Wednesday, May 10, 2017

Fintech meeting calls for wider application

Financial technology, or “fintech”, in Cambodia has until now been largely limited to facilitating electronic money transfers, though experts speaking at a forum in Phnom Penh yesterday said the country has huge potential to develop and adopt digital platforms to deliver a wider array of financial services.

The Fintech Awareness Forum, co-organised by the National Bank of Cambodia (NBC) and the Mekong Business Initiative (MBI), gathered experts and fintech startups to share their experiences of the challenges and opportunities in the sector.

Addressing the forum, NBC Director General Chea Serey said that developing fintech would help promote financial inclusion in Cambodia because it would provide access to more financial products and services for unbanked people or people living in rural locations.

While fintech is already available in Cambodia, mainly to provide money transfers, Serey said the country should launch other services such as online platforms for loan seekers or online software to deliver accounting services for small business owners.

“We will support fintech startups that facilitate the delivery of financial services at a faster speed and cheaper price to customers,” she said. Serey added that digital financial platforms would be more efficient and accountable.

“Digital platforms are important to promote financial inclusion and help strengthen transparency in the Cambodian financial system and economy,” she said.

Tom Moyes, director of MBI, said that there are good reasons to believe Cambodia will soon start to develop more financial technology because it will help spur economic growth and improve business efficiencies.

He said Cambodia, which has a population of 16 million with more than half of the country under the age of 25, is showing high adoption rates of technology.

He added that research shows the country has 7.16 million internet users and 27 million mobile subscriptions, making it a ripe market for fintech ventures.

“Cambodia has good technology available such as 3G, 4G and pretty good cell phone coverage,” Moyes said.

“So, if we can figure out how to bring new business models to Cambodia it is going to be a big help for solving the problem of financial inclusion.”

AirAsia to start flights to Sihanoukville

Budget carrier AirAsia will begin selling tickets next week for a new route linking Kuala Lumpur to Sihanoukville, with the first flights to take off in August, the company’s CEO said yesterday.

Flights between the Malaysian capital and the Cambodian coastal city will run four times a week using Airbus 320s. The first flighat is scheduled for August 9.

Speaking on the sidelines of the World Economic Forum on Asean, AirAsia group CEO Tony Fernandes told The Post that the Cambodian government had repeatedly requested that the Malaysian low-cost carrier launch service to Sihanoukville.

“The government has asked me many times to do it, and now we’ve done it,” he said.

AirAsia currently operates daily direct flights from Kuala Lumpur to Phnom Penh and Siem Reap, while its Thai subsidiary operates flights from Bangkok to the Cambodian capital.

Sihanouk International Airport currently only handles direct flights to and from Siem Reap, with seasonal scheduled international service connecting Ho Chi Minh City and Macau.

However, passenger traffic grew 118 percent last year to 94,630, and renovation is currently underway to increase its capacity.

The growth in passenger traffic to Cambodia reflects a growing international awareness of the Southeast Asian country as a tourist destination, Fernandes said.

“On my flight to Phnom Penh today there were people from China, Indonesia, Malaysia, Ukraine, and they were telling me why they were coming to Cambodia. It was eye-opening for me,” he said.

“There is so much rich culture here that lots of Asean doesn’t know about.”

Quality infrastructure needed to support economic growth

Cambodia sits at a crossroads in the Asean region, potentially making it a key part of regional economic development and trade flows, though improved infrastructure and more innovative financing approaches are still needed, infrastructure experts meeting in Phnom Penh said yesterday.

Speaking at a dialogue session organised by the Japanese government, experts discussed the opportunities and challenges for infrastructure development within the Asean region.

Yuichi Sugano, chief representative of the Japan International Cooperation Agency in Cambodia and one of the panellists, highlighted the Kingdom’s central position along the Southern Economic Corridor, an international trunk route that links Vietnam, Cambodia, Thailand and Myanmar.

“Improving the corridor has a direct impact on the socio-economic health of the region,” he said.

“Nearly half of [the corridor] passes through Cambodia and conditions in Cambodia have been improving year by year.

