Charles River Laboratories said it would cooperate with the U.S. Department of Justice officials, and suspended shipments of primates to its U.S. labs from Cambodia.

But as one route for the drug-testing monkeys shut down, another opened wider – from Cambodia to Charles River’s labs in Quebec, Canada.

From massive caged enclosures in provinces near Phnom Penh, long-tailed macaques are now being imported into Canada for human drug testing development in unprecedented numbers, an investigation by the Southeast Asia Globe, Pulitzer Center and Toronto Star has found.

Since Charles River’s February 2023 announcement that it would stop monkey imports to the U.S., the value of Canadian imports of these endangered animals has spiked nearly six times to roughly 62 million USD, federal data shows. Charles River is the only registered importer of macaques from Cambodia in all of Canada.

The import surge has prompted concerns that Canada has now inherited a tainted supply chain that includes wild long-tail macaques, protected animals that may harbor dangerous pathogens. 

“While they’re [Charles River] doing the right thing in the U.S., they’re doing the wrong thing in Canada,” says Dr. Nicholas Dodman, a veterinary medicine expert and professor emeritus at Tufts Veterinary School in Boston. “It’s a kind of back door…They can still do their research, just not in the United States.”

In a statement, a Charles River spokesperson said the company complies with all Canadian regulations and, by abiding by strict protocols, it has ensured “no members of the public have been exposed to any health or safety risks from our facilities.”

The company said its facilities in Canada are part of its “global network” that includes “state-of-the-art operations in over 20 countries.” In a call with investors following the subpoena, Charles River’s CEO said the company quickly pivoted its monkey shipments to countries with “friendly governments” that are “working with us.”

Poached macaques allegedly smuggled into U.S.

Experts and animal rights activists question whether officials here have done enough to vet those imports.

Canadian officials point to numerous quality control checks in place to ensure proper importation of macaques. But a crucial stage of oversight falls to agents in the exporting countries – including two Cambodian government officials who were indicted by the same U.S. investigation that pulled Charles River into an international scandal and sent its stock value tumbling.

Charles River is not facing any charges and has only been subpoenaed.

The small, docile test subjects are used in Charles River’s lab research, including the development of a COVID-19 vaccine. Animals used in such research are supposed to be captive bred, according to international protocols.

The 2022 indictment alleged thousands of monkeys imported into the U.S. were wild macaques that were poached and laundered through the legal trade of the captive-breds. Officials suspect about 2,600 wild macaques entered the U.S. on false permits since 2018.

The same year of the indictment, the status of long-tailed macaques on the Red List of Threatened Species was upgraded to “endangered.” The threat report listed “biological resource use” as a leading cause of the decline of macaques in the wild.

There are good reasons why laboratory animals should not be captured from the wild, says Andrew Knight, veterinary professor of animal welfare at Australia’s Griffith University.

“Scientifically, their genetic composition, and their health or disease status, may be unknown or variable, which can make experimental results less reliable,” he says. “Additionally, there are major animal welfare concerns when primates are captured from the wild, or transported from breeding centres close to wild populations.”

“Human health and animal welfare is paramount”

Canadian regulators should pay more attention to the importation of macaques, not only because of the alleged problems U.S. investigators found but also because Cambodian monkeys could bring diseases, says Lisa Jones-Engel, a senior science advisor with the U.S. activist group People for the Ethical Treatment of Animals (PETA).

“Charles River…went just to the north to Canada and not only did (Canadian officials) not shut it down, but it appears they threw the borders wide open, rolled out the red carpet,” she said. “And Canadian officials are ignoring that monkeys exported from Cambodia have been harboring pathogens that not only represent a deadly zoonotic risk, but the presence of these pathogens further undermines and confounds the use of these monkeys in experimentation.”

In May, Jones-Engel wrote a letter to officials in Ottawa that warned this primate trade is characterized by the “highest risk of zoonotic disease transmission” and that “Canadian residents may be paying the price for this industry’s hazardous practices.”

She told the Globe that the possibility of wild-caught monkeys entering the supply chain “means that this industry is more likely to usher in the next pandemic than it is to prevent it.”

we may produce or import animals carrying infectious agents capable of causing disease in humans

Charles River Laboratories

A recent case study by U.S. researchers tied a case of melioidosis, an infectious disease that can affect both humans and animals, to a Cambodian macaque imported to the U.S. in January 2021. 

The animal was not imported by Charles River, the company said.

In a statement, Charles River said it respects the views of “groups and individuals who deeply oppose the use of animals in human drug testing.”

“However, any factual and fair assessment of how [Charles River] carries out such drug testing would conclude that our commitment to both human health and animal welfare is paramount. We have no doubt that the people whose lives have been saved or immeasurably improved by the drugs we have helped develop would agree with us.”

In addition to COVID vaccines, the company develops drugs to treat cancer, diabetes and rare diseases.

The company did not respond directly to questions about whether wild-caught monkeys could have been included in their Canadian supply chain. In a 2020 form to the U.S. Securities and Exchange Commission, Charles River noted that “we may produce or import animals carrying infectious agents capable of causing disease in humans,” which “could be a possible risk of human exposure and infection.” 

The company says its strict protocols include a 30-day quarantine for imported primates and required disease testing, all monitored by Canadian officials. 

Canadian officials echoed Charles River, saying they closely monitor the primates to ensure public safety. 

Dodman, the expert in veterinary medicine, is less certain.

“Grabbing a monkey out of a tree and shipping them to a lab, you’re asking for a health crisis,” he says. “However many precautions they take, they can make mistakes and who knows the incubation time on some of these diseases?”

Oversight relies on permits issued in Cambodia

Environment and Climate Change Canada (ECCC) monitors the importation of animals going to labs. 

To do that, the federal government relies on the Convention for the International Trade of Endangered Species (CITES), which is run by the United Nations, to properly vet the animals’ origin and ensure there is no harm to species’ wild population.  

The officials in Ottawa said they look to ensure the incoming animals have CITES permits issued by officials in the originating country.

But Masphal Kry and Omaliss Keo, the two high-level Cambodian officials indicted by the U.S. Department of Justice, lead the CITES Management Authority in Cambodia that issues the permits Canadian officials say they rely upon.

Kry, who was arrested in the U.S. in November 2022, while on his way to a convention on the international trade of endangered species, is the only one so far who has stood trial. On March 22, he was found not guilty of smuggling and conspiracy to smuggle. His lawyers did not respond to a request for comment.

Despite the indictment, Keo is still listed as the CITES chairman for “terrestrial forest and wildlife resources” in Cambodia. When reached, Keo did not answer specific questions, but responded, “I thank [you] for your email and appreciate your asking (for clarification) and finding truth. I will respond as soon as possible.”

