China invests in south-east Asia for trade, food, energy and resources

Burmese trucks carrying timber wait in Panwa, Kachin state, for customs clearance to cross the nearby Chinese border. Photograph: China Photos/Getty Images

Beijing's growing stake in Asean, the region's economic bloc, part of a calculated bid for greater military and political influence

Thursday 22 March 2012

Kate Hodal in Bangkok

guardian.co.uk

In 2015, south-east Asia will become one sprawling economic zone encompassing Burma, Thailand, Cambodia, Laos, Vietnam, Malaysia, Singapore, Indonesia, the Philippines and Brunei.

Already bound by myriad political and trade agreements, these 10 countries comprising Asean (Association of Southeast Asian Nations) account for 9% of the world's population – with some 600 million people, twice the size of the US – and have a combined GDP of $1.8tn (£1.14tn).

China has long had one foot in the region, which is home to rich oil, gas, mineral, hydropower, rice, palm oil, coffee and timber resources. By 2015, however, bilateral trading between China and Asean, which began with a fair-trade agreement in 2010, will have more than doubled from $231bn to $500bn, making China Asean's biggest trading partner, according to China expert Dr Ken Shao of Australia's Murdoch University.

"China's investment in south-east Asia is growing at a double-digit speed annually," says Shao. "In 2011 to 2012, China's top six investment destinations in south-east Asia were Indonesia, Vietnam, Philippines, Malaysia, Thailand and Singapore – with textiles, electrics, steel, shipbuilding, chemical and IT popular investment themes."

Cambodia welcomes more Chinese banks in financial sector: Deputy PM

PHNOM PENH, March 16 (Xinhua) -- Cambodia's Deputy Prime Minister and Financial Minister Keat Chhon on Friday welcomed Chinese banks to open branches in Cambodia and actively participate in his country's economic sectors.

"Bank of China opened a branch in Cambodia was a right decision amid the kingdom's economy is on a path of fast booming," said Keat when meeting with Li Jun, the chairman of the board supervisors of Bank of China (BOC).

He adds that Cambodia has seen two Chinese banks launch offices in Phnom Penh and served the Southeast Asian nation's economy.

Oil refinery to be built

Monday, 05 December 2011
May Kunmakara
The Phnom Penh Post

Construction on a US$2 billion oil refining plant, the Kingdom’s first, will start in April, according to officials close to the project.

The plant, which will be built on 365 hectares across Kampot and Sihanoukville provinces and is expected to be completed in 2014, is a joint venture among domestically owned Cambodian Petrochemical Company (CPC), China National Automation Control System Corporation and Sino March Company of China.

The refinery is expected to reduce the Kingdom’s growing dependence on petroleum imports.

“I believe after we can produce and refine by ourselves our price for oil will be comparable to neighbouring countries,” Hann Khieng, a CPC representative, said on Friday, “because we won’t be paying to import oil from abroad.” Those imports reached 1.2 million tonnes, or $1.14 billion, through October – a jump of 67 per cent year-on-year – according to the Ministry of Commerce.

$96m suit over mine [-Who will win? The Chinese or the crony?]

Tuesday, 12 April 2011
Buth Reaksmey Kongkea
The Phnom Penh Post

AN adviser to the head of Prime Minister Hun Sen’s bodyguard unit faces a US$96 million lawsuit for allegedly defrauding a Chinese mining company in a joint venture project, a lawyer for the Chinese firm said.

Officials from China’s Hong Tung Resource plan to submit an official complaint to the Phnom Penh Municipal Court this week against owners of the Nim Meng Group Company Limited, said Kouy Thunna, lawyer for Hong Tung Resource head Cheng Tung Ko. Among the targets of the complaint is Nim Meng, a general in the Royal Cambodian Armed Forces and adviser to Him Bun Heang, the head of Hun Sen’s bodyguard unit, Kouy Thunna said.

“I will file a complaint to the Phnom Penh Municipal Court against Nim Meng and his wife, Mrs Lay Sineang, who are members of the Board of Directors of Nim Meng Sinohope Group Company, and also Director of the Nim Meng Group, which has broke its agreement with my client’s company,” Kouy Thunna said. Hong Tung Resource plans to seek some $87 million in damages in relation to imported mining equipment seized by Nim Meng Group, $6 million in compensation, and $3 million in loans that were never repaid, he added.

CAMBODIA – CHINA Phnom Penh: thousands of people displaced by booming Chinese investments

Arrest of Boeung Kak Lake protesters (Photo: Reuters)

Some 150,000 people are expected to be evicted this year. Each week, families are in the streets to protest, without success. The government focuses on trade with Beijing, which does not demand political reforms or improvements in human rights. Sources tell AsiaNews that politicians speculate on ...

Friday, April 08, 2011

By Asia News

Phnom Penh – The boom of Chinese investments in Cambodia promises to transform the national economy and improve the lives of millions of poor. However, behind the slogans, which the government is fond of repeating, there is the tragedy of farming families thrown off their land for paltry compensation to give way to luxury housing estates and more. Sources in Phnom Penh told AsiaNews that “farmland is being seized and transformed across the country” after it was “bought by politicians on the cheap and resold at much higher prices to companies and developers.” 

Just around Boeng Kak Lake, in Phnom Penh, more than 2,600 families have been evicted from their homes. Of these, about 1,500 refused the offer of US$ 8,500 in compensation, plus a flat, by the authorities.

The South China Morning Post has reported that families are protesting in the streets every week, only to meet a wall of silence. Some analysts warn that “the government could one day have a rebellion on its hands”.

More neo-colonialist Chinese are coming to Cambodia ... more forced evictions ahead?

