Saturday, March 26, 2011

Economic Update

I don't know how many of my readers receive Leopard Capital's newsletter. The last one contains a rather good overview of the current status of the Cambodian economy. For this reason I thought it is worthwhile sharing it with you.


Cambodia's economic recovery continues to gain momentum. Ramping up from a flat 2009 to grow by 5.5% in 2010, the Kingdom is projected to grow by 6-7% in 2011. Core sectors reasserted their strength last year and are posed to build on these gains in 2011: Garment exports surged 26% to a record $3 billion; tourism roared back with 16% growth in arrivals, rising to 2.5 million; Agriculture kicked back in across several sub-sectors with rubber topping growth for the sector at 43%, bringing rubber output to 50,000 tons. Underscoring growth in tourism, ticket sales for Angkor Wat -rated the world's #1 heritage site on - rose around 20%. The airports are now bustling and airlines are planning new flights. Agriculture's gains come from outside and within Cambodia -- sustained, non-speculative demand in commodities will keep demand and prices high while, internally, the opening of several new rice mills and integrated sugar projects signal upgrades to infrastructure and efficiency of the Kingdom's agricultural sector..

Cambodia's wide-open banking sector continues to attract newcomers willing to meet the capital requirement ($34.5 million); the latest entrants CIMB, Bank of China, and ICBC have raised the number of issued licenses to 30. Meanwhile fifteen firms (including our portfolio company ACLEDA Bank) received securities licenses. Two of these firms have already built spacious new securities trading rooms in anticipation of the planned July 2011 launch of the Cambodia stock exchange. The question to answer: will it open on schedule? Only time will tell, but if precedents matter, note that neighboring Laos successfully opened its securities market in January with two fruitfulI POs.

Cambodia continues to make strides in the international arena. The EIU (Economist Intelligence Unit) scored Cambodia as having the second best environment for microfinance in all of Southeast Asia. The UN reported that Cambodia achieved Asia's fastest rise in human development - defined as income, life expectancy and years of schooling - over the past two decades. Cambodia ratified the ASEAN Free Trade Zone with Australia and New Zealand, opening the way for full, free trade with these countries by 2015. Europe extended its "Everything But Arms" tariff free exports for Cambodia, and slashed from 50% to 30% the local content requirement for such exports.

The development of new infrastructure continues and is laying the groundwork for future growth. The ADB-backed $84 million project to renovate Cambodia's decrepit 650 km line has reopened the first section, 120 km from Phnom Penh southward to Kampot. Next will come the Kampot to Sihanoukville Port link, and the northwest line from Phnom Penh to the Thailand border. Separately, China agreed to finance a $700 million new eastern line to connect Phnom Penh to Vietnam, the 250 km "missing link" of the Trans-Asian Railway system. This five year project would slash transport costs and boost Cambodia's agriculture and mining exports to China. Cambodia's port revenues rose 31% in 2010 in sync with the garment sector recovery. The Phnom Penh river port led the growth, as it now feeds Vietnam's new Cai Mep Port, which offers direct connections to the U.S. and Europe. A second river port with over twice the handling capacity is being financed by China and is now 25% complete. As for power, construction has started on a Malaysia-backed 100 MW coal-fired power plant in Sihanoukville and several hydro dams financed by China. In the meantime, new power lines have been strung from Vietnam to Phnom Penh, and blackouts have become rare in our office.

End Quote

Tuesday, March 22, 2011

Coup de Grace?

The Cambodian Assembly stripped Sam Rainsy of his seat in the Assembly citing his criminal convictions. After being sentenced to prison for 2 years and then for 12 years in two heavily disputed trials this move by the powers that be did not come as a surprise.

In a telephone interview Sam Rainsy stated as much but indicated that he will come back to participate in the 2013 elections. He is not exactly known as that typical come-back kid but he certainly does not appear to ever give up. He always gets up again like a rubber doll. He also vowed that he would continue to lead his party from Paris – a party that is seemingly in some sort of limbo and could urgently do with some form of leadership. That party does not know which direction to take and Sam Rainsy doesn’t know how to handle any of these imbroglios that have come up in his political career. It has been reiterated in many a publication that his intransigence, really stubbornness, won’t get him anywhere within the current power structure. Although he indicated there might be a deal with the CPP for his return before the elections, he did not specifically mention Hun Sen; but Hun Sen is the only person who could pave the way for him. His party asked the King for a royal pardon, which again only demonstrates the sheer helplessness the party finds itself in. The King pardons on recommendations from the Prime Minister and that recommendation has not been reported anywhere.

