Cambodia’s Macroeconomic Development€¦ · South Korea 5% US 4% Japan 3% Malaysia 3% France 3% United Kingdom 3% Taiwan 2% Australia 2% Others 16% Tourist Arrivals by Country

National Bank of Cambodia Riel. Stability. Development.

Seminar on “Crystal Ball” Year Ahead29 January 2019

Cambodia’s Macroeconomic Development

1

Presented by: CHEA Serey (H.E.)

Assistant Governor/Director General of Central Banking

National Bank of Cambodia

The views expressed in this presentation are those of the author and do not necessarily represent the views of the NBC.


Content

I. Macroeconomic Performance

II. Banking sector’s Development

III.Dollarization in Cambodia

IV.Opportunities and Challenges

2

National Bank of Cambodia Riel. Stability. Development.3

I- Macroeconomic Performance


Real GDP Growth in ASEAN

(In percent, y-o-y, 2018estimate)

Source: NIS and IMF

7.36.8 6.6 6.5 6.4

5.14.7 4.6

2.9

2.3

4


Contribution to Economic Growth

(In percent, y-o-y, 2010-2018 estimated)

Source: NIS and NBC staff calculation

6.0

7.1 7.3 7.4 7.1 7.0 6.9 7.0 7.3

-4

-2

0

2

4

6

8

10

2010 2011 2012 2013 2014 2015 2016 2017 2018e

%

Agriculture Garment & Footwear Construction

Services Others Growth

5


Growth in Real GDP and by Sectors

(In percent, y-o-y, 1995-2019 projection)


2

11

7

-15

-10

-5

0

5

10

15

20

25

30

35

Agriculture Industry Service Growth

6


Gross International Reserves

(In billion US dollars, 1998-2019projection)

Source: NBC

0.4

2.2

10.1

11.3

0

2

4

6

8

10

12

Gross International Reserves = 5 moths of prospective imports of goods and services

7


Nominal exchange rate Riel/USD

Source: NBC

3600

3700

3800

3900

4000

4100

4200

4300

4400

Jan

-01

Jun-0

1N

ov-0

1A

pr-

02

Sep

-02

Feb

-03

Jul-

03

Dec

-03

May

-04

Oct

-04

Mar

-05

Au

g-0

5Ja

n-0

6Ju

n-0

6N

ov-0

6A

pr-

07

Sep

-07

Feb

-08

Jul-

08

Dec

-08

May

-09

Oct

-09

Mar

-10

Au

g-1

0Ja

n-1

1Ju

n-1

1N

ov-1

1A

pr-

12

Sep

-12

Feb

-13

Jul-

13

Dec

-13

May

-14

Oct

-14

Mar

-15

Au

g-1

5Ja

n-1

6Ju

n-1

6N

ov-1

6A

pr-

17

Sep

-17

Feb

-18

Jul-

18

Dec

-18

Last two decades’ average exchange rate: 4025 Riels/USD

8


Contribution to Inflation and Core Inflation

(In percent, y-o-y, Jan-2017 to Dec-2018 )


-1

0

1

2

3

4

5

Jan

-17

Feb

-17

Mar

-17

Ap

r-1

7

May

-17

Jun

-17

Jul-

17

Au

g-1

7

Sep

-17

Oct

-17

No

v-1

7

Dec

-17

Jan

-18

Feb

-18

Mar

-18

Ap

r-1

8

May

-18

Jun

-18

Jul-

18

Au

g-1

8

Sep

-18

Oct

-18

No

v-1

8

Dec

-18

%

Foods Oil related items Core items Inflation

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

Mar

-10

Jun-1

0S

ep-1

0D

ec-1

0M

ar-1

1Ju

n-1

1S

ep-1

1D

ec-1

1M

ar-1

2Ju

n-1

2S

ep-1

2D

ec-1

2M

ar-1

3Ju

n-1

3S

ep-1

3D

ec-1

3M

ar-1

4Ju

n-1

4S

ep-1

4D

ec-1

4M

ar-1

5Ju

n-1

5S

ep-1

5D

ec-1

5M

ar-1

6Ju

n-1

6S

ep-1

6D

ec-1

6M

ar-1

7Ju

n-1

7S

ep-1

7D

ec-1

7M

ar-1

8Ju

n-1

8S

ep-1

8D

ec-1

8

Two decades’ average inflation: 3.5%

9


Inflation Forecasting

(In percent, y-o-y, 2017Q1-2019Q4projection)

Source: NBC

2,7 2,52,7

2,5

0

1

2

3

4

5

Projection

Q1 Q3Q2 Q4

2017

Q1 Q2 Q4

2018

Q1 Q2 Q3Q3 Q4

2019

%

10


0

100

200

300

400

500

600

700

800

2013 2014 2015 2016 2017 2018

Australia UK

Stock of FDI from Australia and UK to Cambodia

(In million of US dollar, 2013-2018e)

Source: Council Development Cambodia

FDI is estimated to grow by 12% in 2018, mainly from China, Korea and Taiwan

FDI from Australia accounted for 1.4% of total stock of FDI, mainly to banking and

construction sector

FDI from UK accounted for 3% of total stock of FDI, majorly to garment and footwear.


