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National Bank Cambodia projects 7 pct economic growth in 2019

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Chea Serey, NBC’s director general, speaks to reporters in Phnom Penh. KT

In 2019 the Kingdom’s economy will grow at a rate of 7 percent, according to the nation’s Central Bank, who noted in its latest report that such growth may be weakened by a number of internal and external factors, including the potential cancellation of the Everything-but-arms (EBA) scheme with the European Union.

The National Bank of Cambodia (NBC) has forecasted robust economic growth in 2019, just marginally lower than last year, when, according to the government, it reached 7.3 percent.

Its report on the state of the Kingdom’s economy and the local banking sector in 2018 and 2019, released Wednesday, said this year the inflation rate will remain at 2.6 percent, while foreign reserves are expected to reach $11.3 billion.

Uncertainty regarding Cambodia’s EBA scheme with the EU and the implementation of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) are listed by NBC as possible risks to achieving 7 percent growth.

The report also mentions the possibility of new free trade agreements between with the United States or the EU and countries that directly compete with Cambodia in trade, which would also limit the Kingdom’s economic expansion in 2019.

As for internal risks, one of the biggest worries is an overreliance on the construction sector for growth, which is also burdened by high credit growth. By the end of the year, credit in the construction sector is expected to grow at 31 percent.

Other internal factors are high production costs, small economies of scale, limited access to power, the high cost of electricity and a minimum wage in the garment sector that continues to increase every year.

“To face these threats, the Central Bank will work alongside the government to reform and diversify the economy, provide a favorable investment environment, and develop the economic sector efficiently,” the report noted.

“NBC will work to strengthen trust and develop the banking system efficiently while stabilising prices in line with our development strategy for the financial sector for the years 2016–2025.”

Aun Pornmoniroth, the Minister of Economy and Finance, told Khmer Times that trade has been instrumental in achieving a 7.3 economic growth rate in 2018.

He said Cambodia now exports to 147 countries, with international shipments representing more than 60 percent of the country’s gross domestic product (GDP). At the same time, Cambodia now buys from 135 countries, with exports last year valued at $13 billion.

“We hope to see more cooperation among key actors, including ministries, officials at all levels, and the private sector to enable the fourth phase of the government’s Rectangular Strategy to be a success in the sixth mandate, and to have a very productive 2019,” Mr Pornmoniroth said.

In its report, NBC projects credit growth in the banking sector to reach 17.1 percent, adding that financial inclusion will continue to grow, helping to reduce poverty.

In Channy, president of Acleda Bank, one of the largest commercial banks in the Kingdom, told Khmer Times he expects 2019 to be a great year for Cambodia’s financial sector.

“We still have the three most important factors: economic, social and political stability, which are fundamental for growth in the financial sector.

“2019 will be one of the best years for Acleda Bank since, according to government and World Bank projections, the economy will continue to grow at a very fast pace,” said Mr Channy.

According to the Central Bank’s six-page analysis, in 2018, the garment, construction, and tourism sectors experienced double-digit growth, while foreign direct investment expanded by 12 percent, mostly, going into the banking, real estate, and garment sectors. This contributed to expanding the balance of payment surplus to 4.5 percent of GDP.

posted Jan 9 by Sanjay Rawat

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2018 was a great year for Vietnam’s economy.

The country’s business environment grew tremendously at the start of the year with over 26,000 new enterprises established. In addition to that, the government there highlighted that foreign direct investment (FDI) disbursement reached over US$3.8 billion in the first three months of the year, up 7.2 percent from 2017. Overall, the socialist state’s gross domestic product (GDP) grew by 7.1 percent year on year in the first six months of 2018 – the fastest growth recorded since 2011.

Among the best performing sectors was manufacturing, with an output growth of 13 percent in the first half of the year. Despite the ongoing trade war between the United States (US) and China, Vietnam’s exports soared. The Communist state recorded export revenues estimated at US$244 billion, an increase of 13.8 percent from the previous year.

Rapid growth

Vietnam’s rapid growth over the past decade is mostly due to the country’s move away from a strict controlled economy to a more liberal system. For the past decade, the country has taken on reforms like deregulation which has seen an influx of private enterprises and foreign investment.

The economic reforms carried out by the Communist Party has made Vietnam one of the region’s fastest growing economies. The World Bank also pointed out in its Global Economic Prospects report that Vietnam is one of six countries in East Asia with real GDP growth of more than six percent.

imageSource: Vietnam Briefing

In 2018, the government announced further reforms to Vietnam’s economy. Earlier in the year, in an effort to make Vietnam more regionally competitive, Prime Minister Nguyen Xuan Phuc revealed that the country would cut corporate income tax rates from between 20 to 22 percent to 15 to 17 percent. Furthermore, in March, the Ministry of Transport proposed to enhance services in maritime areas and multi-modal transportation by easing business conditions and regulations. If the ministry’s proposal goes through, 314 out of the current 500 regulations will be cut.

