Cambodia Country Report

CAMBODIA
Country Report
No 1
December 2010
Country Snapshot 03 04 05 06 Basic information Key economic indicators Political structure Infrastructure
CONTENT
Country insights 08 10 11 12 13 18 Political foundation parties Regulatory Environment Propaganda and governmental influences International relations & word linkage Demographics & Resources Emerging Trends
CONTACTS
Nguyen Thi Tuyet (Ms), ACCA Director Research & Investment Advisory tuyet.nt@sbsc.com.vn Huynh Phuong Ngan (Ms) Analyst Research Division ngan.hp@sbsc.com.vn Sacombank Securities (Cambodia) PLC
Capital market development 20 22 23 Banking system Stock market development Financial Sector
Economic outlook 28 29 The economy Economic Performance
56 Preah Norodom Blvd Sangkat CheyChumneas, Khan Daun Penh Phnom Penh, Cambodia Tel: +855 236 69 68 68 H/P:+855 972 18 27 79
45 49
Appendix References
Fax: +855 23 22 34 33 Web Site:www.sbsc.com.vn
Cambodia Country Report
CAMBODIA
Country Report
CAMBODIA
Country Report
COUNTRY SNAPSHOT
CAMBODIA
Country Report BASIC INFORMATION
TERRITORIAL AREA
181,040km2 Bounded on the north by Thailand and Laos, on the east and southeast by Vietnam and on the west by the Gulf of Thailand and Thailand. Central plain is lacustrine formed by the inundations of the Tonle Sap (Great Lake) jointly with the Mekong & Bassac Rivers, which traverses the country from north to south.
CLIMATE POPULATION
Tropical humid with rainy season June-Oct & dry season Nov-May 14.9 million Cambodian 90%; Vietnamese 5%; Chinese 1%; others 4%: small numbers of hill tribes, Cham, and Lao)
GENDER LABOR FORCE INCOME LANGUAGE
Male: 48.6%, Female: 51.4% (of population, 2008) Labor Force (2008): 59.8%; Unemployment: 3.5% Per capita GDP (2009): $739 Khmer is the official language spoken by more than 95% of the population and the major language in education system. French and English are key foreign languages of which English is increasingly popular as a second language. Theravada Buddhism 95%; Islam; Animism; Christian.
Phnom Penh(capital) Siem Reap Battamban Kampot Koh Kong Kompong Cham Approx. Approx. Approx. Approx. Approx. Approx. 1,327,615 (2008 census) 896,309 (2008 census) 1,025,174 (2008 census) 585,850 (2008 census) 117,481 (2008 census) 1,679,992 (2008 census)
RELIGIONS MAJOR PROVINCES POPULATION
NATIONAL PUBLIC HOLIDAYS
Cambodia has 23 national public holidays including celebrations day of the Royal.
CAMBODIA
Country Report KEY ECONOMICS INDICATORS
GROSS DOMESTIC PRODUCTS
Nominal GDP: US$10,028 million (2009), US$ 11,135 million (2010 est.) Real GDP: -1% (2009); 3% (2010 - EIC projection); 4.3% (2010-IMF projection) Major contribution to GDP (2009): Agriculture (33.5%), industry (21.7%), Services (38.8%) CPI: 138 or 1.9% (September 2010); Inflation: 5.22% for 1H2010 Major CPI basket components: Food, Non-Alcoholic Beverages (44.8%); Housing, Water, Electricity, Gas (17.1%); Transport (12.3%); Restaurant (5.9%) Budget deficit: $2,809 billion (2010 est.; EIC)
Major Exports Major exports destinations Major Imports Major Imports origins Garments, fisheries product, rice & natural rubber US, Germany, UK, Singapore & Japan Petroleum products, construction materials, vehicles & motorcycles, clothing Thailand, Singapore, Hong Kong, China & South Korea
CONSUMER PRICE INDEX AND INFLATION
GOVERNMENT FINANCE FOREIGN TRADE BALANCE
CURRENT ACCOUNT BALANCE CAPITAL ACCOUNT BALANCE INTEREST RATE CREDIT RATING
Deficit US$1,520 million; Deficit 13.6% of GDP (2010 est.; updated ADB and World Bank) $ 578 million Commercial bank prime lending rate: 17% (Source: CIA) 3 rating agencies: Moody (B2: highly speculative), Fitch (n/a) and S&P(B+: speculative) n/a: data not available The local currency, Riel (KHR) was introduced in 1980. Exchange rate per US $1: 4,226 (Oct 2010) KHR is pegged to US dollars within a stable range. Cambodia is a heavily dollarization country with the payments of goods and services are quoted and settled both in Riel and US dollar interchangeably.
CURRENCY AND FOREIGN EXCHANGE POLICY
CAMBODIA
Country Report POLITICAL STRUCTURE
RULING PARTY FORM OF GOVERNMENT NATIONAL LEGISLATURE
A coalition government of the Cambodian Peoples Party (CPP) Multiparty democracy under a constitutional monarchy The national legislature includes: The Senate (Upper House) - chaired by Samdech Chea Sim and consisting of 62 senators The National Assembly (Lower House) chaired by Samdech Heng Sarin and consisting of 123 elected members
NATIONAL ELECTION
National Assembly elections were held in 1993 (constitution was formed), 1998,July 2003 (controversial) and July 2008 (relatively peaceful) The National Assembly promulgated Cambodia's sixth Constitution on 24 September 1993. Under the Constitution, the National Assembly holds the primary legislative power. The National Assembly possesses the right to: Approve laws regarding to the national budget, state planning, loans and lending, the creation, change or annulment of taxes, administrative accounts, amnesties, treaties or international conventions, and declarations of war. Make decisions on draft laws or propose amendments to laws Discuss any urgent issues or any issue submitted to the Assembly by the Government.
POLITICS
CAMBODIA
Country Report INFRASTRUCTURE
ROAD & HIGHWAYS
Cambodias road network consists approximately 38,257km including 4,757km of national roads; 5,700 km of provincial roads and 27,800 km of tertiary roads. About 40% of the network is in good condition; 52% in poor condition and 8% in bad condition.
INLAND TRANSPORT WATER TRANSPORT
Includes the Mekong and Sab rivers and Tonle Sap Sihanoukville is the main deep water sea port. Phnom Penhs port is on the Mekong River so access is through the delta in Vietnam and through Ho Chi Minh city. The third port is Koh Kong which is situated near Thailand border. Cambodia has 17 airports (2009) in which Phnom Penh airport and Siem Reap airport are the most important ones
AIR TRANSPORT
CAMBODIA
Country Report
COUNTRY INSIGHTS
CAMBODIA
Country Report POLITICAL FOUNDATION PARTIES
Cambodias political system is a multiparty democracy under a constitutional monarchy The current political system includes the National Assembly (lower house) and the Senate (upper house). It consists of the King, the appointed prime minister, 10 deputy prime ministers, 16 senior ministers, 26 ministers, 206 secretaries of state and 205 undersecretaries of state. Under the Constitution, the Kingdom of Cambodia is divided into 24 provinces and 4 municipalities (Phnom Penh, Sihanoukville, Kep and Pailin). The Constitution also articulates that the king serves as the head of state for life, meaning the king reigns but does not govern and is to serve as the symbol of the unity and continuity of the nation. 1991 Paris Peace Agreements signed, provided elementary for national elections conduct and it also underlined a reconstruction process after decades of conflict and civil war in Cambodia. The Royal Government of Cambodia was officially formed on the basis of election. Established countrys Constitution. Prime Minister Hun Sen was elected and his appointment was officially made through a vote of confidence by the National Assembly. Ranariddh was convicted of corruption but received a royal pardon in 2008, short afterward, he withdrew from politics. Sam Rainsy was convicted in absentia of the removal of several temporary Cambodia-Vietnam border markers
1993
1998
2007
2009
CAMBODIA
Country Report
COMPOSITION OF THE NATIONAL ASSEMBLY OCTOBER 2010 (123 SEATS) THE CAMBODIAN PEOPLES PARTY (CPP)
The Cambodian Peoples Party (CPP) FUNCINPEC SRP Human Rights Party NorodomRanariddh Party (NRP) 90 seats 2 seats 26 seats 3 seats 2 seats
Source: Cambodia Information Center The CPP now is the Ruling party. The country is evoking into a quasi-one party system similar Malaysia and Singapore. The trend towards stronger authorization features has gained momentum and thus, decisions are made and enforced by the political will of the CPP elite. FUNCINPEC was originally formed in 1980s and associated with King Norodom Sihanouk. Its a royalist party and emerged as one of the dominant parties contesting the 1993 national election and won the top vote with Prince Norodom Ranariddh as leader. Besides, the Norodom Ranariddh party (NRP) is nearly dysfunctional and announced its intention to merge with FUNCINPEC by 2012. The opposition parties have largely collapsed. The Sam Rainsy Party, founded in 1995 as the Khmer National Party and changed to its current name in 1998. It was the third largest party in Cambodia until the 2008 elections, and constituted the official opposition to the ruling CPP. SRP emerged as the main opposition party in 2008 election as the royalist party FUNCINPEC showing weakening support. However, Sam Rainsy left the country in 2010, leaving the CPP dominates the parliament and governs the country primarily Supreme Council of the Magistracy (provided for in the constitution and formed in December 1997); Supreme Court (and lower courts) exercises judicial authority.
