Showing posts with label Real estate. Show all posts
Showing posts with label Real estate. Show all posts
Sunday, July 17, 2011
Monday, February 14, 2011
Phnom Penh’s US$70 million Rose City Condominiums set for mid-2011 completion [-Another project by the Koh Pich's OCIC]
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| Construction began in late 2008 on Rose City Condominiums. |
Byron Perry
Property-Report.com
US$70 million Phnom Penh development Rose City Condominiums is scheduled to be completed in mid-2011, the Phnom Penh Post has reported.
Work on the 29-story Rose City Condominiums began in 2008. The project, located near the new Sofitel Phnom Penh in the Chamkarmon district, is part of the larger Bassac Garden City development by Overseas Cambodian Investment Corporation (OCIC).
“We have almost completed our project. We are just doing interior design and will be finished by mid-2011, and open for clients to move in later this year,” said Touch Samnang, project manager for OCIC. OCIC also holds a stake in Canadia Bank.
Monday, December 27, 2010
Property taxes start in January
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Phnom Penh's skyline. Cambodia's new property tax will start being collected from January next year, say government officials. (Photo by: Sovan Philong) |
Soeun Say
The Phnom Penh Post
Cambodia's new national property tax would be implemented from January next year, boosting the federal coffers up to an estimated US$4 million, officials said yesterday.
The real estate division at the Ministry of Economy and Finance was granted approval on Friday to establish a committee for property evaluation, Norng Piseth, the Real Estate Division chief, told The Post.
“We have prepared the prakas to establish a committee for property evaluation and we will start implementing tax collection on property from early 2011 next year, as the National Assembly requires,” he said.
The National Assembly passed the law for a tax on all real estate, including land, houses, apartments, and other infrastructure constructed on that land, in November 2009.
According to the Prakas – or edict Number 493 – the property tax will be an annual payment calculated as 0.1 percent of the value of the property as estimated by the evaluation committee, based on market prices. Only those properties worth 100 million riel ($25, 000) or more will be taxed.
Norng Piseth said the tax would bring more income for the government to further development.
“This tax is very important in order to increase the national income to develop the country,” he said.
The new levy is expected to raise between $3 million to $4 million in additional revenue, according to the Ministry of Economy and Finance estimates.
Touch Samnang, project manager and architecture of the Diamond Island development project behind developer Overseas Cambodia Investment Corp, said yesterday that he supported the tax on property but also called for fairness.
“I think that we should have this tax in order to increase the economic growth in Cambodia. So, it is not a problem for us. We’re really [in] support [of] and follow what the government requires,” he said, adding that the government should ensure transparency, including that all eligible property owners and housing developers did pay up.
Cheap Sareth, a land owner in Dangkor district, Phnom Penh, said yesterday he felt that it was too early for the government to begin collect property taxes.
“In my point of view, I think the government is moving too early to collect tax on property while the country is still recovering from the global economic crisis,” he said.
The International Monetary Fund said in its yearly assessment on Cambodia for 2010 said that long-term fiscal stability for the Kingdom required further improving revenue administration.
“Gains in tax collection offer the best hope for Cambodia to meet the dual objective of securing fiscal sustainability and mobilizing resources for its development needs,” the fund said in a release on its findings.
Keat Chhon, MEF deputy prime minister said during National Assembly discussions on the property tax last year that the new tax was not only contributing to the national budget but was helping establish a “tax culture”.
“We do not expect much income from this new law, but we are making this law as we also want to establish a tax culture which will facilitate us to collect tax directly in the future,” he said.
At the time, he said about 180,000 households would fall under the requirements to pay the new tax.
MEF deputy prime minister could not be contacted for comment yesterday.
Monday, April 12, 2010
Office rental rates plummet by one third
12/04/2010
Soeun Say
Bangkok Post
Soeun Say
Bangkok Post
PHNOM PENH : Office rental prices in Cambodia's capital continue to tumble, dropping by as much as one-third in the first quarter of the year, according to the National Valuers Association.
"Prices have continued to fall because the supply of office space for rent is much higher than the demand," said Keuk Narin, general manger of the Bonna Realty Group and secretary of the National Valuers Association.
The prices are likely to continue to fall throughout the rest of the year, he said.
The NVA estimates that the best Grade A office space now rents for US$20 to $25 (650-800 baht) per square metre per month, down $10 from the final quarter of last year. Grade B rentals now go for $7 to $11 (230-350 baht) per sq m a month, a drop of about $3. Figures for Grade C offices are hard to compile as most of the properties are independently owned and operated.
Khoun Davy, finance manager for the Delano Business Centre, said it was charging $15 per sq m a month, but that the centre was considering lowering the price due to a lack of interest.
