VN deal could draw $6bn investment

Photo by: Heng Chivoan

Guards keep watch in front of the Bank for Investment and Development of Cambodia, a Vietnamese-owned entity set up to help channel Vietnamese investment into Cambodia.

28/12/2009
Nguon Sovan and Ellie Dyer
Phnom Penh Post

VIETNAM and Cambodia have made progress on business deals that some say could attract more than US$6 billion worth of investment to the Kingdom.

Sok Chenda, secretary general of the Council for the Development of Cambodia (CDC), the government’s key investment body, said a memorandum of understanding promoting investment and cooperation between the two nations was inked at a conference held in Ho Chi Minh City on Saturday to guide proposed investments from Cambodia’s eastern neighbour.

It was signed by Cambodian Minister of Commerce Cham Prasidh and Vietnamese Minister of Planning and Investment Vo Hong Phuc.

However, Sok Chenda warned Sunday that no deals were actually finalised at the investment forum, which was co-chaired by Prime Minister Hun Sen and Vietnamese premier Nguyen Tan Dung and attended by 600 businessmen. However, it “did clearly promote potential opportunities in Cambodia”, he said.

Bauxite gold mine
One potential project identified at the forum could account for $6 billion in investment on its own, at least according to Vietnam’s commercial consular in Phnom Penh.

That project, a proposal by Alumina Cambodia Vietnam Co to explore bauxite mining in Cambodia’s Mondulkiri province, received support Saturday by the Vietnamese Minister of Industry and Trade Vu Huy Hoang and the Cambodian Minister for Industry, Mines and Energy Suy Sem.

Hun Sen told the conference that the energy ministry issued the firm an exploratory licence for the project on December 23, adding: “Cambodia is receptive to local and foreign investment in all sectors, including banking, insurance and telecommunications – where many countries around the world do not allow 100 percent investments without entering into a national joint-venture agreement.”

Vietnam’s commercial consular in Phnom Penh, Le Bien Cuong, said Sunday the bauxite investment alone could be worth up to $6 billion.

“If the investment materialises, the bauxite exploitation project alone will cost $2.5 billion in its first phase and $3.5 billion in the second phase,” he said. “I believe that this can be achieved in the next two or three years.”

The scale of the proposed investment could not be verified Sunday. For comparison, a Chinese consortium recently announced plans to invest $5 billion to $6 billion in a Bauxite mine and refinery near the city of Yaounde, Cameroon, according to industry Web site chinamining.org.

However, that investment, which is expected to produce between 4.5 million and 9 million tonnes of the aluminium ore per year, included an 860-kilometre railway to the nearest port.

Sok Chenda added that Cham Prasidh has this year granted licences to four Vietnamese investment projects in the Kingdom: a sugarcane plantation feeding the sugar and ethanol plant in Kratie, a project to buy milled rice to be processed and packed for export, a rubber plantation and a plywood project.

The Bank for Investment and Development of Vietnam (BIDV) also signed a deal at the forum to provide financial services to Vietnamese businesses investing in Cambodia.

This was followed by Hun Sen’s opening of Ho Chi Minh City’s first Bank for Investment and Development of Cambodia (BIDC) on Saturday. The Phnom Penh branch was inaugurated in July.

Pushing investment
BIDC, which is owned by BIDV, is intended to act as a conduit between the financial systems of Vietnam and Cambodia, promoting trade between the neighboring business communities.

Since it arrived in Cambodia, the bank has been central to a number of major investment proposals.

It has also extended a $40 million credit line to mobile phone operator Metfone, which is owned by Viettel, a subsidiary of the Vietnamese military, to finance expansion of its mobile-phone network.

Sok Chenda said that Vietnamese investors have to date poured $900 million into 63 projects in Cambodia, citing figures from the Vietnamese ministry of planning and investment.

These include a $100 million investment by Vietnam Airlines in Cambodia Angkor Air.

This makes Vietnam among the top three foreign investors in the Kingdom, behind China and South Korea, he said.

Vietnamese investments in Cambodia include agro-forestry; agro-industry, especially rubber and sugar plantations; agriculture; mining; telecommunications; banking; and insurance.

According to the Vietnamese embassy in Phnom Penh, two-way trade between the countries has increased significantly in recent years, reaching $1.7 billion in 2008, up 40 percent from 2007.

Bilateral trade, however, fell an estimated 29.7 percent to US$1.049 billion in the first 10 months of 2009, compared to 2008.