From stocks to smartphones to microfinance, experts weigh in with their predictions at the start of the new year

Thomas Hundt, CEO, Smart Axiata

While we indeed see saturation in terms of subscribers, the majority of mobile subscribers in Cambodia do not use the internet actively yet. With fast 3G and ultra-fast 4G LTE mobile data networks available nationwide – not only in provincial capitals but also in cities like Udong, Poipet, Skun, Mongkul Borey, etc – and supported by a rapidly increasing smartphone penetration, mobile Internet is the growth area for the mobile telecom industry in the next few years.

There is no particular difference between the habits of Cambodian customers and world market trends around mobile communications. The internet with its literally unlimited possibilities changes the game. While subscribers used their phones only for calling or sending texts a few years back, the usage habit of smartphone users is totally different. Calling is secondary, while social networks, messenger apps and games let the subscribers hold their smartphones in hand all the time.

Chea Serey, National Bank of Cambodia director general

In 2015, the global economy experienced an uneven and slower growth than previous years. Among the developed economies, the US grew robustly while growth in Europe and Japan remained tepid. Cambodia has been developing herself by implementing comprehensive reform programs and other economic policies over the years.

Robust economic growth this year will lift Cambodia’s economic status to lower-middle income in 2016. Cambodia is expected to sustain this growth amid emerging challenges such as erosion of export competitiveness due to the US dollar appreciation, increased minimum wage in the garment sector, implementation of the Trans-Pacific Partnership, economic liberalisation in Myanmar and the slowdown in China and the EU.

With the expectation that the volume of crude oil supply is stable and the demand for crude oil remains low, crude oil prices are expected to be low in 2016, which will contribute to lower inflation in the region and in Cambodia.

To support the government’s policies in alleviating poverty by more than 1 per cent a year and to comply with ASEAN initiatives post-2015, the NBC will implement policies to promote financial inclusion, which means widening the availability of formal financial services with reasonable prices. Recently, the amount of the adult population who had access to financial services was half the total adult population.

Kim Heang, CEO of Khmer Real Estate

Looking at 2016, the number of borei developments for the Cambodian middle class will be as good as 2015, though there will be more competitors. There could be a little worry for high-end condo projects, because their projects are too big, and I am not sure that they can finish the projects or sell the units.

Prices going into next year will depend on the demand and supply in the market. Most of the current borei and condos are on the higher end price-wise and there are a lot of people who want to buy but they do not have capacity to buy. Real estate prices in Phnom Penh have already reached a peak.

By 2018, there will be around 18,000 to 20,000 condos in Phnom Penh. This is too much for the current market, especially local investors. But this will change with the ASEAN integration, as the total market then will be 600 million and not 16 million. It is only a matter of how we can attract investors here.

Svay Hay, CEO and president of Acleda Securities

The third listing on the Cambodia Securities Exchange (CSX) is an additional contribution and a key change for the market. Many investors are satisfied with getting guaranteed dividend yields and stock price movements. This model may lead CSX to see better days ahead in 2016 and welcome a few more companies to go public.

With the incentives provided by the exchange, more companies are on cue for pre-listing preparations. Other qualitative incentives are needed, such as training and public awareness, wide dissemination of information and media support. 

Derivatives trading is on the move. Now that derivatives are properly regulated, trading in derivatives will be a leading trend and contribute to increasing the rate of existing trading. Derivatives will attract many speculators, traders, and value-approach investors to the securities market.

Keo Mom, CEO of LyLy Food Industry

This year will be a great opportunity for Cambodian small and medium enterprises (SME) as they will be able to export their products within ASEAN, given that there are no tariff barriers now. We also need to strengthen out phytosanitary standards if we are to take advantage of this opportunity.

The government needs to do this to ensure that we are selling safe products and meeting health safety standards expected in other countries. Other ASEAN countries have worked on improving their phytosanitary standards and we have not done enough so far. This makes it easy for countries to export their products, which is not the case in Cambodia. One of the challenges in the local market is to increase the quality of our product offerings, otherwise neighbouring countries will sell their products here and this will impact smaller businesses.

