Tuesday December 01, 2009
By Liza Casabona with contributions from Kristi Ellis
WWD Business
WASHINGTON — Apparel brands, retailers and Cambodian officials are urging duty free benefits for Cambodia, the eighth-largest apparel supplier to the U.S., arguing the move would help the country stay competitive at a crucial time.
During a program last month marking the 10th anniversary of the Better Factories Cambodia project, an initiative to improve labor compliance in the Cambodian garment industry, speakers said the competitiveness of the country’s apparel industry is threatened by the economic environment as well as the lifting of quotas last year on garment imports from China and the conclusion of the Vietnam monitoring program, also last year.
The quotas and the monitoring program “gave Cambodia room to breathe” as the country built its garment sector, said Cham Prasidh, senior minister and minister of commerce. However, the end of those programs “started an onslaught.” Dozens of factories have closed and more than 50,000 jobs have been lost as a result of production shifts to other countries, Prasidh said.
Apparel imports from Cambodia dropped 23 percent to $1.41 billion this year, according to the most recent statistics from the U.S. Commerce Department.
A significant portion of the volume lost by Cambodia has shifted to other countries, including many that “do not share Cambodia’s commitment to improving respect for workers’ rights,” said Michael Kobori, vice president of supply chain social and environmental sustainability for Levi Strauss & Co.
Kobori urged apparel buyers to reward responsible sourcing behavior by supporting “trade preference legislation that provides further incentive to countries like Cambodia that are committed to improving workers’ rights.”
A group of apparel brands, retailers and an entertainment conglomerate called on congressional leaders last month to treat Cambodia as a “special case” and grant it duty free status immediately.
Gap Inc., J.C. Penney Co. Inc., Jones Apparel Group Inc., Levi Strauss & Co., Nike Inc., American Eagle Outfitters Inc., Columbia Sportswear Co., Phillips-Van Heusen Corp. and The Walt Disney Co., which all have significant investments in production in Cambodia, urged U.S. lawmakers to help the country halt the decline in imports and reverse the loss of tens of thousands of jobs in the apparel sector.
Congress is unlikely to grant Cambodia duty free status this year, but could do so next year in the context of a broader reform and expansion of trade preference programs.
Tuesday, December 1, 2009
Friday, November 27, 2009
Cambodia Warming to Idea of Foreign Ownership
November 26, 2009
By SIMON MARKS
The New York Times
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Canadia Tower in Phnom Penh is Cambodia’s tallest building. (Simon Marks)
Just three decades after the downfall of the Khmer Rouge, a deadly regime that left behind little notion of private property, a law that would allow foreigners to buy some kinds of real estate here appears to be nearing approval.
And while the proposed law is focused on the property market, experts agree it also would be a general boost for the country, which has been struggling through its own version of the global economic downturn.
“The law, in essence, will not help the whole economy recover. But it’s part of a wider picture,” said Daniel Parkes, country manager for the CB Richard Ellis real estate company. “What it is doing is making investment in Cambodia more transparent and easier.”
The law, which is expected to go to the National Assembly for a vote in the coming months, would allow foreigners to own apartments and condominiums on buildings’ upper floors. Now they are limited to 99-year leaseholds on any property.
Ground-level residences, which include ownership of the land that the units stand on, would continue to be reserved for Cambodians.
There are some controversial details in the draft. But over all, Mr. Parkes said, the proposed law would improve confidence in the market — especially in comparison with neighboring countries like Thailand, where foreigners are limited to 30-year leases on homes or land, and Singapore, where they are barred from owning property below the sixth floor.
Mr. Parkes’s own presence in Cambodia is due to great expectations for its real estate sector. The 27-year-old arrived here four months ago from Britain; his assignment was to open the first office of CB Richard Ellis in the capital to meet a growing demand for professional real estate services.
“Working in the U.K., it has become obvious over the last two years or so that it is a mature market,” Mr. Parkes said. “Where the future is, is in Asia.”
He says he considers the assignment to be a long-term one, and he spends weekends riding around the city on his 1967 Vespa, keeping his eyes peeled for a property that he might like to buy himself.
Over all, the country’s financial forecasts and Phnom Penh’s growth seem to support his optimism.
Economists here generally agree that Cambodia will emerge from its year-long recession in 2010. And the International Monetary Fund said in September that, while the country’s G.D.P. would contract 2.75 percent this year, it would climb about 4 percent in 2010.
