The third quarter of this year involved some consolidation in the banking and finance sector, while there were mixed signals from economic indicators.

A cooling wind blew in from the property sector in late August with a large Singaporean property developer putting a residential development on hold, in what pessimists believe may be the first signs of tightening in Cambodia’s formerly surging property market.

1 July

Taiwan’s E.SUN Commercial Bank said it plans to purchase the remaining 25 percent stake in Union Commercial Bank for $39.9 million, giving it full ownership of the small Cambodian lender.

Founded in 1994, UCB has 11 branches in Cambodia with over 450 staff. The bank had $671 million in total assets at the end of 2015, with $438 million in deposits and $428 million in outstanding loans.

5 July

The World Bank officially revised the status of Cambodia’s economy, moving it up a rung from the low-income bracket into lower-middle income territory – a reclassification that economists expect will lead to a scale-back of foreign aid and preferential trade access over the coming years.

Low-income economies are defined as those with a gross national income per capita of less than $1,025 in 2016, while lower-middle-income countries are those between $1,026 and $4,035.

14 July

Cambodia’s tax department said it collected $829 million in tax revenue during the first half of the year, 18 percent more than during the same period a year earlier, led by surge in profit-tax revenue.

Figures provided by the General Department of Taxation did not break down the revenue share by tax category, but indicated that profit-tax revenue soared 58 percent during the period.

29 July

Foreign direct investment (FDI) to Cambodia over a 20-year period – from 1994 to 2014 – was estimated to have reached $19.2 billion and was heavily weighed by inflows of capital from China, according to the first-ever comprehensive survey on FDI.

The National Bank of Cambodia and National Institute of Statistics jointly conducted the survey in an effort to provide a definitive data set on FDI that reflects the actual investment situation in the country.

Asian countries accounted for nearly 90 per cent of the estimated $19.2 billion. China, included together with Taiwan, Hong Kong, and Macau, contributed 44 per cent of the total.

9 August

The industry body for the nation’s garment and footwear manufacturers said new trade data showing a decline in Cambodian exports to the US during the first-half of the year was a sign that the Kingdom was losing its competitive advantage, threatening the future of its $6 billion garment industry.

The latest US government census trade data indicate that Cambodian exports to the US from January through June totalled $1.3 billion, down from nearly $1.5 billion during the same period a year earlier. The 8 percent decline represents the first contraction in US-bound exports in five years.

10 August

Cambodia was listed in a new report as the highest-risk nation in ASEAN, and ranks sixth globally, for its susceptibility to money laundering and terrorism financing in a global index that charts the vulnerability of 149 nations.

The report said Cambodia has structural vulnerabilities within the financial sector, a weak judicial system and suffers from high rates of corruption.

16 August

The National Bank of Cambodia forecast a 7.1 percent GDP growth for the rest of 2016.

The bank highlighted the strength of the Kingdom’s banking sector, which is a major boost to the economy. Bank deposits and loans reached 67 and 80 percent of GDP respectively for the first-half of the year, while inflation remained low at 2.8 percent over the period.

23 August

Industrial park operator Phnom Penh SEZ, which became the fourth company on Cambodia’s stock exchange when it listed in May, released its audited 2015 annual report and 2016 half-year financials, reporting declines in revenue and net profit over the past 18 months on slower land sales.

The company’s much-delayed 2015 annual report showed revenue fell by nearly 30 percent to $16.4 million in 2015, compared to $23.3 million a year earlier. The bulk of this loss was attributable to a decline in sales of industrial plots in its 357-hectare special economic zone (SEZ) on the outskirts of the capital.

29 August

The Singaporean developer behind The Bay, a $500 million mixed-use real estate project on the capital’s Chroy Changvar peninsula, announced it was putting the residential phase of the project on hold due to unfavourable market conditions.

“There is a heightened risk of oversupply of condominiums as condominium supply is expected to increase significantly through to 2018,” said developer TEHO International.

“In the best interests of the group’s ‘The Bay’ project … the group and its joint venture partner have decided to put on hold the residential development phase of the project.”

By September, a tax audit of NagaWorld revealed the gaming operator had paid $15 million to settle a tax bill for its non-gaming business. Heng Chivoan

30 August

The government was conducting an audit of NagaWorld in Phnom Penh to assess its tax liabilities on non-gaming operations after finding “discrepancies” last year that prompted the first-ever government probe of the landmark casino and entertainment complex’s finances.

“The audit is ongoing and we have yet to finalise how much NagaWorld owes for their non-gaming operations,” said Ros Phirun, deputy director of the finance industry department at the Ministry of Economy and Finance (MEF). “The reason why we are doing this is because we found last year that they needed to pay more [in taxes].”

In mid-September, it emerged that NagaWorld paid more than $15 million to settle its tax liabilities on non-gaming business operations following the government audit.

5 September

New data released by Cambodia’s independent credit reporting agency indicated a significant slowdown in the rate of lending during the second quarter of the year, a sign that banking industry experts claim is due to a tightening of lending criteria and less seasonal demand from the struggling agricultural sector.

The Credit Bureau Cambodia (CBC) said in its inaugural quarterly publication that overall credit applications – which include personal finance, credit cards and mortgages – decreased by 25 percent during the second quarter of the year. Personal finance and mortgage applications decreased by 26 percent and 10 percent, respectively, since the first quarter.

14 September

In a milestone for Cambodia’s nascent mining industry, the government issued the first commercial mining licence to Mesco Gold, giving the Indian mining firm a green light to extract and process ore at its gold project in Ratanakkiri province, industry sources said.

The landmark approval by the Ministry of Mines and Energy marks the first time for an extraction licence has been issued under a new regulatory framework, and is the final step for Mesco Gold to bring its Phum Syarung mine into production.

14 September

Thailand’s Bank of Ayudhya officially reached an agreement to acquire the full shareholding of Cambodian microlender Hattha Kaksekar Ltd, a banking executive said, while declining to disclose the value of the landmark deal.

In a statement released in January, Bank of Ayudhya announced its intention to acquire HKL in a deal reported to be valued at upwards of $140 million. The spokesman said the figure revealed in the past was incorrect. However, he declined to put a value on the deal.

20 September

The Association of Banks in Cambodia (ABC) launched a banking sector initiative that aims to advise Cambodia’s financial sector on best practices for sustainable lending while capitalising on the growing pool of international funds that could flow into green and socially responsible projects.

Supporting partners for the initiative includes the US AID-funded project Mekong Partnership for the Environment, which is managed by the international NGO PACT, the Wildlife Conservation Society, and the private investment firm Mekong Strategic Partners.

The Sustainable Finance Initiative will conduct two years of research to identify best practices that can be applied by financial institutions when formulating their lending policies, such as ways to mitigate the damage associated with infrastructure, energy and large-scale agribusiness projects.

The initiators hope that the two-year study’s findings will prompt Cambodia’s commercial banks and microfinance institutions (MFIs) to adopt environmentally credible lending platforms that would boost the Kingdom’s investment reputation.

26 September

The list of international insurers tapping into the Kingdom’s market keeps growing, with Bangkok Life Assurance – Thailand’s sixth-largest insurer in terms of market share – slated to enter the market with its life insurance policies by the beginning of 2017. Still a small market pool, the insurance industry promises much remuneration in the years to come.

The Thai insurer was granted by the Cambodian government a license earlier this year, with a joint venture amounting to $7 million in registered capital with a local subsidiary.

Life insurance companies in this country are at a modest number of four now, but the total premium was recorded at $18.5 million in the first half of the year, according to the Insurance Association of Cambodia.