A peek into Cambodia's history: The Portuguese legacy

KI-Media Note: Along with our posting of the recent article on the Elephant Walk restaurant, owned by the de Monteiro family, several readers are wondering who this family is and why their last name features on one of Phnom Penh's street. Since our team includes one ever-curious member, the infamous Heng Soy, we asked him to do the research on this issue and here is what he came up with:

Foreigners in Cambodia

The Portuguese arrived in Cambodia in mid-16th Century and they established a Catholic mission (1553). They obtained a plot of land using a historical trick [whereby they asked for a parcel of land the size of buffalo hide, then] they would cut the hide into a very thin long strip to cover the largest space of land possible to be given to them as a concession by the local inhabitants. Later on, descendants of the Portuguese who were by then of mixed race but still preserving their Portuguese last names, continue to play a role in Cambodia’s history. Mainly at the beginning of the 17th Century, they tried to develop their influence after they were chased out of Sumatra by the Dutch. In 1596, Lavis Velo, a Portuguese man, killed a Cambodia king [Preah Reach Samphear]; in 1811, Joseph de Monteiro was named the king’s doctor and King Norodom’s translator was Bernard Kol de Monteiro. It was the Portuguese who let the world know about the ruins of Angkor in 1570, well ahead of the French.

(Source: http://www.cosmovisions.com/ChronoCambodge.htm)

Kol de Monteiro and his descendants

The genealogy of the Varman Dynasty noted (Source: http://www.royalark.net/Cambodia/camboa12.htm):

"H.E. Bernard Kol de Monteiro was Akkara Yumaraja, sometime Minister for Justice and Marine." His niece, Samrech de Monteiro married Prince Norodom Sotthavongs, the son of King Norodom.

Pierre Lamant’s paper "La Date de la Mort du Roi Khmer Ang Duong" (Date of Khmer King Ang Duong’s death) (1977) noted that Doudart de Lagrée, the French explorer and diplomat who secured French hegemony over Cambodia, indicated that Kol de Monteiro was King Norodom’s secretary.

As one of KI-Media readers noted, several of the de Monteiro descendants served under various Cambodian governments, including Kenthao de Monteiro who was the Cambodian Ambassador to Taiwan under the Lon Nol regime. Nadsa de Monteiro of the Elephant Walk restaurant is the daughter of Kenthao and Longteine de Monteiro.

Kol de Monteiro was the father of Pitou de Monteiro who was a former minister of Justice and Education and he also served under then-Prince Norodom Sihanouk. Kenthao de Monteiro was Pitou de Monteiro’s son.

The Portuguese left a permanent legacy in Cambodia in the name of our currency, the “Riel,” which was derived from the Portuguese old currency, the “Real.”

As with other foreigners who came to settle in Cambodia, most prominently the Chinese, the de Monteiro's success in Cambodia most likely stemmed from their willingness to fully immerse and adopt Cambodia’s customs and traditions through inter-marriages, even though they still maintain their original religious belief and last names (such as the de Monteiro, Seng, Ung, Tan, Ly, etc…).

Heng Soy's mysterious origin: If you are curious about Heng Soy's origin, some claims that he was born out of Chinese Feng Shui, while others adamantly believe that he was no other than a pit of the sleng fruit ("kroab sleng") spit out with disgust from the mouth of a CPP party member. Heng Soy's younger sister even wrote a convincing court affidavit claiming that she witnessed her older brother came out of a chicken egg at his birth. But, as usual, readers are invited to feel free to imagine Heng Soy's origin in any way they please: the more outrageous, the better. "C'est la vie!" he said.

Central Bank Moves To Stabilize Faltering Riel

Ros Sothea, VOA Khmer
Phnom Penh Thursday, 03 June 2010

“The riel depreciation was caused by a slowdown in our economy. The flow of dollars derives from exports, tourism and foreign investment, which has not been as much as before.”

The National Bank continues to buy up riel with dollar reserves in an effort to increase the value of the national currency, which has fallen more than 1 percent since April 20, its lowest level in three years.