China to Encourage More Investors to Cambodia

2011-04-05
Xinhua

The Chinese government will encourage Chinese banks to lend to Chinese investors wishing to do business in Cambodia, said Zhang Xiaoqiang, Vice Minister of the National Development and Reform Commission on Tuesday.

Zhang made the remarks during a meeting with Cambodian Prime Minister Hun Sen at the Peace Palace, the premier's spokesman Eang Sophalleth told reporters after the meeting.

Zhang said that his visit to Cambodia was to strengthen and expand cooperation between the two countries after the leaders of the two governments announced in December to raise the two countries' relations to the level of a comprehensive strategic partnership of cooperation.

He is to visit Chinese firms operating in Cambodia "in order to encourage them to continue and expand their investment to contribute to the development of Cambodia," Zhang told the premier.

SRP MP Son Chhay's letter to Chinese embassy on Chinese investment in controversial Boeung Kak Lake

SRP MP Son Chhay sent a letter to the Chinese Embassy asking for intervention with the Chinese Shukaku Erdos Hongjun Property Development to stop its land-grabbing of lands belonging to 5,000 families in Boeung Kak Lake.

MP Son Chhay Letter to Ambassador of the People's Republic of China in Cambodia on Chinese investment in Bo...

Lakesiders threaten China boycott

Residents facing eviction from the Boeung Kak lake area protest behind Chinese flags at Phnom Penh’s “Freedom Park” on Wednesday. (Photo by: Pha Lina)

Choeung Sopheap (L) and Lao Meng Khin (R) during a meeting with king Sihamoni

Wednesday, 05 January 2011
Khouth Sophakchakrya
The Phnom Penh Post

Villagers from the embattled Boeung Kak lakeside community threatened Wednesday to boycott Chinese products if a Chinese firm reportedly involved in the development project set to displace thousands of lakeside residents does not send a representative to negotiate compensation.

During a gathering Wednesday at the capital’s “Freedom Park” in Daun Penh district, roughly 200 Boeung Kak residents called for talks with Inner Mongolia Erdos Hung Jun Investment Co, a firm that Chinese-language news reports cite as a joint venture partner in the Boeung Kak lake development, along with Cambodian companies linked to ruling party senator Lao Meng Khin.

“We will stop using Chinese products if the Chinese company does not send a representative to negotiate with us,” community representative Ly Mom said Wednesday, as villagers displayed Chinese flags amid their protest signs.

The Chinese reports reveal that Hung Jun’s lake development agreement was signed in July and involves both Shukaku Inc – which is owned by Lao Meng Khin – and the Cambodia International Investment Development Group.

The latter firm also appears to be linked to the senator. According to an undated government investment publication available online, the firm runs a special economic zone in Sihanoukville with Lao Meng Khin listed as the “zone developer”.

In September, Hung Jun representatives travelled to Phnom Penh for a meeting with the Prime Minister that was also attended by Choeung Sopheap, the wife of Lao Meng Khin and head of local conglomerate Pheapimex.

The lake development was reportedly part of a US$3 billion package of investment deals that also included a 750-megawatt power station in Sihanoukville and exploration for bauxite in Mondulkiri province.

The 133-hectare Boeung Kak lake development will ultimately displace more than 4,000 families, rights groups say.

Spokesman at the Chinese embassy Qian Hai denied on Wednesday that a Chinese firm was involved in the Boeung Kak development.

“From what I know, at this stage, no Chinese company is taking part in this project,” Qian Hai said.

He also dismissed Chinese media reports linking Hung Jun to the lakeside project.

“I don’t think you should publish this sentence in the newspaper – you just write what I told you,” he said.

ADDITIONAL REPORTING BY JAMES O’TOOLE

Hun Xen's $600 million kowtow

Cambodia Receives $600 Million Package from China

Chun Sakada, VOA Khmer
Phnom Penh Friday, 17 December 2010

The package included $300 million in projects for national road and irrigation projects in the provinces of Preah Vihear, Mondolkiri and Svay Rieng.

China agreed to nearly $600 million in deals to Cambodia on Thursday, during a visit of Prime Minister Hun Sen to Beijing.

The money, in grants, loans and investment capital, was below the “billions” Hun Sen had said he expected before leaving.

In all, the two sides signed deals on 13 projects, from energy and infrastructure to finance and agriculture, Foreign Minister Hor Namhong said Friday as the delegation returned from a five-day visit.

The package included $300 million in projects for national road and irrigation projects in the provinces of Preah Vihear, Mondolkiri and Svay Rieng, he said. Other projects include bridges to Chroy Changvar, across the Tonle Sap from Phnom Penh, and in Takmao, and a dam in Pursat province.

China and Cambodia will also seek to boost trade, Hor Namhong said.

China’s president, Hu Jintao, promised to push Chinese companies to invest more in Cambodia, he said.

Trade between the two for the first 10 months of this year reached $1.1 billion, he said, a number they hoped would reach $2.5 billion by 2015.

China paves way for potentially blooming times

July 11 2010
By Jonathan Guthrie
Financial Times (UK)

One group of British businesses is sure to do well from what is billed as a “Second Wave” of Chinese expansion into the UK: florists. The opening of an engineering research centre in Nottingham by Chang’an Automobile, one of China’s largest carmakers, featured as many cut flowers as an operatic opening night.

The ribbon-cutting ceremony a fortnight ago celebrated the opening of an outpost that Chang’an hopes will help it move up the value chain by assimilating western technology.

Liu Bo, assistant president of Chang’an, said: “This centre will enable us to optimise engine and transmission technology. We expect to have 200 employees here by 2014, most of them local.”

