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Thursday, April 12, 2012

Rubber Gives New Bounce to Economy

Cambodia plans to expand rubber production to beef up its agricultural sector.


Blocks of rubber latex on display at national workshop by the Ministry of Agriculture, April 12, 2012.


Cambodia’s Prime Minister Hun Sen announced plans Thursday to encourage rubber smallholdings in a bid to expand production as the country promotes the cash crop as the number two commodity after rice.

Hun Sen said the government will support not only large-scale rubber plantations but also smaller producers.

“We must continue to promote smallholding rubber plantations and promote rubber plantation on economic land concessions,” he said.

Cambodian Rubber Department Director Ly Phalla told RFA that family-based rubber plantations have increased in Koh Kong, Sihanoukville, and Kampot provinces in the country’s s southwest.

According to government targets, Cambodia plans to increase the area of land used for rubber plantations to 400,000 hectares (1 million acres) and to export 300,000 tons of rubber latex by 2020.

Cambodia, whose leading cash crop is rice, currently has about 300,000 hectares (750,000 acres) of rubber plantations, but most of the trees have been planted in recent years will not be ready in the immediate period. Rubber trees take about five to six years before they can produce white, milk-like rubber latex.

Last year Cambodia exported about 46,500 tons of rubber, double the year before. The exports generated about U.S. $200 million dollars and made Cambodia the world’s ninth-biggest producer.

All of its rubber is for export and most is sold to Vietnam, Malaysia, China, and Singapore, where it is used in manufacturing

Cambodia has welcomed foreign investment, especially from Vietnam and China, giving companies 99-year land concessions to establish rubber plantations.

Of the land used for rubber plantations last year, over two thirds were land concessions to companies, while the remaining were small-scale family and private plantations.

At least 77 companies are investing in the crop in the country, covering 17 percent more land than the year before.
‘Just like gold’

At the same time as increasing production, Cambodia is moving to increase the quality rubber produced. Most of the rubber produced currently are low grade..

“We must ensure the quality of cultivation and of the variety because inferior varieties return low yields and result in revenue losses,” Hun Sen said.

He warned that failure to upgrade rubber quality could boomerang on the expansion plans, resulting in losses valued at about U.S. $600 million annually from 2020.


Agriculture Minister Chan Sarun said that the government is working on improving rubber grades to make them acceptable in international markets.

“We must guarantee our quality, including planting, selecting seeds because bad seeds will [dampen yield],” he said.
He forecast a great future for Cambodia’s rubber industry, likening planting rubber to “making gold.”

Cambodia’s biggest cash crop will remain rice, its primary agricultural export, he said.

Environmentalists in Cambodia have campaigned against rubber plantations in protected forest areas.

In the Prey Lang forests in the northeastern part of the country, activists have combated illegal logging and other abuses which they say stem from government concessions for opening up the land to rubber plantations.

The Prey Lang network says more than 40,000 hectares (98,840 acres) in the forest have been granted for rubber plantations alone.

Reported by Sok Serey for RFA’s Khmer service. Translated by Samean Yun. Written in English by Rachel Vandenbrink.
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Cambodia May Lure Up to 10 IPOs a Year, Korea Bourse Says

By Saeromi Shin

Cambodia’s stock market, which is set to open next week after several delays, may be able to lure five-to-10 initial public offerings a year, according to Korea Exchange Inc., the Cambodian government’s partner in the bourse.

State-owned Phnom Penh Water Supply Authority (PPWSA) will start trading on April 18, while Telecom Cambodia and Sihanoukville Autonomous Port are preparing to go public, Kim Bong Soo, Korea Exchange’s chairman and chief executive officer, said in an April 9 interview at his Seoul office. Telecom Cambodia may list as early as October, according to Tong Yang Securities (Cambodia) Plc, which is managing the share sale.

“Cambodia is going to be a very attractive market as investors benefit from the nation’s economic development,” Kim said. “Many inquiries are being placed for possible listings.”

Cambodia is developing a capital market to lessen its reliance on aid that is equal to a 10th of the nation’s $11 billion economy. Growth may be around 6.5 percent this year, according to the Asian Development Bank, compared with an average of 8 percent between 2001 to 2010. The nation has said it’s seeking to spur economic development by privatizing its state-owned companies and encouraging private enterprises to expand with new funding.

Cambodia’s financial system was fractured in 1975 when the Khmer Rouge captured Phnom Penh during the final stages of the Vietnam War. Its Communist guerrillas blew up the central bank, declared its currency worthless and outlawed private property and trading. During leader Pol Pot’s reign, Cambodia’s fertile countryside became the killing fields where 1.7 million people, or 20 percent of the population, perished.

Phnom Penh Water

Plans for a bourse in Cambodia have been delayed several times since 2009, derailed by the global financial crisis, technical issues and lack of readiness among the nation’s companies.

Phnom Penh Water (PPWSA) raised about $21 million in Cambodia’s first initial public offering after pricing the shares near the high end of a marketed range, Han Kyung Tae, managing director of sale arranger Tong Yang Securities (Cambodia), said by phone on April 9. The firm is a unit of a Seoul-based Tong Yang Securities Inc. Phnom Penh Water’s IPO was priced at 6,300 riel ($1.58) a share.

