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Friday, December 05, 2008

Cambodia Considers Allowing Foreign Ownership of Property

Cambodia real estate values are in freefall, and officials may soon allow foreigners to purchase buildings, though foreign ownership of land is still out of the question. For more information, read the following article from Global Property Guide:

Cambodia’s housing market is plummeting, and the government is considering a new law to allow foreigners to own buildings.

In 2005, the government amended an investment law to allow foreign ownership of buildings. However Cambodia’s property market was then experiencing one of the biggest booms in Asia. As a result, the law was never implemented and the idea floundered.

The boom saw prices surge 25 percent to 40 percent annually from 2004 to 2007. Land price increases were at first confined to Phnom Penh, Siem Reap and Sihanoukville, but the boom spread right across Cambodia. Other hot spots have been the border areas with Vietnam and Thailand and, to a lesser extent, Laos.

The capital’s most sought after locations fetched US$500 per square metre in 2000, but were sold at around US$4,000 or more per square metre along Norodom Boulevard, and US$2,500 per square metre in the central residential neighbourhood of Boeung Keng Kang (BKK).

A downturn started in July 2007 after the government announced new investment guidelines for developers.

Then in mid-2008, the bubble burst. The global financial crisis had hit Cambodia’s biggest investor, South Korea, and Korean investors began pulling out foreign assets to increase liquidity.

Real estate sales plummeted 30 percent to 50 percent from a year earlier.

To prevent the market from sliding further, the government is considering moves to allow foreigners to fully own buildings. Land ownership is still out of the question.

The housing boom

Cambodia has just witnessed one of the biggest real estate booms in Asia.

The reasons are obvious, as soon as you visit Cambodia. Phnom Penh is an attractive colonial city, with broad avenues, charming housing, a hip and young atmosphere, and a riverfront view. Siem Riep, which houses Angkor Wat, is even more charming, and has a cooler, more agreeable climate. There are agreeable beachfronts at Sihanoukville.

Cambodia is in a strategic position in the centre of IndoChina. Prices are laughably inexpensive (from a foreign perspective) and economic growth is exploding. The combination is hard to argue with.

Rentals are far higher than in days when Phnom Penh was a sleepy outpost where the only foreigners worked for aid organizations. In BKK I, according to a report in the Bangkok Post dated March 2008, a spacious, four-bedroom apartment with gym, swimming pool, parking and 24-hour security is on the market for US$3,000 a month. Nearby, the owners of a two-story, four-bedroom villa are looking for US$5,000 per month.

Phnom Penh has, as a result, experienced a construction boom. The government is aggressively pro-development, and squatters and other eyesores are simply cleared away, by a government which is in league with wealthy developers.

Part of the charm may be about to be lost as Phnom Penh succumbs to development. A 42-story US$250 million twin condominium, twice as high as Phnom Penh’s current tallest building, is being built in the most conspicuous position possible—at a busy corner leading to the city's Independence Monument. Residential units in the ‘Gold Tower 42’ project, which will not be completed till 2011, range from US$459,000 to US$1,500,000, according to developer Yon Woo Cambodia Co. Around 70 percent of the buyers are Cambodian. Around 40 percent of the sales have gone to speculative investors.

World City Co. Ltd., a South Korean company, is investing US$2 billion to build a satellite city called Camko City on a 120-hectare (300-acre) in northwest Phnom Penh. The single biggest foreign direct investment in to date, Camko City will include residential units, villas, condominiums, commercial and public facilities, trade and financial centres, office buildings, shopping centres, hotels, schools and hospitals. The project will include about 500 apartments with price tags ranging from US$112,000 to US$1.8 million a unit. Construction will take 3 1/2 years to complete. Nearly half of the units have already been sold.

Land values in Siem Reap have risen 25 percent to 30 percent every year for the last four years at least. The average price of land per square metre is now around the US$500 to US$600 mark. But premium land in downtown tourism districts is around US$1,600 per square metre.

Housing mortgages

Mortgage finance is now available in Cambodia. Acleda Bank entered the home lending market in January 2007; by March 1 2008 Acleda’s home loan portfolio was worth about $40 million. To get around foreclosure risk, given the corrupt legal system, Acleda keeps the title to the property until the loan is repaid.

ANZ also offers 15-year installment loans, allowing customers to borrow up to 60 percent of the home purchase price at variable interest rates, lending against registered titles.

Foreign-ownership schemes

Foreign individuals cannot buy real estate in Cambodia directly. But land can be held by foreigners on long (renewable) leases and through majority locally-owned companies incorporated in Cambodia. This company structure is the safest for a foreigner wishing to buy land. It is not totally bullet-proof, but in practice it works.

Foreigners typically take two Cambodian nationals as partners in the land-holding company, with the 51 percent share allocated so that the foreigner is the biggest single partner. Other safeguards include

Creating different classes of shares, giving the foreigner more rights;
Minority control documents;
A mortgage on the land, stipulating that the land cannot be transferred without the consent of the foreigner.