"It's so quiet," he said. "It's hard to attract clients to rent our space. We've had 70% of our renters from early 2009 until now. We've still got 30% [empty].
"We're preparing next month to decrease the price from $15 to $8 per square metre per month," he said. "The location is good. It's probably the best location in Phnom Penh."
Office space at many new developments remained empty in the first quarter of the year.
According to NVA figures, the Icon Professional Centre on Norodom Boulevard had rented only 26% of its space. The Delano Business Centre, on streets 134 and 169, filled 70% at $15 per sq m a month. And the Attwood Business centre, near Phnom Penh airport, was reporting 61% occupancy.
Other companies reporting occupancy to NVA included: Canadia Tower at 28%; Bo Retra, 78%; Paragon Office Building, 25%; and Premier Office Centre, 68%.
However, more established properties reported higher occupancies, such as the Intelligence Office Centre, which is 89% full, Hong Kong Centre at 91%, the Phnom Penh Centre with 96% and B-Ray Tower, which was also nearly fully occupied.
Despite the falling prices, Daniel Parkes, country manager for CB Richard Ellis (CBRE), on Tuesday said the company was optimistic demand would grow in the longer term.
"Demand will continue to grow in coming years from existing occupiers within the Phnom Penh market looking to upgrade their premises and business image, and also from new entrants from abroad," he said.
Grade A office space is likely to continue to decline, Mr Parkes added, as demand over the next five years increases.
CBRE previously estimated office-space demand would nearly double to 18,580 sq m by 2013, as businesses look to upgrade their offices and new firms open.
"Prices have continued to fall because the supply of office space for rent is much higher than the demand," said Keuk Narin, general manger of the Bonna Realty Group and secretary of the National Valuers Association.
The prices are likely to continue to fall throughout the rest of the year, he said.
The NVA estimates that the best Grade A office space now rents for US$20 to $25 (650-800 baht) per square metre per month, down $10 from the final quarter of last year. Grade B rentals now go for $7 to $11 (230-350 baht) per sq m a month, a drop of about $3. Figures for Grade C offices are hard to compile as most of the properties are independently owned and operated.
Khoun Davy, finance manager for the Delano Business Centre, said it was charging $15 per sq m a month, but that the centre was considering lowering the price due to a lack of interest.
"It's so quiet," he said. "It's hard to attract clients to rent our space. We've had 70% of our renters from early 2009 until now. We've still got 30% [empty].
"We're preparing next month to decrease the price from $15 to $8 per square metre per month," he said. "The location is good. It's probably the best location in Phnom Penh."
Office space at many new developments remained empty in the first quarter of the year.
According to NVA figures, the Icon Professional Centre on Norodom Boulevard had rented only 26% of its space. The Delano Business Centre, on streets 134 and 169, filled 70% at $15 per sq m a month. And the Attwood Business centre, near Phnom Penh airport, was reporting 61% occupancy.
Other companies reporting occupancy to NVA included: Canadia Tower at 28%; Bo Retra, 78%; Paragon Office Building, 25%; and Premier Office Centre, 68%.
However, more established properties reported higher occupancies, such as the Intelligence Office Centre, which is 89% full, Hong Kong Centre at 91%, the Phnom Penh Centre with 96% and B-Ray Tower, which was also nearly fully occupied.
Despite the falling prices, Daniel Parkes, country manager for CB Richard Ellis (CBRE), on Tuesday said the company was optimistic demand would grow in the longer term.
"Demand will continue to grow in coming years from existing occupiers within the Phnom Penh market looking to upgrade their premises and business image, and also from new entrants from abroad," he said.
Grade A office space is likely to continue to decline, Mr Parkes added, as demand over the next five years increases.
CBRE previously estimated office-space demand would nearly double to 18,580 sq m by 2013, as businesses look to upgrade their offices and new firms open.
Thursday, December 10, 2009
Property Tax Confusion Stalls Market
By Ros Sothea, VOA Khmer
Original report from Phnom Penh
09 December 2009
Original report from Phnom Penh
09 December 2009
Confusion and hesitation over a new law on property taxes have shocked the country’s real estate market, which has yet to recover from the global economic downturn, financial analysts say.
According to the law, passed by the National Assembly earlier this month, taxes will be levied on land, houses and buildings worth more than 100 million real, or $25,000, but experts worry misunderstandings over the law will interrupt the recovery of the stagnant real estate market.
Chan Sophal, president of the Association of Cambodian Economists, said the new tax law had confused people who worry they have to pay a lot of money.
“Educating people about the tax is really important right now, or it will give a negative impact on real estate, as people take a step back or sell their property at a low price,” he said.