Song Saran, CEO of Amru Rice

We are optimistic for rice exports in 2016, but we will not see much increase, at most 550,000 tonnes compared to the 500,000 tonnes exported in 2015. The government needs to take action to lower the cost of rice production. They should reduce electricity costs, give rice millers VAT exemption, and develop warehousing capacity in the country, especially at ports, so that we can stockpile rice for exports.

We need to increase our exports to China and Malaysia, but other countries, such as Pakistan, Thailand and Vietnam, will challenge us. We will also face stiff competition from Myanmar for European Union exports, but quality-wise, Cambodia has better rice.

With El Nino having an impact this year, the yield of paddy rice will decrease in 2016. However, Cambodia will not confront any food shortages, because we have ensured food reserves for the local population. While farmers will not see much increase in their incomes next year, they could see a 5 per cent price rise in the cost of white rice, which could help them earn a little more.

Meng Saktheara, secretary of state at the Ministry of Mines and Energy

Last year was a year of establishment when many institutional and legal frameworks were put in place. So this year we are looking forward to a new mission that will increase stakeholder engagement.

Mesco Gold is progressing well. I believe they will start mine extraction by mid-year and they will also complete the environmental impact assessment and environmental and social management plan. For Kris Energy, we have some way to go, but hopefully we can sign the agreement within the first quarter this year. From the government side, we will push the adoption of the petroleum law, and on the company side, they will have to present the project to their board to get the final investment decision to go ahead with the project.

Grant Knuckey, CEO ANZ Royal Bank

I believe 2016 will be a year of slower growth for the banking sector. Credit will still grow but I suspect well below the levels of recent years. There are two primary reasons for that. One is that the regional economic slowdown is beginning to show up in local business activity levels. Second is that the National Bank of Cambodia is implementing the Liquidity Coverage Ratio framework, and that is going to force banks to think much more carefully about lending decisions and deposit raising. These will all serve to slow growth and reduce margins in the sector.

For many of the unbanked, non-banking services, such as mobile payment operators, will be a better fit. The big question the banking sector should be asking itself is “what are we going to do with all these branches we have built?” because a lot of that space will be redundant in three to five years as transacting migrates online. 

I believe consolidation [in the banking sector] will be driven as much by the profit imperative and the need to re-capitalise as it will be by the ASEAN Economic Community. There is already a tier of banks here that are unsustainable commercially, and at some point over the next one to two years, they are going to have to find new capital and capability.

Bun Mony, president of the Cambodian Microfinance Association and CEO of Sathapana

Based on statistics for the first nine months, microfinance institutions (MFI) have grown more than 30 per cent in 2015, and the expectation is it will have grown 40 to 45 per cent by the end of 2015. To maintain this positive growth in 2016, the Microfinance Association of Cambodia will continue to strengthen cooperation between operators and provide new and convenient services to customers. This year, we plan to increase the number of ATM machines across the country and make sure that ATM cards work across all ATM machines in the country.

There are more than 40 MFIs in the country, with eight of them accounting for 80 per cent of total capital in the market. We don’t know how many MFIs will start next year, but we want to see that the newcomers have enough capacity and resources to compete with existing MFIs.

Thong Khon, Minister of Tourism

In 2015, we attracted 4.8 million visitors to Cambodia, and by 2020, we hope to reach 7.5 to 8 million foreign tourists. Next year, we will try our best to maintain an 8 to 10 per cent growth rate. To achieve this we need to develop more tourism products, such as ecotourism, and strengthen our service quality to a “one service, one standard” mark.

Online marketing and promotion is also in our plans for next year. We will reply to all comments on Facebook and make it easier for operators to cut unnecessary costs. The ministry is looking to promote attractions beyond just Angkor Wat and the coastal areas in the south and ecotourism in the northeast will become big tourist attractions. Creating a second home policy will attract people looking to retire here.

With ASEAN integration, there will be an increase in Chinese and Indian traveler as well as intra-ASEAN visitors, who currently account for 40 per cent of all tourists to the country.