By May 28, the US dollar was equal to 4,219 riel, an increase from 4,186 riel over two months, according to the National Bank. To increase the value of the riel, the bank used $4 million to buy riel out of circulation through a bidding process last week. And on Monday, the National Bank announced it would use $3 million more.

Tal Nay Im, secretary-general of the National Bank, said the first round of bidding would not raise the value of the riel, but would instead stabilize it. The bank intends to sell more dollars in an effort to get more riel out of circulation, thereby raising its value. Financial analysts say it will take around $10 million to increase the value of the riel by 1 percent.

The dollar has been used in Cambodia since Untac’s peacekeeping mission in the 1990s, working side by side with a riel that was demolished along with the banking system under the Khmer Rouge. Decades of civil strife and several currency changes have weakened people’s faith in the riel, and that is likely to continue so long as the riel’s value continues to depreciate, financial analysts say.

Economists say the depreciation is not a great concern, though it can bring an increase in price for exported products. On the other hand, a riel whose value has appreciated too much can also hurt the export market. The National Bank has tried to keep the riel’s value between 3,900 and 4,100 per dollar.

The Economist Intelligence Unit estimated in April the riel would depreciate an average 1.3 percent in 2010 and 2011.

“The riel depreciation was caused by a slowdown in our economy,” Chan Sophal, president of the Cambodian Economic Association, told VOA Khmer. “The flow of dollars derives from exports, tourism and foreign investment, which has not been as much as before.”

Another cause was the fear of a financial crisis in Europe, which recently had to take severe measures to bail out the economy of Greece, a member of the European Union that came close to defaulting on its loans.

“If there is an economic crisis, like the fear of the Greece crisis and the financial system in euro zone, those holding the euro will sell their currency and buy dollars,” said Sam Genthy, a financial expert at the Securities and Exchange Commission of Cambodia. “That trend makes a higher dollar value. So if the dollar goes down a bit, the riel will go back to a normal balance.”

The riel is also undergoing seasonal depreciation.

Cheam Tieng, deputy executive director of treasury and internal affairs at Acleda Bank, said the riel faces depreciation pressure every May, but it’s value will rise again when more dollars flow in the tourism sector and when the harvest arrives.

Cambodia's central bank to take measure to stabilize riel

June 01, 2010
Xinhua

The National Bank of Cambodia (NBC) has been putting another 3 million U.S. dollars to buy in riel currency in a bid to stabilize riel currency which is depreciated in recent weeks.

According to a Monday's announcement, seen Tuesday, from the NBC signed by the NBC's Director General Tal Nay Im, NBC has been putting each of 1 million U.S. dollars for bidding on Monday, Wednesday and Friday this week. Bidders can be commercial banks, licensed money changers and companies, it stated.

"On Monday's bidding for 1 million U.S. dollars, there were nine money changers joined. As a result, Vong Rithy Exchange shop near Phnom Penh's Olympic Market won the bidding at 4,232 riel a U.S. dollar," a central bank official who asked not to be named said Tuesday.

Riel currency is depreciated 1.67 percent to 4,260 riel a U.S. dollar on Tuesday from 4,190 riel a U.S. dollar in mid-April.

This is the second intervention from NBC to stabilize riel currency after the first dollar currency bidding of 4 million dollars in the last two weeks.

Analysts estimated that there is around 500 million U.S. dollars of riel currency has been in circulation in Cambodia and recent depreciation of riel currency is due to the appreciation of U.S. dollar and to the fewer inflows of U.S. dollar into Cambodia through trade and investment, as well as to the recent depreciation of EU currency.

Riel continues to depreciate

Monday, 31 May 2010
Nguon Sovan
The Phnom Penh Post

Strong dollar and eurozone worries hobble NBC efforts to stabilise currency

THE riel continued to depreciate against the US dollar last week despite a US$4 million National Bank of Cambodia (NBC) intervention aimed at increasing its value, experts say.