THE NATIONAL UNITED FRONT FOR AN INDEPENDENT, NEUTRAL, PEACEFUL, AND COOPERATIVE CAMBODIA (FUNCINPEC) THE SAM RAINSY PARTY (SRP)
THE JUDICIARY
CAMBODIA
Country Report REGULATORY ENVIRONMENT
THE LEGISLATION
The Constituent Assembly, or current National Assembly, promulgated Cambodias sixth Constitution on 24 September 1993. The 1993 Constitution was amended in March 1999 to establish the Senate, a new legislative body. The Constitution declares liberal democracy and a multiparty system as the foundations of the political regime of the Kingdom of Cambodia. Under the Constitution, the Legislative, Executive, and Judicial branches of government shall be separated The evident Law on Investment of Cambodia restricts foreigners from owning land in Cambodia since the land ownership is reserved to natural and legal Cambodians. However, foreigners are now allowed to have a long-term lease for up to 99 years or a renewable short-term lease. However, the application for legally licenses in Cambodia is a lengthy process and involves many duplicates and inefficient administrative works. Discretion of policy makers may lead to delaying or distorting investments. License fees and lack of transparency leads to increase in costs for establishing and operating businesses in the country. No adequate venue for commercial dispute. There are no articulated laws covering insolvent enterprises, secured transactions, industrial standards or commercial transactions, businesses usually resolve commercial disputes without using the neither court nor arbitration tribunal, hence jeopardising the healthy business environment. Therefore, code of ethics and increased transparency as well as sufficient rule of law should be introduced to improve Cambodia investment and business prospects.
LEGAL ENVIRONMENT
10
CAMBODIA
Country Report PROPAGANDA AND GOVERNMENTAL INFLUENCES
THE MEDIA
Cambodia media sector is vibrant and radical. Numerous of radio, television and print media outlets are established and currently, there are 11 TV stations nationwide, 2 AM radio stations and 52 FM stations. Broadcast media tends to be more politically affiliated and thus tighter control is imposed than print media. There are more than 100 newspapers in Cambodia but few are kept regular publication. Around 25 Khmer language newspapers are published regularly. Of these, eight are daily such as Kampuchea Thmei Daily, Moneakseka Khmer, Rasmei Kampuchea. Major Englishlanguage newspapers include The Phnom Penh Post (daily), The Mirror (weekly) and Business News. The Cambodge Nouveau (monthly) and CambodgeSoir (weekly) are two popular French-language newspapers. Also, the two main Chinese newspapers are Cambodia Sin Chew Daily and JianHua Daily.
RELIGION
Religion plays a critical role in Cambodia culture and most Cambodians are reluctant to change. Approximately 95% of residents are with Theravada Buddhism. During the time of the Khmer Rouge era (1975-1979), Buddhists, however, were severely persecuted. Monks were forced to do manual work as same as civilian and many lost their lives; most of the countrys wats were destroyed during this period. Since the 1980s, with the encouragement of the government, Buddhism has undergone a remarkable revival and is now recognized in the Cambodian Constitution as the state religion. In more recent years, Christianity has also been growing rapidly in Cambodia especially urban areas. Today, Buddhist pagodas or village-level community based organizations represent an important level of societal participation in the political process
11
CAMBODIA
Country Report INTERNATIONAL RELATION AND WORLD LINKAGE
Cambodia has established diplomatic relations with the United States and it is a member of most major international organisations, including the World Bank, the IMF , and the Asian Development Banks (ADB). In 2004, Cambodia became the 148th member of the World Trade Organization (WTO). Access to ASEAN in 1999 enhanced the country to cooperate closely with countries within the region, especially Vietnam. In recent years, Vietnam has appeared as an emerging close partner with Cambodia in trade, investment and economics. The Mekong River Commission and the Greater Mekong Subregion projects have also contributed much to improving this relationship. On regional basis, China was the largest investor in Cambodia in 2008, and South Korea, the second largest. Both are key members of the East Asia Summit as well as the ASEAN Plus Three process. As a recipient of both foreign aid and foreign investment, Cambodia has managed to gain some confidence from external donors over the last few years. In particular, US direct assistance to Cambodia totalled up to $62m for programs in health, education, governance and economic growth, which administered by the US Agency for International Development (USAID) mission in 2009. The country is being given credit for its stability and economic growth. Low external debt, a stable currency and low inflation rates are attributable to positive developments. Overall, Cambodia remains dependent on foreign aid, both for the national budget and for expert advice. Political steps towards strengthening the democratic process and enhancing transparency are vital for Cambodia to continue gaining confidence from many of its external donors, particularly from Europe, United States, and NGO community.
12
CAMBODIA
Country Report DEMOGRAPHICS AND RESOURCES
POPULATION
Population (m) Population growth (%) 2006 14.2 2.4% 2007 14.4 2.0% 2008 14.7 1.6% 2009 14.9 1.6% 2010f 15.2 1.76%
Source:Economic Institute of Cambodia (EIC )& CIA
EMPLOYMENT
Labour force (% Population) Unemployment rate (%)
Sources: CIA Fact Book; World Bank
2006 57.6 2.5
2007 58.2 2.5
2008 58.8 2.5
2009 59.3 3.5
2010f 59.8 3.5
13
CAMBODIA
Country Report
PUBLIC EDUCATION
Education in Cambodia was traditionally offered by the wats (monastery temples), providing education exclusively for the male population with no public institution of higher education. Until 1960s, the first Khmer Royal University was founded. In 1975 however, the Khmer Rouge abolished education, destroyed teaching materials, textbooks, and publishing houses, schools and universities. During this period large numbers of qualified teachers, researchers and technicians either fled the country or died. The entire education system reappeared and reconstructed by the new Cambodian government came to power in 1979. The constitution of Cambodia now promulgates free compulsory education for nine years, guaranteeing the universal right to basic quality education According to data from CIA, total population age 15 and over that can read and write is 73.6% (male: 85%, female: 64%) Enrolment Primary Grade 7-9 Grade 10-12 Tertiary 94.4% 33.9% 16.4% 2.8% Completion Primary Lower Secondary Upper Secondary University 85.58% 49.05% 20.58% 6%
Nowadays, the education system in Cambodia continues to be challenging, due to an acute shortage of qualified teaching staff and lack of suitable teaching materials. Attendance at school remains limited in rural areas since children are often expected to stay at home and help their families in the fields.
14
CAMBODIA
Country Report
LIVING CONDITION
31% of Cambodias population is currently living below poverty threshold (CIA) Income per capita remains low regardless of strong GDP growth through the 1990s. Although it has risen to nearly $750, more than one-third of the population live in poverty and around 90% of them in rural areas. It is unlikely to converge significantly towards the income of other developing Asian nations over the next few years.
Average 31% population living under property threshold
50 40 36 30 20 10 0 2000 2006 2007 2008 Poverty line (%) 2009 2010 40 40 35 35 31
% population below poverty line (geographically comparable)

