Herd of mobile milk cafés grows

The Cambodian owner of one of the Kingdom’s fastest-growing beverage chains said he is ready to take his mobile milk carts beyond the capital, and perhaps even into neighbouring countries as well.

Cheth Serey Sopheak, who launched his first Monsne Café mobile cart in April, said he has been inundated with requests to franchise the distinct blue-and-pink beverage carts, which specialise in drinks concocted with Hokkaido milk from Japan.

“There is no other milk like this in the world,” the 29-year old entrepreneur said yesterday. “It tastes sweet. It tastes lovable.”

Serey Sopheak said his first Monsne Café cart parked outside Chenla University in Phnom Penh sold over 3,000 cups of Hokkaido milk drinks during its first five days, far outpacing his expectations. The success prompted him to consider franchising.

According to Serey Sopheak, within two weeks of opening the Monsne Café brand to franchises on April 28, a total of 15 franchises were sold. Since mid-May the number of new franchise licences issued has slowed, but not the demand.

“I have to train everyone myself, so it takes time to launch each franchise,” Serey Sopheak explained. “I have over 500 people asking to buy franchises right now, but I go by trust. I need to trust that the people operating Monsne Café carts really love the drink.”

The original Monsne Café – offering coffee, tea and flavoured drinks made with Hokkaido milk – is still in the same place, but now seven franchised beverage carts operate in Phnom Penh. Another eight will open soon in the capital, while one cart is set to hit the streets in Siem Reap and another in Battambang.

Report shows need for Cambodia to diversify exports

Global credit rating agency Moody’s Investors Services said yesterday that while it has retained Cambodia’s B2/stable sovereign rating alongside Vietnam’s B1/positive rating, the Kingdom’s low diversification of exports has put it at higher risk from external shocks than its eastern neighbour.

In a report that compared economic development in Cambodia and Vietnam, Moody’s noted that while both countries share similar overall fiscal strengths, Vietnam’s larger and more diverse economy is underpinned by higher incomes and stronger institutions which provide better shock absorption.

Moody’s added that Vietnam’s continued robust growth and broad economic and financial stability should cap its government’s relatively elevated debt.

As for Cambodia, while it has smaller fiscal deficits and a lower government debt, which provide it large access to concessional loans, the economy is still constrained due to its dependence on garment exports.

“Garment and textiles production and a few other low value-added manufacturing dominate Cambodia’s exports, which are largely destined for the US and the European Union, exposing the economy to sector- and market-specific shocks,” the report said.

The report added that despite Cambodia undertaking government reforms and increasing its tax collection efforts, Cambodian institutions face greater challenges than Vietnamese institutions in weeding out corruption and enforcing the rule of law, which in turn affects the ability of the Kingdom to deliver a high credit rating.

Additionally, Moody’s placed Cambodia at a higher level of political risk than Vietnam based on the fact that foreign direct investment (FDI) could be hindered if tensions between Cambodia’s ruling party and opposition stand in the way of its reforms.

“Should political tensions lower the impetus for reform to address institutional weaknesses, that would be credit negative,” Moody’s said.

Nevertheless, Miguel Chanco, lead Asean analyst for the Economist Intelligence Unit, said Cambodia could diversify its export basket to make it more resilient to shocks if it properly invested in educational reforms and increased government spending.

Cellcard service beats out rivals: OpenSignal analysis

A recent analysis of Cambodia’s top three cellular service providers conducted by OpenSignal, a wireless coverage mapping company, suggests that CamGSM’s Cellcard is the highest-performing cellular provider in Cambodia, receiving more recognition for its services than either Viettel’s Metfone or Smart Axiata.

OpenSignal, which crowdsources data from phones that have installed its applications, collected data from 8,414 smartphone users in Cambodia between April 1 and June 30 and analysed over 80 million data points to determine comparisons between Cambodia’s cellular companies based on 3G and 4G download speed, latency, and availability.

According to the report, Cellcard stands out as being the best in both 4G and overall download speeds. In other categories the distinction was not so easily awarded: both Cellcard and Metfone tied for best 3G download speeds, while both Cellcard and Smart tied for greatest 4G availability. All three companies had similar levels of 4G and 3G latency, meaning each company experienced similarly small delays in transference of data from networks to individual phones.