The NBC dipped into its dollar reserves to purchase riel on May 21 in an attempt to shore up the Cambodian currency’s value.

Ly Hour Exchange owner Sieng Lim said the $4 million intervention had been too small to stop the depreciation of the riel, and that its decline is partly the result of a strengthening US dollar.

The riel traded at 4,260 per dollar on Sunday, down 0.52 percent for the week from 4,238 on May 23. The riel has lost 1.67 percent of its value over the last 45 days, down from 4,190 riel per US dollar in mid-April, according to statistics from Ly Hour Exchange.

However, Sieng Lim said the central bank deliberately intervenes gradually in the Kingdom’s currency, a policy she said she supports.

“When the value of the riel fluctuates, normally the NBC spends US dollars to stabilise the riel, or increase or decrease the prices slightly,” she said on Sunday.

“If the NBC injected more US dollars [to purchase riels], the riel’s value would appreciate quickly, affecting people and the price of goods.”

Most international currencies have been dropping against the US dollar, she added, pointing out €1 was worth $1.23 on Sunday, a 12 percent decline from $1.40 for the same date last month.

Cambodia Institute for Development Study president Kang Chandararot said the intervention had been limited by its small size, having only a slight impact on the riel’s exchange rate.

“NBC should release further US dollar reserves to stabilise the riel – each intervention should be around $10 million,” he said. He added that further interventions should be gradually conducted to avoid sharply appreciating the riel and impacting trade.

He estimated that some $500 million worth of riel is in circulation, said that slowing inflows of trade and investment denominated in US dollars have contributed to the recent strength of the greenback against the Kingdom’s currency.

The riel’s exchange rates closely parallel that of the European Union’s currency, he added. “Recent depreciation of the euro also influenced the riel’s depreciation. When the euro has stabilised, so has the riel.”

NBC Director General Tal Nay Im declined to comment on Sunday, but said in a previous interview that the NBC scrutinises exchange rates every day. Analysts have attributed the recent strength of the US dollar to investors reverting to safe assets because of European financial concerns.

The middle of the year is also a traditional soft spot for the riel’s value, according to International Monetary Fund (IMF) data. The currency generally peaks in December and January, as increased tourism brings in additional dollars, and the harvest leads to more transactions denominated in riel.

Generally, the NBC intervenes when the riel drops below 4,200 to the dollar by dipping into its foreign reserves to buy Cambodia’s currency.

It held $2.8 billion in foreign reserves at the end of the first quarter of 2010, according to NBC data.

Riel value slumps to new low

Tuesday, 18 May 2010
Nguon Sovan
The Phnom Penh Post

Exchange rate falls to 4,235 riels per dollar amid gradual depreciation in 2010

THE value of the riel reached a year low on Monday potentially pushing up inflation and affecting Cambodians’ purchasing power, commentators said.

The riel currency has lost 1.07 percent of its value against the US dollar within the past month, according to rates recorded by Ly Hour Exchange.

On Monday, one US dollar was worth 4,235 riels, up from 4,190 riels per dollar at this time last month.

“We have seen that the riel has gradually depreciated in value against US dollar during the last month,” said Sieng Lim, the owner of Cambodia’s Ly Hour Exchange, on Monday.

“Normally, when riel notes are abundant on the markets, its value is depreciated,” she added.

The rate, estimates for which can vary among agencies, has sparked concern among some members of the Kingdom’s business community.

Chan Sophal, president of Cambodia Economic Association, said that, theoretically, the riel depreciation could be due to a decline in the inflow of US dollars to Cambodia. He could not comment further on why the riel has lost value.

The depreciation, he said, would affect purchasing power and pushes up inflation as the price of goods increases.

“People with wages in riel currency would suffer the most from the depreciation,” he said.

He pointed out that the garment industry, which carries out transactions in US dollars, would not suffer and added that as the circulation of riel in Cambodia is relatively small, it would be easy for the government to raise its value.

