Eximbank supports Korea-Cambodia ties

2011-09-22
By Kim Yon-se (kys@heraldm.com)
The Korea Herald

The Export-Import Bank of Korea has taken the lead in enhancing tie-ups for development projects between Korea and Cambodia.

Under initiative of chairman & CEO Kim Yong-hwan, the state-run bank met to map out further development of the National Polytechnic Institute of Cambodia in Phnom Penh, Thursday.

After Korea Eximbank and the Economic Development Cooperation Fund of Korea pushed to enhance what was then a vocational training center by providing loans, the Cambodian government upgraded it to the status of a national college.

Participants in the meeting included about 50 senior officials from the Manila-based Asian Development Bank, Cambodian ministries and global NGOs.

Korean firm defies norms in Cambodia airport building [-The Koreans are delusional?]

NSRIA CEO Lee Tae-hwan speaks of his new approach to building a large international airport in Cambodia during an interview at his office in southern Seoul, Thursday. / Korea Times Photo by Shim Hyun-chul

03-04-2011
By Oh Young-jin
The Korea Times

First, he mentioned the efficiency and professionalism of the Cambodian public servants. “We deal with Ph.D. holders who studied in the U.S., Russia and European countries,” Lee said.

Secondly, Cambodia proves to be neither a banana republic nor led by a tinpot dictator. “It is a country that has a strong tradition of adhering to a contract perhaps resulting from the influence of the French,” the CEO said.

Building an international airport in a third-world country is a challenging task.

It requires dealing with a mercurial government, acquiring enough land and raising financial support.

There is too much uncertainty for any firm to take on without hesitation.

In this sense, the NSRIA or New Siem Reap International Airport Co, led by two Korean firms ― Lees A&A and its financial partner Cambodia Airport Co. ― is engaged in what others might call a mission impossible.

But when one listens to its CEO Lee Tae-hwan talk about the project, one can appreciate how the difficult feat could be translated into reality. As with any business, however, there is no 100 percent guarantee.

Korea Eyeing SE Asia for Energy Resources

MAY 04, 2009
The Dong-A Ilbo (South Korea)

“Advance into CLV, an alternative to the post-China era!”

Countries are increasingly setting their sights on Southeast Asian countries in preparation for the era in which China loses its attraction as a base for manufacturing and a consumer market.

The Korean government and companies are paying close attention to “CLV,” namely Cambodia, Laos, and Vietnam. The three countries offer more investment opportunities than Thailand and Singapore, where advanced economies have gained the upper hand. In addition, Cambodia, Laos and Vietnam have shown interest in learning from Korea’s experience of achieving rapid economic development over a short period of time.

Korea’s summit with the Association of Southeast Asian Nations slated for early next month is also fueling growing interest in the three countries.

○ Edge in energy trade

Energy resources will play a key role in trade relations between Korean and CLV. As of May last year, oil products made up the largest share of outbound shipments to ASEAN nations. Energy resource-related items such as natural gas, crude oil and petroleum took up the second to fourth-largest shares of imported products from the three countries. Korea imports resources from CLV and processes them for re-export to the same countries.

The Knowledge and Economy Ministry in Seoul will dispatch “energy resources delegates” to CLV to boost energy trade. A ministry official said, “Cambodia, Laos and Vietnam have been shunned by advanced countries because of political instability, though they have vast energy resources.”

“Now that the countries have achieved political stability, we should waste no time in making inroads into them to gain an early edge.”

GS Caltex is seeking business opportunities in Cambodia, though the country’s prospects for becoming a resource development country remain uncertain. Hoping to produce visible results after 2013, however, the company is carrying out oil field explorations there.

In Laos, which is in the process of transforming from an agrarian country into a mineral powerhouse, small and mid-size Korean companies are participating in exploration projects after winning development permits from the country.

Cheap labor in Cambodia, Laos and Vietnam is another attraction for companies. Vietnamese and Indonesian workers earn one tenth of the wages of those in Chinese.

○ Know-how for rapid economic growth

China and Japan have also joined the race to advance into CLV, especially China. Building on what ethnic Chinese have achieved there, Asia’s second-largest economy is expanding its influence.

Japan has been expanding investment in the region centering on Vietnam.

