Weekly news round-up / Week 36
Political (Cambodia-Specific)
- MPs ‘hastily’ approved laws, new report says 28-08-15
Government watchdog COMFREL (The Committee for Free and Fair Elections in Cambodia, a ‘civil society task force’ member association of transparency and democratic values NGOs) has released a mid-year report on the performance of the National Assembly, criticizing the lack of meaningful debate over new legislation.
“There is a lack of preparation, discussion and consultation before plenary session debates and individual lawmakers don’t express their own opinions and are afraid of saying anything different to the party,” Comfrel executive director Koul Panha said.
In particular the report criticizes opposition leader Sam Rainsy – prior to voting on important legislation such as the Election Law and National Election Committee legislation, Mr. Rainsy stated that further debate was unnecessary as the bills had been drafted by bipartisan working groups.
- Cambodia deal doomed after just four Nauru refugees resettled for $55m 31-08-15
Guardian piece on the controversial refugee resettlement agreement between Cambodia and Australia, signed in September 2014. An Interior Ministry spokesperson has stated to the Cambodia Daily that “We don’t have any plans to import more refugees from Nauru to Cambodia … I think the less we receive the better”.Article gives the opinion that the deal has collapsed, though Australian foreign minister Julie Bishop says this is incorrect and that she had a productive meeting with her Cambodian counterpart last month.
Australia committed to providing $55m to Cambodia as part of the deal - $40m in additional aid as well as $15.5m in resettlement, housing, education and integration costs for the refugees. Only four refugees (three Iranians and a Rohingya man from Burma) have been relocated, at a cost of more than $13m per refugee. The deal included no stipulations as to the number of refugees Cambodia must take.
- Too many unions: owners 03-09-15
CAMFEBA (Cambodia Federation of Employers and Business Associations) have released a position paper in support of the proposed trade union law, which it claims will curb instances of illegal strikes and stabilize industrial relations by cutting down the number of minority unions. The paper notes an average of seven registered unions per factory across the garments sector.
The minimum thresholds for setting up a union are a contested issue. The government introduced amendments to the draft on July 28th, changing the threshold from 20% of the worker population to 10 individuals. CAMFEBA are suggesting a two-tiered system based on a percentage for larger enterprises and a minimum number of people for smaller entities.
The law is expected to be passed by year-end, though there is concern over a perceived lack of consultation with unions and other stakeholders.
Europe, European Businesses, EuroCham Members
- Stronger Trademark Protection Sought 02-09-15
Khmer Times article examining the current state of Cambodia’s intellectual property protection laws on the back of EuroCham’s Intellectual Property Rights breakfast briefing on Wednesday 2nd September. Lawyers speaking at the breakfast commented on how clients had trouble dealing with police and were confused about fees they had to pay to proceed with trademark enforcement.
Whilst Cambodia has a body of intellectual property laws developed as part of the Kingdom’s accession into the WTO, understanding amongst police, judges and prosecutors can be lacking whilst results in sub-optimal implementation of the laws.
The government is working on a sub-decree that aims to clarify enforcement procedures for law enforcement officials, including police. It will take one to two years to complete as it seeks to coordinate enforcement activity amongst ten entities including the Ministry of Commerce, Ministry of Interior, the customs department, police and courts.
- Healthy profit for Acleda in first half 02-09-15
Acleda Bank, Cambodia’s largest bank and a EuroCham member, have reported half-yearly results showing a 40% increase in net profits ($50.6m in total) compared to the same period last year.
In Channy, the bank’s CEO, attributed the profit increase to improved loan asset quality, resulting in a very low rate of non-performing loans. Customer deposits also registered significant growth (14.1%), as did loans and advances (12.7%).
The majority of growth in loans and advances, which totaled $2.3bn in the first half of the year, derived from loans to small and medium enterprises rather than to consumers.
Infrastructure, Development and Core Industries
- FDI on the Rise, but Figures Questioned31-08-15
Official figures released by the government report $3.4bn of FDI in the first half of 2015, compared to $4bn for the entirety of last year. However, these figures have been questioned as they may relate to proposed or approved investment rather than actual FDI inflows.
Data from the UN’s 2015 World Investment Report showed FDI in Cambodia to total $1.73bn, which would suggest that the government’s figures are based on proposed investments.
Grant Knuckey of ANZ Royal Bank, a EuroCham member, commented that it’s normal for there to be material differences between approvals and investment inflows. Did notice a large inflow of investment into construction, retail and manufacturing industries.
Commenting on the significance of the Industrial Development Policy, states that "Manufacturers are looking for a signal that an enabling framework is going to support them – electricity, skills development as well as logistics and hard infrastructure – roads and ports,” said Mr. Knuckey. “That's the sort of commitment that an investor would want to see in those three key enabling areas."