For example, a $50,000 home will be charged $25 per year in taxes: the value minus a $25,000 tax base, with a 0.1 percent tax. A $30,000 home would be taxed $5 per year.
Experts say the tax rate is not high enough to cause real trouble in the real estate market, but it is confusion over the tax that has frozen recovery.
More than half of Cambodia’s 2.8 million homes could be taxed, according the National Valuers Association, which assesses property value in the country.
Real estate developers are concerned that if the law is promulgated within the next few weeks, or by the end of the year, buyers may become hesitant.
Sung Bonna, president of the association and the owner of his own real estate group, estimated that without the law, the market could bottom out by early 2010. With confusion over the new law taking place, that recovery will take more time.
“If the law is issued, buyers or investors will take a step back to wait and see,” he said. “They won’t buy, they won’t make a decision. If everyone just wants to wait, our real estate market will be down and quiet.”
If the situation continues, property values will decrease accordingly, he said.
Hesitation over the property tax could stall the market for an extra six months or a year, said Eng Bun Ung, president of ANFI, an Australia-based consultancy. Not only might the tax cause hesitation in potential homeowners, he said, but could also create hesitation in property investors.
Cambodia’s property market boomed from 2006 to 2008, but it slowed considerably after the downturn, in mid-2008, when values fell between 30 percent and 50 percent.
Property investment also went into decline, with fixed construction projects falling 20 percent in the last 10 months, to about $1.8 billion, according to government figures.
Im Chamrong, director-general of the Ministry of Land Management’s construction department, said the property tax would impact the real estate market, but he was unclear how significant the impact would be.
“We will inform our customers about this law,” said Sun Hum Lee, director for Gold Tower 42, a high-rise project in Phnom Penh. “By informing [them of this], I think it will decrease 10 percent or 20 percent of our sell amount.”
Youk Buntha, president of the Nay Sovan property development, said that since the law was passed, no new customers have come to view his 130 apartments, worth $20,000 to $30,000 each.
One buyer canceled his contract, because he was confused and thought he would have to pay “a lot” of money, Youk Buntha said.
“In fact, he had already decided to buy the house and agreed to deposit some money,” he said. “But he suddenly cancelled it and said he wanted to see the law first. So it has become an issue affecting our business.”
With the new law, Cambodia becomes the first developing country in Southeast Asia with a property tax; neither Burma nor Laos have one. By comparison, Thailand taxes citizens 12.5 percent on homes that are also used for commercial purposes, while Vietnam taxes a property-owner 0.03 percent of the construction cost.
According to the law, passed by the National Assembly earlier this month, taxes will be levied on land, houses and buildings worth more than 100 million real, or $25,000, but experts worry misunderstandings over the law will interrupt the recovery of the stagnant real estate market.
Chan Sophal, president of the Association of Cambodian Economists, said the new tax law had confused people who worry they have to pay a lot of money.
“Educating people about the tax is really important right now, or it will give a negative impact on real estate, as people take a step back or sell their property at a low price,” he said.
For example, a $50,000 home will be charged $25 per year in taxes: the value minus a $25,000 tax base, with a 0.1 percent tax. A $30,000 home would be taxed $5 per year.
Experts say the tax rate is not high enough to cause real trouble in the real estate market, but it is confusion over the tax that has frozen recovery.
More than half of Cambodia’s 2.8 million homes could be taxed, according the National Valuers Association, which assesses property value in the country.
Real estate developers are concerned that if the law is promulgated within the next few weeks, or by the end of the year, buyers may become hesitant.
Sung Bonna, president of the association and the owner of his own real estate group, estimated that without the law, the market could bottom out by early 2010. With confusion over the new law taking place, that recovery will take more time.
“If the law is issued, buyers or investors will take a step back to wait and see,” he said. “They won’t buy, they won’t make a decision. If everyone just wants to wait, our real estate market will be down and quiet.”
If the situation continues, property values will decrease accordingly, he said.
Hesitation over the property tax could stall the market for an extra six months or a year, said Eng Bun Ung, president of ANFI, an Australia-based consultancy. Not only might the tax cause hesitation in potential homeowners, he said, but could also create hesitation in property investors.
Cambodia’s property market boomed from 2006 to 2008, but it slowed considerably after the downturn, in mid-2008, when values fell between 30 percent and 50 percent.
Property investment also went into decline, with fixed construction projects falling 20 percent in the last 10 months, to about $1.8 billion, according to government figures.
Im Chamrong, director-general of the Ministry of Land Management’s construction department, said the property tax would impact the real estate market, but he was unclear how significant the impact would be.