The scale of the investment by Chang’an – £20m-£30m over five years – is modest when compared with the numbers that describe the investor. Mr Liu said the Chongqing-based company would make 2m runabouts in China this year, rising to 4.5m in 2015. A staff of 40,000 at nine production centres would generate turnover of about Rmb100bn (£10bn) this year, he predicted.

However, such events as the Nottingham opening are in their small way landmarks in the fraught history of east-west trade relations, if lacking the high drama of the arrival of Commodore Perry’s frigate in Tokyo Bay in 1853.

Chinese companies, still seen by many westerners as anonymous producers of low-grade commodity goods, have begun to set up outposts in developed markets with two aims: to build international brands of their own and to download the currently superior western technology they need to remain competitive.

Initial Chinese excursions into UK business, according to Kevin Lin, owner of KL Communications, a translation agency, consisted of establishing representative offices and making opportunistic takeovers. These included the purchase by Nanjing Automotive of assets of defunct carmaker MG Rover in 2005.

“Through my work I know that the Chinese government is preparing a second wave,” he says. “And this will be much better prepared and planned.”

According to Mr Lin, a seasoned diplomatic translator, the strategies of the big state-owned corporations that dominate the Chinese industrial landscape are largely determined by government bodies such as the State-Owned Assets Supervision and Administration Committee.

Min Rose, proprietor of the East Midlands China Business Bureau, who helped the East Midlands Development Agency bring Chang’an to Nottingham, says: “Improvements in Chinese labour laws mean that Chinese costs are less competitive than those in Cambodia or Vietnam. So the government realises that relying on low-cost manufacturing is unsustainable.”

That explains the focus of Chinese companies on investments that improve their skills. Last month, MG UK, the successor business to MG Rover that belongs to Shanghai Automotive following its merger with Nanjing Automotive, opened a design centre at its Birmingham headquarters.

Its job is to assimilate European car styling trends and apply them to Saic’s models. The unit is adjacent to a technical centre that, in spite of the company's slim UK output of MG TF sports cars, employs 300 engineers.

Saic is investing £5m in facilities at Longbridge that include a new engine testing operation.

Similarly, Dynex Semiconductor of Lincolnshire, ultimately owned by China South Locomotive & Rolling Stock Corporation, is preparing to open a new R&D centre specialising in chips for the power industry.

Brand-building in the west by Chinese companies is at a tentative stage. But Chinese company bosses, present in unprecedented numbers at Birmingham’s huge Spring Fair homewares exhibition this year, are keen to win the same name recognition accorded to such Japanese businesses as Toyota and Toshiba.

China’s engagement with UK business is analogous to that of Japan’s in the 1950s and 1960s: it inevitably involves misunderstandings and false starts. Some Little Englanders accuse the Chinese of seeking to suck up UK expertise and sell it back via low-priced products. They probably over-estimate the appeal of slow-growing western markets.

Mr Lin adds that British executives can be dismayed by the slowness with which Chinese state-owned businesses make decisions.

Chinese companies, often accused of stealing intellectual property rights from western business, worry about becoming victims themselves when they venture abroad. Brian Shaw, managing director of UK Trade & Investment, a government trade promotion body, says Britain’s strong IPR laws are one reason the Chinese set up R&D centres here: “They see the UK as a platform for growth that takes them into Europe and the rest of the world.”

Direct investment in the UK by Chinese and Hong Kong companies was an unimpressive £717m in 2008, the last year for which statistics are available, compared with the £2bn British companies invested in China and Hong Kong.

Mr Shaw hopes the Chang’an opening in Nottingham is the start of something bigger. If so, there will be plenty more ribbon-cutting ceremonies and British partners of Chinese companies, including florists, should do very nicely.

Hun Xen on a begging mission to China

Hun Sen Flies to China for Talks on Trade, Aid

By Kong Sothanarith, VOA Khmer
Original report from Phnom Penh
15 October 2009

Prime Minister Hun Sen flew to China on Thursday, to attend a trade fair and seek agreements on infrastructure rehabilitation, officials said.

“Hun Sen will raise before his Chinese counterpart encouragement of more investors to come, especially investment in the agricultural sector, hydroelectricity and rice mills,” said Sri Thamrong, an adviser to Hun Sen who accompanied the delegation.

Hun Sen is expected to meet with Chinese Premier Wen Jiabao and pay a courtesy call on Liu Qibao, secretary of the Sichuan provincial committee of the Communist Party, Sri Thamrong said. Hun Sen will also give a speech at the opening ceremony of a trade fair on Friday morning, in the forum of international cooperation in a seminar on investment.

During the visit, the Cambodian delegation is expected to sign agreements for financial assistance on a road project between Kampong Thom and Preah Vihear provinces and irrigation in Battambang province.

Hun Sen traveled with Foreign Minister Hor Namhong and Commerce Minister Cham Prasidh.

China remains a strong partner in Cambodian development and is the country’s top donor. Its assistance includes development projects and military aid.

Yim Sovann, a lawmaker and spokesman for the opposition Sam Rainsy Party, warned against encouraging too much investment and financial support from China.

China's ASEAN fund boost to challenge Japan

April 16, 2009
ABC Radio Australia

China is continuing with plans to strenghten its economic presence in South East Asia, despite having to postpone the signing of a free trade agreement with ASEAN. Instead, the country's foreign minister, Yang Jiechi, has announced plans to allocate $US10 billion to an ASEAN infrastructure investment fund, and make $15 billion more available for loans.