1994 (%) 2004(%) 58 40 17 5 42 31 11 46 33 40 39 28
Source: CIA, World Bank
15
CAMBODIA
Country Report
THE BUSINESS SECTORS
Cambodia currently has 19 industrial areas/economic zones and there are 21,184 businesses in operation of which 13,304 foreign enterprises and 513 Vietnam enterprises (including branches and offices). Small and medium sized enterprises (SMEs) make up the vast majority of business in Cambodia and about 40% of the nations enterprises employ between 10-100 employees. It is estimated that SMEs provide around two-third of the countrys employment. Main constraints for business operating in Cambodia: High electric utility costs because energy is mostly imported High transportation due to under-developed infrastructures Risk associated with generating returns due to endemic corruptions Less skilled workforce many people have only a very basic education, limiting their ability to perform more complicated tasks, hence increase costs of additional training Inadequate legal framework and lacks of transparency In March 2003, Cambodia's National Assembly passed the amended Law on Investment Law (issued 8 / 1994) with several new rules as follows: Tax-free period is 3 years and investors are entitled to another 3-year depending on performance and investment fields. Tax exemption is calculated from the first profitmaking year but not later than the 4th year after the operation. Investors enjoy 100% import tax exemption for construction materials, equipment manufacturing, machinery, intermediate products, raw materials, spare parts. No nationalisation adversely affecting the property of investors Permit 99-year long term lease on the land transfer for agricultural purposes, or can own a piece of land through joint ventures with local partners is over 50% stake.
16
CAMBODIA
Country Report NATIONAL RESOURCES
NATURAL RESOURCES METAL AND MINERALS
Oil & gas, timber, gemstones, iron ore, manganese, phosphate, hydropower Exploitable deposits of iron ore amounting to approx. 5.2 million tons are located in Kampong Thum province. Manganese ore reserves are estimated at about 120,000 tons. Thousand tons of phosphate are extracted annually in Kampot Province and are processed locally in Batdambang province. Rubies, sapphires, and zircons have been mined at Ba Kev, Stoeng Treng province, and at Pailin, Batdambang province.
HYDROELECTRIC POWER
Hydro-power electricity is considered potential from the middle Mekong River where it flows through Stoeng Treng and Kracheh provinces. Although the Tonle Sap is Cambodia's dominant hydraulic feature, the rivers flowing into this great lake have little or no exploitable potential.
PETROLEUM
Oil and gas discoveries in the Gulf of Thailand and in the South China Sea Potential significant off-shore oil and gas reserves Timber and firewood are the main forest products. Forest resources have not yet been fully exploited because of poor security in the countryside and a lack of electrical and mechanical equipment, such as power tools and lumber trucks. Forestry covers around 70% of the country and which potentially constitutes a second pillar of the economy in addition to the primary one, agriculture.
FORESTRY
17
CAMBODIA
Country Report EMERGING TRENDS
Increasing trading partners relationship between Cambodia and Vietnam. Recently, Cambodia has signed a deal with Vietnam to lower some trade tariffs aiming to strengthen business ties and open market for specific goods between two countries. Mining is acctracting significant investors, particularly in the northern parts of the country. Companies such as Indochine Mining, Brighton Mining, Liberty Mining and Oz Mineral are investing and injecting large amount of capital in exploration in Cambodia Exploitable oil deposits were found beneath Cambodias territorial waters, representing new revenue stream for governemnt if commerial extraction begins A titanium mine, estimated by its owner, United Khmer Group, to contain deposits worth US$35bn-US$135bn, may begin production as early as mid-2011. Cambodia's first automotive assembly plant was expected to begin operations in September 2010. The joint venture between Hyundai of South Korea and a local firm, Ly Young Phat Group, expects to produce 3,000 vehicles a year. Kampot Cement Co Ltd will be able to export K Cement to Vietnam without taxation and any payment, this tax-free passage was granted by the Council for the Development of Cambodia (CDC) Huadian Group (one of the largest Chinese power companies) signed an agreement with Cambodia for the construction of US$558m hydropower plant in January 2010
18
CAMBODIA
Country Report
CAPITAL MARKET DEVELOPMENT
19
CAMBODIA
Country Report BANKING SYSTEM
THE BANKING SYSTEM
Cambodia is a bank-based economy. Commercial banks are primary source of funding. There are neither interbank nor money market. Stock market is in the process of establishment and expected to launch in July 2011 after several delays. Limited access to capital is one of the constraints in doing business in Cambodia. The key players in Cambodias financial sector are NBC, 27 commercial banks, 6 specialized banks, 20 micro-finance institutions, 60 micro-finance NGOs, and 7 insurance companies. Recent liberal investment regime and open market trade policies have gathered momentum for Cambodia's economic prospects and banks are also enjoying benefits from such strong growth opportunities. The Cambodian banking sector has been improved recently; yet; it still lacks of financial depth and is being fragmented. To gain more international confidence, significant progresses are necessitated to address structural distortions such as inadequate legal framework for secured transactions, and information asymmetry arising from poor disclosure standards. The amended Law on Banking and Financial Institutions made it necessary for all of Cambodias commercial banks to reapply for licenses and the NBC has raised the minimum capital requirement for commercial banks to $37.5million.
20
CAMBODIA
Country Report
THE BANKING SYSTEM
(CONTD.)
1975: The Khmer Rougue Rule of Cambodia Money is abolished All banks are closed 1979: End of Khmer Rougue Rule and Transition The National Bank of Cambodia (NBC) established as the central bank 1992 -1998: Privately Owned and Foreign Subsidiaries Foreign susidiaries initially required min. capital of $5 million and 15% owned by the NBC. 1998-2001: Banking ReformR Introduced under the new Governor H.E. CheaChanto. 2002 - Present
The Foreign Trade Bank was to provide commercial banking services By 1998, 32 commercial Cambodia banks licenced currency, the Riel, introduced in 1980
The Banking Reform process continues Abolishment of required 15% NBC stake The Foreign Trade in private owned/ Bank is privatized foreign banks . New foreign banks Classification of arrive particularly from financial institutions Australia, Korea and into three categories: Japan. Full Commercial Requirement of $37.5 Banks (min. $13 million million min. capital for paid-up capital) Commcercial Banks by no later than the end Specialized Banks (min. $2.5 million paid- of 2010. up capital) Countermeasures set Licenced/Registered by NBC against overliquidity given the Microfinance inflation pressure and Institutions (MFIs) the global credit crisis in 2008.
Sacombank (HOSE: STB) was the first private bank to put a strong foothold in Cambodia. Sacombank promoted a credit package, aims boosting trades between Vietnam & Cambodia, and advocates the banks role in helping Vietnamese businesses to invest in Cambodia. To that, exporters from Vietnam to Cambodia would enable to acquire funds at a preferential VND lending interest rate of at least 12% pa and their partners in Cambodia would also be provided with preferential USD loans at a minimum interest rate of 8% pa. This programme ended on 12th October 2010. In addition, Vietnamese importers from Cambodia would receive a 30% reduction in the fees for transferring money from Vietnam to Cambodia. This promotion ended on 31st December, 2010
21
CAMBODIA
Country Report STOCK MARKET DEVELOPMENT
Cambodia Stock Exchange is scheduled to open in July 2011 and it is expected that the listing criteria will not be onerous. Up to 2nd November 2010, Securities &Exchange Commission of Cambodia (SECC) has officially granted licenses for fifteen companies operating on the Kingdoms first stock exchange in areas such as brokerage, trading and underwriting.
Fields of Operation Company Name 1. Tong Yang Securities (Cambodia) 2. OSK Indichina Securities 3. Canadia Securities 4. Campu Bank Securities 5. Cambodia-Vietnam Securities 6. SBI Phnom Penh Securities 7. Phnom Penh Securities Firm 8. Sacombank Securities (Cambodia) 9. Golden Fortune (Cambodia) Securities 10. ACLEDA Securities 11. Cambodia Capital Securities 12. SONATRA Securities 13. CAB Securities 14. Angkor VDS Securites PLC 15. Angkor Capital Advisor 100% Capital (Holiding nation) Korea Malaysia Malaysia Vietnam Japan Vietnam Cambodia Cambodia United States United States Minimum Capital Requirement
Underwriting
$9.45 million
Dealer/ Trading
$5.9 million
Brokerage
$1.41 million
Investment Advisory
22
CAMBODIA
Country Report
THE FINANCIAL SERVICES SECTOR
In March 2007, the Government set Financial Sector Development Strategy 2006-2015 in which prioritised the following: Addressing issues relating to the preconditions for banking operations and supervision, relating especially developing systems to deal with problem bank resolution and insolvency, and developing an effective, efficient and safe national payment and settlement system. Continuing to improve both the legal and regulatory framework for banking supervision, with the overall objective of supporting financial stability and banking sector development to improve economic growth and reduce poverty.
Capital market: Cambodia initiated this stock market since 2007 and expected to be
ready to launch in July 2011 after several delays. Issuance of equity securities will be either private placement (the total number of people to whom the offer is made shall be no more than 30) or IPO. According to article 43 of the Prakas on Public Issuance of Equity Securities, the permitted securities company is to list on securities market for official trading within 7 days after the complement of the IPO.
23
CAMBODIA
Country Report
DOING BUSINESS IN CAMBODIA Increasing privatization has resulted in many state-owned companies in areas such as
transportation, healthcare, education and banking (either fully or partly privatized by the government). Rubber plantations, the fertilizer company, and the fish export company, have also been named as objects for privatization. Similar to other Asian countries, Cambodia also has a wide range of problematic factors associating with Doing Business. The major ten factors affecting businesss climate in Cambodia are:
Problematic factors
9. Poor work ethic in national labor force, 4.8 8. Tax regulations, 5.3 10. Crime and theft, 3.2 1. Corruption, 23.9
7. Inflation, 5.9
6. Policy instability, 6.4
5. Access to financing, 6.6
4. Inadequate supply of infrastructure, 8.3 3. Inadequately educated workforce, 9.6
2. Inefficient government bureaucracy, 17.4
Source: WB
24
CAMBODIA
Country Report
DOING BUSINESS IN CAMBODIA Cambodia ranks 102nd out of 125 countries in the Enabling Trade Index 2010. Cambodias
(CONTD.)
business environment is characterized by low levels of domestic competition and weak property rights protection. In contrast, regulations on FDI and international capital flows are not too restrictive, hence creating a potential investment opportunities for these sectors. Trade faciliation in Cambodia
Physical Security Regulatory evironment
Market access 6 5 4 3 2
Domestic market access Foreign market access
Business Environment
1 0
Border administration
Avaliability & use of ICTs
Efficiency of custom administration Efficiency of import-export procedure
Availability & quality of transport service
Availability & quality of transport Transparency of border infrastructure administration Transport & communication infrastructure
Asia
Cambodia
25
CAMBODIA
Country Report OPERATIONAL AND POLICY
MONETARY POLICY
The most frequently used instruments are (i) foreign exchange management, (ii) reserve requirement ratios and (iii) standing facilities.
Foreign exchange management