Upon Kry’s verdict and return to Phnom Penh, the Ministry of Agriculture, Forestry and Fisheries released a statement that read “This misrepresentation [the arrest of Kry] was based on evidence obtained via improper investigations, concealed from Cambodian authorities, and contravening normal practices of cross-border law enforcement norms.”

The press release continued that the allegations against Cambodia regarding the long-tailed macaque trade had no evidence and relied on unfounded assertions disseminated by certain individuals or NGO personnel, disseminated through local unprofessional media and Western mainstream media, aiming to discredit Cambodian officials and influence the court decision.”

Also facing charges are six officials affiliated with Vanny Bio-Research, a major exporter of long-tailed macaques bred for use in research. In a statement, the company said it “denies any wrongdoing.”

The allegations by U.S. prosecutors carry significant implications, said Sarah Kite, co-founder of the international advocacy group Action for Primates, adding that they “raise serious questions regarding how widespread this smuggling operation was — and may continue to be — in Cambodia.”

“By continuing to allow the importation of long-tailed macaques from Cambodia, Canada may be… contributing substantially to the cruelty of trapping, and the decimation of the species in the wild,” Kite continued.

Monkey shipments pivoted to ‘friendly’ countries

While the U.S. government has not officially instituted a ban on the import of Cambodian monkeys, redacted letters from the U.S. Fish and Wildlife Service show that at least two re-export requests of live long-tailed macaques and biological specimens have been denied since the indictment.

Pierre Verreault, executive director of the Canadian Council on Animal Care, which inspects Charles River facilities and other Canadian labs to ensure animal welfare, says the U.S. government’s probe is a key way to find out whether the supply chain is tainted. “Hopefully, if there’s something wrong there, it will stop.”

In the meantime, Charles River’s movement of macaque importations away from the U.S. has had no significant impact on operations, CEO James Foster said in a September conference call with investors.

While the indictment “was very concerning,” the company pivoted to its “international footprint, which is quite large, we have got great facilities all over.”

“We have friendly governments…working with us…We’re not going to pivot back to the U.S…The preponderance will be done elsewhere,” Foster said.

Charles River is also facing a class action lawsuit from shareholders. The plaintiffs allege that the company “made materially false and/or misleading statements” and failed to disclose that the company had “engaged in illegal activity with respect to its importation of non-human primates for research” including relying on “non-preferred suppliers of animals from Cambodia.”

As a result of the company’s “precipitous decline in market value” following the subpoena, shareholders have suffered “significant losses and damages,” the claim alleges.

Charles River did not respond to questions about the civil lawsuit. In a court filing responding to the allegations, the company denied making any false statements, saying that it “regularly warned investors of the risks of supply interruption” and potential need to rely on alternative suppliers.

“Charles River expressly warned investors about the risk of disruption to its supply of macaques and about the possibility that its operations may not comply with laws, including laws governing the importation of macaques,” the response reads. “Charles Rivers’ warning that it might be required to source products from ‘non-preferred’ vendors demonstrates that the company was being transparent, not attempting to mislead the market.”

