Uncategorized

No.23 (Dec 25, 2020)

Market Industry Trends

TOP SIX AGRO-INDUSTRIAL CROPS NET KINGDOM $2.3B IN 2020. Cambodia exported 8.55 million tons of its six most profitable agro-industrial crops, through formal and informal channels, worth more than $2.32 billion this year. The six types of crops are cassava, cashew nuts, mangoes, yellow bananas, peppercorn, and Pailin longan. During the period, Cambodia exported 7,075,494 tons of cassava products (worth $1,026,232,000), 218,884.29 tons of cashew nuts ($288,111,700), 945,274.44 tons of fresh mangoes ($473,207,700) and 313,410.94 tons of fresh yellow bananas ($451,125,700). The Kingdom also shipped out 174.52 tons of Pailin longan (worth $57,763,100) and 5,005.65 tons of peppercorn ($25,490,200). The agriculture sector is a significant engine of economic growth which could enjoy a surge in export figures despite the downturn in the industry and services sectors. According to the Ministry of Economy and Finance, Cambodia exported $14.1 billion worth of goods in the first nine months of this year, up 20.07% from the same period last year. (Phnom Penh Post)

ESTABLISHMENT OF CAMBODIA CHAMBER OF AGRO-INDUSTRY. The Ministry of Agriculture, Forestry and Fisheries has summoned an urgent discussion about a draft law on the Cambodia Chamber of Agro-Industry (CCAI). The discussion aimed to collect inputs to substantiate the draft law to make it complete, effective, and acceptable for all concerned players, especially serving the interests of companies, associations, enterprises, federal unions, agricultural communities, and beyond. The draft law will be a key measure to resolve emerging issues timely and efficiently following the government’s vision for comprehensive reform to boost economic growth. The members of the chamber will play a vital role to transform the crisis into opportunities for agricultural production chain and business development. (Khmer Times)

RUBBER EXPORTS INCREASE IN 2020. Cambodia’s rubber exports are expected to reach 340,000 tons by end of this year. The export figure was reported at around 280,000 tons in 2019. It is projected that the growth rate of rubber export will continue to increase until 2024. Currently, there are more than 410,000 hectares of rubber trees nationwide that are ready for cultivation and approximately 290,000 hectares of rubber trees are capable of being tapped for latex. The price of rubber is also promising up to $1,700 per ton. Cambodia sent around 60% of its rubber production to Vietnam, with most of that remaining exported to China, Malaysia, Singapore, and Europe. (Khmer Times)

BANK GETS LOAN FOR SMEs, BUSINESSWOMAN. Sathapana Bank Plc received a $50 million loan from Proparco, a subsidiary of Agence Francaise de Developpement (AFD) to increase lending by the bank to small and medium-sized enterprises (SMEs) and women entrepreneurs in Cambodia. The loan will be divided equally into two groups: $25 million for supporting the development of the bank’s overall lending activities with SMEs and the remaining $25 million for supporting woman entrepreneurship. It is estimated that approximately 3,600 SMEs will benefit from this loan program, particularly businesses in the retail, services, and agriculture sectors. This credit line will help businesses to sustain themselves and seek new investment opportunities. (Phnom Penh Post)

Macro-economy

WORLD BANK: CAMBODIA’S ECONOMIC GROWTH PROJECTED TO GROW BY FOUR PERCENT NEXT YEAR. Cambodia’s economy in 2020 is projected to register a negative growth of 2% but is expected to bounce back and grow by 4% in 2021, according to Restrained Recovery, the World Bank’s latest economic update for Cambodia. Although total manufacturing exports have been hit by the pandemic and the partial suspension of preferential access to the EU market under the “Everything-But-Arms” initiative, the export of bicycles, electrical parts, vehicle parts, and other accessories are rising. Moreover, there is also a surge in the export of rice and other agricultural commodities. Foreign direct investment inflows to non-garment industries and agriculture projects have also been increasing as a result of the recent bilateral and regional free trade agreement. (Khmer Times)