Cambodia adopts a managed floating exchange rate regime in 1992 based on the US dollar. The current exchange rate regime in Cambodia is characterized as: The official exchange rate is determined by the NBC for transactions between the NBC, government and the public sector. The parallel market rate is a freely floating exchange rate and determined by market. It is used for all the private sector transactions.
Reserve requirement
NBC has recently reduced statutory reserve requirement rate from 16% to 12% in order to lower the costs of banking operations and encourage liquidity support to boost the economy. The international reserves level is approximately 3.9-month of import coverage.
Standing Facilities
Fixed deposits: Interbank market has yet established in Cambodia, thus the NBC operates fixed deposit facilities in both USD and Riel to enhance liquidity. Overdraft facility: The NBC overdraft was introduced by Prakas issued January 2009 to help eligible institutions to overcome temporary or short-term liquidity shortages. Refinancing window: The NBC stipulates a swap window to banks and other financial institutions to facilitate microfinance lending to specified sectors. The NBC offers a currency swap, i.e. Riels in exchange for US dollar deposits. Institutions accessing this window must provide full details to the NBC of the purpose of the moneys on-lent (generally the purpose is for agriculture loans in the rural sector). Because of the weak linkage to global capital market, Cambodia's financial market is not directly impacted by the financial chaos in 2008-2009.
26
CAMBODIA
Country Report
ECONOMIC OUTLOOK
27
CAMBODIA
Country Report THE ECONOMY
Having economic liberalisation emerged since the mid-1980s however Cambodia has just made a remarkable progress in the last decade. Havinng access to ASEAN (1999) and WTO (2004) had helped Cambodia expose to one of the largest export destinations, the US (~60% of total exports), followed by Germany, Hong Kong and Vietnam. Cambodia has experienced an economic boom over the last fifteen years with average annual growth of 8% but experienced a contraction in 2009 caused by the global crisis. The economy recovers in 2010 at a slow pace. The governments monetary policies and a stable currency have sustained generally positive macroeconomic developments. However, only a minority of Cambodians has really benefited from this growth, and hardly any redistribution of wealth has taken place. Cambodia shows resilience from global downturn with growth forecast from 3% (EIC) 4.3% (IMF), a remarkable improvement from adversely effect of negative growth in 2009 due to global crisis though at a slower pace than average growth trend of roughly 10% over the last decade. Reforms have been carried out to strengthen free market competition. As an export-dependent economy [export accounts for approx. 60% of GDP]. Products are mainly exported textiles and garments, wood, rubber, timber, fish, and shoes. The private sector is considered to be the engine of growth. Other advantages of Cambodias economy involves: ASEAN membership offers regional trade benefits WTO member since 2004 increasing trade integrations Duty free or preferential export access to most developed economies Among Asias lowest labour cost and dynamic workforces
28
CAMBODIA
Country Report ECONOMIC PERFORMANCE
KEY ECONOMIC INDICATORS
2006
2007
2008 6.7 14.2 13.9 -1,260 4054.2 1,700 42,100
2009 -1 -0.7 0.8 -1,344 4154 1,992
2010f 3 8.2 5.8 -1,246 4226 2,354
Real GDP growth (%) 10.8 10.2 Inflation in Riel (av; %) 4.7 5.9 Inflation in US (av;%) 4.4 7.1 Current account excl. official -577 -733 transfer (US$m) Exchange rate (av; Riel/US$) 4103.3 4056.2 Net Foreign Reserves (US$m) 1,097 1,374 Debt service on external debt 30,584 30,266 (000US$) Source: Economic Institute of Cambodia (EIC);NBC,WB
AGRICULTURAL ACTIVITIES
Cambodia has comparative advantages in agriculture coupled with favourable climate and strong international demand. Its growth rate was average about 4.2% between 1998 and 2008. Although agricultures share of GDP has declined gradually over time, it still accounted for 26% of GDP in 2008 and 33.5% in 2009 and employed over 56% of the total labour force The main agriculture products are paddy, maize, cassava, soybeans, tobacco and rubber. Rice is the most important staple food in Cambodia, averaging 55% of total agricultural produce, or 9% of GDP, during 1994-2006. Nonetheless, agriculture is still natural resource-based and depends largely on rainfall, meaning growth prospects are modest, according to Economic Institute of Cambodia (EICs) projection models; 4% growth is forecasted for the sector in 2010.
29
CAMBODIA
Country Report
INDUSTRIAL ACTIVITIES
Industrials sector contracted sharply and experienced negative growth of -8.3% in 2009, down from +4% in 2008. Garment exports and construction were significantly impacted due to closely tied to external markets and investors. During 2009, exports to the US (about 67% of the total exports) declined by 20.7%, exports to EU markets dropped by 1.7% and those to ASEAN decreased by 48.6%; yet, garment exports to Japan increased remarkably. The sector contracted by a massive 14.7%. Nonetheless, trade for the first nine months of 2010 increased by 18%, fuelled by growing garment exports indicate the reign of garment industry as one of the driver of the economy could be back with a strong rebound of world economy. Despite the governments commitment to increase public construction, growth in construction sector was also negative while prices for imported materials increased substantially in 2009 compared to the same period in 2008, e. g. The price of imported steel rose 21.5% during the first ten months of 2009. Cambodian construction sectors growth is expected to recover at the end of 2010 or early 2011 in line with Korean economy as most of the mega construction projects in Cambodia are Korean-backed.
SERVICES SECTOR
Negative growth adversely affected a few of the services sectors and most notably realestate and tourism. Real estate tumbled by as much as 40% in 2009, with a knock-on effect from decline in prices for land and residential construction activities. The number of foreign tourist arrivals in Cambodia slightly increased by only 0.3% in October 2009 due to the crisis. Air tourist arrivals fell sharply while there was increase in arrivals by land and water but spending tended to be much less from these visitors. Tourism still showed growth in 2009 but only 0.6%, a large fall from 9.8% growth seen in 2008. Trade accounts for the biggest portion of Cambodias service sector, contracted by 0.7% in 2009. Followed is transport and communication increased by only 3.4% in 2009, compared to an increase 7.15% in 2008. Meanwhile, the financial sector performed well during 2009, but non-performing loans increased significantly. Despite suffering from downturn, service sector still posted 1.2% growth in 2009 yet down from 9% the year before.
30
CAMBODIA
Country Report GDP GROWTH
Cambodia shows resilience and growth is likely dependent on sustainability of international trade and foreign capital inflows. Prior to global economic crisis, Cambodia economy grew rapidly and experienced an economic boom over the last decade with annual growth rates that averaged 9.1% from 1998-2008, peaking at 13.3% in 2005 denoting thrive and dynamism of Cambodias economy. Trend was slowing down in 2007 and recorded at less than 7% in 2008 as consequences from global economic crisis of 2008, especially on several key sectors which are the primary economic growth engines of the country. Cambodia experienced its first negative growth since the early 1990s, with a GDP contraction of more than 1% in 2009. The shrinkage reflected output declines in garment exports, tourism receipts and construction, which together account for over one-third of GDP. Nevertheless, Cambodias agriculture remains predominant within the economy. It employed over 56% of the total labour force and approximately 80% of Cambodians live in rural areas and depend on agriculture. The performance of this sector has been consistently positive since 2005 and accounted for 3.5% growth in 2009 despite the countrys negative GDP growth.
Source: NIS for 2005-2008, IMF projection for 2009-2010
Like other Asian countries, 2010 was another difficult year for Cambodia. Gross domestic products grew 4.3% [IMF forecast in Sept 2009] but has been revised upward to greater than 5% in September 2010, indicating Cambodias economy on the rebound and has gained growth momentum again after the worst year of 2009. Overall, theres still a pressing need to diversify the economy to enable the rural poor to contribute to, and benefit from, economic growth.
31
CAMBODIA
Country Report INFLATION
Consumer price index (CPI) rose by 5.22% in 1H2010, driven by rising petrol prices. The CPI increased by 1.6% from July 2009 to July 2010 as a result of increase in group of good and food and non-alcoholic beverages; furnishing household maintenance; health, transport, recreation and culture, restaurants, miscellaneous goods services, personal effects and the other services and only the price of rice decreased by (-1.4%). Overall, inflation has grown in a stable and manageable pace. Historically, inflation in Cambodia was quite low and under control, however there is an upward trend in recent years. The CPI basket is heavy weighted on food and foodstufss thus, volatility on global food prices shall have almost immediate impact on Cambodia inflation. Inflation jumped from only 4.2% in December 2006 to a double digit of nearly 14% y.o.y in 2007. We Source: NBC, CEIC saw a significant upsurge in inflation (above 35%) hit Cambodia vigorously in May 2008, stemming from soaring crude oil and food prices and fears of a U.S. economic recession. In particular, food prices increased around 37%; transportation costs (+25.8%) and prices of other nonfood products like gasoline and cooking gas also rose massively. These problems persisted to some extent til mid-2008 and since had decreased due to the fall in commodity price. In contrast, inflation decelerated and turned negative for the first time in March 2009. This disinflation continued until nearly the end of 2009, causing by decline in global economic activity; world oil and food prices fell and domestic monetary policy was tightened in mid-2008, leading to weaken domestic demand and further subdued price pressures. Nevertheless, the inflation rates turned positive again in late 2009 at 1.3% and 5.3% in November and December respectively as a combined effect of improved global economic condition and the weak US dollar. The financial turmoil began to calm and the medium-term prospect for the world economy appeared more favourable, oil prices & energy costs in the international market started to pick up again.
32
CAMBODIA
Country Report
YEAR-ON-YEAR CHANGE OF CPI ALL ITEMS
Source: National Bank of Cambodia (NBC), CEIC
As reported by the NBC, the Food & Non-alcoholic beverages subgroup, which accounts for 44.8% of the overall CPI basket, increased by 5.4% in December 2009, with major food categories, such as cereals, poultry, meat, fish, fruits and vegetables, registering significant price increases. Following is the rise in Transports, which posted an increase of 11.9% in December 2009 compared to the same period of last year, reflecting the increase in the prices of gasoline, diesel, motor oil, as well as transportation costs. Change in subgroup of Restaurants & Hotels at a rate of 3.8%, a substantial decline against the change a year ago. Meanwhile, changes in the subgroups of Clothing & Footwear and Housing, Water & Electricity were also moderate compared to last years increase, both up by 2.6 percent and 2 percent, respectively.
33
CAMBODIA
Country Report
Contribution to Overall CPI Year-on-Year change Dec-08 8.5 0.4 -0.9 3.1 1.2 Mar-09 -0.3 -0.8 -2 1.7 0.9 Jun-09 -2.2 -1.7 -2.1 0.3 1 -4.7 Sep-09 -1.1 -1.4 -1.3 0.4 1.1 -2.3 Dec-09 2.4 0.3 1.5 0.3 0.8 5.3
Food Housing, Water & Electricity Transports Restaurants & Hotels Others
CPI 12.3 -0.5 Source: The National Bank of Cambodia (NBC)
