Inflation on Goods Eases, But Just a Little

The price of rice and other goods in markets have fallen slightly in November.
The price of rice and other goods in markets have fallen slightly in November.
Inflation pressure has eased on Cambodia, but only a little, as the prices of international commodities and basic foods has slightly decreased, economists say.

Government officials and analysts said the decrease, brought on by lower fuel prices and other reduced costs, was still not enough.

“The price of commodities has a little bit reduced, not much. So we are trying to reduce it further,” said Hang Chuon Narong, general director of the Ministry of Economy and Finance.

The inflation rate was 17 percent in November, down from 30 percent the month before, he said.

The government would like to see an inflation rate of 9 percent in early 2009, he said.

The inflation rate can only be reduced if the price of fuel, which heavily influences commodities, continues its fall on international markets, said Kang Chandararoth, head of the Cambodia Institute of Development Study.

Crude oil on Saturday was down to $48 per barrel, compared to $147 per barrel in July. In Cambodia, a liter of fuel cost around 3,500 riel, less than $1, compared to 5,700, around $1.40, in August.

The price of high-quality jasmine rice was down to $40 per 50 kilogram sack in most markets, while the lower-quality rice consumed by most Cambodians was around $21 per 50 kilograms.

Vegetables in the markets followed the trend, by about 1,500 riel, or $0.37, in November, said market retailer Phay Sokhen.

“Now there is no more rain, so the price of vegetables has reduced a little bit,” she said. “It depends on the climate, not the price of gasoline.”

Fish prices had decreased by about 2,000 riel per kilogram, fish mongers said Saturday, but mostly due to the season.

Meanwhile, commodities imported from neighboring countries, especially Thailand, were down by around 1 percent in November, thanks to a recession of the Thai baht.

Pork remained the same, around 16,000 riel, or $4, per kilogram, and chicken held steady at 18,000 riel, or $4.50, per kilogram.

“I bought expensive, so I have to sell expensive too,” said Hing Chantha, a chicken retailer at Central Market.

Many Phnom Penh residents, from housewives to students to factory and construction workers said they had seen little benefit so far from a lowered inflation rate. Prices had dropped, they said, but not enough to make a difference.

Cambodian People’s Party lawmaker Cheam Yiep said the price of products always increased when fuel prices were high, but not reduced when the fuel price fell.

“Some business people are greedy,” he said. “Although some products have reduced their prices, they won’t follow it.”

Two Crimes Added to Duch Indictment

Kaing Kek Iev will also be charged with murder and torture for his role as chief of Tuol Sleng prison under the Khmer Rouge.
Duch will also be charged with murder and torture for his role as chief of Tuol Sleng prison under the Khmer Rouge.
Jailed Khmer Rouge prison chief Duch was handed two more counts in his atrocity crimes indictment Friday, but he was not charged under a legal principle that would link four other leaders to his alleged crimes.

Chief judge Prak Kimsan announced the decision of the Khmer Rouge tribunal’s Pre-Trial Chamber Friday, adding the crimes of murder and torture from Cambodia’s Penal Code to charges of war crimes and crimes against humanity.

The decision moved the tribunal one step closer to Duch's trial, expected in early 2009, the first ever for courts that have faltered from their inception, alarming critics who worry leaders will perish before they face trial.

Tribunal prosecutors in September lodged an appeal against the indictment, part of a so-called “closing order” by the investigating judges, noting Duch had not been indicted for the two crimes, which fall under the 1956 Penal Code.

Prosecutors also noted Duch, who real name is Kaing Kek Iev, was not indicted for all crimes committed in the notorious prison he ran, Tuol Sleng, known to the Khmer Rouge by the codename S-21.

The Pre-Trial judges said Friday they had found enough reason in the appeal to add the two crimes to Duch’s indictment.

They announced they had found enough cause for murder, because Duch had allegedly planned or incited killings at S-21 and the nearby site of mass graves, or “killing fields,” at Chhoeung Ek, a commune in Phnom Penh’s Dankao district.

Duch’s defense lawyers did not comment after the hearing, but in a brief submitted to the Pre-Trial Chamber in November, they expressed worry that the murder and torture claims could delay the court through further investigation.

However, Hong Kimsuon, a lawyer for the civil parties in Duch’s case, said Friday the new indictment would not extend the investigation or prolong the process.

“It is only an additional [two charges], and after that they will go forward to trial,” he said.

Judge Prak Kimsan also said Friday Duch would be detained until his trial and the case would now be forwarded to the Trial Chamber.

Prak Kimsan said the legal principal known as joint criminal enterprise, which could potentially link the other leaders with Duch’s crimes, had not been satisfactorily demonstrated.

