Leopard Cambodia Fund Monthly Newsletter Issue: 2

June / 2008 

In this Issue

Leopard Investment Forum

Leopard in the News

Additions to the Team

"Why Cambodia is not Vietnam"



Welcome to the 2nd Issue 


Firstly, may we extend a warm welcome and indeed our thanks to those investors who have joined us over the course of the last month. Monthly closures will continue until the $100m funding target is reached when the fund will close (with a final close no later than 2nd April 2009). The next close will take place on the 30th June 2008.

Please contact our Chief Operating Officer Thomas Hugger for offering documents, subscription forms and general enquiries: [email protected].



Leopard Cambodia Investment Forum

18-19 September 2008: Phnom Penh

Veterans of investing in Asia will be familiar with the tried and tested Investors’ Forum concept pioneered by CLSA in Hong Kong back in the early ’90s and we Leopard Cambodia partners who took part in many of these know their value. These forums provide investors with an efficient means of meeting both companies and policy makers over a short period of time, not to mention of course, many other fellow investors.  CLSA and Leopard Cambodia jointly hosted a mini forum in Siem Reap on May 17th and 18th which gave both current and would be investors a first hand look at the country’s booming tourist industry, currently growing at 20% per year and centred for now, before Cambodia’s magnificent beaches see some hotels, upon Angkor Wat, reckoned by many to be the 8th Wonder of the World.        

The first annual Leopard Cambodia Investment Forum will take place at the Raffles Hotel Le Royal in Phnom Penh on the 18th and 19th September. With speakers from the worlds of Banking, Property Development, Agriculture, Law, and Government, investors will be able to hear at first hand of the many opportunities emerging in Cambodia and meet the investment team, advisors, and business partners of Leopard Cambodia Fund.  A poolside reception on the evening of the 18th and dinner on the evening of the 19th will provide investors with a chance to mingle and talk with many of those who live and work in Cambodia. An optional follow-on trip to Siem Reap will be organised for the weekend of the 20th and 21st so investors may experience the spectacular Angkor Wat.  For now we ask you to make a note in your diaries: detailed programmes and registration forms will follow by email.




Leopard Cambodia in the News

Articles containing information and comment on both Cambodia and on the Leopard Cambodia Fund have appeared in the Financial Times, the Wall Street Journal, the International Herald Tribune, Bloomberg and in various other media over the course of the last month.

A link to our website containing these articles in full can be found here




In the News…  

The IMF has cut its Cambodia GDP growth forecast to 7% for FY 2008 due to a slowdown in growth of garments exports to the USA, although the Fund continues to describe the country’s growth this year as ‘robust’.

In a bid to slow very rapid loan growth, the Central Bank has doubled foreign currency reserve requirements from 8% to 16% effective from July this year. 

Malaysia’s TM International has announced plans to invest $150m over the next two years upgrading its mobile network in Cambodia.

The Government has approved the award of two HydroPower projects to Chinese Companies China National Heavy Machinery and Michelle Corporation. Between them they will build capacity of 584MW in the south west province of Koh Kong. 

Based on YTD numbers, the Ministry of Tourism estimates full year tourist arrivals will reach 2.3m, up from 2m in 2007. 

The National Election Committee has announced that only 11 Political Parties will contest the July elections this year down from 20 competing parties in the 2003 elections, as the rationalisation and merger of minor parties continues.



Additions to the Team 

Our newest Associate, Polleak-Guillaume Ok Serei, 27, has over three years of experience working in Cambodia in the development sector within the UN system, mainly with a project of the International Labour Organization.  He was also a lecturer in International Relations at the Pannasastra University of Cambodia.


Polleak holds a law degree from the Université de Paris X and an MA in International Economics and International Relations from SAIS Johns Hopkins University.


Executive Assistant Sreymom Hum, 28, has worked in Cambodia’s hospitality industry, and most recently in public relations and administration. She is presently completing a Bachelor’s degree in Finance Accounting from Phnom Penh’s Vanda Institute of Accounting.  


                       Polleak-Guillaume     Sreymom Hum

                               Ok Serei



Website Enhancements

June will see the addition of a password accessed Members Area in our website. There, you’ll be able to read the current newsletter and past issues, view our performance and prices, and download documents of interest. You also be able to read the many press articles being written about us, and click on links to the Internet media coverage which is fast raising international awareness of Cambodia’s first Private Equity Fund.