NBCs data reveals that domestic food items contributed 2.4 bps to total inflation of the month and Transport items followed on with a contribution of around 1.5 bps. The contributions of other major subgroups, such as Restaurants & Hotels, Housing, Water & Electricity, Health, Clothing & Footwear, Furnishings & Household Operations, and Education, were positive, but relatively small. Should we remain relatively cautious for the potential upsurge in inflation? Despite inflation has recently grown in a stable and manageable pace; at the moment; the government may be reluctant to pursue any tighten policy as to do so it may dampen on economic activity, however cautious remain if policy bias towards supporting growth continues to be escorted and also inflationary pressure may arise from high and volatile international commodity and oil prices.
34
CAMBODIA
Country Report INTEREST RATE
The current interest rate spread in Cambodia is above 13 percent p.a., following the impacts of recent mixed policies with deposit rates falling and lending rate rising in 2009. In the year under our review, banks interest rate spreads (6-months maturity interest rates on loans and deposits) on the KHR portfolio (riel) increased from 12.31% to 16.65%, while interest rate spreads on the US dollar portfolio increased from 10.82% to 12.60%. Conventionally, interest rates on deposits are considerably low, between 2-5% while lending rate of interest is about 48% for family business and 24% for small firms, making very harsh to stablize economic development. This reflects the lack of liquidity management instruments, lack of law and contract enforcement mechanism and thus, banks and credit analysis are of highly needed in Cambodia. INTEREST RATE SPREAD (%) (12-MONTHS MATURITY ON LOANS & DEPOSITS) INTEREST RATE SPREAD (%) (12-MONTHS MATURITY ON LOANS & DEPOSITS)
Source: The National Bank of Cambodia (NBC)
Source: NBC and NIS
Asian economy is often characterized by high domestic savings but Cambodia is an exception with less than 2% domestic savings ratio [2002]. In 2007-2009, there was acceleration in liquidity of banking system thanks to growing of deposits while demand for lending declined. As a result, the average interest rates of a 12M deposit in both KHR and decreased significantly to 6.9% and 5.9% per annum, respectively, in 2009. However, private sector by that time, was the engine to spur demand for loans (most classified as non-performing loans) despite the weak economic activity. Banks needed to strengthen their lending standard by employing severe restrictive policies such as imposing greater focus on credit risks analysis leading to increase in interest rate on loans. The average interest rate on 12-month loans in both riel and US dollars increased by 1.8% and 2.8% respectively, reaching 22.9% and 16.3% per annum respectively in 2009.
35
CAMBODIA
Country Report
CAMBODIA'S INTEREST RATE (% PER ANNUM, END OF PERIOD)
Riel 12-months Deposit Rate US$ 12-months Deposit Rate Riel 12-months Lending Rate US$ 12-months Lending Rate 2005 6.80% 4.00% 18.60% 16.20% 2006 6.40% 4.80% 23.10% 16.70% 2007 7.10% 4.90% 22.30% 16% 2008 7.60% 6.30% 22.40% 15.60% 2009 6.90% 5.90% 22.9% 16.3% 2010 p ... ... ... ...
Source: NBC
In a contracting economy and amid the weak prospects for economic growth, the NBC enacted a Prakas on 26th January 2009 that reduced the reserve requirement ratio on foreign currency deposit from 16% to 12% to encourage banks and financial institutions to lower the costs of borrowing for their customers. However, such policy actions did not seem to have yielded the desired economic outcomes, i.e., the expansionary MP did not lead to a decline in interest rates on loans while the lending activities of banks and financial institutions did not resume at desirable pace. We believe that it is very crucial for Cambodia to increase its domestic savings in order to finance various government infrastructural developments and other government expenditures rather than relies on ODA and other external sources of funds. Another challenge issue is how to finance small business firms as they are the key driver for economic growth in Cambodia and high interest rates at the moment may hinder the development prospect of this sector. The last point we want to address that theres essential for development of bond market in Cambodia which would eventually circulate fund not only to large firms but also to small business firms to generate a stable economic growth in the future. Therefore, Cambodia needs to have some measures and instruments to tackle the high interest rates and increase domestic savings in order to create a feasible environment for such developments.
36
CAMBODIA
Country Report EXCHANGE RATE
The local currency is pegged to the US dollars at stable range of 4,100-4,200. However, we saw a fall in the value of the riel recently and in fact the riel was trading at a stronger level of 4,247 in September 2010, above NBCs preferred rates. Effectively, the dollar has been used freely and widely in Cambodias economy during 1991-1993 when it was administered by the United Nations and since it has been used as a mean of payments along with the riel. It is evident that the local currency has been weakened against USD in recent years with the annual average exchange rate for 2009 recorded at 4,154 compared to 4,065 of 2008, denoting large fluctuations in the movements over of the years under review. The depreciation in 2009 was due to the repercussion of the capital flight out of the country. The increased Governments spending in local currency associated with the stimulus package and the weakness in the current account of the BOP also have contributed. Cambodia Exchange Rate and Its Trend against US Dollar
Source: The National Bank of Cambodia (NBC), IMF, SBS-Cambodia
By the end of 2008 and early 2009, we have seen the value of the riel fluctuated intensely against the cross-rates of its major trading partners currencies, measured through US dollars. The dollar generally strengthened against various international currencies under the time of consideration and the riel also posted some gains vis--vis a number of currencies such as the THB, JPY, EUR and SGD.
37
CAMBODIA
Country Report
A reversal trend came in as the local currency lost its ground during the last six months of 2009 and the USD weakened. According to the NBC, the following units appreciated against the Cambodian riel compared to the base period: Australian dollar, 32.7%; Indonesian rupiah, 19.8%; Korean won, 18.6%; Thai baht, 6.8%; Philippines peso and Singapore dollar, each 4.3%; Malaysian ringgit, 4%; and the Euro and the Chinese yuan, 3.7% and 2.2%, respectively. Meanwhile, the end-period cross-rates of the Vietnamese dong weakened in term of the local unit, with a depreciation of 3.4% compared to previous year. The appreciation among these currencies was mainly as a result of stable macroeconomic outlook and improved sentiment in many Asian and Euro area financial markets. Overall, it seems that the Japanese yen remained broadly stable against the riel over the period and US dollar tended to depreciate toward the end of the reporting year. On one hand, the dollarization of the Cambodian economy has contributed to stabilizing the riel even in times of rising inflation. Over the last ten years, the exchange rate of the riel to the dollar remained relatively stable, mostly between 3.9 (in 2000) and 4.03 (in 2007). On the other hand, this dollarization undermines the effective conduct of Monetary Policy and the NBC with its role as the lender of the last resort for banks facing liquidity problem is greatly constrained because it cannot intervene the market and develop effective instruments of MP under such circumstances. Given the high degree of dollarization and the stage of financial development, massive criticism of the present exchange rate regime may be premature. A greater exchange rate flexibility approach is necessitated and has been called upon by the IMF to stabilise Cambodias economy in the long-term.
38
CAMBODIA
Country Report FISCAL BALANCE
FISCAL POLICY The overall budget for 2010 was expected to be 8.29 trillion riel ($2bn) compared with last years 7.26 trillion ($1.8bn). According to the budget, taxes on properties would be levied for the first time in Cambodia (a tax of 0.1% is levied on properties that are valued at over 100 million riel, approx. $25,000) and expenditure on military will be increased (from $160m last year to $175m to secure the countrys capacity to protect its sovereignty) to accommodate the decline in government revenue, investment and foreign assistance amid the global crisis. Current debts scenario: Although Cambodias debt remains on a sustainable path, the risks are increasing as a result of negative economic growth in 2009 and the low level of current government revenues. External debt constitutes about 95% of public debt and about 35% of the external debt was owed to the Russian Federation and US. In 2008, external debt was 46% of GNI. In 2009, total government spending followed as planned but revenue collected less than expected, foreign financing could not cover the deficit and thus, the government had to use domestic debt to supplement the gaps.
Cambodias Financing Budget (Billion Riels) 2006 Total Domestic Revenue 2,918 Total Domestic Expenditure 4,112 Total Deficit (cash basis) -1,194 Foreign Financing 1,584 Grants 790 Loans (net) 794 Domestic Financing -390 Banks -333 Others -57 Source: EIC
2007 4,015 5,041 -1,026 1,615 730 885 -589 -1,114 525
2008 5,290 6,337 -1,047 2,355 945 1,410 -1,308 -1,060 -248
2009 5,008 7,746 -2,738 2,423 967 1,456 316 493 -177
2010f 5,674 8,483 -2,809 2,804 991 1,814 5 0 5
Budget Revenue Budget Expenditure Current Public Deficit Overall Public Deficit Source: EIC
Budget & Public Debts (% of GDP) 2006 2007 2008 9.8 11.5 12.6 13.8 14.4 15.1 1.0 2.6 3.6 -4.0 -2.9 -2.5
2009 11.6 18.0 0.5 -6.4
2010f 12.4 18.6 1.7 -6.2
39
CAMBODIA
Country Report EXTERNAL BALANCE
Exports declining faster than imports, trade deficit widening in 2009 Cambodias external trade declined significantly in 2009, the balance on the current account & capital account posted a deficit of $490.0m, declined $290.7m (37.2%) compared to last years deficit. Cambodias economy also faces persistent trade deficit on the back of falling exports.
YEAR-TO-YEAR EXPORTS, IMPORTS & TRADE BALANCE
In 2009, total exports of Cambodia was approximately 40% of total GDP. Garment and cigarette exports declined significantly, but other exports Source: Economic Institution of Cambodia( EIC) kept increasing sharply, especially agricultural products. The drop reflected a decline in the export volume of clothing, which represented about 70% of the total exports. Falling in the prices of rubber, fish, paddy rice and other agricultural products were also attributable to the decline of other domestic exports. Although, exports of agricultural products increased fourfold, but their overall volume remained low and was made through informal channels, especially paddy, causing serious leakages in tax revenue.
CAMBODIA IMPORTS AND EXPORT AS PERCENTAGE OF GDP
Source: Economic Institution of Cambodia (EIC), Asian Development Bank (ADB)
40
CAMBODIA
Country Report
The US is the largest consumer of Cambodian garment export, however, local producers have been unable to raise market share like other regional producers. Analysts stated that Cambodia exports were greatly affected by sluggish in demand stipulated from global crisis such as sharp drop in US retail sales dragged down Cambodias garment exports and therefore minor change in US import policy or economic condition will significantly impact the total exports of Cambodia.
Source: ADB & NBC for 2005-2009 and EIC projection for 2010
Meanwhile, imports of raw materials used in the garment and construction sectors (which made up the lions share of imports) slumped down and also the number of imported cars, motorcycles, buses, trucks, tractors and alcohol decreased greatly, resulting in a trade deficit of $1.8bn, 18.1% of GDP. The deficit is offset by foreign investment and overseas remittances on the financial account in the good time. What is the feasible of trade account in 2010 -11? The appreciation of the riel against USD discourages Cambodia export however, we are not over-worried about that as strong economic activity will eventually generate glittering demands for both exports and imports, so what were looking forward is the compelling recovery of world economy begins to take hold.
41
CAMBODIA
Country Report
FOREIGN DIRECT INVESTMENT