“The competition is materially tightening and is pointing toward a two-horse race between Smart and Cellcard,” said Anthony Galliano, CEO of Cambodian Investment Management. “We are seeing Smart and Cellcard establish themselves as top tier in the field.”

Cambodian service providers only introduced LTE coverage in 2014, but LTE availability has spread across the country quickly and OpenSignal’s LTE Report on the first quarter of 2017 noted that overall, Cambodian cellular service users have been able to access an LTE network 63.3 percent of the time.

While 4G is more available in the country than ever before, connection speed in Cambodia remains markedly lower than most other countries. With a typical speed of 5.7 megabits per second (mbps) across all networks, Cambodia’s connection speed ranked among the slowest of the 87 countries OpenSignal analysed in its report.

“As Cambodian operators add more capacity to their networks, 4G speeds will increase to match LTE’s growing reach,” said OpenSignal analyst Kevin Fitchard in the report.

According to Galliano, competition between Cambodian mobile providers is directly linked to the progress networks have made in recent years.

JC Airlines adds fourth jet to a growing fleet

JC International Airlines received its fourth Airbus A320 yesterday, with one more Airbus set to arrive this year before the company more than doubles its aircraft lineup in 2018, the brand manager for the airline said yesterday.

“Because of the huge growth of international arrivals and the domestic tourism industry, we will keep on bringing in new planes to meet the market demand,” said Cheav Kirirom.

JC Airlines, which is part-owned by Yunnan Jingcheng Group, inaugurated service in March of this year and currently offers international flights to Malaysia, China, Vietnam, Thailand and Taiwan. The operator plans on running scheduled service to Singapore next month.

Yunnan lays out plan for airport in Siem Reap

Yunnan Investment Holdings Ltd (YIHL), the Chinese state-run company that plans to build Siem Reap’s new international airport, will begin construction next year and over the course of three phases, Sinn Chanserey Vutha, spokesman of the State Secretariat of Civil Aviation, confirmed yesterday.

The company will invest $500 million into the first and second phase, and $300 million for the third phase. The airport should take two to three years to complete, Vutha said, adding the company was currently clearing the 750 hectares of land that sits 50 kilometres away from Siem Reap.

Yunnan lays out plan for airport in Siem Reap

Yunnan Investment Holdings Ltd (YIHL), the Chinese state-run company that plans to build Siem Reap’s new international airport, will begin construction next year and over the course of three phases, Sinn Chanserey Vutha, spokesman of the State Secretariat of Civil Aviation, confirmed yesterday.

The company will invest $500 million into the first and second phase, and $300 million for the third phase. The airport should take two to three years to complete, Vutha said, adding the company was currently clearing the 750 hectares of land that sits 50 kilometres away from Siem Reap.

Capital’s port shows profit growth for H1

The capital’s listed port operator, Phnom Penh Autonomous Port (PPAP), reported net profits of $1.6 million for the first half of 2017, a 2.5 percent increase compared to the same period last year.

PPAP said in a filing to the Cambodia Securities Exchange yesterday that total revenue increased to $8.2 million during the first half, compared to $7.5 million a year earlier.

Garment maker GTI posts falling numbers

Taiwanese-owned garment manufacturer Grand Twins International (GTI) posted a 0.88 percent drop in revenue for the second quarter this year that led to net profits plummeting by 54 percent compared to the same period last year, according to a release on Cambodia Securities Exchange yesterday.

Revenue for the second quarter amounted to $24.8 million, down $220,000, with net profit falling by $1.1 million to $928,170. Meanwhile, half-year performance showed revenues increasing overall to $42.3 million with net profit at $1.2 million, nearly $2.4 million less than the company made during the first six months in 2016.

The company’s share price remained unchanged yesterday at 4,080 riel ($0.99) with no trading activity.

Sihanoukville port shows solid growth for quarter two

Newly listed Sihanoukville Autonomous Port reported that total revenue for the second quarter of this year reached $13.3 million, a 5 percent increase compared to the same period last year, according to a filing yesterday on the Cambodia Securities Exchange.

The 5 percent increase in revenue amounted to $620,000, and led the state-run company to earn a net profit of $119,000. For the first six months of this year, the company generated $25.4 million in revenue, up 2 percent ($510,000) compared to the same period last year.