Presenter: Helene Hofman
Speaker: He-Ling Shi, professor of economics at Melbourne's Monash University; Pande Silalahi, economist with the Jakarta-based think tank Center for Strategic and International Studies

Click here to listen to the audio program (Windows Media)

HELENE HOFMAN: This month's ASEAN summit in Thailand should have marked a turning point in economic ties between China and ASEAN member countries. Had it not been cancelled because of Thailand's political protests, the summit would have overseen the signing of an agreement between the two - creating the world's largest free trade area. That agreement may have been delayed, but on a flight back from Thailand the Chinese foreign minister, Yang Jiechi, announced plans to inject billions of dollars into ASEAN in the form of aid and infrastructure funding.

He-Ling Shi, a professor of economics at Melbourne's Monash University says the timing of the announcement is not accidental.

HE-LING SHI: China basically wants to have a series of agreements with all these Asian countries so after they establish a free trade agreement china can export more goods and invest more in these countries. All these ASEAN countries, with the exception of Singapore, lack the funding to finance their infrastructure projects so they can use this funding to improve their infrastructure and we know that infrastructure is extrememely important for the future development of all these Asian countries.

HELENE HOFMAN: Over the next three years, China will contribute 10 billion US dollars to infrastructure projects which it hopes will improve its links with ASEAN member countries. A futher 15 billion US dollars will be available in credit, with part of that reserved for co-operation projects. It has also announced plans to offer almost 40 million US dollars to help Cambodia, Laos and Burma - the three ASEAN member states that have been hardest hit by the global economic downturn.

Pande Silalahi is an economist with the Jakarta-based think tank the Center for Strategic and International Studies.
He says the funding is part of a confidence-building exercise:

PANDE SILALAHI: This is the time for China to build confidence because if you look at the last few decades the Asean countries have become the centre of economic growth and I think China wants to contribute to that in the region. I think its a very important opportunity and I think the aim of China is to build the confidence.

HELENE HOFMAN: China has already made significant contributions to infrastructure projects in Burma, Laos and Vietnam - for the building of roads. But, this round of funding will go further than economic support, with the Chinese offering to train 1,000 agricultural technicians and give 2,200 Chinese government and public administration scholarships.

Dr Shi says its all part of China's intention to increase its influence in the region:

HE-LING SHI: At the moment Asia - there are some investment funds established by the Asia Development Bank, but that is mostly dominated by Japan so China basically wants to establish another mechanism in which China could dominate and so personally I believe that intention is behind that investment in the fund. But, if you noticed, in the announcement, in addition to this investment in the fund there's cultural and education exchange programs so I think its a starting point for China to exert a great influence on this area. Not just an economic influence but a cultural and political influence.

HELENE HOFMAN: The trade volume between China and ASEAN is already worth over 200 billion US dollars a year. Once the free trade agreement is signed this is expected to rise to over 1.2 trillion US dollars a year.

Cambodia: Indian inertia versus growing Chinese presence

Sunday, 07.13.2008
Pranav Kumar
IndiaPost.com

Working towards greater economic cooperation forms an important part of India's Look East Policy. In the last two decades India's bilateral trade and investment with this region has increased significantly. However, the increase remains asymmetrical.

The case of Cambodia, for example, shows that India's interaction with the country is far below potential. In 2007, India's total trade with Cambodia was just US$53.7 million.

Although there was an exceptional increase of more than 100 per cent in annual trade over 2006 trade. However, this amount of trade is minimal in the overall trade of both countries.

Interestingly India's exports are far higher than the imports from Cambodia. There is hardly an Indian contribution in investments in Cambodia of around $2.8 billion in 2007. The latest data available shows that till 2002 India had invested only $1.1 million in Cambodia.

In recent times, some Indian companies such as Kirloskar have opened their offices in Cambodia. Even as Cambodian authorities have made it very clear that they are looking for long term investments, the Indian government seems to be happy with paltry measures like lines of credit, donation of some money for Khmer Rouge trials, temple restoration, IT kiosks and gifting jars of indelible ink.

On the other hand, in an obvious indication of assertion in Southeast Asia, China is using economic means as a readily available tool to achieve its strategic objectives. The Chinese economic presence in Cambodia is not only expanding but also growing in strength.

The component of Chinese economic diplomacy largely contains investments and trade. Although China is also a major donor, the focus is on increasing Chinese presence by means of foreign direct investment. The total volume of Chinese investment from 1994 to 2007 was US$1.76 billion.

There are 3,016 Chinese businesses operating in Cambodia which produced more than US$1.5 billion at the end of 2007. China-Cambodia bilateral trade is heading towards the US$1 billion mark having crossed US$900 million in 2007 with an annual growth of 30 per cent. China is present in every possible economic sector in Cambodia.

Chinese and French companies are major players in the emerging oil and gas sector and as Cambodia plans to build more than 10 hydropower plants in the near future, the Chinese are vying to grab the opportunity. Around four major Chinese steel companies are also engaged in joint ventures to develop iron ore mines in Cambodia.

The above facts make it very clear that while Chinese economic presence in Cambodia is overwhelming, the Indian presence is negligible by contrast. There is, therefore, an urgent need to identify some areas where Indian presence can be increased.

Cambodia has untapped natural resources, which makes it attractive destination for investment. According to recent estimates Cambodia has potential offshore oil deposits of about 700 million barrels and natural gas reserves of around 4 to 5 TCF (trillion cubic feet).

According to the Director-General of Cambodian National Petroleum Authority, there are significant onshore reserves in provinces of Kampong Chhnang, Kampong Thom and Pursat. Other than petroleum reserves, Cambodia has iron ore reserves and gold. Given the India's energy needs and its expertise in the mining sector there lie greater possibilities of cooperation in these sectors.

More than 50 per cent of Cambodia's population is under 21 years of age. This population structure coupled with a growing economy makes Cambodia a fertile ground for knowledge-based industries. Given India's expertise in this field, this provides an opportunity for India to explore the human resource development sector in Cambodia.