Another notable step Vietnam has taken to open up its economy is by signing the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which the World Bank has estimated will increase Vietnam’s GDP by as much as 3.5 percent.

New targets for 2019

The Communist Party’s General Secretary, Nguyen Phu Trong has called for increased efforts to meet a higher growth rate than 2018. “This will be a heavy task, and all of us must do our utmost to realise this target,” he said.

The targets for 2019 will not just revolve around the country’s GDP, the government has also set various socio-economic goals. For example, it has set a target of reducing poverty by one to 1.5 percent. Last year, the target was between one and 1.3 percent, which the government exceeded at 1.5 percent. Other targets include keeping unemployment below four percent and to increase the percentage of the population with health insurance coverage to 88.1 percent.

Poor political reforms

Despite stellar growth, Vietnam’s political reforms have not really matched the reforms seen in its economy. Rights groups have often criticised Vietnam for its treatment of bloggers and dissidents. According to Human Rights Watch (HRW), the government there convicted and imprisoned at least 27 rights bloggers and activists under various abusive laws in the first six months of 2018.

“Vietnam seems to be contending for the title of one of Asia’s most repressive governments,” said Phil Robertson, deputy Asia director of HRW.

Vietnam has also introduced a new law which came into effect on New Year’s Day which observers say effectively criminalises criticising the government online. The law also allows the government to force internet providers to give them user data when demanded.

Vietnam may be enjoying its highest economic growth in modern times, but reforms are needed to ensure the Communist Party stays accountable. The state has taken great strides to increase the nation’s wealth, but what’s the point of prosperity if its citizens are not free to exercise their rights?

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Our Group CEO, Mr. Niranj Sangal talks about how important are payments while creating a seamless experience and the disruptors of the payment industry

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BFC Bank, owned by BFC Group, is the latest bank to launch in the UK promising to act as a new, specialist bank that offers reliable, safe banking services to Small and Medium Enterprises (SME’s), Payments Service Providers (PSP’s) and Money Service Providers (MSP’s) that trade internationally.

BFC Bank

BFC Bank launches in UK as specialist provider to PSP’s and MSP’s

BFC Bank makes it clear that it has a 100-year history and is not a so-called Challenger Bank. Rather they have entered the market to service the 60% of SME businesses that make up the back bone of the UK market. The purpose of this entry is to advantage of the “De-risking” that many of the UK’s High Street banks implemented over the last few years.

In the process of De-risking the banks left many SME’s, PSP’s and MSP’s without accounts to provide their services from. Essentially these companies were notified that they had 3 months before their accounts were closed.

BFC Bank sees a massive opportunity to services these clients whom remain underserved by the banking industry through De-risking. “Banking is full of rules and regulations. It’s become too easy when banks have to deal with customers to hide behind these regulations rather than actually solving problems,” explains David Price, CEO, BFC Bank.

“We help small businesses find ways to solve problems. We’re a small business ourselves – we think like they do, and in many ways, we are one of them. We make it clear that we want people working for us who don’t just deal in platitudes, who don’t only speak about putting the customer first – we want to actually do that, to think about how I’d want things to go if it were my business. We don’t hide behind regulations. We are a human-centric, values-driven company.”

Working with SME’s – BFC Banks international payments services complement the existing banking arrangements. SME’s can enjoy an online services and support from experienced relation managers and expert payments teams

Working with PSP’s – BFC Bank knows how important it is for PSP’s to have access to UK domestic payments and cash management services. Fewer banks now provide current accounts and financial services to PSP’s.

Transparent FX – BFC Bank knows about FX charges. It provides clear information on tariffs. This transparency gives the confidence the client needs from a corporate bank and a benchmark against other providers. International payments and FX are BFC’s core competencies.

“We’ve grown from a small business and therefore we have empathy with the small business sector. The UK is a trading nation where SMEs play a vital role and they needs banks that can understand them, made up of staff that can deliver,” says Robert Greene, General Manager, Corporate Banking Division, BFC Bank.

“We are secondary bankers – we have a dedicated relationship management team that can understand businesses and can appreciate the problems they face. The relationships management and customer service mechanisms are vital. Our people will come to visit you and get to understand your business. If we don’t deliver then people won’t use us, and we understand therefore that we always have to deliver.”

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