Looks like it will a few more years, at least, before Cambodia sees any oil...
Reuters
Highlights:
- "U.S. major Chevron Corp has yet to submit a plan for what was slated to be Cambodia's first oil development, a senior Cambodian official said on Tuesday, which would mean first oil is unlikely until the next decade."
- "Chevron issued last year a downbeat assessment of the offshore block, after a second drilling campaign showed the block presented challenges, with hydrocarbons being dispersed rather than in one core field."
- "Cambodia has since toned down its oil ambitions and initial estimates of 400-700 million barrels are no longer discussed."
- "Cambodia is keen to attract investors to develop both the upstream and downstream sectors, as it has no refinery and imports about 1 million tonnes of refined products a year."
- "The lack of geological data has limited interest in onshore blocks, with several yet to find takers."
- "But offshore, the continued border dispute with Thailand is preventing exploration in some areas."
Showing posts with label Oil. Show all posts
Showing posts with label Oil. Show all posts
Wednesday, November 05, 2008
Tuesday, October 28, 2008
Falling property prices in Cambodia; will oil save this country?
It's started to happen. There are businesses around Siem Reap's old market area and beyond that are closing down. One is an Indian restaurant ("Bangladesh, Madam, not Indian," sniffed a competitor).
Today I noticed Enjoy Villa, the Australian-Khmer guesthouse around the Central Market area had a big padlock on its gate. I asked the tuk-tuk guy parked beside the guesthouse what happened? Did it shut down? He said yes. The website is still in operation, so I have no idea what's happened. The Angkor Airways office around the same area is also up for rent, as well as numerous others.
Businesses operating on thin margins will find it harder and harder to survive. Businesses that signed on leases at high prices will also find it a challenge to make money. As businesses struggle, rents will have to fall, because otherwise landlords will face the prospect of having no tenants.
As rents fall, so will property prices, because a piece of land is only as good as what you can extract from it. Except for those people who buy residential or business property planning to live in them or run a small mom and pop shop, the value of a property is what you can rent it for.
That's why if you cannot get a good rent for your property, you'd probably won't be able to get a good selling price for it either.
Still, I think property prices in Siem Reap will not be as badly affected as those in Phnom Penh. At least in Siem Reap there is something that gives the property here real value, namely tourism. In Phnom Penh, it seems to me, property prices are driven by speculation. I am not a real estate agent and I don't have all the facts, but from what I've read, property in Phnom Penh have been snapped up by mainly Korean and Chinese speculators in the last few years, which accounts for the skyrocketing prices.
Speculators are not long term investors. When prices fall, they panic and pull out in order to cut their losses and in order to park their money on something else that seems a better bet.
The Korean won is at its lowest in a decade. As for China, GDP growth has now slowed for the last five consecutive quarters. As demand from the US (still China's top export destination) falls, the economy could be heading for a severe downturn. Two weeks ago the government said that half the country's toymakers had gone out of business.
Of course the Chinese are great consumers themselves, but even then indicators are that growth is slowing. There is falling demand for steel and the Chinese housing market is in a downturn:
"Numerous other property companies around China are similarly beleaguered. The Chinese press says that in September around 100 homeowners in the eastern city of Hangzhou stormed into the offices of Vanke, a big developer, to demand compensation for falling prices. In March a company in the southern city of Shenzhen caused a stir after it cut prices by 20%, by coughing up the difference to about 25 previous buyers of its property. Others have resisted giving cash, but have tried to calm homeowners by offering discounts on management services....In recent weeks 18 cities, including Hangzhou and Shanghai, have introduced measures to prop up the market." TheEconomist
Properties in areas such a BKK1 will suffer fewer losses because land there is limited. As long as there are expats around, there will be a demand for good houses in safe areas.
Maybe the only thing that will save this country is the oil. Because the Cambodians don't have the expertise to drill the oil, American expats (or whoever) will need to come in, and these guys are not going to do the work for peanuts. That'll bring more US dollars into the economy. It'll be just like when the NGOs first came into this country.
Today I noticed Enjoy Villa, the Australian-Khmer guesthouse around the Central Market area had a big padlock on its gate. I asked the tuk-tuk guy parked beside the guesthouse what happened? Did it shut down? He said yes. The website is still in operation, so I have no idea what's happened. The Angkor Airways office around the same area is also up for rent, as well as numerous others.
Businesses operating on thin margins will find it harder and harder to survive. Businesses that signed on leases at high prices will also find it a challenge to make money. As businesses struggle, rents will have to fall, because otherwise landlords will face the prospect of having no tenants.
As rents fall, so will property prices, because a piece of land is only as good as what you can extract from it. Except for those people who buy residential or business property planning to live in them or run a small mom and pop shop, the value of a property is what you can rent it for.