- Zones 'should not be rivals' 31-08-15
Bangkok Post piece that also appeared in Phnom Penh Post, looking at the relationship between Koh Kong Special Economic Zone (KKSEZ) and the Trat SEZ under development in Thailand’s Khlong Yai district.
Features comments from chairman of the Trat Chamber of Commerce, arguing that the zone should not be developed in such a way as to compete directly with KKSEZ. His suggestion is that Trat's SEZ should focus mainly on investors or industries keen to set up head offices in Khlong Yai, which is convenient in terms of transport facilities, while labor-intensive manufacturing should be promoted in KKSEZ to create more jobs for Cambodians. Daily wages in Koh Kong are around half that in Trat. Thailand has stronger infrastructure but higher minimum wage and less preferential market access.
Profile of KKSEZ: Founded in 2002, part of the Ly Yong Phat group. Only has five plants: Hyundai, Hana Group, Yasaki, Mikasa and KKN Apparel. Factories are considered ‘small-scale’ and rely upon imported energy from Thailand. KKSEZ is held back by limited infrastructure and public utilities.
- Draft petroleum law to be in place by the year’s end 01-09-15
A petroleum law being drafted by the Ministry of Mines and Energy is almost complete and should be in place by the end of the year. Will put in place price mechanisms to ensure globally representative and competitive fuel costs. Is aimed at facilitating governance over Cambodia’s emerging oil industry, will cover local pricing as well as offshore and onshore exploration. Will also include provisions relating to quality standards. Unclear at this point whether the law will include provisions for establishing a state enterprise to lead the oil market.
- Young workers face rough time: report 01-09-15
Article covering a report by the Youth Resource Development Program, a Phnom Penh-based youth organization, looking at working conditions amongst young people in the informal economy.
Only 27% of respondents had contracts with their employers, and less than half knew of the Labor Law. Only 3.7% work involved in any form of union association - Low unionization rates in sectors like the restaurant industry are largely due to fears over losing their jobs and a lack of personal investment in jobs seen as temporary.
On average, respondents had a total income of 172usd per month, slightly lower than approximately 188usd in the garments sector once all forms of compensation are taken into account.
- Single rice brand stirs the pot 02-09-15
The Cambodia Rice Federation is working on an umbrella brand name to help distinguish Cambodian rice in the international market, which is currently known simply as ‘fragrant rice’. CRF believes that inconsistent labelling of Cambodian rice among exporters has been diminishing the collective strength of the rice sector.
However, the Ministry of Agriculture has already been urging the use of “Cambodia Jasmine Phka Rumduol” as an umbrella brand – Phka Rumduol is one of multiple Cambodian seed varieties and has been awarded the world’s best rice at the last three annual World Rice Conferences. Some CRF members feel this would be confusing for consumers as not all Cambodian rice is of the Rumduol variety.
There are plans for a marketing drive amongst international consumers to support the eventual new brand name.
- Garment Sector Training Institute Breaks Ground 04-09-15
The Garment Manufacturers Association in Cambodia (GMAC), along with the French Development Agency and the Ministry of Labor and Vocational Training, have begun construction on a $3.81m Cambodian Garment Training Institute intended to increase the capacity of Cambodians to take higher-skilled and managerial roles within the industry. The institute is being built within Phnom Penh Special Economic Zone and should be completed by late 2016.
At the opening ceremony on Thursday 3rd September, plans were revealed to train 1,600 garments workers in the first three years as well as 240 university students per year. There is an ongoing international bidding process for the development of the curriculum.
Developing Cambodian workers to be able to function at managerial is likely to reduce expenditure on expatriate staff that demand higher salaries and often stay only a few years. May also improve industrial relations by reducing cultural misunderstandings between management and the shop floor.
Thematic Pieces
- Myanmar sets $2.80 daily minimum wage in bid to boost investment 29-08-15
Accordingly, Myanmar’s minimum monthly salary, based on a six-day work week, will be around 67 USD.
Important to know as Myanmar is a major competitor for FDI in garments. Cambodia’s comparable monthly minimum wage is 128 USD, giving Myanmar a cost advantage when it comes to labor.
Myanmar exported $1.5 billion of clothes and materials in 2014, up from $1.2 billion the previous year and $947 million in 2012. Economy is expected to grow by 8% this year. Coming into effect on September 1st, Myanmar has passed a bill introducing a national minimum wage equivalent to $2.80 per day for an eight-hour work day. Is aimed at increasing foreign direct investment, particularly in the garments sector.
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