Cambodia still remains an agriculture-based economy and diversification in agro-based products is its top priority in this sector. Indian companies can find a niche, here with their experience in bio-technology that can be used by Cambodia to improve yields in agriculture.

In recent times, Cambodia has also emerged as an attractive tourist destination. However, the lack of basic tourism-related infrastructure hinders the growth of this sector in Cambodia. Here, Indian hotel and resorts can play a vital role by investing in Cambodia's tourism sector.

To facilitate the growth of trade, adequate transportation, infrastructure and minimization of trade costs is needed. Here the physical connectivity from India through other Mekong region states will be a revolutionary step.

Institution-building is another important aspect in developing the economic linkages; a joint trade promotion mechanism of possible players will be a fruitful step. Above all, a good communication mechanism should be developed by the Indian government to inform the business community in India about the opportunities available in Cambodia.

(The writer is a Research Officer at IPCS)

China surpasses SKorea to become the 800-pound gorilla in terms of investment in Cambodia

Asian nations vie to become Cambodia's biggest foreign investors

Wed, 27 Feb 2008
DPA

"Competing regionally remains less than easy. Trading partners use the words 'friendly' and 'cooperation', but of course they always look after their own interests" - Sok Chenda

Phnom Penh - China overtook South Korea as Cambodia's largest foreign investor last year, but Japan had shown an increased interest in investment as opposed to aid, a senior Cambodian economist said Wednesday. Speaking at a press conference in the capital, the secretary-general for the government's Council for the Development of Cambodia (CDC), Sok Chenda, gently chided Western nations for lagging behind Asian nations in foreign direct investment.

He said between 1994 to 2003 investment from Western nations made up just 15 per cent of the country's total, with 60 per cent coming from Asian nations such as Malaysia, China and Korea.

"I can't predict foreign investment figures for 2008 but I hope for even more. Prime Minister Hun Sen just returned from a visit to South Korea yesterday and we are hopeful that will generate renewed investment interest there," Chenda said.

"There is also new interest from other quarters, and especially Japan. Japanese investors have certainly now entered the doors of our home."

Approved foreign investments from 1994 to 2007 totalled 14.83 billion dollars, he said, with China accounting for 1.76 billion dollars of that total and South Korea 1.5 billion dollars.

Industrial investments made up 34 per cent of that total, followed by the service industry with 32 per cent.

Agriculture made up just 7 per cent, but Chenda said that was a promising area of growth and with a boom in global bio-fuel demand and the recently launch of several food processing factories in Cambodia it was expected to continue to grow.

However he admitted the less developed nation still faced obstacles, such as Cambodia's terrible balance of trade and lack of secondary industries, which meant container ships arrived full but often left with room to spare.

He also appealed to foreign governments to help Cambodia strengthen its ability to curb money laundering, pointing out that the country lacked an investment board to investigate potential investors thoroughly, such as the boards set up in Thailand and Japan.

"Competing regionally remains less than easy. Trading partners use the words 'friendly' and 'cooperation', but of course they always look after their own interests," he said.

Chinese Sihanoukville Special Economic Zone

Cambodian, Chinese companies lay foundation of special economic zone in Sihanoukville

SIHANOUKVILLE, Cambodia, Feb. 23 (Xinhua) -- Cambodian and Chinese developers Saturday laid the foundation stone of the Sihanoukville Special Economic Zone (SSEZ), which has been the largest one of its kind so far in Cambodia.

Addressing the ceremony on the construction site, Cambodian Prime Minister Hun Sen said "This special economic zone is currently the biggest one in the kingdom with the investment from China (and Cambodia), which again testifies the close economic and political ties between Cambodia and China and those between the top leaders of both countries."

This cooperation took place in 2008, the 50th anniversary of the establishment of the diplomatic ties between Cambodia and China and we expected it to help attract more Chinese companies to invest here, he said.

China used to export over 400 items of goods to Cambodia, but up to now Cambodia did not have the capacity to export the same amount of goods, so Cambodia needed investment from China, he added.

The premier said that the goods produced in this special economic zone could be exported to foreign markets duty free, but the companies should pay import tax if their goods were sold in Cambodia.

Delegates from the Chinese side also addressed the ceremony, which attracted more than 100 senior government officials to attend.

Also at the ceremony, six Chinese companies signed contracts with the developers of SSEZ to establish their branches here.

SSEZ will escalate into 11.08 square km in eight years with an estimated investment of 3 billion U.S. dollars, according to a press release from the zone's developers -- the Jiangsu Taihu Cambodia International Economic Cooperation Investment Co. Ltd. and the Cambodia International Investment Group Co. Ltd.

In 2011 when the second phase construction is done, 150 companies can be situated here and 40,000 job opportunities provided, it said.

In 2015 when the whole construction is finished, the zone will embrace some 300 companies, provide around 80,000 job opportunities and generate export volumes of 2 billion U.S. dollars a year, it added.

Asia: China invests heavily in Vietnam, Cambodia, and Laos

Sunday, December 02, 2007

China has been the beneficiary of huge foreign direct investment, The Nation reports.

But in recent years, the tables have turned, and China has becomes a prominent foreign investor in Vietnam, Cambodia and Laos. This article, condensed from several by Deutsche Presse-Agentur, looks at what Chinese investors are doing across Thailand's northern and eastern borders.

Earlier this year, China's Commerce Ministry predicted foreign investment by Chinese enterprises would likely exceed US$20.9 billion (Bt707 billion) this year, up at least 30 per cent from last year, as Beijing continues to encourage Chinese companies to expand abroad.