Agriculture Ministry to ink $50 million mango pact

The Agriculture Ministry is set to sign a mango export investment deal with a Chinese firm worth up to $50 million, the second such deal in the country, Agriculture Minister Veng Sokhon said yesterday.

Sokhon said the agreement with Weighai Dragon Union Agriculture Co Ltd was expected to be signed next month after the company presented a $40 million to $50 million plan to package fruit from Kampong Speu province to export to China and Japan.

“I’m confident that our mangoes will find a strong market,” Sokhon said, adding that Weighai Dragon also proposed setting up an agricultural bank to help farmers expand their cultivation.

“First they’ll focus on the mango exports, and then they will look at other potential fruits in Cambodia,” he added.

A local subsidiary of Hyundai Corporation, the South Korean conglomerate best known for producing cars and SUVs, was the first company to invest in mango exports, Sokhon added.

Hyundai CNF Inc is targeting markets in South Korea and Japan, and will begin operations at the beginning of next year, Sokhon said. The company has invested $4 million in developing a processing and distribution centre in Kampong Speu province to wash, process and package mangoes grown on Hyundai’s 400-hectare plantation as well as on local partner Mao Legacy’s 2,000 hectares of mango farms.

Mong Reththa, vice chairman of the board of directors at Mong Reththy Group Co Ltd, said mangoes currently had the most potential for the international market, but farming techniques needed to be improved.

“In order to reach the international market, we need to have techniques and standards for maintaining a mango farm, then focusing on packaging and freezing,” he said.

The foreign investment deals would help spur family farms to adopt more technical methods and “add value for the farmer”, Reththa said. Kingdom Fruits International Co Ltd, a sister company of Mong Reththy Group, was the first to export mangoes abroad.

Telecom regulator to steer clear of service providers’ price war

After a year of toothless warnings against below-cost mobile deals – which it previously called “suspicious” and “unfair” – the country’s telecommunications regulator yesterday capitulated, instead beseeching operators to steer clear of confusing marketing and maintain the quality of their services.

The Telecommunication Regulator of Cambodia (TRC) will no longer attempt to intervene in what was earlier dubbed an “epic price war” between mobile network operators, it said yesterday, explaining that users were benefitting from lower prices.

Im Vutha, TRC spokesman, said the situation was under control – even if the same deals persisted – and providing benefits to the public.

“If there is a sign that one operator is dominating the market and could potentially lead the market exclusively, we will intervene,” Vutha said, adding that currently all operators were able to run their businesses profitably.

“So far, the lower cost of internet services being provided by telecom operators has been a benefit for other sectors, like payment services, financial services, e-commerce and online shopping,” he said.

Early this year, competition between the sector’s bigger players – notably Smart Axiata and CamGSM’s Cellcard – saw the launch of promotional packages allowing subscribers to exchange $1 for more than $100 worth of on-network data, calls and messaging services. The TRC said at the time that the “unfair pricing” was preventing new entrants from being able to cover their costs.

Vutha said yesterday that the regulator’s priority had turned to increasing public awareness about the possible consequences of a price war. As operators compete on price, Vutha observed, service quality can become poorer.

TRC officials had been receiving complaints from the public about poor service, and confusing promotions that have caused subscribers to lose money on their accounts, he said.

Chhin Sreynet, a 27-year-old snack vendor in Phnom Penh, said she enjoyed the benefits of the promotional deals, and spent no more than $5 per month for all her calls and data.

“It’s much cheaper than several years ago,” she said. “Now, I don’t need to ask for WiFi passwords when hanging out at shops or restaurants, because the internet package I have is enough.”

Teng Sokha, a 55-year-old sugarcane juice vendor, however, said she does not use the internet and had lost money on her account after refilling it because it was connected to a promotion that he had not intended to subscribe to.

“Sometimes I refill my account for $5, but I only see $3 left,” he said.

Ian Watson, chief executive officer Cellcard operator CamGSM, said he welcomed the TRC alert, agreeing that it was important to take a holistic view of the market and assess plans and promos on whether they were being communicated transparently.

“I can assure you that at Cellcard we do not deduct any balance without the customer subscribing to a service,” he said, adding that if there is any question about subscriptions, users can check with the company’s contact centre to clarify.