Cambodia is one of the Indochina sub-regions that offer fruitful ground for investors seeking attractive risk-adjusted returns. Within the emerging market universe, FDI inflows are seen as a mean of boosting economic development and growth and assisting in the transition process which consists of both economic reforms and business liberalisation measures. Particularly, Cambodia is a major recipient of private capital inflows and it will continue to retain, sustain, manage and attract yet more FDI inflows. Cambodia shifted to a free market economy and welcomed FDI since 1989. From 1994 to April 2009 the country received a total FDI of approximately $25bn in 1447 projects, peaked in 2008 where many foreign investments attracted into Cambodia. While Cambodia has adopted a competitive investment strategy, it still lags behind Asia-Pacific countries in terms of investment facilities and other factors such as roads, ports and other infrastructures are not yet developed. During the period 1995 -2000, FDI flows to Cambodia were dominated by developing economies with ASEAN countries and the Asian newly industrialized economies accounted for the lion's share of FDI flows. Cambodias economy has struggled since the 2009 recession and FDI dropped 47% compared with a year earlier. The total value of foreign investment projects approved by the government in 2009 was $6 billion compared with $11.36 billion in the same period last year.
FDI Inflows by Region and Changes in FDI Disbursements
Source: US Conference on Trade & Investment Source: The National Bank of Cambodia (NBC)
42
CAMBODIA
Country Report
Projects & Capitals invested in Cambodia from 1994-2009
Source: The Council for Development of Cambodia (CDC) Database
China was the largest investor in 2009 despite a steep decline from $4.48 billion in 2008 to $930 million last year. Most of Chinese companies investing in Cambodia are stateowned companies. Chinese companies started their operation in Cambodia since 1994 and had been considered the biggest investor with a total capital of $5.56bn [1994-April 2009]. The big projects include infrastructure and energy, textiles, manufacturing, agriculture and food-processing. Chinas Projects and Capitals into Cambodia China's projects and capitals into Cambodia
No of Projects 50 40 30 20 10 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Source: The Council for Development of Cambodia (CDC) Database Capitals 5,000,000,000 4,000,000,000 3,000,000,000 2,000,000,000 1,000,000,000 0
43
CAMBODIA
Country Report
Koreas Projects and Capitals into Cambodia Korea's projects & capitals into Cambodia
No of projects 20 16 12 8 4 0 Capitals 1,400,000,000 1,200,000,000 1,000,000,000 800,000,000 600,000,000 400,000,000 200,000,000 0
Source: The Council for Development of Cambodia (CDC) Database
The second largest investor to Cambodia is Korea. From 1995-June 2009, Korea invested a total amount of $2.77bn in about 106 projects in several areas such as real-estate development, banking, construction, tourism and manufacturing. Major projects include: Construction of new town in Phnom Penh cost $988m Construction of international financial centre and shopping complex with high-rise building cost $967m Total capitals for direct investment of Vietnam in 63 projects were approved and issued with license by Cambodian Development Council. As of 30/06/2010, it reached $ 900 million, bringing Vietnam to become the third largest investor among foreign investors in Cambodia, after China & Korea. Vietnams large corporations have established in Cambodia include: Military Telecommunications Corporation (Viettel); BIDV; Vietnam mineral-coal Group, Vietnam national-oil Group, Vietnam national airlines, Hoang Anh Gia Lai Group. In fact, Cambodia has recently implemented a very attractive tax regime in its bid to attract FDI inflow. Cambodia presents as a land for greenfield projects and promises a bright outlook for investment climate of the country.
44
CAMBODIA
Country Report APPENDIX KEY ECONOMIC INDICATORS
GROSS DOMESTIC PRODUCTION
Real GDPProduct by Sector (% share of GDP) 2006 31.7 27.6 40.8 2007 31.9 26.8 41.3 2008 32.5 22.4 45.1 2009 33.5 21.7 38.8 2010
Agriculture Industry Services Source: Asian Development Bank (ADB)
Nominal GDP by Expenditure (Billion Riels) 2006 24,166.8 1,574.8 5,774.7 359.5 20,474.7 22,691.9 2007 35,039.5 2,008.2 6,783.7 499.7 22,891.6 25,560.5 2008 44,529.8 2,268.0 6,898.4 506.7 23,482.9 33,711.8 2009 . . . . . . 2010 . . . . . .
Private consumption Government consumption Gross fixed investment Stockbuilding Exports of goods & services Imports of goods & services
Source: Asian Development Bank(ADB)
45
CAMBODIA
Country Report
EXPORTS & IMPORTS
Exports to: United States Germany United Kingdom Imports from: Thailand Vietnam China Source: Asian Development Bank (ADB)
Main Trading Partners (Million US$)