China's direct foreign investment began to soar in 2005, when the figure jumped 123 per cent year on year to $12.3 billion. The Commerce Ministry's 11th five-year plan, which began last year, predicts aggregate direct foreign investment by Chinese companies will top $60 billion by 2010.

A considerable slice of that investment is going to Vietnam, Cambodia and Laos - Thailand's neighbours - which are building their economies from scratch.

In Cambodia, China was the dominant foreign investor last year, with $763 million in investment approvals - nearly double its 2005 total. Russia was a distant second last year, with approvals totalling $278 million.

In Laos between 2001 and this past August, Chinese foreign direct investment in projects approved by the Lao Committee for Planning and Investment amounted to $1.1 billion, second only to Thailand's projects, worth $1.3 billion.

In Vietnam, Chinese investment skyrocketed from $66 million in 2005 to $312 million last year.

Chinese investment in Cambodia has been welcomed with open arms following a decades-long relationship. The Chinese government is pouring money into bridges and roads - it donated $6 million worth of steel bridges to Cambodia in 2001 - and has pledged military assistance in the form of new vessels for the country's dilapidated navy. Cambodia's revered former king, Norodom Sihanouk, spends months at a time in Beijing, and Chinese Premier Wen Jiabao showed the value he placed on the relationship in April 2006, when he included Cambodia in a tour of New Zealand and Australia. China also agreed to waive outstanding loans to Cambodia five years ago.

These days, China's emphasis on Cambodia is increasingly looking beyond aid towards desperately needed investment. Chinese, and now Cambodian investors, are planting hectares of biofuel crops like jatropha, which Chinese industry devours insatiably. Recently, a Chinese company signed a deal to grow mulberries over a tract of land in southern Cambodia as a resource from which to supply raw silk to its factories and offered to build a factory to process the silk-worm cocoons in country.

In May, China's fifth-largest steelmaker, Wuhan Steel, announced it had joined the Anshan Iron and Steel Group, Shanghai's Baosteel Group and Beijing's Shougang Iron and Steel Group to explore for iron ore in Cambodia's remote northern province of Preah Vihear - on the border with Thailand.

Earlier this year, an investor was given the go-ahead for a $215-million hydroelectric plant in the coastal province of Koh Kong. Huot Pongan, Cambodia's under-secretary of state for industry, mines and energy, says the benefits outweigh the risks.

"We don't have enough electricity. China is developing that for us. We don't have the resources to build mines and harvest our resources. China does. And China has been here for a long time and will stay here for a long time," he says.

In Laos, besides investments in hydroelectric plants, Chinese companies are also investing in mining, rubber plantations, telecommunications, construction materials, hotels and restaurants. In August, Chinese investors opened the China Market near Vientiane Airport. It is now one of the biggest shopping malls in the capital. Chinese merchants man the stalls, and Chinese goods are on sale.

The huge increase in Chinese investments in mining and hydropower plants has led to a two-year moratorium on new concessions. Laos has handed out more than 140 mining concessions in recent years, many to Chinese enterprises looking for gold, copper, iron, potassium and bauxite.

For instance, Australia's Ord River Resources has joined China's Non-ferrous Metals International Mining to develop a 727-square-kilometre concession on the Bolaven Plateau in southern Laos into one of the world's largest bauxite mines, for the manufacture of aluminium. Such concessions are hard to secure in Laos without a Chinese partner.

"It's political," says Vinay Inthavong, a Lao entrepreneur and chairman of the Vico Group. "If the leadership wants to stay in power, they have to support China and Vietnam." In Vietnam, Yang Dewei, 42, manager of a factory called United Motor Vietnam, explains: "Doing business here is pretty much the same as in China, except for the language difference." For Chinese investors, Vietnam's economic climate has the advantage of familiarity: a fellow communist country implementing economic reforms, plus an emerging middle class eager to consume basic and luxury goods.

This explains why Chinese companies invested in 57 projects in Vietnam last year, up from 40 in 2005. At least 250 Chinese investment projects have been established in the last five years, says Vietnam's Planning and Investment Ministry.

China remains a relatively small investor in Vietnam, ranking 13th behind top investors South Korea, Singapore, Taiwan and Japan. But Vietnam has been a major location for China's outsourcing factories.

In 2005, the last year for which detailed figures are available, about 35 per cent of Chinese investment in Vietnam was in manufacturing, while in 2004 that sector represented 83 per cent of Chinese investments. The balance of investment - and the other pillar of China's move into Vietnam - reflects its priorities elsewhere in the world: natural resources.

Investment in projects like coal extraction and bauxite mining made up 44 per cent of Chinese investment in Vietnam in 2005, up from only 3 per cent the year before.

Still, for Chinese manufacturers like Yang Dewei, Vietnam's low wages, geographical proximity and cultural similarity make the country an attractive place to export factories.

"It's not exactly the same," he says. "For instance, in my home town of Chongqing, in southern China, the people eat spicy food, and I have a hard time finding good food here. But I am here for the business, and so far it's worth it."

Source: The Financial Times Limited

Cambodia seeks $3bn investments in power plants

Saturday November 24, 2007
ANUCHIT NGUYEN
Bangkok Post

Cambodia is seeking $3 billion of investments to build power plants in the next decade to meet rising energy demand in Southeast Asia's fastest-growing economy, Commerce Minister Cham Prasidh said.

The nation plans to boost generating capacity by 2,000 megawatts from 300 megawatts by 2017, Cham Prasidh said in an interview in the capital Phnom Penh.

The government is in talks with Chinese and Vietnamese investors to build hydropower plants with a combined capacity of 1,100 megawatts, he said, without naming the companies.