Cambodia Considers Allowing Foreign Ownership of Property

Cambodia real estate values are in freefall, and officials may soon allow foreigners to purchase buildings, though foreign ownership of land is still out of the question. For more information, read the following article from Global Property Guide:

Cambodia’s housing market is plummeting, and the government is considering a new law to allow foreigners to own buildings.

In 2005, the government amended an investment law to allow foreign ownership of buildings. However Cambodia’s property market was then experiencing one of the biggest booms in Asia. As a result, the law was never implemented and the idea floundered.

The boom saw prices surge 25 percent to 40 percent annually from 2004 to 2007. Land price increases were at first confined to Phnom Penh, Siem Reap and Sihanoukville, but the boom spread right across Cambodia. Other hot spots have been the border areas with Vietnam and Thailand and, to a lesser extent, Laos.

The capital’s most sought after locations fetched US$500 per square metre in 2000, but were sold at around US$4,000 or more per square metre along Norodom Boulevard, and US$2,500 per square metre in the central residential neighbourhood of Boeung Keng Kang (BKK).

A downturn started in July 2007 after the government announced new investment guidelines for developers.

Then in mid-2008, the bubble burst. The global financial crisis had hit Cambodia’s biggest investor, South Korea, and Korean investors began pulling out foreign assets to increase liquidity.

Real estate sales plummeted 30 percent to 50 percent from a year earlier.

To prevent the market from sliding further, the government is considering moves to allow foreigners to fully own buildings. Land ownership is still out of the question.

The housing boom

Cambodia has just witnessed one of the biggest real estate booms in Asia.

The reasons are obvious, as soon as you visit Cambodia. Phnom Penh is an attractive colonial city, with broad avenues, charming housing, a hip and young atmosphere, and a riverfront view. Siem Riep, which houses Angkor Wat, is even more charming, and has a cooler, more agreeable climate. There are agreeable beachfronts at Sihanoukville.

Cambodia is in a strategic position in the centre of IndoChina. Prices are laughably inexpensive (from a foreign perspective) and economic growth is exploding. The combination is hard to argue with.

Rentals are far higher than in days when Phnom Penh was a sleepy outpost where the only foreigners worked for aid organizations. In BKK I, according to a report in the Bangkok Post dated March 2008, a spacious, four-bedroom apartment with gym, swimming pool, parking and 24-hour security is on the market for US$3,000 a month. Nearby, the owners of a two-story, four-bedroom villa are looking for US$5,000 per month.

Phnom Penh has, as a result, experienced a construction boom. The government is aggressively pro-development, and squatters and other eyesores are simply cleared away, by a government which is in league with wealthy developers.

Part of the charm may be about to be lost as Phnom Penh succumbs to development. A 42-story US$250 million twin condominium, twice as high as Phnom Penh’s current tallest building, is being built in the most conspicuous position possible—at a busy corner leading to the city's Independence Monument. Residential units in the ‘Gold Tower 42’ project, which will not be completed till 2011, range from US$459,000 to US$1,500,000, according to developer Yon Woo Cambodia Co. Around 70 percent of the buyers are Cambodian. Around 40 percent of the sales have gone to speculative investors.

World City Co. Ltd., a South Korean company, is investing US$2 billion to build a satellite city called Camko City on a 120-hectare (300-acre) in northwest Phnom Penh. The single biggest foreign direct investment in to date, Camko City will include residential units, villas, condominiums, commercial and public facilities, trade and financial centres, office buildings, shopping centres, hotels, schools and hospitals. The project will include about 500 apartments with price tags ranging from US$112,000 to US$1.8 million a unit. Construction will take 3 1/2 years to complete. Nearly half of the units have already been sold.

Land values in Siem Reap have risen 25 percent to 30 percent every year for the last four years at least. The average price of land per square metre is now around the US$500 to US$600 mark. But premium land in downtown tourism districts is around US$1,600 per square metre.

Housing mortgages

Mortgage finance is now available in Cambodia. Acleda Bank entered the home lending market in January 2007; by March 1 2008 Acleda’s home loan portfolio was worth about $40 million. To get around foreclosure risk, given the corrupt legal system, Acleda keeps the title to the property until the loan is repaid.

ANZ also offers 15-year installment loans, allowing customers to borrow up to 60 percent of the home purchase price at variable interest rates, lending against registered titles.

Foreign-ownership schemes

Foreign individuals cannot buy real estate in Cambodia directly. But land can be held by foreigners on long (renewable) leases and through majority locally-owned companies incorporated in Cambodia. This company structure is the safest for a foreigner wishing to buy land. It is not totally bullet-proof, but in practice it works.

Foreigners typically take two Cambodian nationals as partners in the land-holding company, with the 51 percent share allocated so that the foreigner is the biggest single partner. Other safeguards include

1. Creating different classes of shares, giving the foreigner more rights;
2. Minority control documents;
3. A mortgage on the land, stipulating that the land cannot be transferred without the consent of the foreigner.

