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Monthly Archives: February 2012

Naga World profits Double to $98 Million

NagaCorp, which owns Phnom Penh’s only licensed casino, announced on Wednesday that net profits at the company had more than doubled in 2011 and that plans are in store to expand its operations in the country.

Financial results filed with the Hong Kong Stock Exchange show that NagaCorp made a net profit of $92 million in 2011 compared to $44 million in 2010, the highest profit recorded by the company since it went public in 2006.

Revenues totaled $223.8 million, a 49 percent increase on the previous year. According to the results, the largest portion of revenues $80 million was made from gamblers on VIP trips, known as junkets.

A total of $3.2 billion was gambled at junket tables in the casino by 16,019 visitors, that is an average of more than $200,000 per player.

Because it is illegal for Cambodians to gamble at domestic casinos, NagaWorld says that it draws in the wealthy from around the region to play at its tables.

The company believes it has only just begun to tap into the junket market, especially within the burgeoning economies of Vietnam, China and Thailand, the company said in its annual report.

The report also said that share holders had agreed at a meeting on January 30 to acquire two companies owned by NagaCorp’s Malaysian CEO Chen Lip Keong for a total of $369 million.

Those firms have plans to build a “hotel and gaming complex, a retail walkway and a tourist park” at a site next to NagaWorld casino, the report said.

NagaCorp was granted a 70-year casino license by the government in 1995 and has the exclusive right to operate casinos in Phnom Penh and the surrounding area.

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Increase in Special Economic Zone Occupancy

CBRE in the news:  Owen Willaims a Surveyor at CBRE has produced this months monthly ‘Marketview’ report, this month focusing on the Industrial sector.  The report has been used a the basis for the following article in the Property section of the  Phnom Penh Post:

The total occupancy rates in Phnom Penh’s Special Economic Zones (SEZ) have reached 50 percent in 2011, . The report stated that seven SEZs are now operational in Cambodia, while 15 remain in the development pipeline.

The Government has started to establish SEZs in order to attract foreign investors to Cambodia, especially near the Kingdom’s borders, according to Nguon Meng Tech, general director of the Cambodia Chamber of Comerce. They wanted to invest in those [border] areas because it was easier to do business, and because of the tax exemption in those regions, he said at a seminar earlier this month. Improveing political, economic and social stability, coupled with the government’s efforts to encourage further investments has led to and increase in occupancy rates, Nguon Meng Tech added. Despite restrictions on foreign land ownership, there are no limitations on foreign-owned companies. Among the benefits of the lease is a corporate income tax of 9 percent, full import duty exemption on raw materials, machinery and equipment and a nine year tax holiday, accodrding (demand is accelerating thus helping the growth of the sector) the CBRE report. The total values for investment projects in the SEZs increased 683 percent year-on-year in 2011, hitting US$715.25 million, according to figures released by the Council for the Development of Cambodia. Some insiders said, however, that while and additional 15 SEZs will enter the market in the coming years, supply is still lacking. “Demand is accelerating thus helping the growth of the sectoe although this could decelerate due to the low level of supply in the industrial rental market where demand outweighs supply rents will grow,” said CBRE surveyor Owen Williams. He added that SEZ’s are offering a good return for investors with yields reaching double digits.

CBRE continue to be at the forefront of the real estate market in Phnom Penh and Cambodia.

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Ratchaburi Electricity Generating Holding establishes presence in Cambodia

Ratchaburi Electricity Generating Holding has completed the acquisition of 50 per cent of ordinary shares of KK Power Co, marking its first foray into Cambodia.

The investment of US$500,000 (Bt15.3 million) was completed on Tuesday 21st February,2012.  KK Power is a developer of power plants in Cambodia.

In a statement released yesterday, Ratch CEO Noppol Milinthanggoon said the investment followed a thorough study and risk evaluation to ensure that it was worthwhile and would generate a reasonable return. The company foresees ample investment opportunities in the neighbouring country, where infrastructure demand especially in electricity capacity must be improved. Moreover, there is an opportunity to sell excess electricity to Thailand.

“KK Power has officially been granted permission by the Cambodian government to carry out a feasibility study to invest in power plants in Cambodia,” he said.

The new capacity in Cambodia is expected to help Ratch achieve its goal of raising its generating capacity to 7,800 megawatts by 2016

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Bank of Tokyo opens Phnom Penh office in Phnom Penh Tower

Japan’s second-largest bank, Bank of Tokyo-Mitsubishi UFJ, officially opened a representative office in Phnom Penh Tower (a building managed by CBRE) on Friday the 17th February. 

The office is intended to serve as an information centre for potential investors and it is hoped that more Japanese companies will be attracted to engaging in business enterprises within the Kingdom of Cambodia.