“We will inform our customers about this law,” said Sun Hum Lee, director for Gold Tower 42, a high-rise project in Phnom Penh. “By informing [them of this], I think it will decrease 10 percent or 20 percent of our sell amount.”
Youk Buntha, president of the Nay Sovan property development, said that since the law was passed, no new customers have come to view his 130 apartments, worth $20,000 to $30,000 each.
One buyer canceled his contract, because he was confused and thought he would have to pay “a lot” of money, Youk Buntha said.
“In fact, he had already decided to buy the house and agreed to deposit some money,” he said. “But he suddenly cancelled it and said he wanted to see the law first. So it has become an issue affecting our business.”
With the new law, Cambodia becomes the first developing country in Southeast Asia with a property tax; neither Burma nor Laos have one. By comparison, Thailand taxes citizens 12.5 percent on homes that are also used for commercial purposes, while Vietnam taxes a property-owner 0.03 percent of the construction cost.
New Taxes a Burden on Poor: Opposition
Yim Sovann, spokesperson for Sam Rainsy Party.By Sok Khemara, VOA Khmer
Washington
09 December 2009
Government officials are increasing tax policies but continuing with irregular expenditures at a time when they should focus on dampening the effects of the global economic downturn, an opposition official said Monday.
The passage of the 2010 national budget earlier this month includes taxes that will make difficulties for people already struggling in the depressed economy, said Yim Sovann, a spokesman for the Sam Rainsy Party, as a guest on “Hello VOA.”
“In our view, the burden on people by levies should be avoided at this time,” Yim Sovann said.
Taxes have been doubled for car owners, while a 0.1 percent tax on properties worth more than $25,000 has been put in place.
The Sam Rainsy Party did not support the taxes, Yim Sovann said.
Cambodia’s 2010 budget will reach nearly $2 billion, an increase of $100 million from the year before, with spending up for defense, security, health and education.
But Yim Sovann said Monday the government employed irregular expenses, such as a budget for national disaster spending, or for “special mission,” “which we do not know what it is.”
Yim Sovann said he supported cutting salaries for advisers, as well as undersecretaries and secretaries of state appointed for political reasons, postings he called “a waste of the national budget we need to save.”
He did not, however, support cutting tens of thousands of teachers, which would help Cambodia build up its human resources.
In Cambodia, people pay higher taxes than in neighboring countries and others, but the revenue is still relatively low. Cambodia collects around 12 percent of its GDP in taxes, compared to as much as 40 percent in the EU and 23 percent in Thailand.
“It means the people take the effort to pay taxes, but the tax money drops along the way, goes into the pockets of some officials, and not 100 percent goes to the state,” he said.
Cheam Yiep, a National Assembly lawmaker for the ruling Cambodian People’s Party, said Yim Sovann was “politicizing” the tax issue. And while he acknowledged some corruption in the system, he called it “temporary,” claiming, “the government is now taking efforts, as we have laws to curb the corruption issue.”
The passage of the 2010 national budget earlier this month includes taxes that will make difficulties for people already struggling in the depressed economy, said Yim Sovann, a spokesman for the Sam Rainsy Party, as a guest on “Hello VOA.”
“In our view, the burden on people by levies should be avoided at this time,” Yim Sovann said.
Taxes have been doubled for car owners, while a 0.1 percent tax on properties worth more than $25,000 has been put in place.
The Sam Rainsy Party did not support the taxes, Yim Sovann said.
Cambodia’s 2010 budget will reach nearly $2 billion, an increase of $100 million from the year before, with spending up for defense, security, health and education.
But Yim Sovann said Monday the government employed irregular expenses, such as a budget for national disaster spending, or for “special mission,” “which we do not know what it is.”
Yim Sovann said he supported cutting salaries for advisers, as well as undersecretaries and secretaries of state appointed for political reasons, postings he called “a waste of the national budget we need to save.”
He did not, however, support cutting tens of thousands of teachers, which would help Cambodia build up its human resources.
In Cambodia, people pay higher taxes than in neighboring countries and others, but the revenue is still relatively low. Cambodia collects around 12 percent of its GDP in taxes, compared to as much as 40 percent in the EU and 23 percent in Thailand.
“It means the people take the effort to pay taxes, but the tax money drops along the way, goes into the pockets of some officials, and not 100 percent goes to the state,” he said.
Cheam Yiep, a National Assembly lawmaker for the ruling Cambodian People’s Party, said Yim Sovann was “politicizing” the tax issue. And while he acknowledged some corruption in the system, he called it “temporary,” claiming, “the government is now taking efforts, as we have laws to curb the corruption issue.”