Charles River has asked the court to dismiss the civil claim.

~~~

This article was produced by a collaboration between The Toronto Star and Southeast Asia Globe, with support from The Pulitzer Center’s Rainforest Investigations Network.

The post Cambodian monkey exports to Canada for lab tests are surging, fueling health concerns appeared first on Southeast Asia Globe.

However, developments in Cambodia’s lending landscape offer cause for optimism. The explosion in Cambodia’s fintech ecosystem, paired with the growing potential of alternative-data credit frameworks, could provide a path towards financial inclusion for those previously left out of the conversation.

Acccording to Ms. Phal-Chalm Theany, Secretary General of the Association of Banks in Cambodia, “Alternative data has tremendous potential for contributing to financial inclusion by complementing traditional financial data that banks have. They range from information on mobile wallet transactions to information on user behavior on digital platforms that can be utilized for risk assessment of individuals and MSMEs.” 

Most financial institutions use debt repayment history and bank and credit files to determine the creditworthiness of potential borrowers. Driven by digitalisation and developments in technologies such as data analytics and machine learning, alternative credit scoring is based on any form of non-traditional information that can provide insights into the ability and propensity of borrowers to pay back loans. Telecom and utility payment histories, as well as digital footprints and mobile data, can all be utilised to assess creditworthiness within these frameworks.

Banks in Cambodia are increasingly looking to tap alternative data for serving the unbanked and underbanked.

“Data in Cambodia is still very much fragmented and held across multiple organizations and institutions,” said Mr. Mach Chan, CEO of Phillip Bank in Cambodia. “Many people do not have formal loans from financial institutions. This makes it challenging to predict their repayment capacities. If Phillip Bank can easily assess aggregated alternative data, we can better assess a borrower’s creditworthiness based on their social and behavioral indicators, and spending patterns and habits. This allows us to form a more complete picture of the borrower’s risk profile, with opportunities to offer cheaper loans to less risky customers, regardless of whether they are banked. Additionally, many SMEs are not formally registered making lending a challenge. If banks can access the payments data of these MSMEs, the financial Industry will be more confident to support the needs of these businesses.”

Across Southeast Asia, governments, banks and key stakeholders are becoming increasingly interested in the potential of alternative data as a tool to expand the scope and accessibility of financial services.

A Southeast Asia-focused report published by the World Bank Group in 2021 highlights four new data types that have emerged as part of the evolving digital ecosystem, and which can aid credit decision-making: mobile operator and app-based data, digital payments, e-commerce data and enterprise-tech (business-performance) data. Such alternative data has also been highlighted by the Asian Development Bank as one of the key areas for driving financial inclusion in Southeast Asia. 

Across the region, governments, banks and key stakeholders are becoming increasingly interested in the potential of alternative data as a tool to expand the scope and accessibility of financial services.

In December 2022, the National Credit Bureau of Thailand announced the plan to launch a non-credit data centre by consolidating such data into NCB’s existing credit database with initial application of utility payment data from Electricity and Water Utilities.

In Indonesia, Experian collaborated with a telecom company to uplift financial inclusion by using data from telco to provide advanced credit assessment to empower unbanked and underbanked.

In the Philippines, Credit Information Centre (CIC) is working on an open policy to enable accessing entities to utilize credit bureau data with alternative data to come up with a complete picture of a borrower’s credit profile.

In the context of Cambodia, utility bill payment and telco payment data can serve as important sources of alternative credit data. Moreover, with rapid digitalization along with adoption of digital payments, there should be enormous potential to tap a wide array of alternative data on payments and digital footprints. Around the world, such data have served as key drivers for digital financial inclusion. 

With a rise in digital financial service providers, digital payment catalysts and e-commerce in Cambodia, massive amounts of alternative data are already generated at present. Given this scenario, it is important to have an organized ecosystem to collect, process and utilize such alternative credit data.

On the regulatory front, the National Bank of Cambodia revised the prakas on credit reporting in 2020, enabling Credit Bureau Cambodia (CBC) to collect alternative data along with traditional credit data to support financial institutions to strengthen credit risk assessment capabilities.  

CBC was established in 2012 with the support of the National Bank of Cambodia, the Association of Banks   in Cambodia and other key stakeholders in the sector to manage a fair and transparent credit market in support of the nation’s economic development. Since then, CBC has become the leading body providing financial information in the country. Although currently CBC only manages traditional data reported by member banks and financial institutions, it is preparing an ambitious roadmap to collaborate with multiple sectors in the country. Its plan is to establish a comprehensive alternative credit data ecosystem that can work together with the traditional credit data ecosystem for social and economic benefits to Cambodians.

“I would say Cambodia stands a decade ahead of other emerging market economies because of the Credit Bureau and the lending environment,” explained Gordon Peters, co-founder and CEO of fintech firm Boost, which harnesses popular social media platform such as Facebook and Telegram to enable access to finance. “CBC has done a great job of collecting, collating and sharing data on the financial lives of customers,” he said. “I think that is a huge unlock.”

For Peters and company, CBC establishes a level of legitimacy and security that has benefited Cambodia’s financial sector and allowed his firm to fill a gap in the ecosystem. Banks and financial institutions have a high degree of confidence and trust in the role of CBC as a key financial data infrastructure in the country. For a company that already manages credit history data of more than 7 million individuals and businesses, expanding the capabilities to manage alternative data reporting system looks plausible.

Ms. Theany elaborated: “CBC is a data centre for the financial sector that collects data from banks and financial institutions, stores and analyses them for the purposes of credit scoring for those financial institutions. Where each bank and financial institution may have its own data, CBC has the financial information for the whole sector.

“With strong capabilities in data analytics, artificial intelligence and machine learning, CBC is uniquely positioned to harness alternative data from diverse data sources to enable banks and financial institutions to conduct better assessment of the profile of the unbanked (mainly women and farmers) and informal small businesses, estimate income with more precision. This shall enable financial institutions to offer more appropriate credits or other financial services in the absence of a financial footprint, credit histories or property guarantees.”

Mr. Chan added: “CBC could spearhead the aggregation of payments, telco and utilities data. These datasets are then fed into a prospective customer’s credit score. Over the past few years, with NBC’s Bakong as a key enabler, we’ve seen a rapid digitization of payments. We believe that when assessing customer creditworthiness, payments data is just as important as borrowing and repayment data, and should be prioritized. At the same time, CBC would need to seek the cooperation of their member financial institutions to provide these datasets. For SMEs, we also see data from GDT as an important asset. If CBC could connect and obtain data with GDT, it will allow the banks to form better assessments for clean loans, spurring economic activity.”

