Two Voices of the World Bank. Which One Says What? – Thursday, 9.9.2010

On 8 and on 9 September 2010, two high level statements from the World Bank were reported. Here follow some excerpts:

The Phnom Penh Post reported:

Chief Economist Meets Hun Sen, Praises Cambodia

The Chief Economist of the World Bank Justin Yifu Lin praised Cambodia for its economic development at a meeting with Prime Minister Hun Sen yesterday.

“Despite the world facing the financial crisis, Cambodia’s GDP is still positive,” Lin was quoted by Eang Sophalleth, spokesman for Hun Sen, as saying during a courtesy call to the Council of Ministers office in Phnom Penh.

The World Bank estimates that gross domestic product will rise 4.4 percent this year.

The spokesman said that Lin, who is also senior vice president of the World Bank, congratulated the premiere on the Kingdom’s development.

In response, Hun Sen highlighted that the government was trying to improve the economy through agricultural enhancements, physical and telecommunications infrastructure improvements, and energy and human resource development…

The Cambodia Daily reported one day later:

Economic Concessions Endanger Rights of Poor, World Bank Says

The World Bank on Tuesday warned that large-scale farmland purchases posed a threat to rights of farmers in Cambodia and elsewhere in the world, a conclusion that follows criticism by human rights workers of Cambodia’s economic land concessions to private firms.

Big land acquisitions by investors raise “a real concern about the ability of local institutions to protect vulnerable groups from losing land on which they have legitimate, if not formally recognized claims,” the World Bank said in a new report on growing global demand for farmland.

“The veil of secrecy that often surrounds these land deals must be lifted so poor people don’t ultimately pay the heavy price of losing their land,” World Bank Managing Director Ngozi Okonji-Iweala said in a statement.

Is one statement true, and the other is not? No. Both are true. The question is, however, who is looking at what, and for whose benefit. In macroeconomic terms, Cambodia is doing well – says the Chief Economist of the World Bank.

This does not lead to poverty alleviation helping a large number of Cambodian people, says the Managing Director of the World Bank.

The difference depends on the viewpoint. And depending on whether the interest is directed to overall finance figures of the country, or on the economic situation of many people in the rural countryside, different realities are seen.

The Managing Director of the World Bank sees a possible solution: “The veil of secrecy that often surrounds these land deals must be lifted so poor people don’t ultimately pay the heavy price of losing their land.” Worth to consider. Worth to do. Worth to observe if this is happening.

The Mirror, Vol. 14, No. 681, September 9th, 2010

Chinese company plans to invest in Cambodia’s rice mill

September 14, 2010
Xinhua

A Chinese Company from China’ s Guangxi Province is planning to invest in Cambodia’s rice mill, a government official said Tuesday.
Eang Sophaleth, spokesperson to Prime Minister Hun Sen told reporters that during a meeting with Hun Sen on Tuesday afternoon, Song Zhenxiong, president of Guangxi Guohong Development Company said that for the first step, his company will invest 5 million U. S. dollars for rice mill and the investment scale will be upgraded in the following steps.
Song Zhenxiong was quoted as saying that he had already found a location for his rice mill in Kompong Chhnang province, some 80 kilometers northwest of Phnom Penh.
He said, as planned, his rice mill will be able to produce about 100 tons of processed rice per day.
Eang Sophaleth said Prime Minister Hun Sen welcomed the investment plan and encouraged Song to work closely with local people who are farmers in order to secure sufficient rice for process and exports.
Hun Sen has earlier set year 2015 as a year to export at least one million tons of rice to the world markets.
Some 80 percent of the country’s 14 million populations are living in rural areas and are farmers.

Kingdom ranks 109th for business climate

Kingdom ranks 109th for business climate

Phnom Penh Post, FRIDAY, 10 SEPTEMBER 2010 15:01 CATHERINE JAMES

CAMBODIA’S business environment competitiveness has marginally improved, according to the World Economic Forum’s ranking of 139 countries, but the Kingdom continues to lag far behind its regional neighbours.