New Offices   


Another reminder that we have moved to new offices and that we have a new telephone number:


Leopard Cambodia Ltd.
81B, Street 57
PO Box 1141
Phnom Penh, Cambodia
Tel: +855 (0) 23 221634


Thought Piece:  

"Why Cambodia is not Vietnam…"

Several investors have asked us whether they should be worried about Cambodia’s outlook, given Vietnam’s recent decline in asset prices and growing fears of weakening currency. The simple answer is "No." Here’s why.


I.  Cambodia is at a far earlier stage in its economic renaissance.
If one believes that Vietnam’s current woes result from too much investment, too quickly, then one may be tempted to examine Cambodia’s ongoing economic renaissance in a cautious light. However, Cambodia is at a far earlier stage of the investment cycle than Vietnam, with still a low debt to GDP ratio (20%). Cambodia’s recent land boom has been driven by cash rather than leverage as in Vietnam, and land prices in Cambodia remain a fraction of Vietnam’s prices even after Vietnam has corrected. Cambodia’s banking system is structurally sounder than Vietnam’s as in Cambodia there are no state-owned banks, no bubble-bursted stock or bond markets, and hardly any interbank market to transmit individual banks’ risks. On any available yardstick of economic development, Cambodia is still at a very low base, few investors or observers in Cambodia see over-investment or excess capacity as a concern. On the contrary, Cambodia needs more of almost everything!

II. The Cambodian system is a free market with few subsidies.
The free-market nature of Cambodia’s economy provides better pricing signals; for example, Cambodia does not heavily subsidize fuel as does China, Malaysia and Indonesia. Residents pay fair market prices for most expenses as public transportation and public services are either meager or non-existant. The authorities do not intervene to control commodity prices as does Thailand and Vietnam. Thus, Cambodia faces no budgetary crisis or looming inflationary shock from eventually being forced to float fuel or commodity prices. With the majority of Cambodia’s population engaging in unmechanized farming using minimal oil or fertilizer, Cambodia produces food surpluses and enjoys some net benefits from the recent rise in global food prices.

III. Despite rising inflation, the currency is under no apparent risk of weakening. Cambodia’s balance of payments is sound, buttressed by long term inflows of capital, foreign aid and FDI.
Inflation is indeed a problem for Cambodians, especially for urban dwellers whose manufactured goods and major food items are mostly imported. Rising fuel prices and costly food and raw material prices are quickly passed onto consumers and businesses alike. However, the case for a weakening of the Cambodian Riel, which is used maninly by people at the very bottom of the economic "pyramid," is more difficult to see than in its neighbour, for two reasons.

Firstly, the Cambodian balance of payments has been improving alongside a robust stream of long term inflows. The trade deficit worsened to 18% of GDP in 2007 (compared to an average deficit of 14% over the previous five years). However, foreign currency reserves strengthened to four months of imports at year end 2007 driven by strong performance by the services account and the capital account. Our observations from being on the ground and frequent interaction with both the private sector and government (both Cambodian and foreign) foresee that the steady stream of  inflows will continue. We have seen no warning signs that the taps are going to be turned down for tourism, FDI, foreign aid or personal remittances from abroad.  

Secondly, the Cambodian economy is also largely dollarized, so there is little threat of a sudden, painful devaluation as many suspect is possible in Vietnam.

IV.  The Cambodian authorities are vigilant and have the will to act.
The Cambodian authorities have the strength and moral conviction to act vigilantly and decisively. This is partly because both the economy and the government is small and manageable (few state enterprises exist and the network of bureaucrats is limited). As inflation began to worsen and hectic loan growth showed no signs of abating, the National Bank of Cambodia aggressively hiked the reserve requirement of commercial banks from 8% to 16%. The move was a clear signal to commercial banks to cool their rapid loan growth, which rose over 80% YoY in 2007. The bulk of this lending is to non-speculative sources and the move will merely defer loan demand until a later date. Total private sector lending is a mere US$140 per capita in Cambodia, so lending is still on a very low base and the prospects for loan growth are very strong over the long term.

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 The NAV of Leopard Cambodia Investments (BVI) Ltd. was as of 31st May 2008 USD 1’001.41 (30th April  2008:USD 1’000.08)


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Leopard Cambodia Investments (BVI) Ltd. 

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