The capital’s 1.3 million inhabitants mostly live in low-grade concrete apartment blocks that form the city’s low skyline. But Cambodia’s tallest building, the 30-story Canadia Tower, opened Nov. 5. And the structure, which includes apartments for some Canadia Bank employees, is the first of several such projects planned for the city center.
Like many housing markets across the world, speculative buying and inflated land values produced a lot of phantom growth in Cambodia in recent years.
From 2005 to mid-2008, prices for some houses in Phnom Penh rose tenfold. Increasing foreign investment and large-scale residential projects like Gold Tower 42, a South Korean-funded 42-story skyscraper that is still being built, were just some of the factors that led industry observers to have faith in the country’s market.
But as the effects of the global economic crisis spilled over into Cambodia in late 2008, demand dried up, and housing prices tumbled dramatically — 40 percent compared with the same period last year, according to real estate agents.
“Before there was so much investment from developers in China and South Korea,” said Soush Saroeun, executive director of Asia Real Property, a Cambodian real estate agency. He said prices in Phnom Penh’s most affluent neighborhoods had fallen to about $3,000 per square meter, or $280 a square foot, from around $4,500 per square meter in July 2008. (High-end real estate in Cambodia is generally valued in U.S. dollars.)
Some observers here say that confidence in the market actually was boosted when the long-awaited proposal to allow foreign ownership was introduced by the Ministry of Land Management in April.
Some investors and analysts say, however, that the draft contains stipulations that would cause unnecessary complications, like the rule that no more than 49 percent of a condominium building’s units may be owned by foreigners.
The rule would cause “big problems for developers in the region in their initial business plans,” forcing them to sell to two distinct markets, said Matthew Rendall, a managing partner with the legal consultancy Sciaroni & Associates, based in Phnom Penh.
Sek Sitha, an under secretary of state for the land management ministry, said the restriction was included because the government wants “Cambodians to have priority over foreigners.” But he said the Council of Ministers, which is now reviewing the draft law, and the assembly would consider the concerns.
In Channy, chief executive of Acleda Bank, one of the country’s largest banks, said that expecting Cambodians to buy 51 percent of the units in a building created to appeal to foreigners was unlikely because few would be interested in such a costly investment. “Demand is very low,” he said. “Most of our loans go to local Cambodians, but it depends on the cash flow of the individual borrower.”
The proposal also says foreigners cannot be co-owners in land purchases, nor can they buy any properties within 30 kilometers, or 18.5 miles, of the borders, except in special economic zones.
Rory Hunter, chief executive of the local property developer Brocon Group, said developers could bypass the proportional ownership issue by offering long-term leases, rather than sales, on the balance of the units in a building meant for the foreign market.
And while the current 99-year lease is not, practically, very different from an outright purchase, “psychologically, people want to own freehold, not leasehold,” Mr. Hunter said. “It will give foreign investors more confidence regarding the security of their investment.”
By SIMON MARKS
The New York Times
.jpg)
Canadia Tower in Phnom Penh is Cambodia’s tallest building. (Simon Marks)Just three decades after the downfall of the Khmer Rouge, a deadly regime that left behind little notion of private property, a law that would allow foreigners to buy some kinds of real estate here appears to be nearing approval.
And while the proposed law is focused on the property market, experts agree it also would be a general boost for the country, which has been struggling through its own version of the global economic downturn.
“The law, in essence, will not help the whole economy recover. But it’s part of a wider picture,” said Daniel Parkes, country manager for the CB Richard Ellis real estate company. “What it is doing is making investment in Cambodia more transparent and easier.”
The law, which is expected to go to the National Assembly for a vote in the coming months, would allow foreigners to own apartments and condominiums on buildings’ upper floors. Now they are limited to 99-year leaseholds on any property.
Ground-level residences, which include ownership of the land that the units stand on, would continue to be reserved for Cambodians.
There are some controversial details in the draft. But over all, Mr. Parkes said, the proposed law would improve confidence in the market — especially in comparison with neighboring countries like Thailand, where foreigners are limited to 30-year leases on homes or land, and Singapore, where they are barred from owning property below the sixth floor.
Mr. Parkes’s own presence in Cambodia is due to great expectations for its real estate sector. The 27-year-old arrived here four months ago from Britain; his assignment was to open the first office of CB Richard Ellis in the capital to meet a growing demand for professional real estate services.
“Working in the U.K., it has become obvious over the last two years or so that it is a mature market,” Mr. Parkes said. “Where the future is, is in Asia.”
He says he considers the assignment to be a long-term one, and he spends weekends riding around the city on his 1967 Vespa, keeping his eyes peeled for a property that he might like to buy himself.
