Cambodia to form new national flag carrier with Indonesian firms

PHNOM PENH, Cambodia (AP): The Cambodian government signed a joint venture agreement with two Indonesian companies Friday to form a new national airline to tap the country's growing tourism industry.

The new airline, which has yet to be named, is expected to begin flying in six months, the partners said.

Cambodian Deputy Prime Minister Sok An signed a memorandum of understanding for the joint venture with officials from two Indonesia-based companies, the Rajawali Group and PT Ancora International.

"We will create an airline the country will be proud of,'' he said.

The new airline will be Cambodia's national flag carrier, its first since tough competition and mismanagement forced Royal Air Cambodge to shut down over five years ago. Air travel to and from Cambodia is currently dominated by foreign-owned airlines.

The Indonesian partners' businesses include cigarettes, cement, telecommunications, hotels, resorts, extractive minerals and airlines, a joint statement said.

The government will hold a 51 percent share in the new venture and its partners 49 percent, it said.

But since the two foreign firms are responsible for providing the capital for creating the new airline, they are entitled to total 70 percent of potential profit while the remaining 30 percent will go to the government, the statement added.

Peter Sondakh, chairman and CEO of Rajawali Group, declined to discuss other financial details of the new airline when asked by reporters.

But he said it will operate with "better aircraft and better service'' to compete with foreign airlines.

"We envisage more and more travelers coming to Cambodia, and the new national carrier will become indispensable for the tourism market,'' said Vichit Ith, managing director of PT Ancora International.

Cambodia received 1.4 million visitors between January and September this year, up nearly 19 percent from the same period of 2006, according to statistics of the Tourism Ministry, which has also forecast that total tourist arrivals this year will exceed last year's 1.7 million.