Thursday, October 08, 2009
CB Richard Ellis to open Phnom Penh affiliate office
Thursday, October 08, 2009
by Staff Writer
Property-Report.com
by Staff Writer
Property-Report.com
CB Richard Ellis has announced that it is opening a new office in Phnom Penh, Cambodia.
The establishment of an office in the Cambodian capital is the most recent development in CBRE’s Southeast Asian expansion, which already includes offices in Singapore, Indonesia, the Philippines, Thailand and Vietnam.
The new office will capitalise on market opportunities arising from the growing demand for professional real estate services from both international and local organisations within the country.
The office in Phnom Penh will provide a variety of services such as market research, valuation, investment sales, consulting, agency and leasing, and property management. Its goal will be to provide a competitive edge for clients in the fast changing real estate market in Cambodia, via a differentiated services portfolio, as well as to establish CBRE as a key player in the development of Cambodia´s real estate market.
“The opening of an office in Cambodia will strengthen our broader platform in South East Asia,” said Chris Brooke, president and CEO of CBRE in Asia. “Our presence in the market will facilitate the provision of professional property services by CBRE, whilst also supporting regional clients who have an interest in this unique emerging market.”
“With the establishment of the Phnom Penh office, CBRE will be able to develop local market intelligence into measurable results for clients in this expanding market,” said Marc Townsend, managing director of CBRE Vietnam.
Previously, work relating to Cambodia was handled out of the Vietnam office, which will continue to support the team in Phnom Penh.
“Phnom Penh has become a major focal point for economic and business development over recent years. The real estate market in Cambodia is expected to continue its growth momentum, particularly the resort property market along the coast line of Cambodia,” Townsend said.
“CBRE has already established a successful track record in Cambodia and has been servicing clients in market research and consultancy, valuation, and land transactions, as well as property management, even prior to the establishment of an office,” said Townsend.
Daniel Parkes will oversee the operations of the Phnom Penh office. Prior to relocating to Phnom Penh, Parkes was previously based in the United Kingdom where he worked in a real estate firm in the south east of England. He has a wide range of experience in property marketing, valuation and consultancy across residential and commercial sectors.
The establishment of an office in the Cambodian capital is the most recent development in CBRE’s Southeast Asian expansion, which already includes offices in Singapore, Indonesia, the Philippines, Thailand and Vietnam.
The new office will capitalise on market opportunities arising from the growing demand for professional real estate services from both international and local organisations within the country.
The office in Phnom Penh will provide a variety of services such as market research, valuation, investment sales, consulting, agency and leasing, and property management. Its goal will be to provide a competitive edge for clients in the fast changing real estate market in Cambodia, via a differentiated services portfolio, as well as to establish CBRE as a key player in the development of Cambodia´s real estate market.
“The opening of an office in Cambodia will strengthen our broader platform in South East Asia,” said Chris Brooke, president and CEO of CBRE in Asia. “Our presence in the market will facilitate the provision of professional property services by CBRE, whilst also supporting regional clients who have an interest in this unique emerging market.”
“With the establishment of the Phnom Penh office, CBRE will be able to develop local market intelligence into measurable results for clients in this expanding market,” said Marc Townsend, managing director of CBRE Vietnam.
Previously, work relating to Cambodia was handled out of the Vietnam office, which will continue to support the team in Phnom Penh.
“Phnom Penh has become a major focal point for economic and business development over recent years. The real estate market in Cambodia is expected to continue its growth momentum, particularly the resort property market along the coast line of Cambodia,” Townsend said.
“CBRE has already established a successful track record in Cambodia and has been servicing clients in market research and consultancy, valuation, and land transactions, as well as property management, even prior to the establishment of an office,” said Townsend.
Daniel Parkes will oversee the operations of the Phnom Penh office. Prior to relocating to Phnom Penh, Parkes was previously based in the United Kingdom where he worked in a real estate firm in the south east of England. He has a wide range of experience in property marketing, valuation and consultancy across residential and commercial sectors.
Saturday, July 28, 2007
Cambodia, long an Asian mouse, may be ready to roar
Real estate is booming and construction opportunities are rife in Phnom Penh. (Photo: Tang Chhin Sothy/Agence France-Presse)Friday, July 27, 2007
By Erika Kinetz
The International Herald Tribune (France)
PHNOM PENH: Most Cambodians live with two realities: rain and rice. The country that three decades ago abolished money has today embarked on the very long process of adding two new words to the national vocabulary: stocks and bonds.
The Cambodian government recently got its first sovereign debt ratings from the global ratings agencies Standard & Poor's and Moody's, and plans are afoot to open domestic stock and bond exchanges in 2009.
Take a ride into the countryside, where the vast majority of Cambodians live and work in conditions more than one observer has described as more African than Asian, and the very notion of an incipient derivatives market seems absurd.
