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SEOUL, July 3 (Yonhap) -- South Korea and Cambodia have agreed to closely cooperate in the investigation into suspicions that a scandal-ridden South Korean lender concealed hundreds of billions of won in several development projects in the Southeast Asian country, prosecution officials in Seoul said Sunday.
The agreement was reached during a meeting between South Korea's Prosecutor-General Kim Joon-gyu and his Cambodian counterpart in Seoul Saturday, they said.
Kim asked his Cambodian counterpart to cooperate in the inquiry into a sum of 419.5 billion won (US$365 million) that Busan Savings Bank allegedly invested in various Cambodian development projects in the form of loans to local companies.
Prosecutors investigating the Busan Savings Bank corruption scandal are now looking into whether Haedong Construction Chairman Park Hyeong-seon is actually behind a development project in Cambodia run through paper companies set up by the bank.
According to prosecutors, Park is Busan Savings Bank’s No. 2 shareholder and holds a 11.17 percent stake in the company.
The prosecution suspects that executives and major shareholders of Busan Savings Bank aggressively pushed construction projects in and out of Korea by using the institution as their personal piggy bank since Park become the bank’s No. 2 shareholder in 2003.
According to the prosecutors, Busan Savings Bank established nine special purpose companies under false names to develop highways, islands and an airport for Cambodia’s Camco City Project, a development on the outskirts of Phnom Penh. The bank used a total of 496.5 billion won ($459 million) for the mega-project.
City Hall set to relocate to Camko mega-project site outside PPenh Tuesday, 25 November 2008 Written by NGUON SOVAN The Phnom Penh Post
Critics of the move say they are concerned over the fate of the historic building that currently houses the municipal government
IN a bid to alleviate chronic overcrowding at its current offices, City Hall will be relocated outside the capital to the Camko City mega-project site, Phnom Penh Deputy Governor Pa Socheatvong told the Post.
"Camko City has provided us with a free gift of the premises for City Hall in Camko City," Pa Socheatvong said, adding that he did not know when the move would be made.
"The current location of City Hall is small and cannot meet the expanded administrative needs of the city," Pa Socheatvong said. "We prefer the location we have been offered but we are asking for the approval of the government first."
City Hall is currently located in an orderly complex on Monivong Boulevard dominated by a historic colonial building.
Sam Rainsy Party lawmaker Son Chhay said he was concerned that the city would sell the complex once the move had been made, adding that the Camko location lacked infrastructure and was plagued by flooding and bad traffic.
"We thank Camko City for offering the City Hall building free of charge, but we appeal to City Hall not to sell the current location because the building is a heritage site," Son Chhay said.
Sung Bonna, president of Bonna Realty Group, said that the land of the current City Hall is worth about US$3,000 to $4,000 per square metre.
Kheng Ser, assistant to DK Kim, vice president of the Camko City project, said that the company will also build an administrative building for the municipal government.
"The construction of City Hall in the Camko site will start some time next year. We are now negotiating with the city to make sure what type of building style they want," Kheng Ser said.
Camko City is a $2 billion development that includes residential areas, shopping malls, hospitals, business facilities, sports facilities and schools.
A group of construction workers attacked the offices of the Camko City development on the outskirts of Phnom Penh Monday night, lighting a car on fire and throwing stones through the windows of the offices, officials and workers said.
The angered workers are part of a workforce of more than 1,000 people who went on strike Monday, claiming they were owed wages for the month of October.
"The workers are angry enough to burn cars and throw stones because the person who is in charge of the wages told them a lie," Ham Samnang, a construction worker, said. "They promised to pay them by the 24th. Now it is the 27th."
Workers had no more money and were starving, he said, in addition to owing rent.
The workers earn between $80 and $150 per month, he said.
A group of the striking workers gathered inside the compound of Camko City Co. Monday and attacked the car of the company's South Korean general manager.
Company officials declined to comment Tuesday, but Lim Samnang, an advisor of administration at Camko City, said the company had erred by not paying the workers on time.
The company usually pays its workers before the 25th of the month, he said, but the payment is currently late by two days.
Police said no workers were arrested during the demonstration. Camko City is a South Korean investment of $2 billion developing 119 hectares of commercial and residential areas in Phnom Penh's Russey Keo district.
Sok Sovanareth, president of the Cambodian National Federation of Building and Wood Workers, said Tuesday the company should pay its workers on time to avoid violence.
