In Cambodia, a Start-Up Combines Web Sales Skills and Hair Extensions

The Arunji founder Janice Wilson showing a hair extension that is ready to ship from Phnom Penh, Cambodia. (Ron Gluckman for The New York Times)

On the rooftop of Arjuni, a hair company in Cambodia, workers begin sorting the natural-grown hair according to length and quality (Ron Gluckman for The New York Times)

May 28, 2012
By RON GLUCKMAN
The New York Times

PHNOM PENH, Cambodia — For an Internet start-up, Arjuni faces more challenges than usual.

The e-commerce site that sells hair extensions operates out of a five-story building here that lacks elevators and, sometimes, power. Employees typically have to travel to remote villages by motorbike or foot to pick up the goods that Arjuni sells. And the office floor is cluttered with piles of hair strands instead of computers.

But like many new ventures, Arjuni is harnessing the latest Internet tools like Twitter and social media to build a loyal customer base.

In just two years, the company, founded by Janice Wilson, has grown from a handful of employees to 80, and it now generates more than $1 million in revenue. The start-up is also slowly gaining market share from the industry’s dominant players in India and China, as well as retailers in the United States and Europe.

Investors Positive on Impending Arbitration Center

The Coca-Cola company is one of major foreign investors to Cambodia. (Photo: AP)

Ros Sothea, VOA Khmer
Phnom Penh Thursday, 24 June 2010

“One of the main concerns of foreign investors is dispute resolutions."

Foreign investors doing business in Cambodia say they would like to see the newly formed National Arbitration Center solve commercial disputes, but at least some remain skeptical that it will help them.

The center, due to be established this year, will resolve such disputes within crossing the current court system.

The center will be build with financial and technical assistance from various international partners, including the World Bank, Asian Development Bank and European Union and will house approximately 60 national and international arbitrators.

Analysts believe the center will build confidence among existing investors and draw more businesses.

Janet Hausen, president of the International Business Association, which has 70 members, said the center will encourage investors to expand their businesses here.

“One of the main concerns of foreign investors is dispute resolutions,” she said in an interview. “The court procedures not just in Cambodia but other countries are very tedious. So you tend not to be so aggressive in businesses.”

In addition, a local arbitration facility can cut costs, she said.

Currently, businesses must rely on the courts to solve business disputes. Sometimes, companies will take their disputes to Singapore or Hong Kong, where credible dispute bodies are found.

But a 2009 survey by the International Finance Corporation found a need for a local arbitration center. Court cases can take up to 400 days and can cost more than the original dispute, the survey found.

Sok Reden, executive director of the agro-industry company Enviro Corporation Cambodia, said his company is currently involved in a cash dispute for $350,0000 with a former partner. He has sought court resolution, but in two years has seen no movement, he said.

“We filed a lawsuit in the court in 2008, but we haven’t seen any intervention since then,” he said. “This makes the investors afraid, because we don’t have proper measures.”

Sok Reden said he was optimistic about the upcoming arbitration center.

Cambodia also needs to bring in major investors from Japan, the US and Europe, which currently invest heavily in neighboring Singapore, Thailand and Vietnam, economists say, even as it has gained foreign investment from China, South Korea and Vietnam.

About 200 European countries are here operating small and medium-sized businesses, especially in tourism, garments and import-export. But according to David Lipman, president of the EU’s delegation in Cambodia, only a few are investment companies.

An arbitration center will bring more European companies to Cambodia, he said.

“Direct investment will increase once investors are sure the climate is safe for their investment, and this center is exactly the right direction that we want,” he said in an interview. “Once European investors see their investments are secure and there is a proper system of arbitration when there is a dispute, then even more investors will come to Cambodia. And I do believe that we will see the fruit from this within the coming year or two.”

That fruit may not extend to the potentially lucrative oil and gas sector, said Michael McWalter, an adviser to the National Petroleum Authority.

“With respect to the establishment of an Arbitration Center in Cambodia, I do not believe that it will have any effect on the willingness of the petroleum industry to invest in Cambodia at all,” he wrote in an e-mail.

The international nature of most petroleum contracts means an international arbitration site is already agreed on at the early stages of deals, he said.

A national arbitration center would not be seen as “neutral ground” unless the dispute was between Cambodians, he said.