But in the past few years, investors - not just donors, who still prop up the economy of this tiny, impoverished nation - have started to give Cambodia a good, hard second look. That is no small accomplishment for a nation still recovering from the murderous reign of the Khmer Rouge, a radical communist group that not only abolished money during its 1975 to 1979 rule, but also oversaw the deaths of about two million people - roughly one-quarter of the population at the time. After the Khmer Rouge was ousted by the Vietnamese, Cambodia sank into two more decades of civil war.
These days, the notoriously weak judiciary, lack of openness, deep and pervasive corruption, rampant smuggling, mediocre infrastructure (the postal service is barely functional and electricity costs are exorbitant), and the lack of a well-trained work force make Cambodia what has been politely called a challenging business environment.
But not, apparently, too challenging. Foreign direct investment, led by South Korea and China, rose from $121 million in 2004 to $475 million in 2006, according to data from the National Bank of Cambodia and the International Monetary Fund. Historically high levels of liquidity in global markets, as well as a regional boom and a growing perception that, after 30 years of domestic strife, stability has finally taken root, have all helped draw investment.
In January, the country got its first investment bank, Tong Yang Investment, part of the Tong Yang Group of companies in South Korea. Tong Yang plans to start a real estate investment fund of about $100 million focused on Cambodia and Vietnam and marketed to South Korean investors by the end of this year. Other private equity funds are apparently in the works.
Although Cambodia's meager population of 14 million people means that the country is a hard sell for big consumer companies, others have been drawn by the nation's soaring gross domestic product. In the past decade, GDP growth has ranged from a low of 5 percent in 1998, following the bloody factional fighting of 1997, to a high of 13.5 percent in 2005, according to the Finance Ministry.
Over the past three years, Cambodia has sustained average GDP growth of 11.4 percent a year, and the IMF predicts GDP growth will level off to around 9 percent for 2007. Inflation was at 4.7 percent in 2006, according to the ministry. The government has also been deepening its commercial law framework.
"You've got a story of macroeconomic stability," said John Nelmes, the IMF representative for Cambodia. "That's proving comfortable for businesses to invest."
The Australian mining giant BHP Billiton, and its partner, Mitsubishi, have begun a large bauxite exploration project in Cambodia, and Oxiana, the Australian company that runs the huge Sepon copper and gold mine in Laos, is digging for gold in the jungles of northeastern Cambodia.
The promise of oil off the coast of Cambodia has attracted a host of adventurous companies, including the U.S. oil giant Chevron and China's CNOOC and China Petrotech.
At the end of June, a delegation of French business leaders, including representatives of Total Exploration & Production, Société Générale, France Télécom, Lafarge Cement, and the hotel group Accor, came to Cambodia for a fact-finding tour. Japan sent a similar delegation this month, and Biwako Bio-Laboratory has said that it plans to invest up to $800 million in Cambodia for biodiesel production. On Monday, General Electric opened a branch office in Phnom Penh.
Bretton Sciaroni, a lawyer who has practiced in Cambodia since 1993, cited another factor in the country's appeal: the pro-business stance of the government.
Sciaroni, who also serves as a legal adviser to the government, said that when a client, the U.S. packaging company Crown Holdings, wanted to open a factory in Phnom Penh, getting the government to lower its 7 percent tariff on raw aluminum imports was as simple as asking. "The minister of economy and finance, Keat Chhon, asked my client what they wanted it to be," Sciaroni recalled. "My client said zero percent. He said, fine, and zero percent it is."
"People at the highest levels of government understand the necessity of getting stuff done," he added.
Officials describe the turn to capital markets as part of the nation's natural economic evolution. Last month, donors, including China, pledged to deliver $689 million in aid to Cambodia.
"We still need donor assistance," said Hang Chuon Naron, the secretary general of the Ministry of Economy and Finance. But he added that Cambodia would need more - and more kinds of - financing as its economy expands.
The nation's economic base is still quite narrow, dominated by tourism and the garment industry, which could suffer from Vietnam's recent accession to the World Trade Organization and the expiration of U.S. and European quotas on Chinese textiles, scheduled for the end of next year.
Cambodia also has a high level of public debt - most of it on favorable, concessional terms - and it does a poor job of collecting taxes.
On the upside, Cambodia's manufacturing base has been slowly broadening. Oil, natural gas and the mineral sector are promising, and real estate has been booming, some say too much.
Sciaroni said a number of his clients had been buying up property along Cambodia's southern beaches, hoping that the new airport in Sihanoukville would eventually draw tourists who intended to visit only the Angkor Wat temple, in the north, and then leave. "You don't see it yet, but in three to five years, you're going to see major development on the south coast of Cambodia," he said.