Currently, CBC provides K-Score, an algorithmic credit score (ACS). ACS uses machine-learning algorithms to analyse massive data sets to produce credit scores without traditional financial information. This is the only industry level credit score available in Cambodia. First launched in 2015, CBC did a major revamp of the algorithms in 2020 to keep up with the evolving changes in the market landscape. Today, K-Score is available to all member financial institutions of CBC and (via CBC’s mobile app) to all individuals as well.

A 2023 report in the Asian Journal of Law and Science states: “ACS is the tip of the spear of the global campaign for financial inclusion, which aims at including unbanked and underbanked citizens in financial markets and delivering them financial services, including credit, at fair and affordable prices.” The study outlines the wide ranging benefits of ACS and alternative data as tools to benefit individuals across Southeast Asia who lack access to financial services.

In the Cambodian context, Credit Bureau of Cambodia is well positioned to lead the way in leveraging these tools. To make sense of the massive datasets now available thanks to digitalisation, CBC utilises a host of ACS tools. Machine-learning algorithms and other artificial intelligence mechanisms allow for the analysis of data at a scale that was previously impossible. Risk analysis profiles and loan portfolios that are regularly updated and refined are just a couple of the ways these technologies can be leveraged using alternative data. While the power of these tools is certainly important, CBC’s experience in the sector — and its standing as the leading institution managing, analysing and providing financial data — are the most compelling reasons for the adoption of alternative data schemes in Cambodia.

“As we are entering our second decade of credit reporting in Cambodia, CBC is committed to being a trusted (element in the) national financial infrastructure for providing alternative credit data, to strengthen credit risk assessment for our 190-plus member financial institutions, and to expand access to credit for the new-to-credit consumer segments. We are very open to collaborate with alternative data providers such as telcos, utilities and payment service providers to harness information not found in traditional credit reports, to help more Cambodians obtain access to mainstream financial services,” explained CBC CEO, Oeur Sothearoath.

As CBC leverages its established presence in the financial sector, a growing pool of innovators is working with the agency to develop and facilitate the alternative data ecosystem.

The post Emerging digital technology, alternative data and financial inclusion in Cambodia appeared first on Southeast Asia Globe.

As it turned out, apart from its benefits for well-being, Dalat was a great place to grow things that didn’t do well at sea level. Vegetables and fruits like avocados, artichokes and strawberries thrived in the cooler climate. So, too, did flowers: orchids, roses, hydrangeas. Coffee farms and cashew orchards proliferated on the steep-sided mountain slopes.

Much to the gall of the Gauls, however, grapes didn’t do as well. French being French, they loved their wine, and they had high hopes that the upland climate might yield something akin to the Vitis vinifera of their European homeland: A merlot, perhaps. A robust cabernet. A crisp sauvignon blanc.

Through many fits and starts, they finally have it, although the French colonists are long gone.

Today the Ladora Winery, operated by Ladofoods, is firmly established in greater Dalat. Its wines may not be to the taste of many Westerners, but as wineries go, it is the “only one with a proper vineyard and winemaking”, affirmed Tu Lê Huy, president and co-founder of the Saigon Sommelier Association. Indeed, Ladora is the only start-to-finish winery anywhere in the former French Indochina.

Ladora grows its own grapes and processes its own wines. The grapes — cabernet sauvignon, shiraz, merlot and sauvignon blanc, plus the hybrid Cardinal varietal — are grown in 125 hectares of vineyards near Phan Rang, not far from ancient Champa Empire ruins. Immediately upon their twice-yearly harvest, they are trucked 60 kilometers to the Ladofoods factory to be de-stemmed, crushed, fermented, pressed, filtered, aged and bottled.

The French had found the local grapes to be far too tart for wine. Even with vineyard cuttings from Europe, the heat and humidity produced only low yields of bitter berries. So they turned their attention to making sweeter fruit wines, especially apple and strawberry. The Vietnamese already knew that tropical fruits, including bananas and pineapples, could be fermented to produce a high-proof if barely palatable household plonk.

Upon the normalisation of diplomatic relations with the West in the 1990s, wine grapes made a reappearance in Vietnam, boosted by Australian and European investment and modern technology. The key to success was planting in a different climate zone than the production facility.

“Dalat is too rainy, too fertile for grapes,” said Huy, one of three Vietnamese men who founded the sommeliers’ group in 2017. It has now grown to 120 members. “Dalat is great for tea and coffee, but not good for grapes. That’s why Lado grows its grapes in Ninh Thuan province.”

Wine in Asia

Elsewhere in Vietnam, Hanoi’s MAM Distillery, established in 2019, blends rice wine with fermented fruit juices, 15 in all, kumquats to raspberries to lemons. Sơn Tinh, founded in Hanoi by a Swiss winemaker in 2000, makes a small-batch rice wine noted for its herbal qualities.

The DalatBeco wine company, launched in 2007, has been importing fruit from France to counter struggles with the quality and consistency of grapes produced by local growers, despite a joint-venture partnership with wine experts in Avignon.

“A lot of bulk wine importers bottle their own wine here,” Huy noted.

The nearest full wineries to southern Vietnam are 1,000 km from Dalat, in Thailand’s Khao Yai hills northeast of Bangkok. Cambodia has a fruit winery in Battambang province. Other Asian countries are slowly progressing.

One of their champions is American wine educator and author Liz Thach, a certified Master of Wine and a professor at California’s Sonoma State University.

“I am pleased to see the growth of wineries in Asia, along with consumer interest in wine,” Thach said. “China actually has a very old wine culture and over 400 wineries, with some of them producing excellent award-winning wines. Bali now has four wineries, and I recently visited one of them and was extremely impressed with the quality of the wine.

“Vietnam has also been producing wine for many years, and they have become very creative in pairing wine with the delicious Vietnamese cuisine. Wineries are growing in number in Thailand, Japan, Korea and India. I believe there is an exciting future for wine in Asia.”

Huy was less enthusiastic about Chinese wine than Japanese.

“China is still very much in the early stage of winemaking,” he said. “I tried some; it still has a lot of tannin and lacks character. But Japan makes some nice whites, which they’ve crossed with native grapes suitable to the climate.”

Profit and projection

From a profitability standpoint, wine is far from big business in Vietnam. Consumption of imported wines far exceeds domestic brands, yet in 2023, the market yielded only $229 million, about $2.30 per capita. By contrast, U.S. wine revenue was over $56 billion, with per capita consumption of about $58. Continued growth in the Vietnam wine market is anticipated at a rate of just under 4% per year through 2027.

Figures from Ladofoods highlight the fallout the domestic industry experienced in 2022 as a result of the Covid-19 pandemic. Vietnam’s leading wine producer netted $10.15 million in sales in 2021, yet that figure plummeted to $7.85 million in 2022. It’s likely that 2023 will show a recovery to more than $9.2 million, or 223 billion Vietnam dong.

About 40% of Ladora’s production is exported to other Asian countries, said tasting-room manager Ngoc Dung. Of that, Japan gets the lion’s share, followed by Korea. Lesser amounts are shipped to Thailand, Cambodia, Malaysia, Singapore, Laos, China and Taiwan. That leaves 60% for the domestic market.

“The Vietnam market is definitely an entry-level market,” said Huy. “They are only starting to get the idea of wine pairing. There’s a niche market of well-educated and really wealthy Vietnamese for whom classic Bordeauxs are number one.

“They’ve started to drink white with seafood. But for the most part, white wine is not working well here. It’s better in the north because North Vietnamese have a different palate. They like more acidity but not sweet. Central Vietnam likes more spice. The South likes sugar.”