He said he still has wide support among Cambodians and the international community. One might be a little doubtful about the scope of that support. Banking on the international community is an exercise in futility, as he might have realized by now. The example of Libya has made it once again abundantly clear how reluctant the big powers are to intervene in another nation’s internal affairs; only Ghaddafi’s threats of no mercy and attacks on civilians finally brought about the armed international intervention. Nobody in his right mind, though, can compare Libya with Cambodia. Any help Sam Rainsy might be hoping for will simply not be forthcoming. The international community has more pressing, and seemingly never-ending, problems to deal with than reinstating a politician who has fallen from grace. He has simply become a non-person in Cambodia. Personally, as an interested bystander I don’t believe that he will be allowed back under some kind of political deal this time around. I would be very surprised if that were to happen. So in the end losing his assembly seat certainly looks like the coup de grace to his political career in Cambodia.

Thursday, March 17, 2011

Cambodia – The Kingdom of Wonders

And wondering we are – at the new marriage law that went into effect this week. The expat scene in Phnom Penh was abuzz with it. Normally, being not too much interested in anything the expat community is talking about, this new law did, however, pique my interest, being an expat who is married to a Khmer woman myself.

Now, by all accounts that law stipulates that no male foreigner, both Caucasian and Non-caucasioan, over the age of 55 or earning an income of less than $2,500 per month can marry a Khmer woman. It should be noted it says foreign man; this law does not apply to foreign women.

This law begs the question why it was passed in the first place and what is the objective behind it. I mean we are used to all kinds of stupid and ludicrous laws being passed, not only in Cambodia, but all over the world, and the U. S. is among the many Western nations that could do with a thorough overhaul of especially their state laws. But this law really shows the feeble-mindedness of some Cambodian politicians. Why set the age limit at 55 and why a minimum of $2,500 a month when the average male Cambodian makes only a small fraction of that, gets married and has a bunch of children whom he can hardly support? Were they possibly thinking of the proverbial old lecher who is salivating after Cambodia’s young pretty lasses? What about the guy who is widowed (like I was, though I was under 55)? What about a young strapping man in his twenties who came here as a volunteer, now makes $1,500 a month, falls in love with a Khmer co-worker? No chance, buddy, no Cambodian wife for you.

Some spokesperson said they want to protect their young women from being exploited by foreign husbands, probably having in mind those sad Korean stories. Of course, the government does not object to their young, uneducated rural girls to go work as maids in Malaysia, and other mostly Muslim countries. And from press accounts we do know how those girls are treated. Don’t they deserve the state’s protection?

Well, I personally know of an example where a sixty-eight year old man married a twenty-four year old country girl. In fact, he was older than the girl’s father. Only the dumbest person can believe that there was love involved on the girl’s part or on the man’s part for that matter. He told me himself he just got married so he would have a companion and somebody to take care of him. Apart from having to deal with a randy, wrinkled old man on a daily basis, this girl was set for life. He lived on his pension, 60% of which the wife is entitled to after the husband’s demise. So does the government want to protect these girls from their good fortune?

Sure, it’s rather an irritating sight to see an old man holding hands with his young consort in hot pants parading down the street. But he likes it, and she clearly makes money off it. If he wants to get married to a whore, he is just trying to get exclusive rights to her body. It’s their choice, and shouldn’t they be the masters of their personal lives and destiny. Never mind their level of education. She would be off the streets (hopefully) and he would get to spend his money on a worthy cause, since he would also be supporting the wife’s extended family, wouldn’t he?