Look around Phnom Penh and the opportunities for growth are evident: no tall office buildings, no real golf course, few malls. But the question Han Kyung Tae, Tong Yang Investment's chief representative in Cambodia, has been asking himself lately is whether all the heady talk about surging investment and the rise of capital markets is premature.
"One day, I see the big potential," he said. "The next I'm skeptical."
Right now, Sciaroni said, few domestic companies outside the financial sector, where annual audits are required, would meet even minimal listing criteria. "Transparency doesn't exist for the majority of companies here today," he said.
That has not stopped the Korea Exchange, which operates the Korean Stock Exchange, from jumping in to help develop Cambodian securities markets.
Talk with Koreans of a certain age in Phnom Penh and they will tell you that Cambodia reminds them of their childhood home. The financial sector is no different: Fifty years ago, South Korea, like Cambodia today, depended heavily on foreign aid and was struggling to develop domestic sources of financing. Korea is now trying to share the miracle of its own growth, said Hong-Sik Choi, the executive director of Global Business Development at the Korea Exchange.
"Korea has experienced a miracle to transform itself from the poorest country to the 11th largest economy in the world during the last half century," he explained. "The securities market was at the center of Korea's economic growth."
Hang, the Finance Ministry official, knows that his country is not for the fainthearted. "Cambodia is high risk, but it's also high return," he said.
And while he concedes that Cambodia's road to economic maturity will be long, he maintains that the advent of publicly traded securities will demand new systems of accounting, openness and accountability, which could improve the quality of the business environment as a whole.
Jie Sun, the deputy director of the Research Center for International Finance at Beijing's Chinese Academy of Social Sciences, said that the major lesson - and perhaps the most instructive for Cambodia - that China learned in the 15 years since Deng Xiaoping opened the gates to Chinese-style capitalism, was that capital markets could help a country with the slow and challenging work of improving its business environment.
"The Chinese have realized that the main function of the stock market is to improve corporate governance," he said at a recent conference sponsored by the Economic Institute of Cambodia, an independent research institute and consultancy in Phnom Penh. "After 15 years, we have now come to the point."
The Cambodian government recently got its first sovereign debt ratings from the global ratings agencies Standard & Poor's and Moody's, and plans are afoot to open domestic stock and bond exchanges in 2009.
Take a ride into the countryside, where the vast majority of Cambodians live and work in conditions more than one observer has described as more African than Asian, and the very notion of an incipient derivatives market seems absurd.
But in the past few years, investors - not just donors, who still prop up the economy of this tiny, impoverished nation - have started to give Cambodia a good, hard second look. That is no small accomplishment for a nation still recovering from the murderous reign of the Khmer Rouge, a radical communist group that not only abolished money during its 1975 to 1979 rule, but also oversaw the deaths of about two million people - roughly one-quarter of the population at the time. After the Khmer Rouge was ousted by the Vietnamese, Cambodia sank into two more decades of civil war.
These days, the notoriously weak judiciary, lack of openness, deep and pervasive corruption, rampant smuggling, mediocre infrastructure (the postal service is barely functional and electricity costs are exorbitant), and the lack of a well-trained work force make Cambodia what has been politely called a challenging business environment.
But not, apparently, too challenging. Foreign direct investment, led by South Korea and China, rose from $121 million in 2004 to $475 million in 2006, according to data from the National Bank of Cambodia and the International Monetary Fund. Historically high levels of liquidity in global markets, as well as a regional boom and a growing perception that, after 30 years of domestic strife, stability has finally taken root, have all helped draw investment.
In January, the country got its first investment bank, Tong Yang Investment, part of the Tong Yang Group of companies in South Korea. Tong Yang plans to start a real estate investment fund of about $100 million focused on Cambodia and Vietnam and marketed to South Korean investors by the end of this year. Other private equity funds are apparently in the works.
Although Cambodia's meager population of 14 million people means that the country is a hard sell for big consumer companies, others have been drawn by the nation's soaring gross domestic product. In the past decade, GDP growth has ranged from a low of 5 percent in 1998, following the bloody factional fighting of 1997, to a high of 13.5 percent in 2005, according to the Finance Ministry.
Over the past three years, Cambodia has sustained average GDP growth of 11.4 percent a year, and the IMF predicts GDP growth will level off to around 9 percent for 2007. Inflation was at 4.7 percent in 2006, according to the ministry. The government has also been deepening its commercial law framework.
"You've got a story of macroeconomic stability," said John Nelmes, the IMF representative for Cambodia. "That's proving comfortable for businesses to invest."