2006 1,898.9 233.5 153 415 269.9 523.9 2007 2,363.1 298.3 211.7 1,491.1 1,145.2 969.4 2008 2,314.3 329.1 232 2,221.4 1,573.8 1,204.5 2009 1,822.5 302.4 284.2 1,732.6 1,390.1 987.7 2010
BALANCE OF PAYMENT
Goods: exports fob Goods: imports fob Trade balance Services & Income credit debit Current transfer credit debit Current-account balance Direct investment Portfolio investment Foreign aid (net loans) Other investments Financial balance Net errors & omissions Overall balance
Balance of Payments, IMF series (US$ m)

2006 3,692.4 4,771.2 -1078.9 186.2 1,386.3 -1,200.1 919.4 997.1 -77.7 26.7 474.8 -8.2 122.1 -375.9 212.9 -42.7 196.9 2007 4,088.5 5,431.9 -1343.4 268.2 1,659.8 -1,391.6 852.9 945.9 -93.0 -222.4 866.2 -6.5 199.6 -377.9 681.5 -36.6 422.5 2008 4,708.0 6,508.4 -1,800.4 134.7 1,753.5 -1,618.8 847.6 935.3 -87.7 -818.0 794.7 -11.6 234.7 368.6 1386.3 -46.3 522.0 2009 4,301.8 5,875.8 -1,573.9 134.2 1,680.4 -1,546.2 885.8 963.3 -77.5 -554.0 511.3 -7.6 153.1 -72.9 583.9 -34.7 -4.7
Source: Asian Development Bank (ADB)
46
CAMBODIA
Country Report
COMPARATIVE ECONOMIC INDICATORS, UPDATED & ESTIMATE 2010
Cambodiae GDP (USD bn) GDP per head (USD) GDP Growth (%) Consumer price inflation (% per year) Oct 10a Current-account balance (USD) Current-account balance (% of GDP)-2009 Exports of goods FOB (USD bn) Imports of goods FOB (USD bn) External debt (USD) Exchange rate (USD $1) Oct a 2010 Note: a. Actual; e. estimates. Source: EIC, ADB, EIU, Economy Watch 11.1 739 4.3 4 Vietname 103 1,168 6 8.5 Laoe 6.3 964 5 6 Thailande 298 4,403 5.5 3.2 Singaporee 195 40,336 5.7 3
-1,520m -13.6
-9.17bn -7.5
-635m -9
7.4bn 4
26.2bn 18
4.95 6.89 3,531m 4,243
70.8 87 41.7bn 19,675
1.98 2.65 6,227m 8,237
48.1 43.5 81.1bn 30.37
1.40
47
CAMBODIA
Country Report
CENTRAL GOVERNMENT
Government finances ( Billion Riel unless otherwise indicated) Total revenue Grants Total expenditure & net lending Current expenditure Capital expenditure Current balance Capital balance Financing (net) Domestic borrowing Foreign borrowing Memorandum item (% of GDP) Revenue & grants Total expenditure Budget balance excl on lending 2006 3,394.5 761.1 4,203.1 2,450.9 1,752.1 566.1 -1,205.3 . . 11.4 14.1 -0.2 2007 4,222.6 753.8 5,151.2 2,978.9 2,172.3 1,234.7 -1,374.7 . 12.1 14.7 -0.5 2008 5,567 1,084.1 6,680.8 3,952.9 2,727.9 1,534.8 -2,163.3 . 12.5 15 -0.1 2009 5,077.7 1,014.1 7,548.6 4,597.1 2,951.6 451.4 -2,922.3 .. .. 2010 . . . .. .
Source: (Asian Development Bank, Key Indicators for Asia and the Pacific)
MONEY AND BANKING
Money supply ( Billion Riel unless otherwise indicated) Domestic credit Domestic credit growth (%) M1 (% GDP) M2 (% GDP) Net Foreign Reserves (US$m) 2006 2,676 5.4 17.9 1,097 2007 4,570 . 5.7 26.8 1,374 2008 6,907 5.4 22.6 1,700 2009 8,280 6.5 25.9 1,992 2010f 9,154 6.4 26.2 2,354
Source: Asian Development Bank (ADB), Economic Institute of Cambodia (EIC)
INTEREST RATES(%) per annum, period average (Riel)