Exports to Australia slowly increased. Main export products in 2018 are i/-

cereals ii/- textiles and textile articles and iii/- Footwear

Imports from Australia jumped. Main import products are: i/- Vegetable products

and ii/- Mineral products.

0.11 0.15 0.130.19 0.15

0.25

0.90

1.131.07 1.02

0.940.85

0.0

0.2

0.4

0.6

0.8

1.0

1.2

0

20

40

60

80

100

120

140

160

2013 2014 2015 2016 2017 2018

Imports Export Share of total imports (right) Share of total exports (right)

Bilateral trade between Cambodia and Australia

(2003-2018e)Million USD %

Source: General Department Customs and Excise of Cambodia


Exports to UK slightly rose. Main export products in 2018 are i/- textiles and

textile articles and ii/- Vehicles and parts

Imports from UK widened. Main import products are: i/-Machinery and

mechanical appliances and ii/- Vehicles and parts.

0.16 0.14 0.13 0.34 0.27 0.45

10.8 10.5 10.5

9.3 8.98.0

0

2

4

6

8

10

12

0

200

400

600

800

1,000

1,200

2013 2014 2015 2016 2017 2018

Imports Export Share of total imports (right) Share of total exports (right)

Bilateral trade between Cambodia and UK

(2003-2018e)Million USD %

Source: General Department Customs and Excise of Cambodia


China34%

Vietnam13%Laos

6%

Thai6%

South Korea5%

US4%

Japan3%

Malaysia3%

France3%

United Kingdom3%

Taiwan2%

Australia2% Others

16%

Tourist Arrivals by Country to Cambodia in 2018

Source: Ministry of Tourism

Tourist arrivals were estimated to increase by 11.5%, y-o-y, mainly supported by

Chinese tourists. Other tourists beside Chinese, Malaysia and Taiwan registered a

negative annual growth rate including UK (-6%) and Australia (-7%)

UK and Australia ranked the 10th and 12th in 2018, which totally accounted for

approximately 5% of total visitors.



Cambodian Banking sector (Banks+MDIs+MFIs) has been rapidly developed which supports the

robust economic growth over the last decade.

-Assets/GDP 20%

-Credits/GDP 6.4%

-Deposits/GDP 12%

-Assets/GDP 44%

-Credits/GDP 26%

-Deposits/GDP 22%

-Assets/GDP 173%

-Credits/GDP 102%

-Deposits/GDP 92%

Source: NBC

16

1,078 14,707

100,429

2,094

16,516

90,123

3,350

28,424

171,545

2002 2010 2018

Credit

Deposit

Assets (Billion Riel)

Banking Sector’s Expansion

16


Banks’ credit has diversified to mainly: Wholesale and Retail Trade (28%),Household and mortgage 16%, construction 9%, and agricultural sector 9,4%.

While, the MFIs’ credits are mainly distributed to household 33%, agriculture 22%, trade22% and service sector 11%.

Banking Sector’s Credit to Economic Sector(as at end of 2018)

Source: NBC

Credit from Banks to Economic Sectors Credit from MFIs to Economic Sectors

Retail Trade, 17.0%

Wholesale Trade, 11.2%

Restaurant and Hotel,

4.9%

Manufacturing, 5.5%Construction,

9.1%Household, 7.6%

Agriculture, 9.4%

Real Estate Related, 7.0%

Mortgage, 9.8%

Others, 18.5% Agriculture, 21.81%

Trade, 22.26%

Service, 10.68%

Transportation, 5.07%

Construction, 4.15%

Household, 32.62%

Others, 3.41%

Source: NBC

17


Financial Inclusion(2008-2018)

Depositors has increased to 6 millions (growth 13%) and borrowers increase to 2.85 millions (growth 3%) which increase the financial inclusion rate to 68% in 2018.

Source: NBC

1.1

2.86

0.86

6.169%

0%

10%

20%

30%

40%

50%

60%

70%

80%

0

1

2

3

4

5

6

7

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

ចំនួនអ្នកខ្ច ីប្រាក់ ចំនួនអ្នកដាក់ប្រាក់បញ ញ្ ើ អ្ប្រាបរយិាប័ននហិរ ញ្ វត្ថ ុ(ខាងស្ត )ំ

million users

Number of Borrowers Number of Depositors Financial Inclusion Rate (RHS)

18


Banking Sector’s Capital Position

(2011-2018)

Banking sector’s capital remains strong. The banks’ average solvency ratio remains high around 21% and MFIs’ average solvency ratio is around 25% while the current solvency ratio minimum requirement is 15%.

21%

25%

15%

18%

21%

24%

27%

2011 2012 2013 2014 2015 2016 2017 2018

គ រ្ឹះស្ថា នធនាគារ គ រ្ឹះស្ថា នមីគរូហិរញ្ញវត្ាុMinimum requirement 15%

Banks MFIs

Source: NBC

19


Banks and MDIs have maintained their liquidity position as higher than the

minimum requirement, Commercial bank 168% and MDIs 188%.