”However, Sugano noted that the infrastructure capacity of the Kingdom lags behind that of neighbouring Vietnam and Thailand, though he said Japanese financial assistance has led to significant improvements.

In 2015, Cambodia inaugurated the Tsubasa Bridge, which spans the Mekong River and provides a key land access route to Vietnam.

The 2.

2-kilometre cable-stayed bridge replaced a congested ferry crossing at the site and was built with $120 million grant from Japan.

“This bridge meant the Southern Economic Corridor, all 1,200 kilometres of it, could be connected by land,” Sugano said.

He stressed the importance of developing high-quality infrastructure to support economic growth.

“In Cambodia, with 7 percent economic growth – faster than the average in the region – to keep up this [pace of] growth, high quality infrastructure is needed,” he said.

“At the same time, effective maintenance is also needed.

”Japanese infrastructure investments in Cambodia have typically taken the form of grants or official development assistance, with the country providing over $2 billion in aid since 1992.

However, public-private partnerships (PPP) are emerging as a viable mechanism to fund large infrastructure projects, particularly given that the region as a whole will need to invest upwards of $26 trillion through 2030 to satisfy infrastructure demands, according to an Asian Development Bank report issued earlier this year.

Cambodia is seeing a growing number of PPP projects and recently announced it will join an initiative led by the World Economic Forum (WEF), which seeks to increase private investment into infrastructure projects in Asean.

Justin Wood, head of the Asia-Pacific region and a member of the executive committee of WEF, told The Post that the initiative will seek to plug the investment gaps left by government funding.

“We are launching the Asean infrastructure hub to bring private money, private capital, into building infrastructure,” he said.

“If you look across all of Asean there is a huge lack on investment.

Governments alone don’t have enough money to build the infrastructure that’s needed, so they need private money to help.

”The Kingdom is also seeing a growing Chinese involvement in infrastructure investment, potentially leading to competition between Japanese-led ADB and Chinese-backed Asian Infrastructure Investment Bank.

Penghuy Ngov, director and associate professor at the University of Nagoya’s satellite campus in Cambodia, said during the panel yesterday that competing Chinese and Japanese investments could prove beneficial for countries like Cambodia.

“From the perspective of Asean countries, I think the competition between Japan and China is healthy for us,” he said, adding that the question needed to be asked why some countries borrowed from China versus Japan, or vice versa.

“Another thing to consider is decision making speed,” he said.

“China may be faster or they might give better terms.”

Untampered and intact ancient bridges to stay that way

Driving along National Road 6 from Phnom Penh towards Kampong Thom and Siem Reap, one will spot the looming heads of stone serpents – or nagas – on the hundreds of ancient bridges built between the 10th and 14th centuries.

Acrhaeologists and researchers agree that while the names of the bridges may have changed since their establishment in the Angkor era, one can still tell apart the types of ancient bridges from their differing sizes.

“For example, a bridge that looks smaller is called a young bridge, or ‘Spean Khmeng’ and a bridge that is near water flow is called widow bridge or ‘Spean Memai’,”archeologist and deputy director of the Apsara Authority, Im Sok Rithy, said.

‘Spean’ gives the meaning of bridge in Khmer.

Among these bridges, Sok Rithy said, the longest bridge located along National Road 6, in the local Chi Kreng district, is the ‘Spean Preah Toeus’ bridge – or direction bridge – which was restored in the late 19th century by distinguished French researcher Bernard Philippe Groslier.

National Road 6, which recently underwent an upgrade and enlargement, was meticulously reconstructed with difficulty to avoid interfering with the ancient bridges’ structures. All along the 400-kilometre-long highway, hundreds of detours were specifically paved to avoid damaging the old bridges.

“A section of the new National 6 road, from Siem Reap to Kampong Thom, was forged on the remaining shape of the road built during the same time as the bridges – in the Angkor era,” he added.

