Cambodia 20240916: Perdurable, Zenith, Daring
Cambodia 20240916: Perdurable, Zenith, Daring
Mekong Memo Cambodia Weekly: Business, politics, finance, trade & legal news.
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Headlines:
Southeast Asia Navigates U.S.-China Rivalry
Warship Docking Raises U.S. Concerns
November Deadline Set for Foreign Labor Permits
Scrutiny Over Freedom of Association and Labor
Banks Face Rising NPLs and Covenant Breaches
Government Cracks Down on Overseas Critics
Trade Growth and Strengthened China Ties
Cambodia Cooperation with China and ASEAN
Cambodia and the Philippines Strengthen Co-op
The Diamond Hexagon Cooperation Framework
South Korean Youth Exchanges and Events
Cambodia and Thailand Celebrate 75 Years of Diplomacy
$200M for Border and Rural Infrastructure
Inaugural Bilateral Consultation with Canada
New Container Terminal Boosts Trade Capacity
Gumball 3000 Draws Celebs and Supercars
Women-Only Village Offers a Safe Haven
Southeast Asia Navigates U.S.-China Rivalry
Southeast Asian nations, skilled in hedging strategies, are increasingly wary of choosing between China and the U.S. as tensions rise. While the U.S. promotes democracy and human rights as key principles in the region, many Southeast Asian countries doubt Washington’s commitment to upholding their interests, particularly given historical inconsistencies. With both powers vying for influence, ASEAN states are prioritizing their own security and economic well-being to avoid becoming proxies in a bigger geopolitical struggle.
Read more: ChinaFile
Warship Docking Raises U.S. Concerns
The docking of Chinese warships at Cambodia’s Ream Naval Base has raised alarms among U.S. officials and regional experts about its implications for South China Sea stability and Cambodia’s neutrality within ASEAN. Experts fear that China’s increasing military presence in Cambodia could undermine U.S. efforts to maintain a power balance in Southeast Asia. While China describes the move as in support of humanitarian aid and rescue capabilities, critics see it as part of a push to counter U.S. influence. U.S. officials, including embassy spokesperson Wesley Holzer, have emphasized the need for transparency at the naval base and called for stronger U.S.-Cambodia military ties, including disaster relief, demining, and maritime security training.
Read more: Rappler
November Deadline Set for Foreign Labor Permits
The Ministry of Labour and Vocational Training has mandated that businesses apply for foreign labour permits for 2025 by November 30, 2024. Applications must be submitted via the new Foreign Workers Centralised Management System (FWCMS). Businesses that miss the deadline face fines, and repeat violations could lead to imprisonment.
Read more: Khmer Times
Scrutiny Over Freedom of Association and Labor
Major global apparel brands, including Adidas, Puma, and VF Corporation, have voiced concerns over Cambodia's investigation into the labor rights NGO CENTRAL, citing it as a retaliatory move after CENTRAL’s report on workplace freedom of association. The brands have called on the government to cancel the probe and drop charges against CENTRAL’s program manager, Khun Tharo, warning that such actions could damage Cambodia’s appeal as a responsible sourcing partner. The investigation follows wider concerns about labor rights suppression in the garment industry.
Read more: UCA News (Global Brand Pressure), Just Style (Concerns from U.S. Brands), Sourcing Journal (Industry Perspectives)
Banks Face Rising NPLs and Covenant Breaches
Banks are battling a surge in non-performing loans (NPLs), with institutions including ACLEDA Bank, Hattha Bank, and LOLC breaching financial covenants. S&P Global Ratings forecasts that NPLs could peak at 7.7% by 2026, driven by lagging recovery in tourism and real estate sectors. While larger banks have negotiated covenant waivers, smaller banks remain at greater risk. Structural improvements in the banking sector, including diversified loan books and cautious lending, are expected to mitigate longer-term risks, but this is a story to watch.
Read more: Asian Banking & Finance (Covenant Breaches), Asian Banking & Finance (NPL Forecast)
Government Cracks Down on Overseas Critics
Prime Minister Hun Manet's regime appears to be doubling down on efforts to suppress criticism from overseas Cambodians as part of a bid to gain favor with Western governments. The Cambodian authorities have targeted activists abroad, including the apparent forced disappearance of Vannith Hay, brother of opposition figure Vanna Hay, and the arrest of Sun Chanthy. Opposition leader Teav Vannol was fined $1.5 million for criticizing Hun Manet and his father. The Cambodian government is pressuring foreign governments to limit anti-regime activities on their soil.
Read more: The Diplomat
Trade Growth and Strengthened China Ties
Cambodia's foreign trade grew 16.5% in the first eight months of 2024, driven by exports of agricultural products and apparel. The Regional Comprehensive Economic Partnership (RCEP) and Cambodia-China Free Trade Agreement (CCFTA) have significantly helped trade with China, now Cambodia’s largest trading partner. The Cambodian government continues to prioritize quality and export growth, aiming for long-term stability and improved regional integration.
Read more: Bernama (China Trade), Xinhua (RCEP Benefits), The Star (Trade Growth), Fibre2Fashion (Apparel Exports)
Cambodia Cooperation with China and ASEAN
Cambodia's Secretary of State, Kung Phoak, met with China's Deputy Head of Hong Kong and Macao Affairs to talk Cambodia-China and ASEAN-China cooperation. They discussed expanding collaboration in the digital economy, green transition, and blue economy, while working to develop hubs through trade and investment. Both sides also discussed specific projects to strengthen ASEAN-China ties, contributing to ASEAN Community building efforts. Areas of focus include financial, technological, and logistical development.