U.S. TO PROVIDE ADDITIONAL $66.2 MILLION TO AID CAMBODIA’S DEVELOPMENT. The Royal Government of Cambodia and the Government of the United States of America have officially inked the exchange of notes reflecting the addition of $66.2 million to the development project agreement grants for Cambodia. The additional funding will support Public Health and Education ($43.3 million), Agriculture and Environment ($22.9 million), according to the Council for Development of Cambodia (CDC)’s press release. From 1992 to 2019, the U.S. Government provided approximately $1.5 billion in assistance, equivalent to 6.1% of total Official Development Assistance (ODA) disbursement by all development partners to Cambodia, focusing on priority sectors such as health, education, environment, agriculture, governance, democratic development, and de-mining. (Khmer Times)

FRANCE PROVIDE OVER $91 MILLION TO DEVELOPMENT OF AGRICULTURE AND COMBAT CLIMATE CHANGE IN CAMBODIA. The Government of France through the French Development Agency (AFD) is committing 75 million euros (more than US$91 million) for the agricultural development and the fight against climate change in Cambodia. Two financing agreements were signed to support sustainable agricultural and rural development as well as climate-resilient development in Cambodia. The Rural Infrastructure Development for Cambodia (RID4CAM) project will improve access to basic services for rural people and contribute to opening up the most remote areas. The Agriculture Value Chain Competitiveness and Safety Enhancement (ACSEP) project will promote agricultural diversification by supporting five potential sectors (cashew nuts, mangoes, sweet potatoes, poultry, and crops). These projects will be carried out with the German Development Bank – KfW and the Asian Development Bank (ADB).

No.22 (Dec 11, 2020)

Market Industry Trends

CBC mobile app launched to promote credit management. Credit Bureau (Cambodia) Co Ltd (CBC) has recently launched its “CBC Mobile” application to promote credit transparency, financial health, financial literacy, and responsible credit management in Cambodia. The CBC is an independent provider of financial information, analytical solution, and credit reporting services to Cambodia’s financial institutions and consumers. Once registered with the application, it allows users with a loan history to track their credit score, access their credit reports, and receive real-time credit monitoring alerts, said the CBC. The application will enable users to monitor their credit health and provide financial institutions with a credit scoring system that will promote transparency between both parties. (Phnom Penh Post)              

Online customs drive to accelerate trade by road. The online ASEAN Customs Transit System (ACTS) was launched recently to accelerate trade in goods by road within Southeast Asia. The system has now been formally launched in Cambodia, Laos, Malaysia, Singapore, Thailand, and Vietnam. It will be available to other member states soon. Being developed with the support of the European Union, ACTS is simplifying the movement of goods across the region, making it more efficient and cost-effective. The system enables transporters to make a single customs transit declaration that covers the transport of goods across multiple countries, without the need to make repeated customs declarations or change vehicles at each border. Special arrangements allow reliable traders to load their goods at their premises in the country of departure, and to deliver the goods to their premises at other places. Faster customs clearance at borders helps accelerate transit and reduce the time and expenses needed for carrying out regional trade in goods. This system will be an excellent tool in enhancing trade and unified the market within ASEAN. (Khmer Times)

Three solar stations set to generate power earlier next year. Three solar stations will start generating power and link to the grid earlier next year, as currently, the projects are 90% complete. The three solar construction projects consist of a 20-megawatt solar plant invested by Green Sustainable Ventures Co., Ltd. located in Bavet city, Svay Rieng province; a 30-megawatt solar plant in Banteay Meanchey province’s Serey Sophorn district, invested by Ray Power Supply Co., Ltd.; and 60-megawatt solar plant in Battambang province’s Thmar Kol district, owned by Risen Energy Co., Ltd. Currently, Cambodia has renewable energy sources generated from solar stations including a 10-megawatt solar farm in Bavet, Svay Rieng province, 80-megawatt solar station in Kampong Speu province, 60-megawatt solar park in Kampong Chhnang province, 5-megawatt solar in Bavet, and 30-megawatt solar station in Pursat province. (Khmer Times)