That's why if you cannot get a good rent for your property, you'd probably won't be able to get a good selling price for it either.
Still, I think property prices in Siem Reap will not be as badly affected as those in Phnom Penh. At least in Siem Reap there is something that gives the property here real value, namely tourism. In Phnom Penh, it seems to me, property prices are driven by speculation. I am not a real estate agent and I don't have all the facts, but from what I've read, property in Phnom Penh have been snapped up by mainly Korean and Chinese speculators in the last few years, which accounts for the skyrocketing prices.
Speculators are not long term investors. When prices fall, they panic and pull out in order to cut their losses and in order to park their money on something else that seems a better bet.
The Korean won is at its lowest in a decade. As for China, GDP growth has now slowed for the last five consecutive quarters. As demand from the US (still China's top export destination) falls, the economy could be heading for a severe downturn. Two weeks ago the government said that half the country's toymakers had gone out of business.
Of course the Chinese are great consumers themselves, but even then indicators are that growth is slowing. There is falling demand for steel and the Chinese housing market is in a downturn:
"Numerous other property companies around China are similarly beleaguered. The Chinese press says that in September around 100 homeowners in the eastern city of Hangzhou stormed into the offices of Vanke, a big developer, to demand compensation for falling prices. In March a company in the southern city of Shenzhen caused a stir after it cut prices by 20%, by coughing up the difference to about 25 previous buyers of its property. Others have resisted giving cash, but have tried to calm homeowners by offering discounts on management services....In recent weeks 18 cities, including Hangzhou and Shanghai, have introduced measures to prop up the market." TheEconomist
Properties in areas such a BKK1 will suffer fewer losses because land there is limited. As long as there are expats around, there will be a demand for good houses in safe areas.
Maybe the only thing that will save this country is the oil. Because the Cambodians don't have the expertise to drill the oil, American expats (or whoever) will need to come in, and these guys are not going to do the work for peanuts. That'll bring more US dollars into the economy. It'll be just like when the NGOs first came into this country.
Monday, June 09, 2008
Singapore and Cambodian governments, jobs and aid
I got a called from the Al Jazeera TV station last week. It was their office in Kuala Lumpur in Malaysia, and they wanted to do a story on foreign aid and its impact on Cambodia. The researcher came across the blog and thought I'd be perfect for a contrarian view on foreign donations. This is because I state categorically that Bloom is NOT an NGO and why we refuse to register as one. Anyway, the TV station's panel discussion will take place in Phnom Penh on Wednesday (I have no idea when the show will be broadcast) and I have to miss it because Alan is away and I need to look after my dogs, which always come first.
I did reply to their question on why I disagree with the huge amount of donation this country receives (see below). At the end of the day, what is more effective in helping this country is not aid, but jobs. I am optimistic that eventually, Cambodia will make it. Khmers want to learn English and the government is trying to make this place more conducive for business. I am not sure the government bothers too much about improving the average Cambodian standard of living through foreign investment, but whatever--that improvement in the average Khmer life *will* happen. A happy consequence of FDI.
The former developing countries that have succeeded, like Singapore and South Korea, did so not through aid, but through industry. I cannot comment on South Korea but I've always thought that one of the reasons Singapore succeeded is precisely because we lack natural resources.
In resource rich countries like the Gulf states and African nations, there is really no compelling reason for the government to invest in its people. They can get rich simply through the land--oil, forests, plantations etc. You will find that these countries I mention do not bother with educating its people. In fact, in many ways, it makes sense for these governments NOT to educate its people--educated people tend to be troublemakers, challenging the status quo.
Contrast this with the case of Singapore, which has nothing--no land, no rice, not even our own water (we import this from Malaysia). There is no other way for the government to get rich, except through its people. That is why the Singapore government invested in our education and training--to make us a diligent workforce that would attract foreign investors. One of the ways the government can then make money is through taxation. A cynical or pragmatic view of politics? People often tell me how good the Singapore government is, for investing in our education, but I was never convinced that "good" means "altruistic" in this case.
So what do we make of the many, many governments in countries such as the US, Canada, Australia that have both natural resources and a firm belief in education? They're smart enough to recognise the country can only be as powerful as its people are? I don't know. I *do* know it has taken the west hundreds of years to get to where they are, and they had the industrial revolution which empowered many people, economically. Perhaps they had to invest in education because of pressure from their by now economically powerful people? I don't know the answer but the history of education should tell us, which is why I will go investigate.