Cambodia's economy has expanded at an average annual pace of about 11% in the four years ending 2007, according to the Asian Development Bank, spurring demand for energy. The nation, which emerged from a two-decade civil war in 1993, is wooing overseas companies to invest in natural gas exploration and power plants to ease electricity shortages and ensure energy supplies.

The energy shortage "problem must be resolved as soon as possible because it's hard to attract foreign investments with unstable power supply," Cham Prasidh said.

Cambodia's economy, which relies on garment exports and tourism, may grow 9.7% this year, Prime Minister Hun Sen said on Nov 7. Companies such as Club Me'diterrane'e SA and Starwood Hotels and Resorts Worldwide Inc are planning to build hotels to tap the country's rising tourist arrivals.

Poor Infrastructure "Cambodia has very low labour costs that can even compete with China," said Van Sou Leng, chairman of the Cambodian Garment Manufacturers Association, a trade group. "Investors are cautious to invest here because of poor infrastructure such as electricity, roads and ports."

Exports in 2006 rose 24% to $3.45 billion, according to Cambodia's central bank. Garments accounted for 70% of total overseas shipments, with the US and European Union the nation's biggest markets.

Foreign tourists to Cambodia may reach a record two million in 2007, Hun Sen said. Overseas tourists rose 19% to 1.4 million in the first nine months of this year, he said.

"Most large hotels in Cambodia have their own power generator because the power blackout situation has worsened," said Cham Prasidh.

The country currently buys electricity from Vietnam and Thailand.

The government is in discussions with Chinese investors to build two hydropower plants with a combined capacity of 700 megawatts in the northwest province of Pursat, said Cham Prasidh. A group of Vietnamese investors plans to build hydropower plants with capacity of 400 megawatts in the northeast province of Rattankiri province, he said.

Cambodia will also open bids for gas-fired power plants which will use natural gas from its onshore and offshore reserves, Cham Prasidh said, without elaborating.

The economy of Cambodia will be the fastest growing of nine Southeast Asian nations this year, according to the ADB. It also reported the quickest pace in the region in 2006 and 2005.

In Communist China Hun Sen trusts

Cambodia has confidence in China, says prime minister

Nov 7, 2007
DPA

Phnom Penh - Cambodia sees China's booming economy as a benefit, not a threat, and the kingdom is anticipating 1 million Chinese tourists a year as Chinese became richer, Prime Minister Hun Sen said Wednesday.

'Some people say China's economic growth is a threat to the world economy but some say it is good for the region and the world,' Hun Sen told a conference on investment and trade in the capital.

'I believe when China becomes rich it is good for Cambodia. When we receive Chinese tourists it is even better than Chinese investment. We want 1 million Chinese tourists per year.'

Hun Sen said he was inclined to trust in China's continued economic growth, and questioned the effect the burgeoning current account deficit of the US would have on exports for Cambodia and other regional economies in the not-so distant future.

'This could be a danger for the world economy. The US is like the locomotive engine of the train. When the engine stops, we all slow down,' he said.

According to the Ministry of Tourism third quarter statistics for 2007, mainland Chinese tourist arrivals to Cambodia ranked a distant sixth of all nationalities, but the 82,915 Chinese tourists still represented an increase of more than 47 per cent from last year.

China has rapidly become Cambodia's most important source of foreign direct investment, and is also a major donor.

Cambodia welcomes Chinese investment surge [- Norodom Sihanouk spends months at a time in Beijing]

DPA

For Cambodia, struggling to regain its economic footing after 30 years of civil war and keen to shrug off its dependence on aid, Chinese investment has been welcomed with open arms and few questions asked, at least publicly.

The Chinese government is pouring money into bridges and roads (it donated 6 million dollars of steel bridges to Cambodia in 2001) and pledging military assistance in the form of new vessels for the country's dilapidated navy.

But China's emphasis is increasingly looking beyond aid towards desperately needed investment. Chinese, and now Cambodian investors, are planting hectares of bio-fuel crops like jatropha, which the Chinese industry devours insatiably.

Just last month yet another Chinese company inked a deal to grow mulberries over a tract of land in the country's south to supply raw silk to its factories and offering to build a factory to process the silk worm cocoons in Cambodia.

In May, China's fifth largest steel mill, Wuhan Steel, announced it had joined Shanghai-based Baosteel Group, Anshan Iron and Steel Group and Beijing's Shougang Iron and Steel Group to explore for iron ore in Cambodia's remote northern Preah Vihear province on the Thai border.

The relationship has not been built overnight. China's Ministry of Foreign Affairs website boasts diplomatic ties with Cambodia since 1958 and notes China's agreement to wipe outstanding loans to Cambodia five years ago - something the US, amongst others, still steadfastly refuses to do.

Cambodia's revered former king Norodom Sihanouk spends months at a time in Beijing and Chinese Premier Wen Jiabao showed the value he placed on the relationship in April 2006 when he included Cambodia in a tour of New Zealand and Australia.

"Chinese companies come to Cambodia because we have a long relationship and Cambodia is openly courting Chinese investment," Chhin Cheadara, deputy director of the Phnom Penh Chamber of Commerce explained.

"Most of these investments are in the garments and construction industries, as well as mining and electricity production," said Chhin Cheadara. "This creates infrastructure and employment opportunities here, but more importantly, it is long term investment. In the future, we envisage more and more Chinese companies coming to Cambodia."

But this Chinese investment boom has worried some environmental and human rights groups. For instance, Australian mining giants such as BHP Billiton Ltd, currently exploring in the north-east for bauxite, have vast corporate responsibility programmes and are accountable to the scrutiny of media and shareholders at home.

Activists claim that Chinese companies may not feel these restraints and the Cambodian government has refused to rule out mining in environmentally sensitive areas if it deems the benefits outweigh the risks.