A visit to Ladora

The Ladora Winery is located 28 kilometers east of Dalat city in the hill country of the Phat Chi district. The elegant Chateau Dalat, sitting atop a garden knoll, is at the heart of a building complex overlooking a landscape of greenhouses that provide colourful flowers to the markets of Dalat and Ho Chi Minh City.

Twenty-five steps beneath an earth-covered hummock is an elaborate and extensive wine cellar. Oak barrels filled with aging cabernet sauvignon, shiraz and merlot, and stainless-steel drums of sauvignon blanc, are stacked against the walls. A tower of unlabeled bottles of reds occupies the middle of one room. A long tasting table awaits tour groups, not present on this day.

Assistant winemaker Nguyen Lan said the company makes two principal kinds of wine with these same grapes, for two distinct markets. The Chateau Dalat brand is designed for those of European predilection; wines are plus or minus 12% alcohol. Vang Dalat, its grapes blended with the hybrid Cardinal varietal, is typically over 15%. Ladoro also makes a sweet but lower-alcohol Nouvo Sangria and a sparkling Vivazz fruit wine.

“Mostly, Asians like the sweeter wines,” Lan said. “So we add mulberries, whose sugar increases the alcohol content while making the colour a bit lighter.”

“In Dalat, there’s just not enough sugar in the natural wine,” sommelier Huy reiterated. “The mulberry adds more sugar and more colour.”

Europeans, by contrast, prefer the unblended Chateau Dalat varietals, made under the direction of head winemaker Lê Binh together with European consultants. Some of these have been honoured at wine competitions in Hong Kong and San Francisco.

A sample tasting

A visit to Ladora’s sophisticated, Czech-designed tasting room begins with a video presentation introducing the Ninh Thuan vineyards. The company owns one-fifth of the grapes here; the remaining 100 hectares belong to private farmers contracted to sell the grapes to Ladora. Drip irrigation ensures the plants have sufficient water in the dry season. Flocks of ducks patrol the wine hedges to eat insect pests.

Annual grape production averages 10 to 15 tonnes per hectare, Lan said. All of the fruit is transported uphill to the modern Central Highlands factory, where the temperature is maintained at a steady 18 to 20 degrees Celsius.

It would be impossible to taste each one of the more than two dozen wines in the Ladofoods catalogue in a single sitting. A sample tasting is more instructional than comprehensive. The 2017 Chateau Dalat Special sauvignon blanc is very dry, a little sour, with aromas of lime and passion fruit. It’s recommended to be enjoyed with shellfish.

The Vang Dalat Classic Special is a 70-30 blend of Cardinal grapes with mulberries. Despite high acidity and peppery spice, it has a mellow finish. “It’s my favorite,” said the assistant winemaker. Vang Dalat Strong, at 15% alcohol, is an 85-15 blend of Cardinal and mulberries with a lighter ruby colour and the aroma of sweet berries, almost like jam on bread. “Korean guests love this one,” Lan said. Because of their mulberry content, the Vang Dalat wines don’t carry a vintage date.

More traditional in approach is the 2018 Chateau Dalat Reserve cabernet sauvignon, aged in French-made American oak barrels for 1½ years. A subtle flavour of black currant presides over a gentle red that retails at $14. Aged six months longer, the 2019 Chateau Dalat Signature shiraz is earthy and full-bodied with rich tannins and a white-pepper finish.

Its retail price is $34. “Japanese and Koreans love this one,” said Lan.

“Most people in Vietnam have the idea that import wine is better than wine from Vietnam,” the assistant winemaker said. “So it’s hard to change their mind.”

Of course, not all Vietnamese are enamoured with their country’s domestically produced wines. Lê Huy, the sommelier, suggested that they lack originality: “Welcome to the government company,” he laughed. Formerly state-owned, Ladofoods is now a Vietnamese joint stock corporation.

Looking ahead

Today, as a picturesque city of nearly half a million people, Da Lat is a favorite of tourists both domestic and international. It remains a health resort as well as a center for education, its universities famed for their work in biotechnology, nuclear physics and architecture. Beautiful gardens surround its urban lakes. A street market is renowned throughout Vietnam.

But there are no winery tasting rooms even though there is apparently no prohibition against them. Dalat wines are widely available in shops in that city, and in Ladofoods’ showroom in Ho Chi Minh City, but consumers have no chance to taste the wines before buying them. It seems that someone is missing a great great marketing opportunity.

Foreign investors have looked into the possibility of establishing other wine regions in Vietnam. But Huy said it’s unlikely that will happen.

“In the North, we don’t have a delta big enough for vineyards,” he said. “It’s only rocks.

“The Bana Hills near Danang are very suited for wine grapes, but the best climate is in the middle of a national reserve — and money cannot talk in the national reserve. There was interest from an Italian winemaker, but the wine would have had to be priced at $70 a bottle. There would be no way to sell it.”

The post A passion for wine in Vietnam’s Central Highlands appeared first on Southeast Asia Globe.

Driven by Chinese government crackdowns from the casino enclave of Macau, some organisers of VIP gambling tours – known as junkets – appear to be enduring the storm while also transferring business elsewhere in their regional networks. Meanwhile, in Vietnam, locally owned gambling operators are restyling themselves to snap up Chinese whales of their own, potentially cutting deeper into the besieged junkets.

The legal pressure in Macau sought to cut down on money laundering and capital flight, both of which are often suspected of jet-setting Chinese gamblers. 

Junket operators in the enclave developed a reputation for helping the affluent ferry their money across the border of the special administrative district to gamble in casinos. There, they could obtain their winnings in U.S. dollars or other foreign currencies that could then be used to invest in property or offshore tax havens. 

But with the effects of the pandemic on this clientele still reverberating across the region’s casinos, unfavourable foreign currency exchange fees and slippery Macau junkets refusing to die, the prospect of Vietnam or other regional destinations becoming hubs for such exiled gamers is up in the air. Gambling operators both in Macau and across Southeast Asia are left to adapt to secure their piece of the market. 

“I think that there’s going to be new intermediaries which won’t call themselves junkets, but in effect, are going to be providing the sorts of services that junket operators used in the past,” said John Langdale, a researcher and expert on money laundering at Australia’s Macquarie University. 

Vietnam is already a node of the bustling Chinese gambling tour business that re-emerged after the pandemic. As junkets in Macau get pushed further underground, preexisting Vietnamese gaming firms, known as “international tour operators” seem eager to fill a gap. 

For now though, their organisations have a more limited reach than the Macau giants that came before them. In general, Southeast Asian junkets “tend to be what we call ad-hoc casual junkets,” said gaming industry consultant Ben Lee. 

That stands in contrast to what former junket operators in Macau utilised as an almost vertical integration model, where gambling tour operators had junket rooms in various casinos. There, they could staff their own cashiers, food and beverage services, and even drivers due to their enormous market share of affluent Chinese gamblers, Lee explained.

Southeast Asian junket operators – at the moment – simply do not have the ability to target the Chinese as they do not have the network in the country. Their main markets are the various Southeast Asia countries with nowhere near the size or volume of Chinese players, Lee said. 

Only a few regional facilities right now may have the clout to break through.

The Hoiana, a multi-billion-dollar integrated resort-casino, could be one of them. It stretches across 1,000 hectares of land in the Chu Lai Open Economic Zone south of Da Nang, Vietnam.

“The Hoiana is probably one of the first proper five-star resorts that has a chance to target [the Chinese market],” Lee said. “But, by the end of day, the volume of mainland patronage in Vietnam is small compared with China.”

