[PHNOM PENH POST]
Until last December, Canadia Bank and its property investment offshoot
Overseas Cambodian Investment Corporation (OCIC) weren’t having a good
run.
After over-exposing itself to the property sector, which
had entered a full-blown slump by the second half of 2008, the bank
recorded non-performing loans of US$45.5 million for the year – more
than 11 per cent of its total portfolio.
Although the number of
bad loans reportedly halved in 2009, OCIC’s flagship Can-adia Tower
reportedly lost its bid to house Cambodia’s first stock exchange to
South Korean development Camko City as work on Phnom Penh’s tallest
building suffered a ser-ies of delays.
Then OCIC’s Diamond
Island was the scene of the grim stampede in November last year that
resulted in more than 350 Cambodians losing their lives and subsequent
payouts to the families of the dead and injured.
A month later, however, things began to turn around.
Although
representatives of World City Co Ltd, Canadia Bank and the Securities
and Exchange Commission of Cambodia (SECC) have declined to attribute
the reassignment of the stock exchange to Canadia Tower to the recent
problems at Camko City, suspension of building activity at the South
Kor-ean development in October left the government with few other
options.
Two months later, Canadia Tower was given back the
stock exchange, resulting in a significant impact on occupancy at Phnom
Penh’s only Grade A office space.
“After the SECC came to our
place, we got a lot of clients to rent here. We also . . . confirmed a
lot of clients [wanting] to book the space,” Pen Phyrun, marketing
manager of Mega Asset Management Co, the property unit of Canadia Tower
owner OCIC, told the Post in March.
But Canadia’s gain represents
a loss for most of the companies and private individuals associated
with the recent corruption scandal that has engulfed senior executives
at South Korea’s Busan Bank, reportedly the primary financial backer of
the Camko City project.
Because Camko’s developer, World City
Co, was unable to fund continuation of the project after October last
year, contractors such as Hanil Engineering and Construction say they
have not been paid in full.
There are also question marks over
the status of Camko Bank, which provides loans to customers buying
property in the stalled Camko City.
What, exactly, are the
bank’s links to the project? And will the South Korean government step
in to guarantee Camko City’s development (which was scheduled to
continue until 2018)?
Then there are the residents of the
satellite city and the wider property market, which has just begun to
recover from a downturn in sales, rentals and construction prompted by
the economic crisis.
This latest stalled project and ensuing
scandal hardly bodes well for house prices in Camko City itself or
confidence in the Phnom Penh property market.
Whether or not the
Camko City project can be rescued almost certainly depends on whether
the South Korean government will be prepared to bail out Busan Bank and
its investments.
In the meantime, Canadia Tower is set to house
Cambodia’s first stock exchange – and if Camko goes down, Canadia will
surely keep it.
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