September 22 2008 By Raphael Minder Financial Times (UK)
A young Cambodian couple smile for David Kim, the South Korean photographer, as he takes their wedding pictures.
Last November Mr Kim moved with his wife to Phnom Penh, the Cambodian capital, using the proceeds from the sale of his photo shop in Seoul to open Luk Studio. The business has made “a really good start” as more and more Cambodians turn to professionals to capture their union, he says.
Although his business is still in its infancy, Mr Kim has already hired three people to help manage bookings and photo shoots.
“I had my company in Korea for three years, but demand wasn’t growing any more and there was simply too much competition,” says the 32-year-old. “I can already say that I am the number one here because nobody was really offering this [service] professionally.”
Mr Kim is making a grassroots contribution to a much more substantial flow of South Korean money and expertise entering Cambodia.
Last year South Korean investments there grew fivefold, making Cambodia the second-biggest recipient of Korean investment after China, according to the Korean International Trade Association. South Korea briefly overtook China two years ago as the biggest source of foreign direct investment, accounting for 23 per cent of projects approved by Cambodian authorities that year. Although China regained its leadership, several large-scale Korean projects are in the pipeline, in sectors including construction and finance.
Observers find it hard to explain exactly why Koreans have zoomed in on a country that is not particularly close to them, either geographically or culturally. “A lot of Korean businessmen are looking to invest abroad and somehow Cambodia seems to be now better known, particularly among small and medium-sized businesses, than other countries,” says Anh Ho-young, South Korean deputy trade minister.
One suggestion is that the historic disconnect between the countries has helped. Decades of war have fuelled a profound distrust in Cambodia of its neighbours.
Also, “Koreans are Asia’s most adventurous frontier market investors right now”, says Douglas Clayton, who has been investing in south-east Asia for two decades and manages Leopard Capital, a Cambodian fund.
“They understand how Korea itself was rapidly developed from a frontier market into a developed society and see the possibilities to repeat that process in transitional economies like Cambodia.
“For historical reasons, Koreans are not eager to place all their bets on China, so they are interested in alternative low-cost production centres,” he adds.
The most visible sign of South Korean investment in Cambodia is the redrawing of Phnom Penh’s skyline. Two Korean construction companies are erecting skyscrapers that will be the city’s tallest buildings.
Meanwhile, a joint venture between Korean and Cambodian companies is developing a satellite city, appropriately named Camko City. The $2bn (€1.4bn, £1bn) project is financed by Shinhan, a Korean bank, and is also due to house Cambodia’s future bourse – again with financial as well as training assistance from the Korean stock exchange.
In the six years since he arrived in Cambodia, Won Jong-min estimates the Korean community has grown from less than 500 to about 10,000. He settled there “not because of business but because I fell in love with the beautiful nature” around the temples of Angkor Wat, Cambodia’s cultural treasure.
Mr Won has since founded K-Channel, a Korean-language broadcaster that is expanding rapidly and is expected to break even after just two years on the air.
His success owes much to the fact that Koreans remain close-knit and rarely learn Khmer, even though many marry Cambodians or form property partnerships with locals to circumvent restrictions on foreign land ownership.
“Demand for more Korean [TV] content and entertainment is very strong,” says Mr Won.
Some pundits date the flourishing of business ties between the two countries to a state visit by Roh Moo-hyun, the former South Korean president, in late 2006, accompanied by a cohort of Korean executives.
Hun Sen, Cambodia’s long-standing prime minister, has also encouraged an open door policy. Last year, when a Cambodian chartered aircraft crashed on a domestic flight with 13 Koreans among its 22 passengers, he headed the search-and-rescue team, a gesture that did not go unnoticed in Seoul.
“It’s very rare for any prime minister to lead this kind of rescue, and I think it shows just how close this prime minister feels to Korea,” says Mr Anh.
15 October 2007 By Channel NewsAsia's IndoChina Correspondent Anasuya Sanyal
PHNOM PENH, Cambodia: Cambodia, one of the world's poorest countries, is enjoying an influx of foreign investments, and land prices in the capital Phnom Penh have been shooting up.
Demand is strongest for affordable housing suitable for growing families and projects with foreign partners are particularly attractive to Cambodians.
Scores of South Korean construction companies are getting in on the action.
Camko City, a US$2 billion residential community, is the single largest investment in the country's history.