The casino-resort didn’t respond to a request for comment, but Hoiana president and CEO Steve Wolstenholme said in an interview earlier this year that following the pandemic and a return of Chinese tourists, the Hoiana was focused on “diversifying our products and services, especially services for high-class guests”.

In recent months, control of the Hoiana seems to have passed hands from LET Group Holdings – previously known as the Suncity Group, one of Macau’s largest junket organisers pre-crackdown – to the billionaire Cheng family from Hong Kong through its flagship investment firm, Chow Tai Fook Enterprises. 

The family and Suncity were already deeply connected before the now-embattled tour operator was all but crushed by law-enforcement agencies in Macau. 

As a gambling investor in casino-dense Macau, now-deceased family patriarch Cheng Yu Tung allegedly partnered with triad organisations such as 14K and Sun Yee On as early as the 1980s. Macau prosecutors would later say he was in business with the notorious 14K leader Wan Kuok Koi – better known as “Broken Tooth” Koi – before the gangster met with a dramatic 1998 arrest.

The Cheng family later partnered with a man reportedly seen as Koi’s protege – Alvin Chau, founder and CEO of the once-powerful Suncity tour company. After starting his company in 2007, Chau built a fortune with Chinese VIP gamblers and, later, real-estate development. But his success put him under the thumb of the Chinese junket crackdown and he was arrested in 2021, effectively cratering that industry.

Last year, Suncity officially rebranded itself as the LET Group while Chau awaited trial in Macau for 286 criminal charges, including fraud and money laundering. By January, Chau was convicted of heading a criminal organisation and sentenced to 18 years in prison.

Suncity had publicly led development of Hoiana and held a major ownership stake in the project, which reportedly struggled in recent years. 

The recently publicised change in management coincides with the shutdown of Suncity’s VIP rooms in Macau following Chau’s jailing. It also follows upon the regulatory tightening of Macau junket operators documented as having associations with organised crime and money laundering – or simply suspected of such.

Jeremy Douglas, regional representative of the U.N. Office on Drugs and Crime (UNODC) for Southeast Asia and the Pacific, fears that in the months and years ahead, the Hoiana could prove to be a model for still-ambitious junket bosses and Chinese gamblers eager to launder their money.

Vietnam currently has no specific licensing regimes for operators of gambling-related tours. Still, the Hoiana has kept much cleaner operations than the many more notorious casinos littered across the region’s special economic zones.

Regional casinos located in these special economic zones (SEZs) are often known to deploy a model whereby casinos become money-laundering fronts for displaced Chinese and regional syndicates. In addition, they may harbour other illicit activities such as cyber scams, human trafficking, drug trafficking and the wildlife trade. 

Some zones, such as the notorious “Golden Triangle” SEZ in Laos, become self-policed areas for syndicate bosses migrating from China. The Golden Triangle SEZ is organised under the Kings Romans Group, owned and operated by the U.S.-sanctioned syndicate chief Zhao Wei. 

Other SEZs are clustered along Mekong region borders and closely overlap with casinos. 

More than 100 casinos in Myanmar are nestled among 13 such zones, according to maps and data provided by the UNODC, while Vietnam has an estimated 41 casinos in or near 44 SEZs.

The diversification into entertainment and conventions and all the rest of it, they provide the cover and the legitimacy for the casinos

John Langdale

The prospect of lawlessness in these zones has caught the attention of authorities, contributing to China’s tightened control over outbound visas. With that, Macau has remained the ideal gambling destination due to its proximity and limited autonomous status.

The former Portuguese colony – despite the supposed shutdown of junket operations in the zone – has developed an underground model that is giving just enough space for high-rolling Chinese gamblers on the hunt for capital flight destinations and elaborate gambling tours.

“What most people don’t know is that the (junket) agents are still operating in Macau, but they’re no longer being identified as junkets because that’s no longer politically correct,” said Lee. “They are now being recognized by the casinos as players.”

As “programme players”, junket operators are able to allocate a private VIP room in a casino with a large enough buy-in. The junket agents are then able to organise a private gaming setting for their “friends” in which only the agent deals with the casino directly. The agent will then redistribute the buy-in chips to their friends, who are actually their clientele, Lee explained. 

“They don’t make any money, but they’re doing that to keep the relationship with their players warm, waiting for the day when they and their players can start going to the casinos around the region,” he said.

In the meantime, operators in Vietnam appear to be looking to team up with Macau’s veteran casino concessionaires.  

The tour operator Let’s Win Group, which had its soft-opening at the Hoiana in February 2022, held a grand opening ceremony and gala dinner for its VIP club in March of this year – and flaunted an invitation to six of Macau’s casino concessionaires. 

Still, as Vietnam shows benevolence to foreign investment from the moguls of the gambling-tour industry, the country heavily restricts lending money to foreigners. This results, among other things, in a bureaucratic bump in the road for the junket-diaspora to the country. 

According to Langdale, the Hoiana also resembles the trendy “integrated resort” model – such as Singapore’s Sentosa Island – that has been established in the gaming industry as a guise to revamp an outdated Macau junket model. In the case of Singapore, where junkets are illegal, it disguises the fact that the real money is coming from high rollers. 

“[Instead of] smoky casinos with Chinese gamblers – gambling 24 hours a day – they’ll present a nice, healthy family-oriented resort,” he said.

The integrated resort model stresses an atmosphere of a holiday destination with family entertainment, and incentivizes hosting conventions. The Hoiana advertises itself only as a resort and golf destination “but you’re still getting VIP gamblers,” said Langdale.

“The diversification into entertainment and conventions and all the rest of it, they provide the cover and the legitimacy for the casinos,” he added. “By going down as the integrated resort, the casino operator can say we’re no longer relying on hardcore gamblers.”

As Thailand begins to relax visa rules for Chinese tourists, Langdale suspects that Vietnam will follow a similar shift. This could attract affluent Chinese tourists and investors seeking a landing zone for capital flight.

“And the Hoiana is one mechanism for doing that,” he said.

The post After junket crackdown in Macau, SEA casinos target Chinese gamblers appeared first on Southeast Asia Globe.

Property development companies and real estate projects from all over the kingdom competed for prestigious honours on Friday, 18 August 2023 at the Grand Ballroom of Sofitel Phnom Penh Phokeethra.

OCIC Group won the top award of Best Developer for the first time ever while its project Diamond Bay Garden won two accolades, including Best Condo Development (Cambodia). Siha Property Co., Ltd was named Best Boutique Developer while its project Siha Residence won four awards, including Best Housing Development (Cambodia).               

Marum Estate, a project by Sir Stamford Raffles (Cambodia) Co., Ltd., also won four awards, including Best Township Development. Canopy Sands Development garnered three awards for its project Bay of Lights, including Best Township Masterplan Design.                     

Other award-winning projects this year include Angkor Sereymongkol by Sok Tonh Real Estate; Apsor Mera by Bosba Property Co., Ltd; Dragon Land 598 by Dragon Land Investment Co., Ltd.; La Maison Plaza by Cambestate Management Co., Ltd.; Maline Office by Maline Office Co., Ltd; Mean Chey Avenue by RM Commercial Co., Ltd.; The Garden Residency 2 by JS Land Plc; and Vong Residence by Bossba Investment Co., Ltd.

