Cambodia 20240722: Encompassing, Painstaking, Granular
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Headlines:
Trade Growing along with ASEAN Ties
Canal Dreams Spark Local Nightmares
Diplomatic and Economic Ties: CN, KP, PH
Funding Boost for Infrastructure and Development
Banking Faces Headwinds Despite GDP Growth
Bakong Digital Payment System Targets Tourists
Tourism Recovery Efforts Gain Traction
Addressing Rejection of Damaged US Notes
Financial Crime Crackdown Intensifies
BYD Expands Electric Vehicle Production
Airlines Boost Regional Connectivity
Gumball 3000 Rally Set to Traverse Cambodia
Trade Growing along with ASEAN Ties
ASEAN trade grew 11.6% in H1 2024, hitting nearly $8 billion as Cambodia works to diversify its mix of economic partners. The RCEP agreement has gone a long way towards improving regional commerce, with greenfield investments increasing by almost 30% last year. As if juggling wasn't hard enough, Cambodia is also looking at a potential FTA with India, in order to loosen China's economic grip and spread its bets more broadly across the region.
Read more: Khmer Times (ASEAN Trade Growth), Cambodianess (ASEAN Trade), Khmer Times (Trade Figures), Cambodia Investment Review (Cambodia-India FTA), Khmer Times (RCEP Impact)
Canal Dreams Spark Local Nightmares
The $1.7 billion Funan Techo Canal project is promising to carve a 176-kilometer path of prosperity from Phnom Penh to Kep, with the government saying it will result in a 50,000 person-strong job bonanza. Yet for locals facing eviction, the grand vision of revitalized waterways feels more like a tsunami threatening to wash away their livelihoods. As officials tell tales of fair compensation and community kumbaya, residents are holding on to their homes with white knuckles, wondering if the price of progress is too high a price to pay.
Read more: Newsweek (Economic Benefits), Khmer Times (Project Launch), Barron's (Local Concerns)
Diplomatic and Economic Ties: CN, KP, PH
Cambodia is celebrating 66 years of ties with China, reaffirming their longstanding partnership and cooperation. The Philippines is talking up growing economic collaboration, particularly in trade, investments, and tourism. Recent talks between Cambodia and the Philippines were focused on improving air connectivity and coordinating rice exports. North Korea is also eyeing expanded cooperation with Cambodia, building on their longstanding relationship.
Read more: Khmer Times (China), Khmer Times (China), Khmer Times (North Korea), Khmer Times (Philippines)
Funding Boost for Infrastructure and Development
Japan has pledged $60 million for National Road 5 upgrades and human resources development. Cambodia is calling for more Chinese support for further development projects. The Phnom Penh-Poipet expressway project, expected to come in at a cost of $4.2 billion, is awaiting government review. The 400-kilometer, two-phase project promises to more efficiently link Phnom Penh, Siem Reap, and Poipet (and therefore Bangkok?).
Read more: Cambodianess (Japan Funding), Khmer Times (China Support), Cambodianess (Expressway)
Banking Faces Headwinds Despite GDP Growth
Lending growth hit a 20-year low at 2.6%, despite GDP increasing 6.3% in the first half of 2024. Non-performing loans rose, impacting both banking and microfinance sectors. Bucking the trend, Canadia Bank reported a $102 million net profit for 2023, with assets growing 4.4% to $7.97 billion. The bank expanded its digital services and physical presence, signaling confidence in the economy's stability.
Read more: The Star (Lending Growth), Cambodia Investment Review (Canadia Bank)
Bakong Digital Payment System Targets Tourists
The National Bank is launching Bakong for international tourists, enabling digital transactions upon arrival. Visitors can use the Bakong app with their home credit cards, which will relieve longstanding issues with banks refusing to deal with damaged US dollar notes (see article below). The new app has been developed in concert with Japanese tech firm Soramitsu.
Read more: Cambodianess (Tourist Benefits), Khmer Times (System Launch)
Tourism Recovery Efforts Gain Traction
Cambodia is focusing on unique cultural experiences over mass tourism tactics. The government wants to increase flights and introduce new attractions, at the same time collaborating with Thailand to grow regional tourism. Prime Minister Hun Manet undertook alleged “undercover operations” in Siem Reap to check in on local challenges, saying that he was satisfied with the quality of local reporting. Siem Reap is working to better leverage local culture to attract visitors and ensure sustainable growth.
Read more: Pattaya Mail (Strategy), Cambodianess (Government Efforts), EAC News (Cooperation), Cambodianess (Siem Reap Initiatives), Khmer Times (PM Undercover)
Addressing Rejection of Damaged US Notes
Prime Minister Hun Manet has called on the National Bank to tackle the longstanding issue of traders rejecting (sometimes even mildly) damaged US dollars from tourists in Siem Reap. The NBC introduced emergency measures to ensure acceptance of all dollar bills, hoping to better protect tourists and maintain Cambodia's reputation as a visitor-friendly destination.
Read more: Khmer Times (Measures), Khmer Times (Compliance)
Financial Crime Crackdown Intensifies
The National Police Chief has called on officials to work together with banks and money transfer agencies to improve the bank account registration system and combat financial crimes. A 24/7 hotline scam team has been set up to try and deal with technology fraud. The crackdown also includes ongoing public education on scams and tighter controls on bank accounts.
Read more: Khmer Times
BYD Expands Electric Vehicle Production
BYD plans to build its second Southeast Asian factory in Cambodia, with an annual capacity of 20,000 units. The move will serve both domestic and regional export markets. Cambodia's EV-friendly policies, including reduced imports of fuel-powered cars and incentives for EV ownership, are in alignment with BYD's overall (and ambitious) expansion plans.
Read more: Nation Thailand (Assembly Plant), Pandaily (Details)
Airlines Boost Regional Connectivity
Vietnam Airlines will launch direct flights between Hanoi and Phnom Penh on October 27, with four weekly flights. Cambodia and the Philippines have resumed direct flights between Cebu and Siem Reap to boost tourism and trade. Both countries are looking to increase the volume of agricultural exports and grow economic cooperation under ASEAN and RCEP agreements.
Read more: Travel News Asia (Vietnam Airlines), Khmer Times (Cebu-Siem Reap), Asia News Network (Cooperation)
And now for something completely different.
While the focus of The Memo is on news for business, we often wrap with a less business-focused article.
This week, this headline and the article’s photo gave us a laugh, and many, many sources were keen to report on a discovery of a new load of Siamese Crocodile eggs. The real fun, this week however is this:
Gumball 3000 Rally Set to Traverse Cambodia
Prime Minister Hun Manet announced that the iconic Gumball 3000 rally will be coming to Cambodia, a big win for tourism and international exposure. The rally, known for its luxury cars and celebrity participants, will cover some of Cambodia's most scenic routes, an unparalleled promotional opportunity. The rally will attract a global audience, giving Cambodia another opportunity to put itself on display as a premier travel destination.
Read more: Khmer Times
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