Overbanked Cambodia tries to regain momentum
The number of commercial banks has increased from 17 to 27 in the past two years. New government measures aim to force consolidation. Meanwhile, though, many are reluctant to lend, and local businesses are suffering. Lawrence White reports from Phnom Penh.
A COUPLE OF hundred metres past the airport on the way out of Phnom Penh, a bright orange sign and a showroom filled with small demonstration walls mark the location of the sales office of Primoris Brick and Paving Company. Rob Brough, an Australian lawyer-turned entrepreneur, launched the venture three years ago as the country’s construction boom was gearing up, offering a higher-quality brick than was usually available locally. By the time he was ready to start serious production the financial crisis had hit and only one of four planned factory lines is now active.
The business is ticking over nicely now, says Brough, thanks to some timely diversification and careful cost management but he is still excited by the sector that many locals see as Cambodia’s future – agribusiness – and is talking to funds whose main problem is finding projects large enough to use the amounts of capital they want to deploy.
The Cambodia story is fundamentally a positive one despite the economic slowdown, says Doug Clayton, manager of private equity fund Leopard Cambodia. Marvin Yeo at Frontier Investment & Development Partners says his firm’s Cambodia fund is near to a first close and that investors remain interested.