The project, led by a conglomerate of South Korean companies, has gone ahead with the government's full support.
Thach Sotharath, a commercial real estate agent, said: "The landowners, they want to build something – a big, big project – so they have only the land, they don't have the capital to build, so they have to find an investor to come to join venture or to buy their land."
With the high level of interest shown by investors, land prices in the city have skyrocketed from US$5 per square metre in 2004 to US$100 this year – a twenty-fold increase.
"Many investors have come in and Cambodian people are happy that they have so many jobs," said Sotharath.
Many foreign investors were once concerned about putting money in a country with a troubled past.
But they were won over by the Hun Sen government's business-friendly policies, which include a one-stop service to facilitate paperwork.
James Chang, a South Korean investor, said: "Many foreign investors used to be very worried about the political situation in Cambodia. But nowadays everything has been very stabilised."
With foreign investments pouring into the once war-torn economy, Cambodia's GDP growth is expected to hit more than 9 percent this year.
Cambodia's business boom can be attributed to Asian investors like South Korea and China.
Total direct foreign investment in the country has quadrupled over the past three years and it looks likely to reach half a billion US dollars in 2007.
While Cambodia is now seen as a profitable destination for investors, there are still concerns over business risks.
As the country opens its doors wider, it has to improve transparency, amid allegations of government corruption.
A [South] Korean company, which announced to invest approximately $2 billion in Cambodia, giving the image that this will be foreign investment, finally will use the money of Khmer citizens to build a city. An economic analyst said that such kind of an investment game would not be accepted by any country except Cambodia.
"At the Council for the Development of Cambodia, capital of approximately $2 billion had been announced, and this figure was used to be included in the development report, describing it as part of Cambodia's economic growth, but finally this development company makes cake without flour, because it conducts the development of a sister city by starting to announce the sale of houses and land to Khmer citizens to get money to construct the buildings. Thus, it now advertises the sale of flats and of condominiums to start on 25 June, and those who visit the scheme of the sister city would sign contracts to buy such condominiums, and the company would later provide them. However, the condominiums do not yet exist; therefore, money has to be deposited so that the company uses the money to construct the condominiums.
"The plan of the sister city looks to be real, as Khmer citizens assume that the Korean company really brings $2 billion to build a city in Cambodia; in fact, the plan is just empty of any capital, the real money is the money of domestic Khmer citizens. The announcement is for the sale of houses that do not yet exist to Khmer citizens, so they will deposit money that will be used to build houses for them. Hence, the company comes to develop Cambodia using Khmer land, collecting money from Khmer citizens, to build houses and then sell them to Khmer citizens. Such kind of development cannot be accepted by other countries, but for Cambodia it is made available.
"According to the scheme and the model of the houses which look even more luxurious than buildings in America and France, it is announced that the sister city will cost $2 billion. However, the Korean investor does not bring $2 billion to construct the buildings, but they collect the money from Khmer citizens to construct the buildings, by selling houses that do not yet exist to Khmer citizens.
"So far, Khmer businesspeople or local companies also announce the sale of houses, or to build houses for sale, but they make such announcements after the constructions are 70% completed; they do not sell only the plan and demand Khmer citizens or customers to deposit money, so as to use the money from their customers to build houses. Therefore, the Korean company that announces the construction of a sister city should at least invest half of the capital to build the city, so the construction of houses is 50% completed before it advertises the sale of houses and collects deposits from the citizens who are their customers.
"However, it is funny that while not one flat has been constructed, the company announces the sale of flats to collect money; this is equal to making cake without flour, because it just shows the plan to the customers, and it announces the sale of houses and collects money. However, the government likes such kind of investors and allows them to enter the country, because they know how to go along with the way in which things flow in Cambodia, as long as Khmer officials and Khmer leaders get money or benefits from them.
"As for Japanese investors, if they come to invest that means they really come, they really bring money to do business; therefore, Khmer officials do not benefit from them, therefore Japanese investors did not come to Cambodia. For that reason it is difficult for Cambodia to attract Japanese investors, because they do not want to make cake without flour, or to farm on Khmer citizens' backs like Chinese and Korean investors do.
"An economic analyst said that the Korean company which plans to constructs Camko City also opens a bank with the name Camko. The bank is located in [National Police Director-General] Hok Lundy's villa on Norodom Boulevard. It is not known whether Hok Lundy holds shares of the bank, or whether he sold or rents the house to the Korean company, but Hok Lundy and the company are very close to each other.