The forum’s annual competitiveness study scores 110 factors across 12 areas affecting an economy’s business climate: institutions, infrastructure, macroeconomic environment, health, education, goods and labour market efficiency, financial market development, technological readiness, market size, business sophistication, and innovation.

Cambodia, which was ranked 109th, was the worst performer of the 10 countries in the Association of Southeast Asian Nations, excluding Laos and Myanmar which were not included in the survey.

This year’s rank is one better than last year’s 110th position.

GDP forecast: Analysts positive on growth

Phnom Penh Post, MONDAY, 13 SEPTEMBER 2010 15:00 MAY KUNMAKARA

Analysts believe Cambodia’s economy is set to match or surpass the International Monetary Fund’s forecast of 4.5 to 5 percent economic growth this year.
On Friday, the IMF issued its latest prediction for the Kingdom’s gross domestic product. Highlighting the role of anticorruption laws in improving international competitiveness and reducing business costs, senior economist at IMF’s Asia and Pacific department Olaf Unterroberdoerster said inflation, measured by the Consumer Price Index, was estimated at 4 percent in 2010.
GDP growth for 2011 and 2012 was forecast at about 6 to 7 percent.
He said that gains in tax collection offered the best hope to meet the dual objectives of securing fiscal sustainability and mobilising resources for development.
Other analysts welcomed the IMFs comments, and many were even more positive.
Senior researcher for the Economic Institute of Cambodia Neou Seiha said the forecast may yet be exceeded, predicting economic growth would increase from through November.
Bretton Sciaroni, Senior Partner of Sciaroni & Associates, agreed, highlighting growth potential in agriculture, tourism and garments.

Mong Reththy to build $32m cooking oil plant

Phnom Penh Post, TUESDAY, 14 SEPTEMBER 2010 15:00 CHUN SOPHAL

 

AGRICULTURAL investment firm Mong Reththy Group and an unnamed Thai company have agreed to invest US$32 million in a joint venture to build Cambodia’s first cooking-oil plant.
Mong Reththy, senator and head of Mong Reththy Group, said yesterday that an agreement had been made, and that the plant would be built in Preah Sihanouk province next year, capable of producing 100 tonnes of cooking oil per day by 2012.
“I think that now is the time for us to build a plant because more and more cooking oil is being imported and used in the country at the moment,” he said.
According to Mong Reththy Group, which operates Cambodia’s biggest palm-oil plantation, the Kingdom currently imports more than 30,000 tonnes of cooking oil worth about $36.5 million per year from Thailand, Vietnam, Singapore and Malaysia.
Mong Reththy said that his company did not want to continue to export raw palm oil while local demand was increasing.

Taking stock: Cambodia’s exchange

TUESDAY, 14 SEPTEMBER 2010 21:15 NGUON SOVAN

The government has said Cambodia’s first stock exchange will launch next July “at any cost”. As the country readies itself for the much-delayed bourse Inpyo Lee, project director of Korean Exchange, which holds a 45 percent stake in the Cambodian Securities Exchange, holds an interview with Nguon Sovan.

What  still needs to be done for CSX to launch in July?

Our project is now running to the finish line. We have almost completed our information technology system development and are now in the final stage of testing.

We are about to ship all the IT equipment and materials from Korea to Cambodia.

In the meantime, the first CSX board members meeting will be held soon. Then we will decide when we will apply to SECC to get a licence for CSX.

However, we need to develop more macrostructure – such as a balanced banking and financial sector, and an advanced accounting system.

Moreover, potential companies for listing must be carefully examined.   Another major issue is the education of potential investors, but CSX is preparing for that.

What have you observed about companies in Cambodia in terms of adherence to accounting standards, management systems and transparency? Are they qualified enough for listing?

For many companies, I think there is a long way to go to meet CSX requirements.