Meanwhile, the quality of the arbitration remains to be seen.

“The quality of the people and the quality of the center are very important to the private sector,“ said Billie Jean Slott, a law consultant for Sciaroni and Associates. If it looks like poor quality, disputes will be settled elsewhere.

Arbitrators will have to speak many foreign languages and must learn about international commercial law, such as Singaporean law and Hong Kong law, which would be used in arbitration, Slott said.

Mao Thura, secretary of state for the Ministry of Commerce, said a lack of support for the center from the private sector will mean its collapse. So the ministry has been working on strengthening its quality and to provide training to arbitrators.

Finally, arbitrators will have to be above corruption, Commerce Minister Cham Prasidh said.

Dinner Reception: "Working Together on Business and Human Rights in Cambodia"

Click on the announcement to zoom in

Unconvincing Salesman Par Excellence

Sok Chenda Sophea

Alternatives Watch – 30viii09
Op-Ed by Ung Bun Ang
Originally posted online

Council for Development of Cambodia secretary-general Sok Chenda may find it most difficult to attract foreign investments. He is confident, enthusiastic, and optimistic, which are necessary attributes for the task. However, he may need to be more. Reporter Roger Mitten, who conducted and published an insight interview with Sok Chenda, concludes he is only half convinced after encountering the man he dubs the salesman par excellence.

There are reasons why the salesman par excellence is not fully convincing. He claims all businessmen are interested only in profit, “not physical incentives, the political regime, not even religion – Ramadan or not, they don’t care”. His best selling point is simply that there is money to be made in Cambodia. He says there are fiscal incentives, total foreign ownership, and many untouched sectors to choose, offering “unique” opportunity foreign investors cannot find elsewhere.

Unfortunately, the sale pitch is only half truth. Globalised Cambodia, of which Sok Chenda is proud, also means investors do have access to other truth the salesman par excellence would prefer buried. Many long term investors – the type that Sok Chenda claims like growing up with the host country – take into account in their investment decisions those Sok Chenda dismisses as irrelevant, plus much more.

One of them is the high cost of doing business in Cambodia, which Sok Chenda acknowledges in particular for electricity, telecommunication, and transportation sectors. The government’s effort to reduce the electricity costs by buying it from Vietnam is commercially sensible at least in the short run, but this will not address a structural defect that keeps the cost high – corruption.

Sok Chenda shows the least concern about the impact of corruption. He maintains as long as there is a profit at the end businessmen do not mind making some payment they “should not really have to make”. He does not seem to realise these unnecessary payments push the business cost up, requiring the businessmen to pass them onto consumers in the form of higher prices to retain their profit. This in turn keeps away other businessmen whom Sok Chenda tries to entice. It is a vicious cycle that could be broken only by bringing corruption under control.

However, the corruption is likely to persist, if not prospering. Sok Chenda trivialises corruption by claiming the number one in transparency Singapore still has “people who are corrupt and who cheat the tax department”. He fails to distinguish between corruption and impunity for corruption when asserting, “Singapore has policemen and jails for a reason [corruption]”. It would be hard pressed for him to come up with any case where a Cambodian high profile official is convicted and jailed for corruption. Incidentally, Sok Chenda – he says he ends the interview so that he can pick up his daughter at the British School – may have difficulty in justifying the school fee with his official meagre income.

Thus, the salesman par excellence appears to be an optimist who would say, “See, I am not injured yet” while falling from Eiffel Tower.

Ung Bun Ang

Quotable Quote:
“The latest definition of an optimist is one who fills up his crossword puzzle in ink.” - Clement King Shorter (1857–1926), British journalist and literary critic. Observer.

SBI Cambodia bank starts business

Tuesday, Sept. 2, 2008
Kyodo News

Financial company SBI Holdings Inc. said Monday that a bank it jointly established with South Korea's Hyundai Swiss Group has begun operations in Cambodia.

Phnom Penh Commercial Bank is initially managing money deposited by customers and plans to expand operations to property project financing and lending, Tokyo-based SBI said.

The bank is also hopeful that a stock exchange in Cambodia scheduled to be opened in the second half of 2009 will attract Japanese and other foreign companies to the country, creating new business opportunities.