Over all, the country’s financial forecasts and Phnom Penh’s growth seem to support his optimism.
Economists here generally agree that Cambodia will emerge from its year-long recession in 2010. And the International Monetary Fund said in September that, while the country’s G.D.P. would contract 2.75 percent this year, it would climb about 4 percent in 2010.
The capital’s 1.3 million inhabitants mostly live in low-grade concrete apartment blocks that form the city’s low skyline. But Cambodia’s tallest building, the 30-story Canadia Tower, opened Nov. 5. And the structure, which includes apartments for some Canadia Bank employees, is the first of several such projects planned for the city center.
Like many housing markets across the world, speculative buying and inflated land values produced a lot of phantom growth in Cambodia in recent years.
From 2005 to mid-2008, prices for some houses in Phnom Penh rose tenfold. Increasing foreign investment and large-scale residential projects like Gold Tower 42, a South Korean-funded 42-story skyscraper that is still being built, were just some of the factors that led industry observers to have faith in the country’s market.
But as the effects of the global economic crisis spilled over into Cambodia in late 2008, demand dried up, and housing prices tumbled dramatically — 40 percent compared with the same period last year, according to real estate agents.
“Before there was so much investment from developers in China and South Korea,” said Soush Saroeun, executive director of Asia Real Property, a Cambodian real estate agency. He said prices in Phnom Penh’s most affluent neighborhoods had fallen to about $3,000 per square meter, or $280 a square foot, from around $4,500 per square meter in July 2008. (High-end real estate in Cambodia is generally valued in U.S. dollars.)
Some observers here say that confidence in the market actually was boosted when the long-awaited proposal to allow foreign ownership was introduced by the Ministry of Land Management in April.
Some investors and analysts say, however, that the draft contains stipulations that would cause unnecessary complications, like the rule that no more than 49 percent of a condominium building’s units may be owned by foreigners.
The rule would cause “big problems for developers in the region in their initial business plans,” forcing them to sell to two distinct markets, said Matthew Rendall, a managing partner with the legal consultancy Sciaroni & Associates, based in Phnom Penh.
Sek Sitha, an under secretary of state for the land management ministry, said the restriction was included because the government wants “Cambodians to have priority over foreigners.” But he said the Council of Ministers, which is now reviewing the draft law, and the assembly would consider the concerns.
In Channy, chief executive of Acleda Bank, one of the country’s largest banks, said that expecting Cambodians to buy 51 percent of the units in a building created to appeal to foreigners was unlikely because few would be interested in such a costly investment. “Demand is very low,” he said. “Most of our loans go to local Cambodians, but it depends on the cash flow of the individual borrower.”
The proposal also says foreigners cannot be co-owners in land purchases, nor can they buy any properties within 30 kilometers, or 18.5 miles, of the borders, except in special economic zones.
Rory Hunter, chief executive of the local property developer Brocon Group, said developers could bypass the proportional ownership issue by offering long-term leases, rather than sales, on the balance of the units in a building meant for the foreign market.
And while the current 99-year lease is not, practically, very different from an outright purchase, “psychologically, people want to own freehold, not leasehold,” Mr. Hunter said. “It will give foreign investors more confidence regarding the security of their investment.”
Monday, November 23, 2009
Ozawa looming as 'shadow shogun'
The Japan Times
By ALEX MARTIN
Staff writer
Saturday, Nov. 21, 2009
DPJ heavyweight's clout seen eclipsing Hatoyama's
The Democratic Party of Japan's oldest lawmaker recently had a few bitter words for his old friend, DPJ Secretary General Ichiro Ozawa.
Shadow shogun: Democratic Party of Japan Secretary General Ichiro Ozawa heads to the Prime Minister's Official Residence on Nov. 14, escorted by a security guard. KYODO PHOTO
Speaking in Fukuoka earlier this month, Kozo Watabe criticized what he considered the monopolization of party authority in Ozawa's hands.
"If Mr. Ozawa says turn right, we turn right. If he says turn left, we turn left. And if he says five plus five is 15, then we just have to say, 'Yes, sir,' " Watabe said.
Although the 77-year-old veteran lawmaker was apparently unhappy with Ozawa's decision not to reappoint him as the party's top adviser, his comments did provide a glimpse into how Ozawa almost single-handedly dictates policy, trying to reform the way politics are done.
But his top-down management isn't open to criticism, and his overwhelming authority over the DPJ has led many to fear Ozawa's influence may undermine the government of Prime Minister Yukio Hatoyama, the party's president.
There are already signs.
