Industrial rail project gathers steam with government push
Sathapana executive off to build new MFI
TRANSPORT Minister Sun Chanthol has vowed to reinvigorate a long-dormant project to connect the Kingdom’s sole operating railway line to the capital’s biggest industrial park – a move that would boost rail traffic ahead of the completion of a rail link to northwestern Cambodia and Thailand.
Chanthol said during the opening of a workshop for the National Logistics Council on Monday that his ministry was pushing Royal Railway, which owns a 30-year concession to operate the Kingdom’s railway network, to build a spur into the Phnom Penh Special Economic Zone (Phnom Penh SEZ).
“There are a lot of factories there and workers that need to travel to the zone,” he said.
“This will benefit the railway and help the zone get goods to and from factories.”
A rail link was always on the cards.The 266-kilometre Southern Line that runs from Phnom Penh to Sihanoukville skirts the eastern edge of the 357-hectare industrial park – one reason for choosing its location nearly 20 kilometres west of the capital’s centre. However, currently all cargo transport is handled by container trucks.
John Guiry said the decision to build a spur line into Phnom Penh SEZ was a “no-brainer”.
“The railway already runs just outside of the fence of the zone,” he explained. “All that needs to be developed is 30 metres of track.”
He added that with Chanthol’s support, it was clear that the small extension was soon on the horizon.
“We could start constructing the spur as soon as January when the rainy season is over and the land has dried up,” he said.
“We are all geared up to do our own rail work.”
However, he said Royal Railway was still awaiting a concrete plan from Phnom Penh SEZ and that the two companies were finalising a deal.
The plan made commercial sense for the 81 tenants operating in the industrial park, Guiry said.
“We are already shipping 40 to 80 containers to our dry port a week to be put on the railway,” he explained.
“And that costs companies $60 per container to drive approximately 2 kilometres.”
He said that the overall cost savings for Phnom Penh SEZ tenants would increase investment and place it in a better logistics position ahead of the opening of the 386-kilometre Northern Line. A portion of the line running 42-kilometres from Poipet to the Thai border is expected to open by the end of the year.
Meanwhile, state-run news agency AKP reported yesterday that Chanthol proposed a separate rail line that would run 8 kilometres from the capital’s airport to Phnom Penh SEZ, with a planned cost of nearly $4 million.
The rail link could improve transport for Phnom Penh SEZ’s 16,000 workers, increasing the safety of their commute and providing additional revenue to cover its costs.
“Even if we opened a passenger line that got at least 1,000 workers using it each day, it would pay for itself,” Guiry said.
Hiroshi Uematsu, CEO of Phnom Penh SEZ, was less optimistic that a plan was close to being finalised that would facilitate better access of trade to the industrial park.
“We are still in negotiations with Royal Railway about this, so it is still too early to give a full comment on if this will happen,” he said. BANKING figurehead Bun Mony has resigned from his position as CEO of Sathapana Bank Plc after more than 20 years at the helm of the financial institution in which it grew from a small rural NGO into the country’s third-largest microfinance institution (MFI), and recently transitioned into a fullservice commercial bank.
His departure on December 1 leaves Sathapana under the interim stewardship of Lim Aun, the bank’s former chief operating officer, while Mony has already jumped into his new role as board chairman of newly formed Vithey Microfinance Plc.
Contacted yesterday, Mony, who was reluctant to discuss his resignation, described it “as a tough choice”.
“I think the reason is that when we became a commercial bank with our Japanese shareholders, we had different ideas for which way the bank should be heading,” he said. “Also, it can be difficult to work with Japanese partners because of cultural differences.”
Sathapana Bank Plc completed its merger between Maruhan Japan Bank Plc and Sathapana Ltd last April after the National Bank of Cambodia (NBC) gave the deal a nod. The merger created a commercial bank with a combined registered paid-up capital of $120 million and total assets of $772 million. Its loan portfolio amounted to $533 million with total deposits at $367 million.
Mony, a career banker who spent two consecutive terms as head of the Cambodian Microfinance Association (CMA), said his new role would give him a fresh start at building an MFI. Vithey Microfinance, which received a licence from the central bank on October 31, operates just two branches.
“My interest is to focus on lending that helps the poor who need access to credit,” he said, adding that the MFI would cap lending at $1,000 per client. “While it is just a small MFI operating in Kandal province and Phnom Penh, I hope it will expand to other provinces.”
Mony said Cambodia’s MFI landscape has greatly changed over the last 20 years, but he still sees room for growth, especially as the central bank weeds out informal lenders.
He added that he expected foreign investors would continue to play an important role in the growth of MFI lending as local banks were still not providing much funding for growth.