Mekong Memo Cambodia Weekly: Business, politics, finance, trade & legal news.
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This week's Mekong Memo Cambodia covers headline stories related to the economy, diplomacy, technology, and crime. Topics include surging credit growth, expanding air travel routes, digital governance initiatives, ASEAN disaster management, and strengthening ties with nations like China, India, and Australia. The headline piece is a hard-hitting, must read article on Cambodia's cyber-fraud epidemic, suggesting deep elite complicity in an industry generating billions annually.
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Overdue Payments Shadow Credit Surge
In Q3 2023, Cambodia's consumer credit reached a record $14.93 billion, accompanied by a worrying 20% increase in overdue payments. The rise in late payments, indicates emerging financial stress among borrowers. Despite this, the consumer loan account number rose by 1.78% to 1.68 million. The credit market saw a marked increase in personal finance and credit card applications, while mortgage applications declined, signaling a shift in consumer borrowing patterns. This trend calls for potentially more aggressive credit risk management from banks to maintain financial stability.
Read more: Cambodia Investment Review
CDC Green-lights 191 New Projects
Cambodia's Council for the Development of Cambodia (CDC) has approved 191 new investment projects in the first nine months of 2023, a significant rise in industrial sector investments totaling $1.8 billion. This marks a 33% increase in project approvals compared to the previous year. Sun Chanthol, deputy prime minister, emphasized the collective effort of state agencies in creating an investment-friendly environment. The projects span several sectors, including manufacturing, agriculture, tourism, and technology, demonstrating some success of the country's focus on creating a conducive environment for FDI and job creation. The full article also includes a breakdown of FDI by sector.
Read more: Phnom Penh Post
Fast-Tracking of Railway Upgrades
The government is expected to expedite studies on enhancing the Phnom Penh to Preah Sihanouk railway line to potentially increase the maximum train speed to 80km/h, up from the current 50km/h. This initiative is expected to improve the efficiency of goods transport and support economic development. Plans are also underway to develop other key infrastructure, including expressways and a deep-water port in Preah Sihanouk province, to improve connectivity between different regions to support economic progress.
Read more: Phnom Penh Post
Digital Platforms Spurs Business Growth
Cambodia's Online Business Registration System (OBRS) has facilitated the registration of over 31,000 businesses, representing companies with nearly of $9 billion of combined capital. Originally launched in 2020, the platform integrated six ministries and state institutions, with the goal of simplifying the registration process. Since that time, two further phases of the project have been launched to include more ministries and institutions. The majority of registered capital is in building construction, followed by hospitality and real estate sectors. The rise in registrations, including a significant proportion of women-owned businesses (38%), indicates the system has been a success and that business owners are becoming increasingly technological proficient. This digital shift is expected to improve transparency and aid government policy-making. Digitalization is also being pushed at the customs department in an effort to streamline systems for the same reasons.
Insurance Sector Records $87M in Q3 Premiums
The domestic insurance industry saw a modest 2.6% increase in its total premiums over last year, reaching $87.4 million in the third quarter of 2023. The growth involved contributions from general, life, micro-insurance, and reinsurance firms. The sector also recorded a significant increase in claims paid out, amounting to $17.1 million. Despite these gains, the Insurance Regulator of Cambodia notes that the industry's growth is still low compared to regional and global standards, indicating potential for further expansion.
Read more: Xinhua
China Hosts SEA Drills Amid South China Sea Tensions
China is scheduled to conduct anti-terrorism exercises with Cambodia, Laos, Malaysia, Thailand, and Vietnam in its waters, marking a new collaborative effort to build military trust during a time of increasing tension due to disputes in the South China Sea. The "Aman Youyi 2023" drills, hosted for the first time in China since their inception in 2014, are intended to improve upon urban and maritime counterterrorism capabilities and maintain regional peace. This initiative includes participants from the Southern Theatre Command and contributes to deepening pragmatic cooperation in the politically sensitive region.
International Tourist Numbers Rise Sharply
Cambodia has experienced a 211% increase in international tourist arrivals, with significant contributions from Thailand, Vietnam, and China. The country recorded 1.34 million arrivals by air and 2.58 million through land and waterways for a total of nearly four million visitors so far. This growth is expected to continue apace with the opening of the new Siem Reap Angkor International Airport and the tourism ministry projects a total of at least 5 million international visitors this year.
Read more: VNExpress
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