Experts say Korea can beat China and Japan in Cambodia, Laos and Vietnam by utilizing its know-how accumulated from achieving rapid economic growth. The three Southeast Asian countries are relatively backward in economy, and are eager to follow Korea’s example.

Korea has begun full-fledged government and civil cooperation to teach Korean know-how to the construction, textile and machinery sectors of the three Southeast Asian countries. The Small Business Corporation of Korea is running programs to train personnel and the Korea Rural Corporation is instructing Cambodian farmers on agricultural technology.

A ministry official said, “Vietnam admires Korea for achieving fast growth over the short period of 30 years and seeks to take a page out of Korea’s book.”

China: The 800-lb Gorilla investor in Cambodia in 2008

China top investor in Cambodia in 2008

PHNOM PENH, Feb. 5 (Xinhua) -- China was No. 1 foreign investor in Cambodia last year in terms of approved projects in Cambodia, nearly four times the capital of second-placed South Korea, national media on Thursday quoted official figures as saying.

China invested 4.3 billion U.S. dollars in 2008 in Cambodia, or 40.14 percent of the total, and South Korea 1.2 billion U.S. dollars, or 11.39 percent of the total, said the 2008 report issued by the Cambodian Investment Board.

The Chinese projects were in a wide range of sectors, including garments, hydropower, agribusiness and bodiless, while the largest Chinese investor was Tong Min Group Engineering with 3.8 billion U.S. dollars for a coastal development project in Kampot province, it added.

"The Chinese leadership encourages investors to come to Cambodia... (and) the Chinese government is pushing investors to come here," Sok Chanda, secretary general of the Council for Development of Cambodia, was quoted by English-language newspaper the Phnom Penh Post as saying.

In addition, China expert Michael Sullivan said that close ties between the private sector and the government gave Chinese firms an advantage.

"This is all occurring within the context of emerging bilateral ties between China and Cambodia," said Sullivan, who is conducting a research for the Association of Southeast Asian Studies under UK sponsorship.

In 2007, the Cambodian Investment Board put Malaysia as the foreign investment champion, with China and South Korea trailing behind.

South Korean investment changes Cambodia

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.

Korean investors reach for Cambodian skies

Sep 16, 2008
By Geoffrey Cain
Asia Times (Hong Kong)

Some analysts believe fast rising property prices, fueled by rapid South Korean capital inflows, might even be inflating Cambodia's first-ever property market bubble.

PHNOM PENH - Planned to tower 52 stories above this city's low-slung skyline, the US$1 billion International Finance Complex (IFC) embodies the bold new ambitions of Cambodian capitalism. If South Korean investors actually complete all the projects they have announced and launched, the once colonial Phnom Penh will soon come to resemble a mini version of high-rise Seoul.

Led by property developers, South Korean investors accounted for over 70% of the $1.5 billion worth of foreign direct investment (FDI) that entered Cambodia in the first half of this year, nearly three times higher than the $520 million it received all of last year. South Korean investments have since 2006 dwarfed Chinese inflows, which have been more critically scrutinized, but only represented 10% of total FDI in the first half of 2008.

Cambodia has long been one of Southeast Asia's laggard economies, plagued by its war-torn past and a backward period of communist-led central planning. With economic opening and market reforms, Cambodia's economy is zipping along nicely, with gross domestic product surging at 9.5% last year. Nowhere is that fast growth more noticeable than in the city's fast-changing skyline.

With all the building activity, some are beginning to wonder if the economics of the building spree compute and how the broader Cambodian economy might be affected if South Korea goes into financial meltdown, as some analysts have predicted. South Korean investors are overseeing and building at least eight major property projects in Phnom Penh, but that number is constantly changing as new concepts arrive at and leave the drawing boards.

There are clear risks to the high-end developments, which are banking heavily on the arrival of high spending foreigners once a purported major oil and gas find on the country's southwestern coast is realized and exploited. The World Bank once estimated the country's total offshore production potential to be at around 2 billion barrels, though Chevron, the US energy company managing the concession, has remained tightlipped about the details and viability of the fuel find.