Market Deals

WorldBridge’s SME cluster project breaks ground. WorldBridge Industrial Development’s i4.0 SME Cluster project has officially broken ground in Takhmau city, Kandal province. The total investment worth between $28 to $30miliion (exclude the price of land) and construction is expected to complete by end of 2021. This project is seen as an innovative and strategic solution for small and medium enterprises (SMEs) and industrial development in Cambodia. It aims to promote and booth the competitive ability of SMEs in terms of production, business, and services. The zone will provide a complete and flexible production line including a service center, training facility, food court, medical center, conference hall, and office space, as well as other utility supplies for factories. Besides, the cluster will also include logistics, supporting services (accounting, human resources, information technology, etc.), and a services center that will provide domestic transport, import-export clearance, on-site customs, cold storage packaging, and value-added services. SME Cluster project will be a place to support SMEs in terms of having sufficient market access, capital, and training in various skills, logistics and transportation, and energy efficiency, as well as helping those players to form complete value chains. (Khmer Times)

Peer to Peer Singapore lender launches services in Kingdom. Rai Capital, a newly established peer to peer (P2P) lending marketplace based in Singapore, has officially launched in Cambodia. It is a joint venture with Goldbell Financial Services, one of Singapore’s leading non-bank business finance providers. Recognizing the lack of financial inclusion in the lending market and the scarcity of financiers for micro, small and medium enterprises (MSMEs), Rai Capital is setting out to facilitate access to credit and reduce the financing gap by introducing a crowd-lending platform for MSMEs in Cambodia. According to The United Nations, Economic and Social Commission for Asia and the Pacific, MSMEs account for 99% of the total businesses in Cambodia, with most businesses being micro-enterprises with fewer than 10 employees. As a pioneering P2P lending marketplace platform, Rai Capital can get on board suitable investors around the region such as accredited or corporate investors and financial institutions outside Cambodia. This platform is accessible via mobile application. Currently, the firm is looking out for potential partners and is discussing with local payment providers in Cambodia. (Khmer Times)

Yet another commercial bank get principle approval for Cambodian setup. A Malaysian investment company, G Capital Bhd, has announced that it has received licensing in principle from the National Bank of Cambodia to establish a full-fledged commercial bank under the name “Oriental Bank Plc”. According to a news reported by The Edge Markets, the group has agreed with Public Bank Bhd’s Indo-China operations regional head Datuk Phan Ying Tong and Cambodian firm E S Packaging Co Ltd to jointly undertake the venture. The driving motivation for the establishment of the bank is the financial health of Cambodia which has shown steady growth and its banking sector has emerged as one of the most robust industries set on making healthy profits, according to the group. (Khmer Times)

Macro-economy

ADB approves $70 million loan to strengthen agricultural value chain and food safety in Cambodia. The Asian Development Bank (ADB) has approved a $70 million loan to improve the capacity of agribusinesses in six provinces across Cambodia to process key agricultural products such as cassava, cashews, mangoes, vegetables, and poultry. Under the agricultural value chain competitiveness and safety enhancement project, it aims to benefit about 230 agricultural cooperatives and 50 agribusinesses in the provinces of Kampong Cham, Kampong Thom, Oddar Meanchey, Preah Vihear, Siem Reap, and Tboung Khmum. Processed agro-based goods now account for just 4% of GDP, due to the lack of diversification and value-added products. According to ADB, the project will facilitate access to credit, reinforce finance schemes including credit lines and credit guarantees for agribusiness. This project will also support initiatives to strengthen food safety and quality across the value chains for cassava, cashews, mangoes, vegetables, and native chickens. It will help agricultural cooperatives adopt good agricultural practices and upgrade food-safety testing laboratories to gain international accreditation. (Khmer Times)