Neak Oknha Chen Zhi, chairman of Prince Holding Group, accepted the Cambodia Real Estate Personality of the Year award from the editorial team of Property Report by PropertyGuru, the official magazine of the Awards. Under Neak Oknha’s leadership, Prince Holding Group has invested in over a million square metres of projects throughout the kingdom.

“The Awards this year continue to celebrate success in the Cambodia property market,” said Jules Kay, GM of PropertyGuru Asia Property Awards and Events. “With growing interest from local buyers and international investors in quality homes and developments, Cambodia truly remains one of the region’s most important and impressive frontier markets.”

“Congratulations to the award winners in Cambodia this year for creating such high-calibre residential and commercial developments,” said Jeremy Williams, managing director, Marketplaces, PropertyGuru Group. “These properties have great potential to contribute to economic progress in Cambodia, supported by its resilient domestic real estate market.”

The independent panel of judges who determined this year’s list of winners are Sorn Seap, chairperson of the Awards in Cambodia and president, Cambodian Valuers and Estate Agents Association (CVEA); David Granger, Siem Reap branch manager, IPS Real Estate Agency; Dilip Abye, architectural design manager, Archetype Cambodia; Jenny Chea Sok You, architect and managing director, CMED Construction; Jovany Antonio, residential director, DA&G Asset Management; Kinkesa Kim, deputy managing director, CBRE Cambodia; Lim Veasna, partner and attorney-at-law, commercial arbitrator and mark agent, Vinaya Law Firm; Simon Griffiths, managing director, The Mall Company; Dr. Simon Vancliff, COO, Rose Marvel Co., Ltd; and Thida Ann, managing director, PropNex Cambodia.

HLB International Real Estate Group, led by Paul Ashburn, made the selection process as fair, transparent, and credible as possible.

Main country winners of the PropertyGuru Cambodia Property Awards will advance to the 18th PropertyGuru Asia Property Awards Grand Final, presented on Friday, 8 December in Bangkok, Thailand where they will compete for regional honours against their peers from various dynamic property markets in the region.

Established in 2005, the PropertyGuru Asia Property Awards continue to reward high-calibre work within the industry, encompassing property development, construction, architecture, interior design, and sustainable building practices. The series initially covered Southeast Asia and has expanded over the years to include the region’s dynamic property markets, including Australia, China, India, and Greater Niseko in Japan. 

The 8th PropertyGuru Cambodia Property Awards are supported by gold sponsors CBRE Cambodia; silver sponsors Dewan Architects and Engineers and SALTO Systems; official magazine Property Report by PropertyGuru; official publicity partner TWPR; media partners Bridges, Cambodia Begins at 40, Construction & Property, Siemreap.net, and Southeast Asia Globe; supporting associations Cambodian Valuers and Estate Agents Association (CVEA) and EuroCham Cambodia; and official supervisor HLB.

For more information, email awards@propertyguru.com or visit the official website: AsiaPropertyAwards.com.

LIST OF WINNERS

8th PropertyGuru Cambodia Property Awards

DEVELOPER AWARDS

Best Developer

WINNER: OCIC Group

Best Boutique Developer

WINNER: Siha Property Co., Ltd

DEVELOPMENT AWARDS

Best Township Development                           

WINNER: Marum Estate by Sir Stamford Raffles (Cambodia) Co., Ltd.

Best Mixed Use Development                          

WINNER: Marum Estate by Sir Stamford Raffles (Cambodia) Co., Ltd.

Best Luxury Housing Development (Phnom Penh)

WINNER: Siha Residence by Siha Property Co., Ltd

Best High End Housing Development (Phnom Penh)                                    

WINNER: Dragon Land 598 by Dragon Land Investment Co., Ltd.

Best Affordable Condo Development (Phnom Penh)                  

WINNER: The Garden Residency 2 by JS Land Plc                         

Best Waterfront Condo Development                             

WINNER: Diamond Bay Garden by OCIC Group

Best Housing Development (Greater Phnom Penh)                     

WINNER: Apsor Mera by Bosba Property Co., Ltd

Best Residential Development (Siem Reap)                                   

WINNER: Angkor Sereymongkol by Sok Tonh Real Estate

Best Retail Development                                   

WINNER: Mean Chey Avenue by RM Commercial Co., Ltd.

Best Leisure Development                                

WINNER: Bay of Lights by Canopy Sands Development                                                                                                       

Best Shophouse Development                         

WINNER: La Maison Plaza by Cambestate Management Co., Ltd.

DESIGN AWARDS

Best Township Masterplan Design                                  

WINNER: Bay of Lights by Canopy Sands Development

Best Luxury Housing Architectural Design                    

WINNER: Siha Residence by Siha Property Co., Ltd

Best High End Housing Architectural Design                                  

WINNER: Dragon Land 598 by Dragon Land Investment Co., Ltd.

Best Housing Architectural Design                                   

WINNER: Marum Estate by Sir Stamford Raffles (Cambodia) Co., Ltd.

Best Luxury Housing Interior Design                               

WINNER: Siha Residence by Siha Property Co., Ltd

Best Housing Interior Design                            

WINNER: Vong Residence by Bossba Investment Co., Ltd.

Best Housing Landscape Design                    

WINNER: Marum Estate by Sir Stamford Raffles (Cambodia) Co., Ltd.   

Best Office Architectural Design                     

WINNER: Maline Office by Maline Office Co., Ltd

Best Retail Architectural Design                     

WINNER: Mean Chey Avenue by RM Commercial Co., Ltd.

Best Leisure Architectural Design                   

WINNER: Bay of Lights by Canopy Sands Development

BEST OF CAMBODIA AWARDS

Best Condo Development (Cambodia)                          

WINNER: Diamond Bay Garden by OCIC Group

Best Housing Development (Cambodia)                       

WINNER: Siha Residence by Siha Property Co., Ltd

PUBLISHER’S CHOICE

Cambodia Real Estate Personality of the Year           

WINNER: Neak Oknha Chen Zhi, Chairman, Prince Holding Group

The post The 8th PropertyGuru Cambodia Property Awards celebrate success in the real estate market appeared first on Southeast Asia Globe.

Eighteen days into what has been called the “rescue flight” trial and was expected to last a month, the four ex-officials from the ministries of foreign affairs, health and public security received life sentences. Charged for their involvement in bribery-related schemes, fraud and abuses of power that resulted in a multi-million-dollar scandal within Vietnam’s 2020 Covid-19 response, they avoided the death penalty recommended by prosecutors.

Though none of the 54 total defendants convicted in the trial were sentenced to death, 18 were eligible for capital punishment. Among the wide net of defendants were 10 businesspeople and civilians who received suspended sentences.

The verdict appears to confirm a sensational flare in the “blazing furnace” campaign (chiến dịch đốt lò), an anti-corruption purge spearheaded by party leader Trong. It’s the same campaign that led to President Nguyen Xuan Phuc’s abrupt resignation earlier this year – an unorthodox move in Vietnam, where most political redirections are carefully orchestrated. 

This latest trial focused on additional graft allegations from deals made at the height of the country’s pandemic response. Previously, private medical company Viet A Technologies was found guilty of collecting $22 million (about 521 billion VND) in illegal revenue by overcharging for Covid testing kits in collusion with hospital managers and senior officials nationwide. 

“I don’t like disciplining my comrades … but I have to do it. As Uncle Ho said, I have to cut off a wormy tree branch to save the whole tree,” Trong said publicly after sentencing in that trial.

In this newest round, a wave of prominent ex-party members, including former Hanoi Deputy Mayor Chu Xuan Dung and Vietnam’s former ambassador to Japan Vu Hong Nam, were found guilty of manipulating the organisation of Covid-era repatriation flights. The stipulations of “combo flights” required citizens who were abroad during the pandemic to make a single payment for plane tickets back to Vietnam and subsequent quarantine fees. 

The Ministry of Foreign Affairs proposed a total of 772 repatriation flights. To win licensing, air transport providers bribed senior officials to broker 372 combo flights and, presumably, the balance of the 400 other flights.