Chinese investors are not confined to mining either. In January one group was given the go-ahead for a hydroelectric plant in the coastal province of Koh Kong worth up to 215 million dollars.

Critics point out other potential drawbacks. The International Monetary Fund warned last month that soaring property prices constituted a risk to the country's nascent banking sector, going as far as to call the situation "a bubble" and cautioning that 90 per cent of loans were currently secured against property.

Analysts say the sudden rise in land values is due at least in part to the long Chinese tradition of property investment and speculation. Huot Pongan, undersecretary of state for the Ministry of Industry, Mines and Energy said the benefits outweigh the risks.

"We don't have enough electricity. China is developing that for us. We don't have the resources to build mines and harvest our resources. China does. And China has been here for a long time and will stay here for a long time," said the energy minister.

By 2004, the World Bank listed China as one of Cambodia's key sources of FDI as countries like the US and Japan continue to drag their feet, preferring instead to fund aid and soft loans.

Council for the Development of Cambodia figures show domestic and foreign investment approvals more than doubled to 2.6 billion dollars in 2006 from 2005, fed by key areas which China has shown vast interest in, including mining, energy and construction.

And of foreign investment approvals, China was dominant, with 763 million dollars in approvals in 2006 - nearly double its 2005 total. In comparison, Russia was a distant second, with approvals totaling 278 million dollars for 2006.

"There are a number of reasons why Cambodia is receptive to China. One is the way it does business. China understands Cambodia. It doesn't throw us scraps of aid and then scold us in front of the world like a naughty child. That is not the Asian way - that is the colonial way," one Cambodian analyst said on condition of anonymity.

ANALYSIS: China's investment push abroad picks up pace

DPA

For more than a decade, China - with its 1.3 billion consumers and legions of industrious, low-paid workers - has been Asia's biggest magnet for foreign direct investment (FDI) from around the globe.

Less noticed, until recently, has been China's effort to become a foreign-investor nation in its own right, a development yet in its infant stage by global standards.

"China's outward FDI is still relatively small," said a report published by three North American universities in August, which found that China's total was 5 per cent of US investment in 2005, only 0.6 per cent of the global amount.

But the study also noted that the pace of investment has been picking up, climbing to 16 billion dollars in 2006, or nearly 30 per cent more than the previous year. That is starting to show in the FDI statistics in neighbouring Asian countries.

In Thailand, Chinese firms applied for approval of projects totalling 155 billion baht (4.5 billion dollars) between October 6, 2006 and July 7 of this year.

In Laos, for the fiscal year ending on September 30, Chinese companies accounted for nearly half of the 1.1 billion dollars of FDI projects approved, about 32 per cent of it in hydroelectric power.

Much of China's push abroad has been motivated by the country's need for energy and raw materials to fuel its relentless growth.

That thirst has taken Chinese companies to mineral-rich Perth, Australia, where the state economy is growing at triple the national average due to Chinese trade and investment, giving birth to a new generation of Perth millionaires.

The quest for energy has also taken Chinese state investors to countries with less-savoury governments such as Sudan, Iran and Myanmar.

The recent international furore over the Myanmar junta's latest crackdown on its citizens has highlighted the political dimension of China's investment spree.

China is a significant investor in Myanmar and one of its main trading partners. It is also key to the ruling military regime's financial survival.

Chinese companies are studying plans to invest billions of dollars in a pipeline from Sittwe, in western Myanmar, to Yunnan province in China, to deliver natural gas from the Shwe gas field.

The huge field has the potential to generate about 12 to 15 billion dollars for Myanmar's generals if it can be piped to market. That could be enough to keep them in power for another decade or two.

China is also a major potential investor in hydroelectric power in both Myanmar and Laos.

China's Sinohydro Corporation has set up a joint venture with Thailand's MDX Corp to build a 1-billion-dollar dam at Hat Gyi on the Salween River in northeastern Myanmar.

The 1,200-megawatt project, expected to sell its output to Thailand, threatens the livelihoods of thousands of ethnic Karen in the area, who have been waging a guerrilla struggle against Myanmar's military for six decades.

Chinese companies have also invested in hydroelectric projects in neighbouring Laos, hoping to cash in on Thailand's need for energy.

Unlike the hunt for petroleum, the hydroelectric investments are export-oriented, and perhaps driven by employment considerations.

"China has the biggest dam industry in the world," said Witoon Permpongsacharoen, editor of Watershed Magazine. "They have 80,000 large dams in China and they need to create jobs for this industry."

Given China's dismal record of disregarding the social and environmental impacts of its own dams, that is not necessarily a good omen for the people of Myanmar and Laos, although it will no doubt benefit their leaders.

China's political connections with those countries help them to secure the deals, but it means that more environmentally conscious companies are losing out.

"What this country needs to do is attract some of the multinational companies that are forced to have high environmental and social standards by their shareholders," said forest engineer Peter Fogde, a Swedish director of the Burapha Group in Vientiane, Laos with interests in eucalyptus plantations for wood products.

"Coming from Sweden you have social-environment issues built into you when you are born," said Fogde, who warned that huge tracts of land being given as concessions for rubber plantations to Chinese and Vietnamese investors will cause massive erosion of topsoil.

But not all Chinese investment is as environmentally or politically dangerous. Chinese investors are supplying cheap motorcycles to Laos, Cambodia and Vietnam, giving the dominant Japanese brands a run for their money.

A Chinese company also plans to set up the first cement plant in Laos, giving the domestic construction industry a needed boost and lowering its costs.

And in Thailand, the Chinese projects approved this year include one to produce 5,000 tons of candles annually, and the Chinese-Thai Fusen Angell Motor company's plan to produce 55,000 electric cars.