Read more: Khmer Times
Cambodia and the Philippines Strengthen Co-op
Cambodia's Minister of Labour and Vocational Training Heng Sour and Philippine Ambassador Flerida Ann Camille P Mayo agreed to deepen cooperation in employment and vocational training to support growth and human resource development. Both leaders spoke about the success of past collaborative efforts and re-affirmed their commitment to partnerships in labor, social security, and vocational training. Ambassador Mayo praised Cambodia's leadership for facilitating progress, particularly in supporting Filipinos living and working in the country.
Read more: Khmer Times
The Diamond Hexagon Cooperation Framework
The Diamond Hexagon Cooperation Framework is reportedly strengthening Cambodia-China relations across six areas: politics, manufacturing, agriculture, energy, security, and cultural exchanges. While progress has been slow, especially in agriculture and industrial projects, both countries expect to expand collaboration in emerging sectors such as AI, digital trade, and green innovation. Initiatives like a planned electric vehicle plant by BYD are indicative of future opportunities, but challenges remain in ensuring long-term investment in Cambodia’s heavy industry.
Read more: Cambodia Investment Review
South Korean Youth Exchanges and Events
The Korean Cultural Association (KCA) is working with the Cambodian government to promote cultural exchanges, particularly among youth, to improve ties between the two countries. During a meeting with Senate President Hun Sen, KCA President Samuel Chung spoke about plans for exchange visits, exhibitions, and charity events. These events include showcasing Cambodian culture in Seoul and bringing more South Korean artists to Siem Reap. Hun Sen endorsed these plans, saying that they had great potential to boost tourism and improve people-to-people connections.
Read more: Khmer Times
Cambodia and Thailand Celebrate 75 Years of Diplomacy
Cambodia and Thailand are working hard on their bilateral relations, which were elevated to a "Strategic Partnership" in 2024, with plans to commemorate 75 years of diplomatic ties next year. Outgoing Thai Ambassador Cherdkiat Atthakor spoke about progress in trade, investment, tourism, and infrastructure development. Both nations reaffirmed their commitment to better cooperation, particularly in economic diplomacy and regional frameworks like ACMECS and ASEAN, as they prepare for special anniversary celebrations and future collaborations.
Read more: EAC News (Diplomatic Relations), Khmer Times (Strategic Partnership)
$200M for Border and Rural Infrastructure
Cambodia is pouring more fuel on its infrastructure development fire, committing more than $200 million to complete the "Border Ring Road" within the next 10 years. This road project, supported by public donations in excess of US$19 million, is intended to improve border security and connectivity in border areas. The Ministry of Rural Development has upgraded 1,550 km of rural roads, with plans to build 7,755 km more by 2028, improving market access for agribusiness and supporting economic growth. The government says that it is focused on transparency and public involvement in these national projects.
Read more: Pattaya Mail (Border Road), Khmer Times (Rural Roads), Thai PBS (Public Donations)
Inaugural Bilateral Consultation with Canada
Cambodia and Canada have completed their first Bilateral Consultations, with an eye on deepening ties in trade, investment, demining, tourism, and ASEAN collaboration. Specific topics of discussion included the ASEAN-Canada Free Trade Agreement and Canada's Indo-Pacific Strategy. The meeting was centered on finding mutual interests and working together to increase trust and partnership between the two nations. The talks are indicative of Cambodia's growing importance in Southeast Asia and Canada's increased focus on the region.
Read more: Khmer Times (Trade and Investment), EAC News (Bilateral Relations)
New Container Terminal Boosts Trade Capacity
Cambodia has opened a new $37.5 million container terminal at the Sihanoukville Autonomous Port (PAS), expanding its capacity to handle 1 million TEUs annually. The additional terminal, completed after 17 months of construction, will improve Cambodia's standing as a regional logistics hub. Prime Minister Hun Manet has been keen to talk up the port's significance in driving socio-economic development and international trade, as PAS saw a 26% rise in revenue in the first seven months of 2024.
Read more: Xinhua
Gumball 3000 Draws Celebs and Supercars
The iconic Gumball 3000 rally arrived in Cambodia, showing off more than 100 luxury cars driven by international celebrities. The rally began at Bavet International Gate and featured stars like Ken Griffey Jr., Patrice Evra, and social media influencers like iShowSpeed. In Phnom Penh, participants performed “drifting” techniques and attended a massive concert. The rally will continue to Siem Reap, where a Guinness World Record attempt for the largest gathering of supercars at Angkor Wat will take place.
Read more: Khmer Times (Phnom Penh), Khmer Times (Celebrities)
And now for something completely different.
While the focus of The Memo is on news for business, we often wrap with a less business-focused article.
Miss Grand Cambodia flew the flag for Cambodia in Saraburi, Thailand, hundreds of women who paddle boats on the Tonle Sap are gaining global attention and praise, Cambodian stars dazzled at New York Fashion Week, we found this story about a rock to be hilarious, and here are some beautiful photos of Bayon Temple illuminated. In closing this week, a unique story:
Women-Only Village Offers a Safe Haven
In Phnom Penh, the "Girls to Grannies" village, an all-female community established by the Cambodian Children's Fund, provides a secure environment for women and girls, protecting them from gang violence, harassment, and drugs. This unique village features educational resources and builds a supportive atmosphere for girls to pursue their ambitions in education and careers. Founded by former Hollywood executive Scott Neeson, the village aims to empower girls in a safe space, with 80% progressing from primary school to university.
Read more: ABC News (Story), Korea Herald (Video)
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