Consider, for instance, Gold Tower 42, a $240 million condominium project financed by South Korea's DaeHan Real Estate Investment Trust and built by developer Yon Woo. The high rise project is selling units for between $460,000 to $1.5 million and the developer claims 75% of the tower's space has already been sold, mostly to Chinese and South Koreans. Considering 33% of all Cambodians earn less than US 50 cents a day, according to government statistics, the project's pricing is out of reach for nearly all local buyers.

The same is true of the $2 billion Camko City, a satellite city built and owned by South Korean developer World City Company, which entails an international university, condominiums, exercise centers and modern shopping for a community of over 1,000 well-heeled residents. Another South Korean-built mini-neighborhood, Sun Wah International Finance Center, is also on the drawing board and promises similar top-notch amenities.

Camko City, like several other South Korean-led developments, has stirred local controversy and carries big political risks. To make way for the project, the developers completely filled Pong Peay Lake, once a main outlet for the city's dysfunctional drainage system, while evicting long-term residents with compensation at one-tenth of the property's market value, rights groups say. According to Cambodian land laws, lakes are public property and may be developed only in a "rational" manner.

Bypassing donors

South Korea's building spree comes just 11 years after the two countries re-established formal diplomatic ties, which were broken off in 1975 when the communist Khmer Rouge regime took power. Cambodian Prime Minister Hun Sen has warmly welcomed Seoul's capital inflows and even presided over the launch of certain South Korean-led big ticket property projects. The former communist guerilla-cum-market reform champion was recently reelected to a new five-year term and has successfully leveraged the country's recent fast economic growth to his political advantage.

During an inauguration event in May for a new road project, funded by the South Korea International Cooperation Agency (KOICA), Hun Sen pointed to the South Korean-built Gold Tower 42 as a sign of coming Cambodian prosperity. He lauded South Korea for being at the forefront of eight Cambodian business sectors and said that "diplomatic relations with the Republic of Korea are remarkably developed".

He attended in person the inauguration earlier this year of South Korean President Lee Myung-bak and surprised many when he told a local television reporter that Lee was his former "economic adviser".

South Korean investment signals a shift from Cambodia's traditional reliance on multilateral development aid funded by the likes of US Agency for International Development (USAID) and the Japanese International Cooperation Agency (JICA), towards more private investment-led growth. The South Koreans' no-strings-attached approach to business is also believed to be favored by Hun Sen's government, which often found itself at loggerheads over issues of transparency and corruption with multilateral lenders.

At the same time, there are mounting and apparently unhedged market risks to the breakneck growth. The building spree in Phnom Penh notably coincides with a spike in inflation, which rose a dramatic 25% in the first half of 2008, according to the National Bank of Cambodia. That's driven up substantially the prices of imported building materials such as glass and steel.

Some analysts believe fast rising property prices, fueled by rapid South Korean capital inflows, might even be inflating Cambodia's first-ever property market bubble.

The National Bank of Cambodia recently projected gross domestic product would slow to 7.2% in 2008, down substantially from last year's 9.5% clip. The report noted that the construction sector is now the country's biggest urban employer.

Some economic and financial analysts have drawn worrying comparisons to neighboring Vietnam, where land and property prices skyrocketed in line with rapid FDI from Taiwan, Singapore and South Korea in 2007, but fell back around 25% in the first half of 2008 due to softening economic conditions and dried-up finance for buyers. In response, Vietnamese banks have restricted their lending to property buyers and developers.

South Korean property developers in Phnom Penh have so far defied economic gravity, with representatives from IFC and Gold Tower 42 claiming that the impact of inflation on their ventures will be minimal and that construction would continue on schedule. So far most developers have not increased their asking prices, despite the fact existing housing prices and rents have increased five-fold or more since 2005, when the projects were first drawn up. Scaffolding prices alone have jumped to $1,035 per ton this from $400 in 2007, property analysts say.

Other analysts say South Korea's mounting economic troubles at home, including a ballooning short-term debt profile, could soon impact on Cambodian ventures as credit conditions tighten. It's still unclear how much South Korea's own softening economy has served as a push factor in outward investments into Cambodian property.

