Tuesday, July 27, 2010

Rubber News – July 2010

It’s been awhile since I last reported on this subject. So for all those people interested in this aspect of the Cambodian economy here is another take.

Despite my expectations to the opposite, prices have held steady this year, hovering around the $3,500 mark on the Malaysian Rubber Exchange. Since Cambodia still lags behind with their pricing, traders here pay around $3,100/mt for the top-grade CSK5L crepe rubber. The reason is still the industry’s reliance on Vietnamese buyers. On the one hand this is good for the processing plants as these buyers come with cash in hand. They don’t have to deal with letter of credits and banks, and all the paperwork that is involved when shipping their products. On the other hand they lose quite a bit of money because of that. If they were a little more educated in modern business techniques they could reap a higher profit. The next economic crisis may be just around the corner, that is if the Chinese cannot dampen their overheated real-estate market, then that extra income could be put in the piggy bank for a rainy day.

Rubber plantations get about $2.20 per kg of dried latex which is lower than it should be but since pricing is pretty much uniform throughout the country you can’t do much about it. Prices should be $2.90/kg. So the lack of a heterogeneous market deprives both farmers and processing plants of sorely needed income; income to build reserves for market fluctuations and re-investment for planting new trees, which, after all, take 6 – 7 years to mature, for acquiring updated machinery/ovens, new trucks, etc.

So there is still a lot to be done. In the past 4 – 5 years the industry expanded considerably in terms of added acreage but not too much in the field of technology.

Despite the relative profitability of rubber plantations and processing plants there a number of privately held plantations which are up for sale. They are 4,000 ha, 5,000 ha, or 6,000 ha respectively; tapping areas vary, as do areas with immature trees. They all come with their own processing plant, all machinery, trucks, etc, and all staff that are well-trained in their fields. I am actively involved in the divestiture of these plantations and currently in talks with one large foreign company. Nevertheless, should there be someone else interested in either one or more of these businesses, please contact me by email and I will be in touch right away. I have all necessary documents on hand and can provide any information required. But please, only serious, qualified parties should contact me.

Saturday, July 24, 2010

Car Repairs

After so many political commentaries I am turning to a rather mundane subject; but to people living here this may be of some interest.

Since I go off-road quite a bit I drive a Toyota 4-runner, one of the best off-road 4WD vehicles around (eschewing the more ostentatious full-size SUVs for simple economic reasons). Whenever there was a problem, and I must say there were very few, I took it to one of the many free repair shops that abound along the roads in Phnom Penh. I favored the one across the Rattanak hospital in Tuol Kork. One time they really didn’t know how to adjust the brakes – they went by the trial and error method - so I took it to the Toyota dealership on Russian Boulevard. In the end the slightly higher prices would make up for them being able to fix things the first time around, so I thought.

They promptly located the problem, fixed it, and I was good to go. Some time later I needed the wishbone joints replaced (part of the suspension). Unfortunately, they didn’t have the spare parts in stock. Ordering meant a wait time of 21 – 45 days by air, or up to 90 days by ground. Luckily, I didn’t need the truck for some time as I was out of country for some time. So when I go back everything was fixed nicely again.

Now just recently I had this problem with the water getting too hot and actually overheating. I had to put in about 2.5 ltrs. every day. I went to Toyota and found that the radiator lid was defective, so we replaced it. They didn’t find a leak in the radiator itself and said if the problem persists we would need to replace cylinder head gasket. There is probably a tiny leak in there making me lose all that water – sounded credible to me, although the engine oil checked out all right, but who am I to doubt a specialist’s word?

Ok, the problem didn’t go away, so I took it back for the gasket replacement. Lo and behold, they didn’t have the gasket in stock, wait-time 21-45 days. No way could I go on driving this vehicle without proper cooling for 3 – 6 weeks.

I decided to use my old shop again. They quickly found the leak in the radiator, replaced it, and $200 and 3 hours later I was all set - no problem with the gasket. Come to think of it, a simple compression check would have proved that. Lesson learned: I won’t use the Toyota shop again. They are no better than the rest, though one might expect more. First they didn’t diagnose the problem and I would have had to pay for an unnecessary repair and second, how can a qualified repair shop work without a sufficient stock of spare parts? It’s not that this is an exotic make around here, and the 3.4 ltr. engine is used in many other Toyota models too. So if you think of going there for a repair be prepared.

Reality Check

This Friday the multi-national military exercise Angkor Sentinel 2010 with the support of the U. S. came to its conclusion.

On July 21 Cambodia and the U. S. celebrated the 60th anniversary of their diplomatic relations attended by Sok An, Carol Rodley, among others.

Previously an Under Secretary of State for Political Affairs had visited Cambodia. He promptly came under fire for the military exercises. Critics, including Md. Mu Suchua, condemned the exercises claiming human rights violations by some of the participating Cambodian military units.

Whatever the case, nothing can better demonstrate the U. S.’s stance towards Cambodia. This all must have come like a slap in the face for all those critics who had turned to the U. S. seeking support from the House of Representatives and even the President in punishing Cambodia because of the government’s human rights record, including the curtailment of freedom of expression, etc. Even the possible imprisonment of an MP did not cause the U. S. to reconsider their military commitment.

The opposition must now realize that their efforts abroad are rather futile and won’t amount to much, if to anything at all, and focus on domestic issues instead. I have pointed this out in previous posts. If the opposition wants to be heard they need to play to their constituents in Cambodia, not to some obscure U. S. politicians or the overseas Khmer community; or submitting practically worthless petitions; which is not to say that petitions shouldn’t be used as an instrument in a political struggle, but it should certainly be used more selectively. Looking back on the last few years, I don’t think the SRP and their supporters will ever learn how the game of politics is played.

As a footnote, it is interesting to note that Md. Mu Sochua travels to the U. S. a lot. These trips are expensive, as I know from my own experience, traveling back and forth around 4, sometimes 5, times a year. Her salary as an MP is around $1,000. Who pays for all this – the party and their supporters with their donations? Couldn’t the money be used for a better purpose rather than enhancing her own international profile? Of course, if she pays for this out of her own pocket, it’s an entirely different story.