“I believe dozens of companies will list their shares within five years,” Korea Exchange’s Kim said. “Listings of five-to-10 companies are possible a year.”

The Cambodian government, which offered the site and building for the bourse, holds a 55 percent stake in Cambodia Securities Exchange Co., while the Korean bourse operator, which provided information-technology systems, owns the rest.

Myanmar Exchange

Korea Exchange, which oversees the world’s 13th-largest stock market, is helping Asian countries set up exchanges in return for stakes in the bourses and is seeking cross-trading partnerships in a bid to respond to mergers among global bourses. The Seoul bourse operator helped Laos open its stock market last year and is hoping to do the same for Myanmar.

Myanmar President Thein Sein has sought to reconcile with political foes and open the economy since taking power after 2010 elections that ended five decades of military rule. This month, the government floated its currency and held by-elections that included dissident Aung San Suu Kyi, prompting the U.S. and European Union to reconsider sanctions.

Tokyo Stock Exchange Group Inc. and Daiwa Securities Group Inc. had negotiated a “memorandum of understanding” to establish a stock exchange and develop the country’s capital markets, the companies said in an April 11 statement.

Cross Trading

Korea Exchange said in an e-mail yesterday that it will do its best to win the Myanmar government’s confidence until the Southeast Asian nation makes a final decision and enters into a binding agreement for the establishment of its exchange.

Last year, the South Korean bourse and Tokyo’s exchange began listing prices of each other’s equities and agreed to develop the technology to allow for cross trading, aiming to promote mutual-listing of exchange-traded funds and derivatives. Korea Exchange has proposed cross-trading partnerships with Turkey, Greece and Brazil, Kim said.

“Those countries are highly interested in our offer,” he said. “Securing many cross-trading deals is a necessity for our survival amid growing global competition among exchanges,” he said.

The Korean bourse is also contacting companies in Turkey, Greece, Brazil, Uzbekistan and Kazakhstan about listing their shares in South Korea, according to Kim.

To contact the reporter on this story: Saeromi Shin in Seoul at sshin15@bloomberg.net
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US Government, Sotheby's Battle over Ancient Khmer Warrior Statue

A federal judge in New York says that a 10th century Cambodian statue will remain in the custody of Sotheby's auction house while a dispute over its ownership plays out in court. U.S. District Judge George Daniels says that because all parties agree that the statue is safely housed in a Sotheby's warehouse, it should not be subjected to the risk of being moved unnecessarily.

U.S. prosecutors and the Cambodian government say the 1,000-year-old sandstone statue, depicting a warrior in the Hindu saga The Mahabharata, was looted from the temple of Prasat Chen in the 1960s or 1970s and should be repatriated. The feet of the statue remain at the temple at Koh Ker, which was briefly the capital of ancient Cambodia.

In a civil complaint, federal prosecutors said that Sotheby's knew the statue had been stolen when it offered it for auction last year on behalf of a Belgian client who had bought it in 1975, the first time it was sold publicly. The U.S. filing reads like a magazine story, quoting at length from email exchanged between a Cambodian art expert and Sotheby's.


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"According to the forfeiture complaint, Sotheby's was told by the very expert they hired to authenticate and appraise the piece, that it was, quote, 'definitely stolen,'" said Tess Davis, an antiquities lawyer who is advising the Cambodian government. "And the same scholar actually urged them to consider donating it back to the national Museum of Phnom Penh to, quote, 'save everyone some embarrassment.'"

In a later email, however, the scholar wrote Sotheby's that it did not appear that Cambodia was requesting the return of all looted artifacts owned by foreign individuals and museums, saying "[I] think that legally and ethically you can happily sell the piece." Sotheby's subsequently featured the statue on its catalog cover. It was expected to sell for up to $3 million.

Peter Neiman, an attorney representing Sotheby's, said the statue was purchased legally by the Belgian collector. "We vigorously dispute the government's allegations," he said after the hearing. "Sotheby's acted in good faith and compliance with the law at all times here, and we expect the evidence is going to show that this is not stolen property, that it belonged to the consignor, and Sotheby's acted perfectly appropriately in consigning it for sale."

In a statement, Sotheby's added that the statue might have been missing from its site for as long as 1,000 years. It said that "condemning a public sale process inevitably drives those owners of antiquities toward private transactions, an outcome deeply disadvantageous to any and all who claim to be on the side of sensitive and careful handling of this material."

Davis, however, said that much of Cambodia's ancient art was looted during the upheaval surrounding Cambodia's civil war, and sold to foreign collectors and museums. "I doubt that anyone who has been working in the field of cultural heritage preservation is very surprised by this court proceeding," she said.

The statue, known as the Duryodhana, stood facing another warrior figure, the Bhima, whose feet also remain at the Koh Ker temple site. Davis said challenges to the ownership of that figure, now in the collection of the Norton-Simon Museum in California, might also be raised.
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