Leases up to 99 years are another common acceptable structure—the magnificent Raffles Hotel le Royal in Phnom Penh, for instance, is held on a simple lease.
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CAMBODIA: Children miss out on school because of corruption

PHNOM PENH, When Sok Sopheap could not pay his daily bribe, his secondary school teacher refused to let him attend class.

The teacher demanded he stand for an hour by the door until the class finished.

"It was humiliating, but it happens a lot to students," said the 19-year-old son of a food vendor, graduating years late because of what he calls "high corruption fees".

"We have to pay unfairly for almost everything at school," he complained, including exams, tests and even class time.

"I don't think the problem is getting better," he said. "Young people in Cambodia have lived with this all our lives and no one has done much to stop it."

Chronic poverty

"New teachers often face a many-month delay before they receive their salaries," David Coleman, education chief of the UN Children's Fund (UNICEF) for Cambodia, told IRIN. "Teachers sometimes supplement their income with a second job. This can affect their own attendance at school, and can put pressure on the amount of time they have to prepare their lessons."

Teachers' salaries start from US$50 a month, even less than garment factory workers earn, Coleman added.

High oil and gas costs, which have only fallen slightly since their summer peak, despite a global price plummet, could be adding to teachers' salary woes, said Soprach, a primary school teacher in the capital, Phnom Penh.

"The price I pay for gas every month is almost the same as my salary," Soprach told IRIN. "How am I supposed to survive and feed my family without charging extra?"

Daily fees of 700 riel (20 cents) do little to drain students of money while keeping his own family afloat with $200 a month, he added.

Yet others think the tiny costs add up in significant ways, unfairly forcing poorer students out of school.

A 2007 report by the Cambodian NGO Education Partnership (NEP)
reveals education costs for each child averaged $108 annually, or 9 percent of each family's annual income.

The inability to pay informal fees was the most common reason parents gave for their children dropping out, the report stated.

"When you include informal and formal school costs, and private classes and snacks, many students are paying $2.50 every day," Leng Theavy, education and capacity-building officer for the NGO Education Partnership (NEP), told IRIN.

"That money is a lot because many Cambodians don't make more than $60 a month. In the survey we found the informal fees to be small, but we think the numbers could be much higher now," she added.

The study also noted that a quarter of parents were unaware that their children were entitled to a free education, a legal right.

Informal fees are prevalent in Phnom Penh, not in the countryside, the report said, though Theavy said corruption still happened in the provinces.

"Some teachers in the countryside take large fees too, and often the communes receive documented complaints from parents," she said.

Tackling corruption

As part of Cambodia's Education Strategic Plan for 2006 to 2010, the Ministry of Education is seeking ways to improve efficiencies to reduce informal fees.

The establishment of a Teacher Professional Code, ensuring on-time payments and raising teacher salaries are priorities.

However, Theavy said government had only limited options.

"The situation is out of the control of the Ministry [of Education] even though they circulated a ban on informal payments," she told IRIN. "Teachers commit this on their own."

Corruption overall is one of Cambodia's most pressing issues, with anti-corruption watchdog Transparency International scoring the country the 14th most corrupt in the world in its 2008 index, and the third most corrupt country in the Asia-Pacific region.
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Global Draw and Elixir Gaming form Strategic Alliance for Placement of Server-Based Gaming Machines in Asia

NEW YORK, SGMS wholly-owned subsidiary, The Global Draw Ltd. ("Global Draw") and Elixir Gaming Technologies (EGT:elixir gaming technologies) announced today they have formed a strategic alliance to address new opportunities in the high-potential gaming market of Cambodia through placements of Global Draw's popular server-based gaming machines at Elixir Gaming sourced venues. Pursuant to this agreement, gaming machines from Global Draw will be placed at venues on a revenue share basis and Global Draw and Elixir Gaming will share in the net win of the machines placed into operation. It is expected that Global Draw and Elixir Gaming will enter into a similar arrangement for the Philippines in the first quarter of 2009.

The first placement of Global Draw machines under this new agreement of approximately 65 Silverball networked gaming machines will be placed in casinos and licensed gaming halls in popular visitor destinations in Cambodia, as sourced by Elixir Gaming, during the first quarter of calendar 2009. In addition to securing new locations for the placement of Global Draw products, Elixir Gaming will provide ongoing marketing and technical support of the installed units.

Global Draw first introduced server-based gaming to the British betting market in the late nineties and has over 13,000 of its popular Silverball and Nevada terminals operating worldwide.

Neil Moir, Director of International Business Development for Global Draw, said: "This new alliance with Elixir Gaming aligns us with the perfect strategic partner to immediately access the South East Asian gaming market, which is the fastest growing gaming market in the world and represents another significant milestone in Global Draw's ability to expand our presence beyond our core market in the UK. Global Draw's unique downloadable, server-based games and services are applicable to all global markets as they allow us to work closely with our customers to increase machine income by making constant changes to our content. We are very pleased to leverage the benefits of Global Draw's unique products with the expertise Elixir Gaming has quickly developed in addressing the Cambodian market through their strong market presence and expanding relationships with venue owners. We expect our exciting level of content and increasing the level of security and flexibility offered by our products will provide immediate benefits to venue owners and their players in these rapidly growing markets."