Lending interest rate (12 month) Deposit interest rate (savings) Time: 6 month 12 month Source: (IMF, ADB) 2006 23.1 1.83 5.4 6.4 2007 22.3 1.9 6 7.1 2008 22.4 2.05 6.46 7.6 2009 22.9 1.21 5.28 6.9 2010
48
CAMBODIA
Country Report REFERENCES
NATIONAL STATISTICAL SOURCES
The National Bank of Cambodia (NBC) The National Institute of Statistics (NIS) The Phnom Penh Post The Ministry of Economic & Finance The Ministry of Commerce The Council for the Development of Cambodia (CDC) Economic Institute of Cambodia (EIC) Economist Intelligence Units (EIU) The World Bank (WB) The IMF Asian Development Bank (ADB) The Business Review Magazine Central Intelligence Agency , www.cia.gov The Khmernews.net
INTERNATIONAL STATISTICAL SOURCES
OTHER SELECTIVE SOURCES
GLOBAL DISCLAIMER
This document was prepared by SBS. Its subsidiaries, branches, and affiliates are also referred to as SBS. The information and statements contained herein, including any expression of opinion, are based upon sources believed to be reliable, however no representation or warranty, either expressed or implied, is provided in relation to their accuracy, completeness or reliability. Expressions of opinion herein were arrived from careful considerations, which were based upon the best information known to us; and our opinion are believed to be fair and reasonable in the circumstances prevailing at the time. Any opinion expressed herein is subject to change without notice and may be different or contrary to opinions expressed by other business sectors as a result of using different assumptions and criteria. This document is distributed solely for information purpose and should not be construed as an offer or solicitation to buy or sell any securities or related financial instruments. Any analysis in this document is based on numerous assumptions, and past performance is not necessarily indicative of future results. SBS hereby does not promise that investors will obtain profits, nor will it share with investors any profits or liabilities for any investment activity taken by investors with regards to the contents presented herein. The use of any information, statements forecasts and projections contained herein will be at the sole discretion and risk of the users. The responsible analyst(s) of this report may interact with trading desk personnel, and sales personnel for the purpose of synthesizing and interpreting market data. SBS has in place policies, procedures, and physical information barriers to control the flow of nonpublic materials contained in one or more areas, divisions into another within SBS, and to ensure confidential information is not publicly disclosed without proper procedures, authorization. SBS and/or its officers, directors and employees may have a position in any security mentioned herein and may also perform or seek to perform investment banking services for these companies. No person is authorized to give any information or to make any representation not contained in this document and any information or representation not contained in this document must not be relied upon as having been authorized by or on behalf of SBS. This document is for private circulation only and is not for publication in the press or elsewhere. Any duplication or redistribution of this document is prohibited.
49
CAMBODIA
Country Report
SACOMBANK SECURITIES COMPANY

Hotline: (+84.8) 62 55 59 50 E-mail: contact_english@sbsc.com.vn Website: www.sbsc.com.vn
Headquarters Address: 278 Nam Ky Khoi Nghia, Dist. 1, HCM City Tel: (+84.8) 62 68 68 68 Fax: (+84.8) 62 55 59 39 Hanoi Branch Address: Floor 6 & 7 88 Ly Thuong Kiet St., Hoan Kiem Dist., Hanoi Tel: (+84.4) 39 42 80 76 Fax: (+84.4) 39 42 80 75 Email: hanoi@sbsc.com.vn Tay Do Branch
Saigon Branch Address: 63B Calmette St., Nguyen Thai Binh Ward, Dist. 1, HCM City Tel: (+84.8) 38 214 888 Fax: (+84.8) 38 213 015 Da Nang Branch Address: 62 Nguyen Thi Minh Khai St., Hai Chau Dist., Da Nang City Tel: (05113) 81 86 86 Fax: (05113) 81 88 86
Hoa Viet Branch Address: 36-38 Phung Hung St., Dist. 5, HCM City Tel: (+84.8) 38 54 78 58 Fax: (+84.8) 38 54 78 56 Vung Tau Branch Address: Floor 3 67A Le Hong Phong St., Vung Tau City Tel: (+84.64) 35 53 398 Fax: (+84.64) 35 53 390
Singapore SBS Global Investment Pte Ltd. Address: 3 Shenton Way, #24-03 Shenton House, Singapore 068805 Tel: +65-6592-5709 Fax: +65-6592-5700 Website: www.sbsglobalinvest.com
Cambodia Sacombank Securities PLC. Address: 56 PreahNorodom Blvd, SangkatCheyChumneas, Khan Daun Penh, Phnom Penh, Cambodia Tel: +855-236-69-68-68 Fax: +855-23-22-34-33
Address: 212A Ba Thang Hai St., Ninh Kieu Dist., Can Tho Tel: (0710) 3783434 Fax: (0710) 3783436
Research and Investment advisory: sbs.research@sbsc.com.vn
50

Cambodia Country Report

Enviado por

Dados do documento

Direitos autorais

Formatos disponíveis

Compartilhar este documento

Compartilhar ou incorporar documento

Opções de compartilhamento

Você considera este documento útil?

Este conteúdo é inapropriado?

Direitos autorais:

Formatos disponíveis

Cambodia Country Report

Enviado por

Direitos autorais:

Formatos disponíveis

CAMBODIA

Economic outlook 28 29 The economy Economic Performance

Fax: +855 23 22 34 33 Web Site:www.sbsc.com.vn