When the Government Revitalization Unit recruited 32 lawmakers as part of a team of inspectors tasked with examining and recommending cuts in unnecessary state budget expenditures, Ozawa muscled in and demanded first-term lawmakers be excluded, drastically cutting their ranks and in the process highlighting Hatoyama's lack of leadership.
"Even after being a lawmaker for 40 years, I still find it difficult to examine fat budget documents — besides, the party was unaware of the entire process," Ozawa said in an Oct. 26 press conference on his reasons for keeping junior ranks out.
The incident was evidence that Ozawa not only had assumed control of the DPJ, but also had a say in government personnel decisions.
In a recent article for the quarterly journal Bungei Shunju, political commentator Takashi Tachibana expressed concern over Ozawa's increasing clout, and compared his dictatorial style to that of Ozawa's Liberal Democratic Party mentor, the late Prime Minister Kakuei Tanaka, one of postwar Japan's most powerful, and scandal-tainted, politicians. Known as the "shadow shogun," Tanaka's behind-the-scenes clout lasted long after his prime ministership ended.
But with the entry of some 140 freshmen lawmakers who rode the DPJ's tidal wave into power in the Aug. 30 election, and who owe their success to Ozawa, his political influence now even dwarfs Tanaka's. "Ozawa has now assumed command of the nation's future," Tachibana wrote.
Even though Ozawa was forced by financial scandal to give up the DPJ presidency last spring, and faces fresh allegations of receiving illegal political donations, his influence seems to be on an ever-increasing upward trajectory.
He recently ruled that all petitions directed from municipalities to the government be channeled through the DPJ secretary general's office instead of having their targeted ministries handle them.
Ozawa said this "reform" was intended to prevent various organizations from directly petitioning ministries — a practice that often led to cozy ties between bureaucrats and politicians with vested interests.
"Petitions taken directly to the central bureaucracy via political connections contravene our goal of decentralizing power," Ozawa said this month.
While significantly hiking the authority of his office, the petition rerouting simultaneously serves to bolster the DPJ's control over municipal organizations — key vote-generating machines — ahead of next summer's Upper House poll, in which the party aims to win a majority on its own.
But while such tactics may boost the DPJ's chances of winning elections, experts warn it is essential that Ozawa not become a "back seat driver" who pulls the strings behind the scenes and is immune from responsibility.
Hidekazu Kawai, honorary professor at Gakushuin University, said that considering Ozawa's background and political expertise, it was only natural that he assumed command of the party — especially with most of the other DPJ heavyweights in the Cabinet.
Ozawa — a '90s defector from the LDP — was the point man when it came to whittling away the LDP's traditional support base ahead of the last poll, and is doing likewise for the coming Upper House election, and Hatoyama thus has no choice but to rely on him, Kawai said.
But unless the administration can find a way to hold Ozawa accountable, he could become the next shadow shogun, calling the shots without ever having to take any responsibility for the government's actions, Kawai said, adding the key to the political situation will be whether the kingmaker can be held to account.
Ozawa's rapid changes in the way the government does business are having side effects. Since the DPJ abolished the policy research council, lawmakers who aren't part of the government apparatus are having a hard time getting their voices heard.
Out of the 419 DPJ lawmakers, 160 have been assigned to either government, party or Diet posts, leaving more than 200 with time on their hands.
A rookie DPJ lawmaker, who declined to be named, recently said he was still unsure how he could be involved in policy decisions, voicing hope that a way can be paved for young lawmakers' opinions to be reflected in policymaking.
"It's as if we're only here to vote (on) bills," he said.
But Koichi Nakano, political science professor at Sophia University, said that while it was unlikely Ozawa will loosen his grip on power, he also believed the media might be going overboard with his image as a backroom fixer.
Despite fears of Ozawa's influence, there's a limit to how far his authority can stretch, he said, adding, "After all, he's neither the prime minister nor the president of the DPJ. He can't possibly assume complete control."
By ALEX MARTIN
Staff writer
Saturday, Nov. 21, 2009
DPJ heavyweight's clout seen eclipsing Hatoyama's
The Democratic Party of Japan's oldest lawmaker recently had a few bitter words for his old friend, DPJ Secretary General Ichiro Ozawa.
Shadow shogun: Democratic Party of Japan Secretary General Ichiro Ozawa heads to the Prime Minister's Official Residence on Nov. 14, escorted by a security guard. KYODO PHOTOSpeaking in Fukuoka earlier this month, Kozo Watabe criticized what he considered the monopolization of party authority in Ozawa's hands.