CDC okays five projects worth $121M. The Council for the Development of Cambodia (CDC) had recently issued final registration certificates to five investment projects worth more than $121 million and expect to generate 1,334 jobs. The CDC issued final registration certificates for Inter-Mattrid Beverage (Cambodia) Co Ltd’s $78 million (brewery plant), Ruizexing Chemical Technology Co Ltd’s $20.1 million (agricultural pesticide plant), Sing Fu Sun (Cambodia) Plastic Co Ltd’s $11.7 million (PET perform factory), Blissfull Capital Co Ltd’s $9.5 million (commercial center along National Road 2), and Chunteng Industrial (Cambodia) Co Ltd’s $2.6 million (pet-friendly upholstery-fabric factory). The upsurge of inflow investment shows that investors are positive about the future economic recovery of Cambodia despite the damages caused by Covid-19. (Khmer Times)

Russia FTA feasibility study on the cards. Cambodia and Russia are planning a joint feasibility study on a potential free trade agreement (FTA) aiming to reinforce trade and investment ties between the two countries. This mechanism will facilitate the cooperation of the two nations in investment, culture, education, etc. Cambodia had expressed its intention in conducting a feasibility study on a bilateral FTA with Russia as soon as possible. Notably, bilateral trade between the two countries was to the tune of $45.15 million in the first 10 months of the year, representing an increase of 4.5% year-on-year, based on figures from the Ministry of Commerce. (Khmer Times)

No.21 (Nov 27, 2020)

Market Industry Trends

Banks and Fi loan restructuring extended until mid-2021. National Bank of Cambodia (NBC) has decided to extend loan restructuring to all sectors impacted by pandemic and floods until mid-2021. The loan restructuring is conducted based on the actual evaluation of the client’s situation from the bank’s financial institution. It will also be dependent on a mutual understanding between banks and financial institutions and their clients and will include provisions for the reduction of interest rates and the waiving of other additional fees. The central bank will permit restructuring up to three times without any impact to the loan classification during the referred period and specified that all financial institutions must follow the implementation of the extension and monitor the restructuring loans regularly as directed by NBC. (Khmer Times)

Mortgage loans reach $4.6 billion in the first nine months. Demand for residential units and real estate in Cambodia continues to grow in 2020, despite the spread of the COVID-19 pandemic, which has negatively affected economic growth. According to the quarterly report of the Credit Bureau of Cambodia (CBC), loans in the real estate sector reached $4.6 billion by the end of September 2020, a significant increase from $3.9 billion at the end of 2019. According to Cambodia’s Economic Trends report of the Ministry of Economy and Finance, there were 2,819 residential projects, accounting for 84% of the total 3,350 construction projects, in the first eight months of this year. The report underlined that residential demand in Cambodia continues to grow even though the COVID-19 crisis has weakened other economic bases. (Khmer Times)    

Gov’t credit guarantee unit set for 2021. The Credit Guarantee Corporation of Cambodia (CGCC) is expected to launch in the first half of 2021. It was established with $200 million in registered capital funded by the government. The corporation sets out to increase access to financing for small and medium-sized enterprises (SMEs) in priority sectors such as agricultural, industrial, and service sectors with a capped lending size at $500,000. CGCC will be tasked with providing credit services, evaluating and managing risks, cooperating with banks and financial institutions, and developing partners that also provide credit services. It aims to provide a source of capital for SMEs who struggle to raise additional funds due to limited collateral and provide them with collateral protection insurance. According to the Ministry of Economy and Finance, the government is seeking more fund injection from international finance partners and the World Bank plans to provide about $100 million in loan to the government for additional capital. (Khmer Times)

Market Deals

PPCB bonds trade on the secondary market. The Cambodia Securities Exchange (CSX) data shows that the corporate bonds of Phnom Penh Commercial Bank Plc’s (PPCB) are now traded in the secondary market. The secondary bond market is where investors can buy and sell the bond and transaction proceeds will go directly to the counterparty. The volume of bonds traded is 40,000 units selling at a premium of KHR105,309 per unit with 867 days left to maturity. It represents a yield-to-maturity (YTM) of 4.49%, which is substantially lower than the initial coupon rate on the bond’s issue date. PPCB has successfully raised $20 million from two separate listings this year with an annual coupon rate of 6.50% and a maturity date of three years. (Phnom Penh Post)

