Weekly news round up 2016 / Week 1
Political (Cambodia-Specific)
- PM Nixes Ban on Dual-National Party Leaders 08-01-16
Prime Minister Hun Sen has stated that, following consultation with CPP leaders, there are no longer plans to introduce an amendment to the Law on Political Parties which would exclude citizens who have dual nationality (including CNRP leader Sam Rainsy) from holding leadership positions within parties. The Prime Minister stated that dual nationality Cambodian citizens are welcome to compete in elections, whilst a spokesman for the CPP commented that the party had four time previously defeated parties led by Sam Rainsy at the poll booth.
Infrastructure, Development and Core Industries
- Rice warehouses are put back on the table in talks with China 05-01-16 http://www.phnompenhpost.com/business/rice-warehouses-are-put-back-table-talks-china
The Ministry of Commerce is considering a $400m proposal by the three Chinese firms to build state-run rice warehousing facilities in Battambang, Pursat and Kampong Thom provinces.
A lack of storage capacity has long been identified as an obstacle to Cambodia’s rice industry and agricultural sector in general. The proposed plan, which could see construction begin this year, comes after the Royal Government had made a request last year for a $300m loan from China to build 10 warehouses capable of storing 1.2 million tonnes of paddy.
Kann Kunthy, CEO of rice miller Brico, commented that the storage facilities would most benefit the industry if equipped with drying facilities. Rice harvests generally take place in November and December, and lack of facilities within Cambodia limits the amount that local millers and exporters can currently invest in. If more warehouses with drying facilities were available, the paddy could be stockpiled and used for milling year-round and less low-value paddy would need to be sold to neighboring countries.
- S. Korean Firm to Invest $40 Million in Plantation 06-01-16
South Korean-owned Welt Bio Co. Ltd. is investing $40 million in a 500-hectare pepper plantation, which is being described as the largest in the world, in Mondulkiri province. According to the agriculture ministry, the plantation area for black pepper increased by more than 40 percent in 2015, from 2,653 hectares in 2014 to 4,645 hectares last year. Production rose from about 7,500 tons in 2014 to about 9,800 tons last year. This year, officials believe the total will reach 11,000 tons.
- PM signs health decree 07-01-16
A sub-decree signed by Prime Minister Hun Sen on 6th January mandates the National Social Security Fund, which already provides workplace injury insurance to more than 900,000 Cambodian workers, to begin providing health insurance. Whereas employers currently cover all of the costs for the NSSF’s injury insurance, it is understood that healthcare insurance will be paid for by both employers and employees though details are yet to be revealed. There are plans to further enhance social security in 2017, with the NSSF eventually intended to administrate a pension regime.
- Positive growth has ports upbeat 07-01-16
http://www.phnompenhpost.com/business/positive-growth-has-ports-upbeat
Final container traffic figures for 2015 saw a 17% year-on-year increase for Sihanoukville Autonomous Port (SAP) and an 8% increase for Phnom Penh Autonomous Port (PPAP). PPAP intends to increase its container capacity with work soon to begin on a new terminal in Kien Svay, Kandal province. The expansion is intended to be funded by issuing an IPO on the Cambodia Securities Exchange. SAP is also exploring the possibility of listing in mid-2016 with a new port planned for 2020.
- ‘World’s Largest’ Sugarcane Factory to Open in Preah Vihear Next Month 07-01-16
http://www.khmertimeskh.com/news/19586/---world---s-largest----sugarcane-factory-to-open-in-preah-vihear-next-month/
The ‘world’s largest’ sugarcane factory is set to open in Preah Vihear next month. The $300m factory, built by Chinese investors, is planned to be able to produce around 1,000 tons of sugar per day for domestic consumption and export and to create thousands of jobs in the province. Local farmers are being encouraged to switch from rice to sugarcane to sell to the factory, which will need around 20,000 tons of cane to refine each day.
- Gov’t Preparing to Eliminate Import Duties for ASEAN Products 07-01-16
http://www.khmertimeskh.com/news/19589/gov---t-preparing-to-eliminate-import-duties-for-asean-products/
On 7th January the Royal Government passed a sub-decree requiring the reduction and elimination of import tariffs for productions originating from ASEAN countries in order to comply with the ASEAN Trade in Goods Agreement (ATIGA), a key component of ASEAN Economic Community.
A director from the General Department of Customs and Excise explained: “We are renewing the tariff list from 2016 until 2025. Our tariffs were already low, but some will become even lower to comply with the ASEAN framework,” he said, explaining that some tariff lines that are now around 5 per cent will fall to zero in five years, but said this would not apply to every import good.
ATIGA covers not over tariff elimination but the harmonization of other potential obstacles to trade such as certificate of origin and phyto-sanitary requirements. Local taxes such as VAT will remain in place.
Under the AEC framework, Cambodia, along with Laos, Myanmar and Vietnam, have more flexibility in lowering import duties than the more developed members of the regional bloc. They can maintain duties at 1 to 5 percent on specific tariff lines accounting for 2.7 per cent of the total ASEAN tariff lines until 2018.
- Cambodia’s Airport Passenger Figures Display Robust Growth 07-01-16
Figures released by Cambodia Airports reveal a 12.9% increase in the total number of passengers in 2015, with the three international airports of Phnom Penh, Siem Reap and Sihanoukville handling a total of 6.47 million passengers. The impressive growth very almost matched the growth rate of 2014 which was 13%. Despite concerns at the start of the year over the impact of political instability in Thailand and economic slowdown in China, Cambodia was able to increase its international visitors on the back of political stability, strong economic growth and the growing affluence of the middle class amongst regional neighbors.
This being the case, Cambodia Airports expects more modest growth closer to 7% in 2016. Whilst Phnom Penh and Sihanoukville airports are expected to continue to register double-digit growth, a “seeming erosion of tourist arrivals” is likely to deflate growth at Siem Reap.
- Office space development predicted to dominate 2016, 07-01-16
In a Q+A session with Phnom Penh Post, Sharon Liew, CEO of real estate company Huttons CPL, expects the market for premium ‘grade A’ office space to take off in 2016.
Ms. Liew expects the inauguration of ASEAN Economic Community to spur an increase in the number of companies investing in Cambodia, as well as the relative stability of the US dollar compared to Chinese yuan or other national currencies in the region which may encourage companies to set up headquarters in Cambodia. Currently, Grade A office space is very limited in Cambodia – arguably only the Vattanac Tower would be considered ‘Grade A’ but even this location has limitations such as shutting off of air conditioning at 7pm.
Asked to comment on the future ‘financial district’ of Phnom Penh, Ms. Liew commented how there are already 15 banks clustered around the Canadia Tower and Vattanac Capital Tower and that this would be the most likely location for future development of Grade A office space.
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