Anyway, here is the gist of my answer to Al Jazeera:
"I believe regular and constant handouts create a dependency mentality that is ultimately detrimental to people--and not just Cambodians. You can draw comparisons with the welfare system in developed countries, which I think discourages work and independence, replaces pride with poor self-esteem and marginalises instead of integrating people into economic and community life. All over the world, welfare benefits have created people who are dysfunctional--whether the indigenous people in the US, Australia or Canada. These "beneficiaries" are often stuck in a cycle of drug and alcohol abuse, violence and despondency.
"I believe there is value and honour in work, and it is work that often makes life interesting and worthwhile. We feel a sense of achievement when we create something of value and we share a sense of belonging when we work alongside other people. With Bloom, we are taking small steps for Cambodians to learn a skill and a trade so they can produce and sell quality products that people all over the world want, thereby, be part of the international trading community."
I did reply to their question on why I disagree with the huge amount of donation this country receives (see below). At the end of the day, what is more effective in helping this country is not aid, but jobs. I am optimistic that eventually, Cambodia will make it. Khmers want to learn English and the government is trying to make this place more conducive for business. I am not sure the government bothers too much about improving the average Cambodian standard of living through foreign investment, but whatever--that improvement in the average Khmer life *will* happen. A happy consequence of FDI.
The former developing countries that have succeeded, like Singapore and South Korea, did so not through aid, but through industry. I cannot comment on South Korea but I've always thought that one of the reasons Singapore succeeded is precisely because we lack natural resources.
In resource rich countries like the Gulf states and African nations, there is really no compelling reason for the government to invest in its people. They can get rich simply through the land--oil, forests, plantations etc. You will find that these countries I mention do not bother with educating its people. In fact, in many ways, it makes sense for these governments NOT to educate its people--educated people tend to be troublemakers, challenging the status quo.
Contrast this with the case of Singapore, which has nothing--no land, no rice, not even our own water (we import this from Malaysia). There is no other way for the government to get rich, except through its people. That is why the Singapore government invested in our education and training--to make us a diligent workforce that would attract foreign investors. One of the ways the government can then make money is through taxation. A cynical or pragmatic view of politics? People often tell me how good the Singapore government is, for investing in our education, but I was never convinced that "good" means "altruistic" in this case.
So what do we make of the many, many governments in countries such as the US, Canada, Australia that have both natural resources and a firm belief in education? They're smart enough to recognise the country can only be as powerful as its people are? I don't know. I *do* know it has taken the west hundreds of years to get to where they are, and they had the industrial revolution which empowered many people, economically. Perhaps they had to invest in education because of pressure from their by now economically powerful people? I don't know the answer but the history of education should tell us, which is why I will go investigate.
Anyway, here is the gist of my answer to Al Jazeera:
"I believe regular and constant handouts create a dependency mentality that is ultimately detrimental to people--and not just Cambodians. You can draw comparisons with the welfare system in developed countries, which I think discourages work and independence, replaces pride with poor self-esteem and marginalises instead of integrating people into economic and community life. All over the world, welfare benefits have created people who are dysfunctional--whether the indigenous people in the US, Australia or Canada. These "beneficiaries" are often stuck in a cycle of drug and alcohol abuse, violence and despondency.
"I believe there is value and honour in work, and it is work that often makes life interesting and worthwhile. We feel a sense of achievement when we create something of value and we share a sense of belonging when we work alongside other people. With Bloom, we are taking small steps for Cambodians to learn a skill and a trade so they can produce and sell quality products that people all over the world want, thereby, be part of the international trading community."
Sunday, February 25, 2007
So they found oil in Cambodia
But it's not good news, I fear. Call me a cynic.
Update: I had originally posted the entire AP article on my blog, for the convenience of readers, but have since realised I'd better stop publishing news articles on my blog before someone tells me they want money for their copyrighted materials.
Anyway, so I did a google search to find the original article to point readers to it. Here it is, on IHT's website:
www.iht.com/articles/2006/11/03/business/cambo.php
And here's an updated news article:
www.iht.com/articles/ap/2007/ 02/22/asia/AS-GEN-Cambodia-Offshore-Oil.php
One more by Radio Free Asia:
a.org/english/features/lelyveld/2007/03/12/cambodia_oil/
Update: I had originally posted the entire AP article on my blog, for the convenience of readers, but have since realised I'd better stop publishing news articles on my blog before someone tells me they want money for their copyrighted materials.
Anyway, so I did a google search to find the original article to point readers to it. Here it is, on IHT's website:
www.iht.com/articles/2006/11/03/business/cambo.php
And here's an updated news article:
www.iht.com/articles/ap/2007/ 02/22/asia/AS-GEN-Cambodia-Offshore-Oil.php
One more by Radio Free Asia:
a.org/english/features/lelyveld/2007/03/12/cambodia_oil/
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