Elixir Gaming is a leading supplier of technology gaming solutions in its key markets in Asia. Through its growing installation base of over 1,200 electronic gaming machines which are leased to its customers on a participation basis, local market relationships, and operational expertise, Elixir Gaming has established a meaningful presence in the high-potential gaming markets of the Philippines and Cambodia.

Clarence Chung, Chairman and Chief Executive Officer of Elixir Gaming, said: "We are delighted to be working with a company like Scientific Games, and its subsidiary Global Draw, which share our passion for delivering excellence in terms of cutting edge games, technology, and customer service. This agreement provides us with opportunities to ramp up our installed base with value-added networked gaming machines that complement our existing operating units. Importantly, this new alliance is another indication of the progress we are making with initiatives to improve our operating performance as we believe the entertainment value of Global Draw's products will help to deliver incremental net revenues to Elixir Gaming while allowing us to preserve capital for execution on additional growth initiatives."

About Scientific Games

Scientific Games Corporation is the leading integrated supplier of instant tickets, systems and services to lotteries worldwide, a leading supplier of server based gaming machines and systems, Amusement and Skill with Prize betting terminals, interactive sports betting terminals and systems, and wagering systems and services to pari-mutuel operators. It is also a licensed pari-mutuel gaming operator in Connecticut, Maine and the Netherlands and is a leading supplier of prepaid phone cards to telephone companies. Scientific Games' customers are in the United States and more than 60 other countries. For more information about Scientific Games, please visit

Company Contact:
Investor Relations
Scientific Games

About Elixir Gaming Technologies, Inc.

Elixir Gaming Technologies, Inc. is a provider of gaming technology solutions. The Company secures long-term contracts to provide comprehensive turn-key solutions to 3, 4, and 5 star hotels and other well-located venues throughout Asia that seek to offer casino gaming products. The Company retains ownership of the gaming machines and systems and receives recurring daily fees that average in excess of 20% of the net gaming win per machine and provides on-site maintenance. The Company has established a strategic presence in the Asia Pacific region with a focus on the Philippines, Cambodia, and Vietnam markets. For more information please visit

Company Contact:
Traci Mangini
SVP, Corporate Finance

Forward-Looking Statements

Certain statements in this press release which are not historical facts constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Those forward-looking statements include statements regarding the expectations for the business relationship between Global Draw and Elixir Gaming including the placement of games and recurring revenue that may develop from the relationship between the two companies. These statements, including those relating to timing of contracts, renewals or other events, business plans and performance objectives, are based upon management's current expectations, assumptions and estimates and are not guarantees of future results or performance. Actual results may differ materially from those projected in these statements due to a variety of risks and uncertainties and other factors, including, among other things: that Global Draw and Elixir Gaming may not realize the expected benefits of the game placements, risks related to Elixir Gaming's inability to place gaming machines at significant levels or at all and risks relating to Elixir Gaming's ability to place games that generate the expected amount of net-win; competition; material adverse changes in economic and industry conditions in our markets; technological change; protection of intellectual property; security and integrity of software and systems; laws and government regulation, including those relating to gaming licenses, permits and operations; seasonality; dependence on suppliers and manufacturers; factors associated with foreign operations; failure to retain, renew or perform on contracts; resolution of pending or future litigation; and other factors described from time to time in our filings with the SEC, including our most recent Annual Report on Form 10-K. Forward-looking statements speak only as of the date they are made, and except for our ongoing obligations under the U.S. federal securities laws, we undertake no obligation to publicly update any forward-looking statements whether as a result of new information, future events or otherwise.

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Cambodia promised aid worth nearly $1 bln for 2009

PHNOM PENH, Cambodia has been promised aid worth $951.5 million for next year -- the most since 1994 -- with pledges linked to the country implementing reforms and fighting graft, the finance minister said on Friday.

Speaking at a news conference after a donors' meeting, Keat Chhon said China was Cambodia's biggest aid donor, with $257 million, followed by the European Union with $214 million, and Japan with $112 million.

"China is more than just a good rich neighbor ... China knows what Cambodia needs," he told reporters, saying Beijing's aid was unconditional, unlike assistance from the rest of the donors.

At the conference, other donors urged Cambodia to approve a long overdue anti-corruption law which they said was essential for private sector investment.

"Passing the law will be an important signal, providing investors and development partners with confidence to make more long-term commitments in Cambodia," said Qimiao Fan, the newly appointed World Bank country manager for Cambodia.

The International Monetary Fund (IMF) also expressed reservations about the government's plan to double spending on the military next year to $500 million after a border clash with Thailand earlier this year.

Finance Minister Keat Chhon said the spending increase was for pay and social welfare rather than arms and equipment. (Reporting by Ek Madra; Editing by Bill Tarrant)
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