An ongoing research study, the Living Angkor Road project, was started in 2005 to support anthropologists’ work on the Kingdom’s roads of relic. Endorsed by the Thailand Research Fund and the Authority for the Protection and Management of Angkor (Apsara Authority), the study involves anthropologists attributing the remaining portions of the age-old Angkor roads to the different provinces of the ancient Khmer empire.

Sok Rithy, who is closely associated with the project, said the bridges were constructed with stone, laterite – a reddish clay material – and sandstone.

“From what I know, the Ministry of Culture and Fine Arts (MCFA) is preserving and protecting these ancient bridges and what remains of their connecting infrastrucutre,” he said.

“Today, we are learning more about the role of local roads of that era and, more importantly, we want to know about the extent and scale of the Khmer empire.”

To preserve the relics of a once-grand and proud empire, MCFA spokesman Thai Norak Sathya said a lot of care had gone into the construction of the revamped National Road 6 to ensure that not a single inch of the old bridges were damaged in the process, citing the Spean Kampong Kdei bridge, which remains untouched.

“We haven’t placed ancient bridges on the cultural heritage list yet but the ministry works hard to preserve the ancient strucutres. Now, we only allow pedestriations and villagers who travel by motorbikes or bicycles to travel along the bridges,” Norak Sathya said.

Cars and other large vehicles are prohibited from wheeling onto the bridges – which, although have shown impressively enduring strength over the last hundreds of years, should not be vulnerable to excessive weight.

Elections no deterrent to soaring land prices

Although residential and commercial property sales have decelerated, land prices in Phnom Penh and a few key provinces are unusually on the up this year, going against the usual status quo of stagnating as elections approach.

Sorn Seap, CEO and founder of Key Real Estate, told Post Property earlier this week that although the sector’s activity is sluggish with many projects racing to complete, land prices in Phnom Penh and Sihanoukville are still increasing.

“In the current situation, some business people are waiting and buying land because they believe that the economy will spike after the election,” he said. “As a matter of fact, land prices for property north of Camko satellite city are climbing due to the many development projects happening in the area.”

The land prices in that area, and along Mong Rithy Street near Camko City, were $300 to $400 five years ago, but have now increased to $700 to $900 per square metre. Meanwhile, prime land along Mong Rithy Street is now selling from $1,000 to $1,500 per square metre, according to Sorn Seap’s estimation.

Based on Century 21 Mekong CEO Chrek Soknim’s observation, land prices are growing at about five to 10 percent this year.

“Land prices have yet to decrease, but transactions aren’t occurring as frequently as last year,” he said.

Soknim added that land where prices had climbed and many trade activities is still ongoing is around Phnom Penh Thmey, Kop Srov in Prek Pnov district, Sen Sok district, and along National Road 1, where much vacant land is still available.

According to a consumer sentiment survey conducted by realestate.com.kh, 54.6 percent of 5,000 respondents expect property prices to continue increasing over the course of the next year. Nonetheless, a primary report by Bunna Realty Group found that the land price growth in the first quarter of 2017 has slowed down compared to last year.

Pen Sokhea, head of evaluation at Bunna Realty Group, said land prices this year have not increased much because of numerous risks related to concerns over the election, causing prices in some areas to ease off.

He added that despite the deceleration, land prices in Phnom Penh Thmey and Camko City remain high due to the recent development as the area is now awaiting the completion of the second Aeon mall and some other boreys.

“The reason why owners decide to increase the price is because they see new infrastructure and various development projects, but these activities aren’t what they’re demanding,” he said.

“If you take demand into consideration, I doubt the price in this area would’ve soared as high as it did.”

Cheng Kheng, CEO of Huttons CPL – which has an office in Sihanoukville – said trade activities in Sihanoukville had increased along with the land prices, but he has yet to estimate the rate.

“Land prices in Sihanoukville are climbing because of the nonstop flow of investors, especially Chinese investors, but the prices haven’t reached boiling point yet,” he said.

Cambodian Valuers and Estate Agents Association president Kim Heang said this year was a peculiar case, with trade still active despite the upcoming election. Land prices naturally increase because trade is still ongoing, contrary to the past when property trades reached somewhat of a standstill in the months before elections.