And I am wondering why draw a distinction between foreigners and Khmer men? It is quite normal and customary for an older man, often over 55, to marry a girl 20 years or more younger. Don’t even mention the many old men who keep a beautiful, young mistress in clothes, jewelry, car, and apartment or house. Why this hypocritical morality all of a sudden? Now the most astounding thing is that Licadho, that otherwise reputable human rights organization, lauded this law. Do we even know the number of marriages of foreign men over 55 with Khmer women, some of whom may well be of the same age or only slightly younger?

It is a fact that it is mostly fellow Asian men that seek out much younger brides - like the Korean men who came here and who had no marriage prospects in their own country. So they exploited the plight of these gullible girls and took them to Korea and in many instances abused them. Surely, there are different ways of protecting these young, vulnerable women, e. g. mandatory pre-marriage counseling.

It is clear that somebody must have had too much to drink when they drew up the law and the legislature must equally have been mentally absent when voting for it. I would think that it is unconstitutional to begin with as it infringes not so much on the rights of the foreigner but on the Khmer bride’s rights first of all. It is discriminatory and contravenes the basic concepts of human rights. Yes, Cambodia doesn’t have the most stellar record on human rights and according to pundits some people just don’t have any rights at all. Much needs to be done even according to the Prime Minister, but why even bother with such an unnecessary, outright ludicrous and really stupid law. It’s a waste of time and effort and will in no way curb human trafficking, sexual exploitation, or any other abuses of women’s rights.

Personally, of course, although now over 55, I am not affected since I have been married for a long time anyway, and additionally, we were married abroad (in the U. S.). We were also married well before that other section of the family law went into effect under which the foreigner needs to provide all kinds of documentation to the foreign ministry and get their approval before they could be issued a marriage certificate. After all, that certificate is a prerequisite for obtaining a visa at most embassies so that the spouse can travel to Europe or the U. S., for instance. That process will set back the groom (it’s always a groom, isn’t it?) about $1,500. Well, if you are serious about this you will probably not mind spending that money.

Apart from those older men and that new silly law, the question of how to go about a possible marriage with a Cambodian woman will arise for most eager-to-wed foreigners contemplating it. First there is the incredible amount of red tape in this country. Then the $1,500 to get everything together and approved. Traditional girls or women would most likely want a nice wedding ceremony, which incidentally has no legal bearing on the couples marriage status. Depending on the number of guests and with all the razzmatazz, like multiple dresses for both, the wedding tent, the monks, the dinner and subsequent dance, etc. spending $10,000 is no rarity. If you want to get married here so you can take you wife to your home country, I wouldn’t go through with all this rigamarole. Try to get her a tourist visa by vouching for her so that she won’t become a charge of the state and get married in your home country. Marriage licenses in the U. S. require a minimum of paperwork and cost about $150. The Clerk of Court of the county or their representatives can administer the oath. Nothing to it, really.

As a U. S. citizen you could also get a fiancee visa. This takes some time but will usually be granted according to a knowledgeable source. Similar visas are available from most EU countries with varying regulations. The important factor for all of them is to provide credible proof that the couple has known each other personally for some time and that they intend to get married in the groom’s home country. This may involve registering for marriage at the magistrate’s office of your home town, or some other official confirmation. You need to check with your country’s regulations. Some countries require that the bride have at least rudimentary knowledge of the language spoken there. From what I hear this is the best albeit not the quickest way of getting your bride out.

If you want to settle in Cambodia, why get married in the first place? The majority of Khmer people I know never bothered with the civil ceremony.

When we applied for my wife’s visa at the U. S. embassy way back we applied for a tourist visa. The official asked why not go for a fiancee visa to which I replied that first, I am not a U. S. citizen, and second, I don’t want to go all the way right away but see how it works out. He completely understood and was very sympathetic to this. As a long-time resident, business and home owner in the U. S. I had no credibility problem either. So we got that visa and avoided all that hassle with the Cambodian authorities. Ironically, though, we are legally married everywhere else in the world except in Cambodia because the Foreign Ministry will not recognize our U. S. marriage certificate without that red tape I mentioned above. Aw shucks, I thought, what do we need that for anyway? If we want to travel we can get any visa we want for her.

As for that law, one could think that the writers live on a different planet. Smart people won’t be affected, and ignorant foreigners deserve no better, or do they?