Leases up to 99 years are another common acceptable structure—the magnificent Raffles Hotel le Royal in Phnom Penh, for instance, is held on a simple lease.

Nominee structures should be avoided.

Technology Pioneers Programme (Wold)

LogoThe World Economic Forum has announced 34 visionary companies selected as Technology Pioneers 2009 for their accomplishments as innovators of the highest calibre, and whose technologies will have a deep impact on business and society. The selection of these companies is the result of a vigorous selection process, for which the Forum received more than 320 applications from around the world that were evaluated by 44 global technology experts. Read more
Video Playlist of the Technology Pioneers 2009

The Technology Pioneers programme is the World Economic Forum's means of identifying and integrating those companies around the world that are involved in the design and development of new technologies. Each innovation, whether it has large or small consequences, is another step in society's attempt to harness, adapt and utilise technology to change and improve the way business and society operate.

In line with the World Economic Forum’s commitment to improving the state of the world, the Tech Pioneers are integrated into its activities with the objective to identify and address future-oriented issues on the global agenda, in proactive, innovative and entrepreneurial ways. By bringing these executives together with scientists, academics, NGOs, and Forum members and partners, the Forum hopes to shed new light on how technologies can be used to, for example, find new vaccines, create economic growth and enhance global communication.


Nominations for the Technology Pioneer programme are solicited from a variety of sources: Forum Members, technology experts, venture capital firms, technology incubators, current Technology Pioneers and the Selection Advisory Committee (SAC). A crucial part of the selection process is the SAC, which is an external group of technology experts in specific fields. Committee members are selected based on their extensive experience in and knowledge of the various technology sectors.

SCG cuts non-core activities (Thai)

The current economic slump differs from the 1997 crisis in many aspects. But for Siam Cement Group (SCG), the country's largest industrial conglomerate, it is necessary to revert to a similar strategy: focus on fundamentals and beef up efficiency.

Kan Trakulhoon, the SCG president and chief executive officer, said the group had revised its five-year business plan to shelve investment in peripheral businesses to consolidate its financial position. Its strategy now focuses on efficiency measures in cost control and inventory management.

In his view, the current crisis is even more precarious than a decade ago, particularly in light of the fallout from the closure closure of Bangkok's airports by anti-government protesters under the People's Alliance for Democracy.

''If the damage from 1997 stood at 100, the situation now could equal 200. We need to get ourselves ready,'' Mr Kan said.

SCG is no stranger to cost-cutting and restructuring. The group undertook a massive restructuring during the economic crisis, as the sharp depreciation of the baht caused its external debt to double to 240 billion baht even as earnings fell sharply.

The crisis prompted SCG to divest 57 of 140 subsidiaries classified as non-core assets. The companies sold had owed more than half of the group's total foreign debt.

SCG has cut its current five-year investment plan, originally projected at 120 billion baht, to 80 billion and could slash more.

''Our priority is balance sheet health over growth. We are postponing new capital expenditures. We are preserving liquidity and have an efficient cash plan,'' Mr Kan said.

SCG's external debt stood at just 3% of its total of 130 billion as of Sept 30. Exports now contribute one-third of total sales. SCG has reduced its US market share from 20% to 2% of exports, and sales to Europe from 10% to 8%. Asean markets now account for half of its exports and Africa's share is rising.

SCG will increase its research and development budget to one billion baht in 2009 from 800 million this year, a dramatic rise from just 70 million in 2005. The aim is to lift high-value products to 15% of sales from 7%.

It is also stepping up recruitment of top graduates and doctorate holders.

''We have a vision to be a sustainable leader in Asean in terms of society, environment and communities. We must continue to react to changes in customer demand,'' Mr Kan said.

SCG also plans to invest 10 billion baht in a project to promote efficient use of energy. ''Oil prices are unlikely to stay at $50 per barrel for long. New crude sources cost $75-80 [to develop] while oil sands cost $65,'' he said.

Siam Cement shares (SCC) closed on Thursday on the Stock Exchange of Thailand at 89 baht, down one baht, in trade worth 73 million baht.

Making money: Khmer Rouge economic strategy takes shape

Cambodia's revolutionary faction Khmer Rouge has started laying out its economic plan with the creation of its own currency.It is also trying to establish autonomy in its present areas of control by bribing its people with lands to till. These developments come as a surprise toobservers as, ironically, the Khmer Rouge is well-remembered for its murderous regime and the abolition of its own currency. This could only mean that politically and economically, the Khmer Rouge is trying to assert its legitimate presence as a state within the Cambodian state by having its own currency and head of state.