The Australian mining giant BHP Billiton, and its partner, Mitsubishi, have begun a large bauxite exploration project in Cambodia, and Oxiana, the Australian company that runs the huge Sepon copper and gold mine in Laos, is digging for gold in the jungles of northeastern Cambodia.
The promise of oil off the coast of Cambodia has attracted a host of adventurous companies, including the U.S. oil giant Chevron and China's CNOOC and China Petrotech.
At the end of June, a delegation of French business leaders, including representatives of Total Exploration & Production, Société Générale, France Télécom, Lafarge Cement, and the hotel group Accor, came to Cambodia for a fact-finding tour. Japan sent a similar delegation this month, and Biwako Bio-Laboratory has said that it plans to invest up to $800 million in Cambodia for biodiesel production. On Monday, General Electric opened a branch office in Phnom Penh.
Bretton Sciaroni, a lawyer who has practiced in Cambodia since 1993, cited another factor in the country's appeal: the pro-business stance of the government.
Sciaroni, who also serves as a legal adviser to the government, said that when a client, the U.S. packaging company Crown Holdings, wanted to open a factory in Phnom Penh, getting the government to lower its 7 percent tariff on raw aluminum imports was as simple as asking. "The minister of economy and finance, Keat Chhon, asked my client what they wanted it to be," Sciaroni recalled. "My client said zero percent. He said, fine, and zero percent it is."
"People at the highest levels of government understand the necessity of getting stuff done," he added.
Officials describe the turn to capital markets as part of the nation's natural economic evolution. Last month, donors, including China, pledged to deliver $689 million in aid to Cambodia.
"We still need donor assistance," said Hang Chuon Naron, the secretary general of the Ministry of Economy and Finance. But he added that Cambodia would need more - and more kinds of - financing as its economy expands.
The nation's economic base is still quite narrow, dominated by tourism and the garment industry, which could suffer from Vietnam's recent accession to the World Trade Organization and the expiration of U.S. and European quotas on Chinese textiles, scheduled for the end of next year.
Cambodia also has a high level of public debt - most of it on favorable, concessional terms - and it does a poor job of collecting taxes.
On the upside, Cambodia's manufacturing base has been slowly broadening. Oil, natural gas and the mineral sector are promising, and real estate has been booming, some say too much.
Sciaroni said a number of his clients had been buying up property along Cambodia's southern beaches, hoping that the new airport in Sihanoukville would eventually draw tourists who intended to visit only the Angkor Wat temple, in the north, and then leave. "You don't see it yet, but in three to five years, you're going to see major development on the south coast of Cambodia," he said.
Look around Phnom Penh and the opportunities for growth are evident: no tall office buildings, no real golf course, few malls. But the question Han Kyung Tae, Tong Yang Investment's chief representative in Cambodia, has been asking himself lately is whether all the heady talk about surging investment and the rise of capital markets is premature.
"One day, I see the big potential," he said. "The next I'm skeptical."
Right now, Sciaroni said, few domestic companies outside the financial sector, where annual audits are required, would meet even minimal listing criteria. "Transparency doesn't exist for the majority of companies here today," he said.
That has not stopped the Korea Exchange, which operates the Korean Stock Exchange, from jumping in to help develop Cambodian securities markets.
Talk with Koreans of a certain age in Phnom Penh and they will tell you that Cambodia reminds them of their childhood home. The financial sector is no different: Fifty years ago, South Korea, like Cambodia today, depended heavily on foreign aid and was struggling to develop domestic sources of financing. Korea is now trying to share the miracle of its own growth, said Hong-Sik Choi, the executive director of Global Business Development at the Korea Exchange.
"Korea has experienced a miracle to transform itself from the poorest country to the 11th largest economy in the world during the last half century," he explained. "The securities market was at the center of Korea's economic growth."
Hang, the Finance Ministry official, knows that his country is not for the fainthearted. "Cambodia is high risk, but it's also high return," he said.
And while he concedes that Cambodia's road to economic maturity will be long, he maintains that the advent of publicly traded securities will demand new systems of accounting, openness and accountability, which could improve the quality of the business environment as a whole.
Jie Sun, the deputy director of the Research Center for International Finance at Beijing's Chinese Academy of Social Sciences, said that the major lesson - and perhaps the most instructive for Cambodia - that China learned in the 15 years since Deng Xiaoping opened the gates to Chinese-style capitalism, was that capital markets could help a country with the slow and challenging work of improving its business environment.
"The Chinese have realized that the main function of the stock market is to improve corporate governance," he said at a recent conference sponsored by the Economic Institute of Cambodia, an independent research institute and consultancy in Phnom Penh. "After 15 years, we have now come to the point."
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