the period worth $232 million, a 40% dropped year on year. Cambodia is one of the main exporters which benefit greatly from duty-free access to the US market under the Generalized System of Preference (GSP) program. The major exported commodities to the US are textiles, footwear, travel goods, bicycles, and agricultural products. Meanwhile, imported goods are vehicles, animal feeds, and machinery. (Phnom Penh Post)

KINGDOM’S ELECTRICITY DEMAND RETREATS ON COVID-INDUCED ECONOMIC SHOCKS. Electricity demand in Cambodia stumbled between 10% and 12% this year due to Covid-19 trigger economic shocks in key sectors, especially in the manufacturing sector. The garment manufacturing sector which accounts for approximately 40% of total electricity consumption has suffered from operational suspension and business slowdown caused by customers canceling or freezing orders. The decline in electricity is a result of slow economic growth. Last year, the peak electricity demand was 2,000MW and is decreased to 1,700MW this year while household consumption remains stable. In response to the economic downturn, the government had issued a plan to reduce electricity tariffs for companies in four key sectors namely manufacturing, agriculture, commercial, and service, for five months starting from June to encourage them to continue working during the spread of Covid-19. Moreover, electricity bills will be reduced by 25% based on the previous average from January to March of this year. (Phnom Penh Post)

BILATERAL TRADE WITH JAPAN SLIGHTLY DOWN BUT OUTLOOK OPTIMISTIC. Bilateral trade between Cambodia and Japan was reported at approximately $1.54 billion in the first nine months of this year, down from $1.67 billion in the same period last year, showed by data from state-run agency Japan External Trade Organization (Jetro). Cambodia exported $1.20 billion worth of goods to Japan and imported $339 million worth of goods from Japan. Export to Japan comprise of clothing, footwear, electronic components and bicycles. Arrivals from Japan mostly consist of electronics and finished products. The diminishing in export figures is due to low demand driven by lockdown restrictions, competition with other countries, lack of production capacity and limited qualified products to meet Japanese required standards. (Phnom Penh Post)

IMF CALLS ON ASEAN TO TEAM UP ON JOINT ECONOMIC RECOVERY. International Monetary Fund (IMF) called on all ASEAN leaders to join hands in the battle against Covid-19 and ensure a quick economic recovery. The meeting was held through video link under the theme Securing Growth and resilience in the ASEAN: Policies for the Post-Covid World. Last year the ASEAN countries contributed 10% of global growth just as much as the 19 countries in the Eurozone, said IMF Managing Director Kristalina Georgieva. Going forward, it will be crucial for countries within their parameters and capacity to maintain crucial fiscal and monetary measures, and importantly, to continue to target those measures in a way that helps the most vulnerable people, the most vulnerable parts of the economy.

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