"The economic analyst said that in other countries, the buying and selling of immovable property is very carefully monitored for fear of money laundering through such transactions. Also in Cambodia, it is easy to use much money for money laundering. Consequently, it is also necessary to be cautious about the Camko Bank, because this bank is for collecting the money from the sale of immovable property in the Camko Sister City; different images can be used to conduct money laundering under the pretext of trade in immovable property."
The first commercial bank funded by South Korean investors will begin operations in Phnom Penh next month, with unusual banking services on offer, local newspaper the Rasmei Kampuchea said on Thursday.
Camko Bank, which is in the family of Camko City, a 2 billion U. S. dollar South Korean housing project to construct a satellite city on the outskirts of Phnom Penh, will become operational late July, the report quoted a Camko City official as saying.
With capital from its parent bank in South Korea, Busan Bank, Camko Bank will provide a variety of "unprecedented" banking services such as loans, VIP services and savings, according to the official.
Different from commercial banks currently operating in Cambodia, Camko Bank will provide among other things a lending service that borrowers don't have to repay the principal, but only the interest, said the official, who declined to elaborate on the issue.
According to the official, Camko Bank will play a main role in the future stock market in Cambodia.
The Korean International Cooperation Agency (KOICA) has been assisting the Cambodian government to set up a stock exchange market in Cambodia, which is expected to start in 2009.
“We should not have huge developments surrounded by slums, with the poorest of the poor looking up at the skyscrapers” - Mu Sochua, SRP secretary-general
The project is a sign of the country’s real estate boom after decades of civil war. Young people lead the residential boom as they buy new houses.
Phnom Penh (AsiaNews/Agencies) – World City, a joint venture between South Korean and Cambodian companies, has begun building a satellite city near Phnom Penh. The US$ 2 billion urban development project will be financed by South Korea's Shinhan Bank.
The South Korean bank will provide US$ 65 million to build Camko City's first thousand residential units, and infrastructure for the development, which is expected to take between 11 and 15 years to complete. The first phase is due for completion in two years and the latter phases will include a university, a hospital and schools.
The development is the latest outgrowth of Cambodia's building boom—one of the country's most visible signs of recovery after decades of civil war and destitution.
Bolstered by its newfound political stability and large injections of donor aid, Cambodia achieved GDP growth of 10.5 per cent last year. And new houses are being marketed to the growing numbers of young Cambodians.
“After the Khmer Rouge regime ended [in 1979], there were more children than average. Now they are 25, 26 years old, and they have families who need homes," said Hang Chuon Naron, secretary-general of the Ministry of Economy and Finance. Average price tags are US$ 120,000.
Not everyone is enthusiastic about the trend. Some have voiced concern about Cambodia's ability to manage its urban growth, particularly when 35 per cent of the population still lives below the poverty line.
“We should not have huge developments surrounded by slums, with the poorest of the poor looking up at the skyscrapers,” said Mu Sochua, secretary-general of the opposition Sam Rainsy Party.
Noting Phnom Penh's “limited and inadequate housing supply,” Robert Taliercio, senior Cambodia economist for the World Bank, cited the capital's need to manage its building boom without losing its character. “[I]t would be a shame if it became just another generic-looking East Asian megalopolis,” he said.
In order to recover the lost splendor of Phnom Penh, the government brings its support to the mammoth South-Korean “city” project located north of Phnom Penh. Vice-prime minister Sok An made this declaration yesterday during the groundbreaking inauguration of the Camko City construction site.
The groundbreaking for the construction site of the ultra-modern South-Korean city project, christened Camko City, located north of Phnom Penh, took place yesterday. $2 billion will be invested to build, from now until 2018, villas, skyscrapers, hospital, one university and several shopping centers. Sok An declared: “In the 60s, Phnom Penh was beautiful like a jade. But, after the war, it is impossible to compare Phnom Penh with other cities in the region. That is why, today, the government encourages the Camko City project which will embellish the city anew.” “I would like to live here, but I don’t know if I would have enough money,” Kep Ravy, a hardware store manager commented during the inauguration. An optimistic official from the Ministry of Economy believes that Camko City will be accessible to one third of the population of the capital, because most of them own lands in the provinces which they can sell to buy an apartment here.