Masato Miyachi, general manager of the bank’s Asia and China division, said. “We will further develop in Cambodia by offering effective information geared towards the needs of our Janpenese customers,”

CBRE are pleased to welcome Bank of Tokyo, now the second Japanese bank to take-up their office in Phnom Penh Tower and are pleased to welcome such a prestigous tenant to the building and Cambodia.

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Total Approved Investment Jumps 159%

The total approved investment in Cambodia has jumped approximately 159 percent from 2010 to 2011 from $2.7 billion to US$7.021 billion , official data from the Council of the Development of Cambodia (CDC) showed.

The tourism industry and agricultural sectors saw dramatic increases of 1,993.57 per cent and 203.48 per cent respectively, the data showed.

It showed total investment in the tourism sector reaching $2.760 billion with 8 projects, up from $132 million the year before. Industry attracted $2.869 billion with 113 project, of which 78 were in the garment sector, compared to $945 million in 2010. The agricultural sector with 24 projects took in $725 million compared to $554 million in 2010, according to the data.

Experts said political stability and open economic policy were the two main factors behind the rise. Moreover, good economic performance in the region also contributed to the growth.

Stephen Higgins, CEO of ANZ Royal Bank, wrote in an email that positive growth in the economic outlook led naturally to a higher levels of investment.

“We are seeing a significant expansion in the manufacturing industry, which is a real positive for Cambodia,”he said.

The approved investment in the service sector declined by around 38 per cent from $1.059 billion to  $658 million in 2011, according to the CDC data.

Higgins said it was not a sector requiring an intensive level capital investment.

According to the data, investment from the United Kingdom stood at number one worth $2 billion on nitrogen-based chemicals, followed by local investment worth $1.93 billion. China came in third at $1.191 billion and Vietnam reached $631 million.

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Hun Sen Seeks $500M More in Chinese Loans

Phnom Penh Post, 15th February reported that just days after the government signed off on a new strategy aimed at limiting the level of publish debte, Prime Minister Hun Sen announced that the Cambodian Government would apply to the Export-Import Bank of China for $500 million in additional loans for seven new infrastructure projects.

The announcement comes just weeks after the International Monetary Fund (IMF) and the world bank raised concerns over the speed at which the government was racking up new debt. Mr. Hun Sen’s announcement also follows Cambodia’s decision last month to sign off on a separate $302 million  worth of loan financing from the same Chinese bank for infrastructure projects such as roads and bridges.

“Cambodia has submitted a proposal for seven projects with the cost of $500 million,” said Mr. Hun Sen during a speech at a groundbreaking ceremony for the expansion of National Road 6 to Banteay Meanchey province, which is being finance with $70 million in Chinese loans.

Mr. Hun Sen did not specify what projects the money would finance if granted.

Two-thirds of Cambodia’s total estimated debt of $3.3 billion is already from China.

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Japanese bank tests Kingdom’s waters

CBRE were out to support the opening of Japan’s Sumitomo Mitsui Banking Corporation (SMBC) on the 14th February, 2012.  SMBC has opened a representative office in Phnom Penh Tower, a building managed by CBRE, who among excellencies and other guests of notoriety welcomed the prestigious bank into the building and were all pleased to support the latest Japanese bid to expand investments and pursue interests in Cambodia’s still untapped markets.

Cambodia’s location at the heart of the Greater Mekong Sub-Region (GMS) is enticing to foreign companies, General Manager of Planning at SMBC Hiroshi Irie said.

“Japanese banks are now coming back to Cambodia after 45years. Cambodia is located in the centre of the GMS, which is a strategic position for trading in the region,” he said.

Chairman of the Japanese Business Association of Cambodia Hiromitsu Iwatate said that SMBC’s new opening reflected a growing trend amongst Japanese businesses looking to expands in Cambodia.

“Japanese companies have been increasing sharply in Cambodia over the last three years. It has risen from 50 companies [in 2009] to 100 now, even though the numbers remain small compared to Thailand and Vietnam.”

According to Suzuki Hiroshi President of the Business Research Institute for Cambodia (BRIC), the SMBC office will function primarily as an information office for Japanese investors.

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Premier Pushes Skyscrapers

The Phnom Penh Post reported on Friday the 10th of February, 21012, that Prime Minister Hun Sen has promised an accolade to the builder of Cambodia’s next sky scraper. 

Premier Hun Sen downplayed contention surrounding disputes on the construction of tall buildings near the Kingdom’s monuments and commented at the opening of the new Ministry of Land Management, Urban Planning and Construction, before hundreds of government officals that “Construction investments in Cambodia increased by about 105 percent in 2011, hitting US$1.73 billion….Curently, there are no problems with skyscrapers [in Cambodia] and I declare that I will grant a medal to the builder of the highest skyscraper,” The premier said.

With Vattanac Tower due to complete this year, the next highest skyscraper in Phnom Penh will face tough competition.

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