"If Mr. Ozawa says turn right, we turn right. If he says turn left, we turn left. And if he says five plus five is 15, then we just have to say, 'Yes, sir,' " Watabe said.
Although the 77-year-old veteran lawmaker was apparently unhappy with Ozawa's decision not to reappoint him as the party's top adviser, his comments did provide a glimpse into how Ozawa almost single-handedly dictates policy, trying to reform the way politics are done.
But his top-down management isn't open to criticism, and his overwhelming authority over the DPJ has led many to fear Ozawa's influence may undermine the government of Prime Minister Yukio Hatoyama, the party's president.
There are already signs.
When the Government Revitalization Unit recruited 32 lawmakers as part of a team of inspectors tasked with examining and recommending cuts in unnecessary state budget expenditures, Ozawa muscled in and demanded first-term lawmakers be excluded, drastically cutting their ranks and in the process highlighting Hatoyama's lack of leadership.
"Even after being a lawmaker for 40 years, I still find it difficult to examine fat budget documents — besides, the party was unaware of the entire process," Ozawa said in an Oct. 26 press conference on his reasons for keeping junior ranks out.
The incident was evidence that Ozawa not only had assumed control of the DPJ, but also had a say in government personnel decisions.
In a recent article for the quarterly journal Bungei Shunju, political commentator Takashi Tachibana expressed concern over Ozawa's increasing clout, and compared his dictatorial style to that of Ozawa's Liberal Democratic Party mentor, the late Prime Minister Kakuei Tanaka, one of postwar Japan's most powerful, and scandal-tainted, politicians. Known as the "shadow shogun," Tanaka's behind-the-scenes clout lasted long after his prime ministership ended.
But with the entry of some 140 freshmen lawmakers who rode the DPJ's tidal wave into power in the Aug. 30 election, and who owe their success to Ozawa, his political influence now even dwarfs Tanaka's. "Ozawa has now assumed command of the nation's future," Tachibana wrote.
Even though Ozawa was forced by financial scandal to give up the DPJ presidency last spring, and faces fresh allegations of receiving illegal political donations, his influence seems to be on an ever-increasing upward trajectory.
He recently ruled that all petitions directed from municipalities to the government be channeled through the DPJ secretary general's office instead of having their targeted ministries handle them.
Ozawa said this "reform" was intended to prevent various organizations from directly petitioning ministries — a practice that often led to cozy ties between bureaucrats and politicians with vested interests.
"Petitions taken directly to the central bureaucracy via political connections contravene our goal of decentralizing power," Ozawa said this month.
While significantly hiking the authority of his office, the petition rerouting simultaneously serves to bolster the DPJ's control over municipal organizations — key vote-generating machines — ahead of next summer's Upper House poll, in which the party aims to win a majority on its own.
But while such tactics may boost the DPJ's chances of winning elections, experts warn it is essential that Ozawa not become a "back seat driver" who pulls the strings behind the scenes and is immune from responsibility.
Hidekazu Kawai, honorary professor at Gakushuin University, said that considering Ozawa's background and political expertise, it was only natural that he assumed command of the party — especially with most of the other DPJ heavyweights in the Cabinet.
Ozawa — a '90s defector from the LDP — was the point man when it came to whittling away the LDP's traditional support base ahead of the last poll, and is doing likewise for the coming Upper House election, and Hatoyama thus has no choice but to rely on him, Kawai said.
But unless the administration can find a way to hold Ozawa accountable, he could become the next shadow shogun, calling the shots without ever having to take any responsibility for the government's actions, Kawai said, adding the key to the political situation will be whether the kingmaker can be held to account.
Ozawa's rapid changes in the way the government does business are having side effects. Since the DPJ abolished the policy research council, lawmakers who aren't part of the government apparatus are having a hard time getting their voices heard.
Out of the 419 DPJ lawmakers, 160 have been assigned to either government, party or Diet posts, leaving more than 200 with time on their hands.
A rookie DPJ lawmaker, who declined to be named, recently said he was still unsure how he could be involved in policy decisions, voicing hope that a way can be paved for young lawmakers' opinions to be reflected in policymaking.
"It's as if we're only here to vote (on) bills," he said.
But Koichi Nakano, political science professor at Sophia University, said that while it was unlikely Ozawa will loosen his grip on power, he also believed the media might be going overboard with his image as a backroom fixer.
Despite fears of Ozawa's influence, there's a limit to how far his authority can stretch, he said, adding, "After all, he's neither the prime minister nor the president of the DPJ. He can't possibly assume complete control."
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