Mak­ing group in­vest­ment vi­able

CMIG leads Chi­nese com­pa­nies in new model in Cam­bo­dia to help re­duce risks, mul­ti­ply ad­van­tages

China Daily (Hong Kong) - - BUSINESS - By ZHANG HAIZHOU in Phnom Penh zhang­haizhou@ chi­nadaily.com.cn

Cam­bo­dia has never been a pop­u­lar des­ti­na­tion for Chi­nese in­vestors. Not for long though.

Par­tic­u­larly for State-owned en­ter­prises or SOEs that, in re­cent years, have spent lav­ishly ac­quir­ing land­mark projects in North Amer­ica, west­ern Europe and big­ger economies in the ASEAN re­gion, Cam­bo­dia has been a bit of a no-no.

For, among its South­east Asian peers, Cam­bo­dia ranks only eighth in terms of econ­omy size.

Ac­cord­ing to the In­ter­na­tional Mon­e­tary Fund’s 2015 data, Cam­bo­dia’s GDP per capita of less than $3,500 con­trasts with Sin­ga­pore’s nearly $85,000, and sits at the bot­tom of the 10-coun­try bloc.

Yet, for Dong Wen­biao, chair­man of China Min­sheng In­vest­ment Group or CMIG, Cam­bo­dia’s poor foun­da­tion may be hid­ing many op­por­tu­ni­ties.

The coun­try will be an ideal des­ti­na­tion for China’s lead­ing pri­vate en­ter­prises, if they go and in­vest to­gether rather than in­di­vid­u­ally. To­ward this end, CMIG is pi­o­neer­ing a “group in­vest­ment” model.

CMIG com­prises 59 pri­vate en­ter­prises. It was founded in Shang­hai in 2014 with a reg­is­tered cap­i­tal of 50 bil­lion yuan. CMIG’s to­tal as­sets have since snow­balled to 200 bil­lion yuan.

Ac­cord­ing to Dong, to re­duce risks and mul­ti­ply their ad­van­tages, Chi­nese pri­vate-sec­tor en­ter­prises from dif­fer­ent sec­tors would be bet­ter off in­vest­ing abroad in groups, given that they can’t match the fi­nan­cial mus­cle of SOEs.

Dong has been so en­thu­si­as­tic in pro­mot­ing the model that noth­ing, not even con­stant power fail­ures dur­ing a me­dia con­fer­ence at a new lux­ury ho­tel in Phnom Penh, would dent his be­lief in Cam- bo­dia. For Dong, em­bar­rass­ments like power fail­ures not only re­flect the se­vere in­fra­struc­ture short­age in the coun­try but rep­re­sent po­ten­tial op­por­tu­ni­ties for for­eign in­vestors.

That is what he told the first-ever Cam­bo­dia-China Busi­ness and Fi­nan­cial Devel­op­ment Fo­rum on Dec 1, or­ga­nized by CMIG and Ly Yong Phat or LYP Group, a lo­cal con­glom­er­ate.

“Cam­bo­dia has huge room to develop in­fra­struc­ture… Many of the CMIG’s share­hold­ers are lead­ers in wa­ter, elec­tric­ity and gas in­fra­struc­ture. They will work with lo­cal gov­ern­ments in the fu­ture,” he said.

Dong said CMIG’s plan also in­cludes help­ing Cam­bo­dia to develop clean en­ergy, real es­tate, and fi­nan­cial ser­vices.

Three re­lated deals were signed as a re­sult of the fo­rum.

They in­clude a $1.5 bil­lion deal to develop Cam­bo­di­aChina Friend­ship City by LYP Group and SRE Group of Shang­hai. The city will be a sub­di­vi­sion of a 2,000-hectare satel­lite city in north­ern Phnom Penh.

What was more sig­nif­i­cant than the fo­rum was that China’s lead­ing pri­vate-sec­tor ty­coons from var­i­ous in­dus­tries gath­ered to­gether in Cam­bo­dia, un­der the aegis of CMIG, to seek in­vest­ment op­por­tu­ni­ties.

The CMIG-led del­e­ga­tion in­cluded real es­tate de­vel­oper SRE Group, and fi­nan­cial in­sti­tu­tions Guangxi Beibu Gulf Bank and Fu­dian Bank.

In the run-up to the fo­rums, Cam­bo­dian Prime Min­is­ter Hun Sen even held a meet­ing with Dong in Phnom Penh in Septem­ber.

Li Huaizhen, pres­i­dent and CEO of CMIG, said the fo­rums typ­ify the po­ten­tial of the group in­vest­ment model to band to­gether in­dus­trial and fi­nan­cial play­ers for a com­mon goal of “co­or­di­nated devel­op­ment” abroad. “Such a model will have strong vi­tal­ity.

hina is CMIG’s fo­cus with more than 80 per­cent of its busi­ness in the do­mes­tic mar­ket. But Li noted that it is con­sis­tently seek­ing busi­ness op­por­tu­ni­ties over­seas, in­clud­ing along the vast area cov­ered by the Belt and Road Ini­tia­tive.

CMIG In­ter­na­tional Hold­ing, a sub­sidiary of CMIG, ac­quired Sir­ius In­ter­na­tional In­sur­ance Group in Sin­ga­pore in Au­gust 2015, mark­ing CMIG’s en­try into global in­sur­ance.

The group had said in 2015 that it will guide dozens of lead­ing Chi­nese pri­vate en­ter­prises to jointly in­vest $5 bil­lion in In­done­sia to con­struct CMIG In­done­sia In­dus­trial Park.

CMIG later pledged 100 mil­lion yuan ($14.5 mil­lion) to fund ex­ec­u­tive ed­u­ca­tion in China of In­done­sian man­agers and Chi­nese ex­ec­u­tives seek­ing in­vest­ment op­por­tu­ni­ties in the ar­chi­pel­ago for 10 years.

Un­der the first Belt and Road Ini­tia­tive-CMIG-Ts­inghua Pilot Pro­gram for In­done­sian En­trepreneurs, 15 stu­dents started classes at the Ts­inghua School of Eco­nom­ics and Man­age­ment in late July. They are the founders or se­nior ex­ec­u­tives of In­done­sian en­ter­prises in fields such as agri­cul­ture, man­u­fac­tur­ing, trade and ser­vices.

Cam­bo­dia has huge room to develop in­fra­struc­ture … Many of the CMIG’s share­hold­ers are lead­ers in wa­ter, elec­tric­ity and gas in­fra­struc­ture.” Dong Wen­biao, chair­man of China Min­sheng In­vest­ment Group

PRO­VIDED TO CHINA DAILY

Dong Wen­biao (left), chair­man of China Min­sheng In­vest­ment Group, meets Cam­bo­dian Premier Hun Sen (mid­dle) and his wife dur­ing the first-ever Cam­bo­dia-China Busi­ness and Fi­nan­cial Devel­op­ment Fo­rum held in Phnom Penh on Dec 1.

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