The South Korean won has depreciated around 10% against the US dollar this year and foreign capital outflows from Seoul are gathering pace. Some analysts estimate South Korea became a net borrower as of July, witnessed in the country's narrowing foreign reserve stock. If the won-dollar depreciation continues, as some analysts predict, it will create new burdens to South Korean companies through higher external lending rates.

Add to that mix fast rising prices for building materials and it seems possible the more ambitious of the South Korean property projects could become financially unviable before they are completed. To fill all the high end space now scheduled to be built - assuming it's actually completed - Cambodians will eventually need to occupy a substantial percentage of many developments, some property analysts say.

Yet with a national GDP per capita of $1,800, it's not clear yet that locals, apart perhaps from government-linked elites, can afford the prices South Korean developers and their financial backers still expect to fetch. There are also potential cultural barriers: middle class and elite Cambodians' have long favored to live in stand-alone, colonial-style villas rather than cement and glass skyscrapers.

While South Korean developers continue to ramp up their building spree, the sky may yet be the limit to their Cambodian designs.

Geoffrey Cain is based in Phnom Penh and a contributor to the Far Eastern Economic Review and Integrated Regional Information Networks (IRIN), a United Nations-run news wire service. He may be reached at geoffrey.cain@gmail.com.

Cambodia 6th leading destination for Korean overseas investment

PHNOM PENH, Aug. 14 (Xinhua) -- Cambodia has become the sixth leading destination for South Korean overseas investment, English daily newspaper the Phnom Penh Post Thursday quoted South Korean Ambassador Shin Hyun-suk as saying.

The total amount of South Korean investment in Cambodia to March 2008 stood at 1.46 billion U.S. dollars, followed by China, the U.S., Hong Kong of China, Vietnam and Malaysia, he said.

The number of South Korean investors in Cambodia was above 500 and they used to focus on the garment sector, but in recent years became diversified to banking, agriculture, food processing, tourism, manufacturing, construction and IT, he said.

"In terms of amounts, construction is the dominant field for South Korean investment in Cambodia in these days," he added.

Meanwhile, South Korea's imports from Cambodia totaled 8.9 million U.S. dollars in 2007, an increase of 62.5 percent over 2006, and South Korea's exports to Cambodia have posted big rises over the past three years, amounting to 144 million U.S. dollars in 2005, 206 million U.S. dollars in 2006, and 281 million U.S. dollars in 2007, he said.

"Once the South Korea-ASEAN Free Trade Agreement is ratified, the trade volume between South Korea and Cambodia will be boosted immensely," he added.

Cambodia, Laos See Surge in Korean Investments

Jun.25,2008
Arirang News
Cholsun Ilbo (South Korea)

Cambodia and Laos are emerging as the next window of opportunity for Korean investors.

Figures by the Korea International Trade Association show a steep on-year growth of US$1.3 billion in Korea's corporate investment in Cambodia last year. That makes the Southeast Asian country the second-biggest destination after China in terms of Korea's overseas investment.

Investments to Laos, meanwhile, posted a 16-fold jump in 2006 from the year before and chalked up $81 million in 2007.

Analysts say such expansion in investment has helped Korean exports to the two countries post significant growth, especially for auto parts, textiles and steel.

Ambassador expects more S Korean investment to Cambodia

June 19, 2008
Xinhua

South Korean ambassador to Cambodia Shin Hyun-suk has said that he expected more investment from his country to the kingdom, local media reported Thursday.

"I am optimistic about further (South) Korean investment (to Cambodia)," Shin Hyun-suk told the Mekong Times in an interview.

In 2007, Cambodia became the 6th biggest host of South Korean investment after China, the U.S., China's Hong Kong region, Vietnam and Malaysia, he said.

"Recently, some South Korean investors who had invested in China and Vietnam have been moving into Cambodia. With this trend, South Korean investment in Cambodia has been diversified," he added.

Initially, South Korean investment was concentrated on the garment manufacturing sector, he said, adding that banking, agro-industry, manufacturing, real estate development and IT sectors are the dominating fields of South Korean investment in Cambodia now.

Beginning in the late 1990s, South Korean investors began to look at Cambodia as the country regained political and social stability, Shin Hyun-suk said.

In particular, South Korean investment in Cambodia has increased sharply since 2006, as Cambodia recorded high economic growth and achieved further political and social stability, he added.

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.