Chy Sila, CEO of CBM Corporation, holds his mobile phone while driving a car in Phnom Penh August 28, 2014.
Credit: Reuters/Samrang Pring
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Consumerism booms as Cambodia embraces once-forbidden capitalism
Reuters | 28 September 2014
A man arranges croissants at a bakery of CBM Corporation in Phnom Penh August 28, 2014. Credit: REUTERS/Samrang Pring |
Chy
Sila has come a long way since he invested his $500 life savings in a
small shop in Cambodia's capital to sell bootleg music and pirated
movies.
Chy Sila, CEO of CBM Corporation, gestures during an interview with Reuters at a coffee shop near his office in Phnom Penh July 24, 2014. REUTERS/Samrang Pring |
Fast-forward 16 years
and Cambodians are now watching the films he distributes not on scratchy
DVDs but in a $5 million multiplex theater, a joint venture with
Thailand's Major Cineplex (MAJOR.BK) and the centerpiece of a new mall owned by Japanese retail giant Aeon (8267.T) that drew 2 million visitors in its opening month.
The
39-year-old former tour guide, university dropout and son of a mechanic
is one of the biggest success stories in a country that was for years
Southeast Asia's war-torn, aid-dependant basket case.
Though poverty is still rife in the countryside, an urban boom and robust growth fueled by garment manufacturing for brands such as Nike (NKE.N) and GAP (GPS.N) has given rise to a growing consumer class that earns triple the average income.
"We
see there's a lot more buying power than before," said Chy Sila as he
took a bite from a croissant and sipped cappuccino at one of the
bakeries run by his CBM Corporation, Cambodia's biggest food and
beverage firm.
"People can
afford to pay so now's the time, we're ready for big brands to come
here... Materialism is in peoples' hearts, what you wear, what you
drive, represents what you are."
With
a fast-growing working population and falling dependency ratio,
Cambodia has the demographics most favorable to rapid economic growth.
Young Cambodians now buy smartphones, flat-screen TVs and Japanese motorcycles. They tap banks
for loans and credit cards and are fuelling the kind of capitalist
culture the 1970s ultra-Maoist Khmer Rouge killed 2 million people to
prevent.
Aeon plans more
malls in Cambodian cities and operates a microfinance firm so shoppers
can buy on payment plans. Its new mall, boasting shops from the likes of
Mango, Levi's and Versace, drew 100,000 visitors daily when it opened
in June.
"The middle class
is growing," said Aeon spokesman Satoshi Otsuka. "The average age for
Cambodians is early 20s and they're fashion-conscious."
FAST-GROWING CITY
Chy
Sila was born the same year the Khmer Rouge swept to power and says he
lost "countless" relatives to Pol Pot's genocidal pursuit for a peasant
utopia.
Today's capitalist Cambodia, with an economy
that averaged 8.1 percent growth from 2000-2012 and expanded 7.4
percent last year, according to the World Bank, is a far cry from what
the Khmer Rouge envisioned when it abolished money and property
ownership, executed entrepreneurs and blew up the central bank.
Forty years after the population of Phnom Penh were emptied into labor camps, the city is swelling, with malls, office towers, hotels and fast-food chains popping up rapidly.
Modern SUVs, and even the occasional Lamborghini or Porsche, cruise its once potholed streets.
The
World Bank says the country of 15 million people is a top global
performer in tackling poverty, having cut the ratio of poor from 53
percent of its population in 2004 to 20 percent in 2011.
Foreign
direct investment has grown, from $2.65 billion recorded in 2007 to as
high as $10.8 billion in subsequent years, according to Cambodia's
investment board.
There's now a small stock market and the number of banks
has nearly doubled since a decade ago, with 35 commercial lenders
providing $9.5 billion in loans since records started. Cambodia's Credit
Bureau expects that to surpass $14 billion by 2020 and credit demand to
almost double to 3.3 million people.
The
average bank loan in 2004 was $3,895, about a fifth of last year's
average of $19,096, according to Acleda Bank, Cambodia's biggest lender.
"Loans
are good for young people like me," said Hour Veasna, 20, as he signed
up for financing from Aeon to buy a $600 camera, equivalent to five
months salary. "We don't have enough money to purchase things that we
want."
WEALTH GAP
In
the first half of 2014, bank deposits grew 13 percent and loans to the
private sector were up 28 percent, central bank Governor Chea Chanto
said in a recent speech. Three million Cambodians use banks to deposit
money, up 18 percent from last year, with about 600,000 users of credit
or debit cards.
But there
are still plenty of Cambodians who don't have such privileges and Chy
Sila says he's saddened by the yawning gap between rich and poor. He
raises money to send children to school and has cultivated an image as a
humble entrepreneur, driving a Ford SUV rather than luxury cars such as
Rolls-Royce, which entered the local market in June.
The
new-found opulence of Phnom Penh can leave a sour taste in the mouths
of those who struggle to get basic services in Cambodia, where hospitals
are overwhelmed and average annual income is $950 - or $2.60 a day -
nearly half that of Vietnam and a fifth of Thailand."Economic
growth is only for the city," said rice farmer Heang Samnang, waiting
with her sick daughter at the city's foreign-funded Kantha Bopha
Hospital, which provides free treatment to millions of poor. "In rural
areas, there's no development, we just work on farms."
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