However, there are good, qualified companies that can be listed in the CSX next year – some companies already practice international
standards

Gold tower 42 stops at 31

Phnom Penh Post, MONDAY, 13 SEPTEMBER 2010 20:46 SOEUN SAY

CONSTRUCTION at Phnom Penh’s Gold Tower 42 has been temporarily suspended, with developers unable to say when work will restart on the much-anticipated US$240-
million skyscraper.
When finished, Gold Tower was set to become the tallest building in the capital at 192 metres, dwarfing the 32-storey Canadia Tower at 118.1 metres. But so far, just 31 storeys of structure, being built on the corner of Sihanouk and Monivong boulevards, stand complete.
“It is true that we have, since the beginning of this month, temporarily put it on hold,” Kim-KW, a South Korean project director at developer Yon Woo Cambodia Co, said yesterday.
“We will continue progress again, but at the moment we don’t know when.”
Kim-KW refused to reveal the reason for the decision. But an administrator, who asked not to be named, said: “It is just a temporary suspension. We see that the economic situation is not getting better.”
A reporter visited the site yesterday and found it deserted, save for a handful of security guards.

Globalization with weak Institutions: Cambodia

Hal Hill, Jayant Menon, Chan Sophal

The charming riverside capital of Phnom Penh, home to about 1.5 million inhabitants, has seen a lot in its turbulent history. But nothing arguably is on the scale of its first sky-scraper, the 42-floor ‘Golden Tower’ now nearing completion, not to mention the university and bank complexes mushrooming throughout this ancient city.
This changing physical landscape reflects broader developments in the country, which has been experiencing rapid economic growth – the sixth fastest in the world in the decade to 2007 – for the first time in its history. More than 2 million tourists now visit this country of 14 million, a 20-fold increase over the figure in the early 1990s. The Cambodian people have better nutrition and access to education and health services than ever before. Since the cessation of hostilities almost two decades ago, life expectancy has risen by almost a decade and infant mortality has fallen significantly.
The macro-economy is stable, with inflation under control, underpinned by very high levels of dollarization, currently about 90%. Debt service is almost negligible, and public debt has fallen sharply, to about one-quarter of GDP.
The economy is highly open, with exports plus imports equivalent to more than 120% of GDP. The investment climate is welcoming, with generous tax incentives and low tariffs. Aid flows are very large, currently almost $1.1 billion in a $10 billion economy. The country’s openness meant that growth dried up in 2009 as the global financial crisis hit. But the economy is now rebounding.

Banking System Shows Signs of Recovery

Ros Sothea, VOA Khmer
Phnom Penh Wednesday, 07 July 2010

 

The total amount of deposits in Cambodia’s 28 banking institutions recorded a jump in the first part of the year, a positive sign of recovery following the 2008 economic crisis, an industry leader said Monday.
Banks posted $3.6 billion in deposits in the first five months of the year, a 13 percent increase from the same period in 2009. Loan disbursements increase 8 percent, to $2.7 billion, for the same period.
That’s a signal of healthier banks, In Channy, CEO of Acleda Bank, a leading lender in Cambodia, told “Hello VOA” Monday.

Cambodia Still Unable to ‘De-Dollarize’

Ros Sothea, VOA Khmer, Phnom Penh Wednesday, 07 July 2010

After nearly a decade of government efforts to de-dollarize its economy, Cambodia remains one of the most heavily dollarized economies in the world.
The greenback is used in nearly 90 percent of transactions, alongside the riel, and experts say this won’t change without more administrative reform.
Meanwhile, people’s trust in the riel has been shaken by recent inflation, making the dollar, which was introduced during the UN’s rebuilding efforts, more attractive.
There are of course benefits to dollarization. It attracts foreign investment, stabilizes the exchange rate and prevents devaluation of the riel while promoting growth in the banking sector.
But dollarization also undermines monetary policies conducted by the central bank, limiting its role as a lender of last resort and creating losses in revenue from the printing and issuing of new currency.
Such losses cost the government between $20 million and $90 million annually.
Overall, many regional experts warn against continued dollarization.