“It’s not difficult to stabilise the riel because it constitutes 10 percent of total money supply,” he said.

Generally, the National Bank of Cambodia (NBC) intervenes when the riel depreciates, by selling US dollars to buy riels when the exchange rate reaches 4,200.

In August last year, it announced it would dip into its foreign reserves to buy $6 million worth of Cambodian riels to hold up the value of the local currency, which had reached 4,191 against the greenback.

But since the start of this year, Cambodia has not seen any NBC intervention against depreciation.

Tal Nay Im, NBC’s director general, did not pick up the phone after repeated calls on Monday.

Some analysts believe the depreciation may be a blip. Cheam Teang, Executive Vice President Chief of Treasury and International Cooperation Officer at ACLEDA Bank, said Monday that it is seasonal trend. He said he believes that, as the depreciation is small, it will not have much of an impact on the economy.

“In my own observations, at this time of the year riel currency is always depreciated, and it would recover the value in the last quarter of the year.

The depreciation is just around 1 percent – it’s normal, and it’s no surprise” he said.

“But it fuels some rise in inflation too,” he warned.

The Kingdom’s consumer price index, recorded by the National Institute of Statistics, saw inflation rise to 7 percent in March.

Microfinance industry wants more Riel to lend

By Susan Postlewaite
Phnom Penh Post, Issue 16 / 25, December 14 - 28, 2007

Microfinance industry leaders are planning to ask the National Bank of Cambodia to loosen the purse strings on Riel in 2008 and put more Riel in circulation.

The predominant use of the U.S. dollar in the economy is preventing the lenders who specialize in Riel loans from getting the funds they need, industry leaders said. "For our clients the dollar is not appropriate. We have to have Riel," said Paul Luchtenburg, chief executive officer of Angkor Microfinance (AMK) and a UNDP advisor.

"We need $10 million worth of Riel next year."

He said AMK specializes in tiny loans with an average loan size of $85 to more than 120,000 clients in 15 provinces.

He estimated the industry will need about Riel 120 billion next year and that amount is not available in the market for a variety of reasons. For one, Cambodia's commercial banks don't save in Riel; they save in dollars so there is not a lot of Riel in the banking system. Some say the National Bank is sitting on a large amount of Riel that they don't want to put into circulation due to fears that too much Riel could lead to the currency's depreciation.

Margarete Biallas of International Finance Corp. said she would like to see the government pay civil servants in Riel, not dollars, to get more local currency in circulation.

The central bank is "not entirely enthusiastic" about the idea, she said. "I don't think you're talking about a total de-dollarization just by paying government employees in Riel," she said, but "I'm not sure it would be slow enough for them."

The decision to approach the National Bank about the shortage of Riel was one of the conclusions of a microfinance workshop in early December sponsored by the IFC and UNDP.

The workshop participants also said they want to move ahead with setting up a credit information bureau so microfinance lenders can share confidential loan information about their customers to help ensure that borrowers aren't getting in too deep with loans from different MFIs. "The microfinance industry doesn't know if somebody has taken out loans from another lender. We need a system that looks at $10 to $100,000 loans," said Biallas.

Another development for the industry coming in 2008 is a Prakas being drafted by the National Bank to allow microfinance institutions to accept savings deposits from a variety of customers, not just their own borrowers. Bun Mony, chairman and general manager of Cambodia Entrepreneur Building Ltd., said the measure would help the industry grow.

Although the microfinance industry is growing by 200,000 clients per year, it is hampered not only by the lack of Riel, but by a lack of access to funds in general, said Mony.

Mony said that the commercial banking industry in Cambodia has never cooperated well with the microfinance industry, forcing the MFIs to go outside the country to get funds for their credit operations. Although the foreign borrowers are charging interest rates of 10 to 11 percent, that is cheaper than the money available locally, which is more like 13 percent, he said.

The high cost of getting funds translates into higher loan rates. The MFIs must charge interest rates of 24 to 36 percent per annum.