KE offers assistance to SMEs. The state-run Khmer Enterprise (KE) has recently signed grant agreements with 27 start-ups and small and medium-sized enterprises (SMEs) for the first and second round of financial assistance packages to sustain their business during the Covid-19 crisis. KE is an implementation unit of the Entrepreneurship Development Fund (EDF) established by the Ministry of Economy and Finance which purpose to promote entrepreneurial activities and ecosystem. The key prioritized sectors for the program include ICT, services, agro-processing, and agriculture for export and manufacturing aimed at curbing imports in its aspiration to enhance economic diversification, innovation, productivity, and job creation. The financial assistance packages awarded amount to approximately $400,000 and a single fund ranges from $5,000 to $20,000 with a maximum period of one year. The third round of Khmer Enterprise assistance packages (KEAP) is expected to roll out next year. (Phnom Penh Post)

Top US venture capital firm moves into the Kingdom. The US-based global venture capital firm 500 Startups is now collaborating with Khmer Enterprise to launch Angkor 500, which aims to drive the formation of technology-driven startups and prepare relevant entrepreneurs for regional expansion. Within the initial partnership period of 2 years, 500 Startups will conduct a range of programs and international showcase to accelerate the investors. This program will create an opportunity for investment in new generation startups by connecting them to key industry stakeholders and corporate partners. Since its inception in Silicon Valley, 500 Startups has invested in more than 2,300 companies via its five global funds and 15 thematic funds dedicated to either specific geographic or vertical markets. It has contributed to the development of innovation ecosystems by supporting startups and investors through educational programs, events, conferences, and partnerships with corporations and governments around the world. (Khmer Times)

Macro-economy

UK to make trade preference available to lease developed countries Cambodia will be able to get trade preference from the United Kingdom (UK) after the new Generalized Scheme of Preferences (GSP) takes effect on January 1, 2021. The UK has left the European Union (EU), and the post-Brexit transition phase period is expected to end by this year. The new scheme will consist of three frameworks that replicate the market access provided under the UK’s GSP such as least developed, general, and enhanced countries. Cambodia, which falls under the least developed countries framework, will therefore be entitled to duty-free and quota-free access on exports to the UK of all goods, except arms and ammunition. (Khmer Times)

Cambodia signs the world’s largest free trade pact. The negotiation for Asia-Pacific Regional Comprehensive Economic Partnership (RCEP) has been concluded and the leaders of 15 Asia-Pacific nations have officially signed the blockbuster trade pact. Leaders of the 10 ASEAN states, Australia, China, Japan, New Zealand, and South Korea witnessed the signing of the RCEP agreement via video link following the conclusion of the 4th RCEP Summit. Marking as the largest free trade pact, the RCEP has a combined gross domestic product (GDP) to the tune of $26.2 trillion, or 30% of global GDP, and engages 2.2 billion people, according to the ASEAN secretariat. This trade deal will help to promote trade flow and facilitate market access for countries through eliminating tariffs and quotas on over 65% of traded commodities. Moreover, common and transparent rules and regulations will be introduced within the region upon the agreement came into force. It noted that the agreement comprises 20 chapters, 17 annexes and 54 schedules of commitments that cover market access, rules and disciplines, and economic and technical cooperation. The Jakarta-based Economic Research Institute for ASEAN and East Asia (ERIA) found that the deal would boost Cambodia’s GDP an additional 2%, increase exports by an extra 7.3% and raise investment by an added 23.4%. The signed trade pact is very crucial for rapid economic recovery after the Covid-19 crisis and the promotion of intra-bloc supply chains to bolster trust among the member of the region. (Phnom Penh Post)

The signing of the Japanese ODA loan agreement with Cambodia: contributing to Covid-19 crisis response in Cambodia through the provision of budget support. The Japan International Cooperation Agency (JICA) signed a loan agreement with the Royal Government of Cambodia in Phnom Penh to provide a Japanese Official Development Assistance (ODA) loan of up to 25 billion yen for the COVID-19 Crisis Response Emergency Support Loan. The objective of the program loan is to subsidize the country’s recovery from the social and economic downturn caused by COVID-19 through budget support for the implementation of the COVID-19 Master Plan and related policies. (JICA)