Source: NBC

168%188%

0%

50%

100%

150%

200%

250%

300%

350%

400%

2011 2012 2013 2014 2015 2016 2017 2018គ រ្ឹះស្ថា នធនាគារ គ រ្ឹះស្ថា នមីគរូហិរញ្ញវត្ាុCommercial Banks Microfinance Taking Deposit

Liquidity Ratio (2011-2015) replaced by

Liquidity Coverage Ratio (2016-2018)

The LCR was implemented in 2016 with limit:

- 2018: 80%

- 2019 June: 90%

- 2020 Jan: 100%

Banking Sector’s Liquidity Position

(2011-2018)

20


Banking sectors’ NPL ratio remains low reflecting from Banks’ NPL ratio around 2.8%

and MFIs NPL ratio around 1% in 2018.

Banking Sector’s Credit Quality(2010-2018)

Source: NBC

1.2%

0.2% 0.3%

0.6% 0.6%0.8%

1.0%

2.0%

1%

3.1%

2.4% 2.5%2.7%

2.2%2.0%

3.1%

2.3%

2.8%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

2010 2011 2012 2013 2014 2015 2016 2017 2018

MFIs NPL Ratio Banks NPL Ratio

21


Payment System Development

NCS

R T G S

Development of payment system infrastructure

22


Payment System Infrastructure

NCSNBCP

Remittance

Mobile Banking and Internet Banking

e-Transportatione-Government

Payment Service Institutions

e-Commerce

FINTECH Start-up

23


III- Dollarization in Cambodia

24


Beginning of political and economic

instability in Cambodia

18/03/1970: Coup d’état

17/04/1975: Khmer Rouge

revolution

No market! No monetary system! No

money!

07/01/1979: Liberation from KR

Riel banknotes were reintroduced on March 20, 1980

Early 1990s: Dissolution of

the USSR

Monetization of fiscal deficit, hyperinflation

and inflow of USD through UNTAC

History of dollarization in Cambodia

25


Share of USD deposit in M2 & in total deposit

84.3

94.8

36.3

83.2

30

40

50

60

70

80

90

100

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

FCD/M2 FCD/TD

Source: NBC

26


Riel in Circulation in Billion

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

307

9,992

Source: NBC

27


Negotiable Certificate of Deposits (NCDs)

Source: NBC

USD NCDs KHR NCDs

0

500

1000

1500

2000

2500

3000

0

5

10

15

20

25

2013 2014 2015 2016 2017 2018

Issued Amount Outstanding Amount Number of NCDs

0

100

200

300

400

500

600

700

800

900

1000

0

2

4

6

8

10

12

14

16

2014 2015 2016 2017 2018

Issued Amount Outstanding Amount Number of NCDs

In Billion USD Number of NCDs In Trillion Riel Number of NCDs

(RHS) (RHS)

28


Development of LPCO since October 2016

138

465

0

50

100

150

200

250

300

350

400

450

500

Oct

-16

No

v-1

6

Dec

-16

Jan

-17

Feb

-17

Mar

-17

Ap

r-1

7

May

-17

Jun

-17

Jul-

17

Au

g-1

7

Sep

-17

Oct

-17

No

v-1

7

Dec

-17

Jan

-18

Feb

-18

Mar

-18

Ap

r-1

8

May

-18

Jun

-18

Jul-

18

Au

g-1

8

Sep

-18

Oct

-18

No

v-1

8

Dec

-18

LPCO

(in billion of Riel)

Bidding Amount

Outstanding Amount 2.70

2.60

2.95 2.86

3.05

2.00

2.50

3.00

3.50

Oct

-16

No

v-1

6

Dec

-16

Jan

-17

Feb

-17

Mar

-17

Ap

r-1

7

May

-17

Jun

-17

Jul-

17

Au

g-1

7

Sep

-17

Oct

-17

No

v-1

7

Dec

-17

Jan

-18

Feb

-18

Mar

-18

Ap

r-1

8

May

-18

Jun

-18

Jul-

18

Au

g-1

8

Sep

-18

Oct

-18

No

v-1

8

Dec

-18

3months 6months 1year

Interest Rate of

LPCO

Source: NBC

29


III- Opportunities and Challenges

30


Opportunities

- Peace and Stability- Highly opened and integrated economy- Access to preferential schemes- Special Economic Zone- Geographic dividend- Demographic dividend (Young population)- Potentials of tourism & agricultural sectors

31


Challenges- Narrow economic base- Less of domestic production- Climate change

Risks- Spillovers from global rise in protectionism- Erosion of competitiveness (high production cost,

strong USD, loss preferential schemes- Tighter global financial condition- High credit growth to construction & real estate

32


Thank You

33

Documents

Cambodia’s Macroeconomic Development€¦ · South Korea 5% US 4% Japan 3% Malaysia 3% France 3% United Kingdom 3% Taiwan 2% Australia 2% Others 16% Tourist Arrivals by Country