Hoang Dieu Mo, general director of the An Binh Trading, Tourism and Aviation Services Co., caught wind of this bribery scheme early, according to documents presented by state media.  One of the 10 businesspeople caught up in the trial, she received licensing for 66 of the 372 flights, spending nearly $1.5 million (about 35 billion VND) to bribe eight officials from the five ministries involved in the licensing process.

The collusion between airlines, tourism companies and officials to “rip-off” desperate expatriates, students and foreign workers trying to get back to Vietnam during the pandemic caused major public outrage, said Nguyen Khac Giang, a visiting fellow at ISEAS–Yusof Ishak Institute. Although ticket prices were already exceptionally high, he said, excess demand for the limited seating on repatriation flights resulted in a system of waiting lists.

“Because some people could not be put on the list they had to actually bribe officers in the (Vietnamese) embassies,” said Giang. 

The trial that we are witnessing right now is multifaceted – not only purifying the party or cleaning up bad roots.”

Nguyen Khac Giang, visiting fellow at ISEAS–Yusof Ishak Institute

As the case fueled citizens’ outrage, some experts were left asserting the purge and its sensational coverage by state media reflects an attempt by Trong to either ostracise outliers with forced resignations, summary stripping and public trial, or to simply consolidate the party and its image.

“The anti-corruption campaign has many different goals and the trial that we are witnessing right now is multifaceted – not only purifying the party or cleaning up bad roots that the party has been propagating,” said Giang a day before the sentencing. He saw the anti-corruption purge as an opportunity for party members to take out rivals, taking into account that the next party congress is scheduled in less than three years. 

Bill Hayton, associate fellow with the Asia-Pacific programme at the policy institute Chatham House, concurred. 

“The general secretary is using the campaign to take out his opponents. And I think it’s fair to say that he perceives his opponents as a corrupt class,” said Hayton. “People who are willing to damage the interests of the Communist Party as a whole for their own personal benefit pose a threat to the legitimacy of the Communist Party system because they’re willing to allow individual ambition over party discipline.”

As the public uproar metastasized, the Hanoi People’s Court disclosed during the trial that total bribery money equaled $9.5 million (more than 224 billion VND), of which $2.65 million was given to police officials to avoid prosecution. 

Pham Trung Kien, former secretary to the deputy health minister, was found guilty of accepting 253 bribes totaling $1.8 million during an 11-month period. One of the four convicted officials, he received a life sentence for his involvement in the graft scandal. 

“I did not ask any firm to be granted a certificate for rescue flights. Instead, they contacted me for help,” he pleaded during the hearing.

During the proceedings, prosecutors said 21 officials and civil servants were charged directly for receiving nearly $7 million in bribes from 100 businesses “to solve administrative procedures for repatriation”. 

Thirty-three others faced such charges as enabling bribes, fraud and power abuse, according to the indictment. Some officials such as Dung, who was the most senior in the pool and received 16 years in prison, and Nam, who was sentenced to 30 months, each returned $75,000 to the state as a means to “fix the consequences”, state media reported.

“The system is designed to get people to confess, so that investigators can get people higher up the food chain,” said Hayton.

According to Vietnam’s appellate procedures, the defendants may file an appeal with the immediate superior court within 15 days of the judgement. 

“I think some might choose this option, as their sentences are harsher than proposed,” said Giang.

The post Vietnam’s rapid ‘rescue flight’ trial stokes anti-corruption fervour appeared first on Southeast Asia Globe.

Rising inflation, the reopened economy and heavy storms combined to spike in demand and short-circuited supply, sending the price of the pungent vegetable soaring to a 14-year high of $12.8 (700 PHP) per kilogram. 

“[It got] to the extent that flight attendants were caught smuggling onions from other countries to bring into the Philippines because of the high price,” said the regional lead economist at the Asian Development Bank (ADB).

Such anecdotes have become symbols of a global economy wracked with uncertainty, as the continuing war in Ukraine and increasingly urgent climate crisis fuel concerns over inflation and rising living costs. But a new report from ADB released this month and regional analysts are giving reasons for Southeast Asian optimism in the face of wider global challenges such as flagging growth numbers and rising inflation.

Released Wednesday, the Asian Development Outlook reported a “marginal” downgrade for Southeast Asia’s growth prospects – from 4.7% to 4.6% for 2023 and from 5.0% to 4.9% in 2024 – reflecting weaker global demand for manufactured exports. The latest edition of ADB’s flagship publication focuses on analyses and insights for individual and regional economies across Asia. 

But despite the foreboding outlook, experts still believe the region’s interconnectivity, resilient internal markets and the return of international travel will bolster Southeast Asia’s economies against the wider global challenges. Villafuerte noted that while growth projections have slowed, they still exceed those in other subregions and the global average. 

“This is a region of 600  plus million people,” said Villafuerte. “Domestic demand remains intact and ‘revenge travel’ has really seen a huge leap in tourism, arrival and tourism related activities.” 

Villafuerte acknowledged that global headwinds from elevated prices had contributed to global inflation. On Tuesday, the Philippines central bank announced that policymakers were prepared to tighten monetary policy in view of continually rising inflation. 

His remarks came shortly after Kristalina Georgieva, managing director of the International Monetary Fund (IMF), the UN’s major financial agency, voiced similar concerns at last week’s G20 summit. The IMF’s own growth downgrades were predicted at 3.4% in 2022 to 2.8% in 2023, before settling at 3% in 2024.

Georgieva cautioned that economic activity is slowing, “especially in the manufacturing sector”, and called for a stronger “global financial safety net” to help support less-developed countries.

But for now anyway, she said the broader economic system is withstanding the pressure. 

“The global economy has shown some resilience,” Georgieva stated. “Despite successive shocks in recent years and the rapid rise in interest rates, global growth – although anaemic by historical standards – remains firmly in positive territory, supported by strong labour markets and robust demand for services.” 

A history of interconnected trade 

While international trade networks remain important, countries are also looking inwards to their own domestic economies. 

According to the ADB report, while global demand for manufactured goods slowed, domestic demand amongst Southeast Asian countries remained intact. Indonesia’s GDP expanded by 5.03% in the first quarter of this year, and economic growth remained steady, despite a slowing in exports. 

Strong national economies can help build on a history of intra-regional connectivity, according to Amanda Murphy, head of commercial banking at HSBC.  

“Southeast Asia has long been a bastion of free trade and sits at the crossroads of two of the world’s largest free trade agreements: the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP),” she told the Globe. 

These agreements, formed in 2018 and 2020 respectively, have strengthened bilateral relations within the Asia Pacific area, creating a network of trade avenues with the advantage of geographical proximity. There are signs this is already paying some dividends.

According to a recent HSBC survey, Murphy explained, over the next two years, Asia-Pacific corporations will place 24.4% of their supply chains in Southeast Asia, up from 21.4% in 2020.

“In particular, RCEP, with its tariff reductions and business-friendly rules of origin, is increasing the appeal of Southeast Asia as a manufacturing base, something more corporates are recognising,” she said.

China 

Within the Asia-Pacific region, Southeast Asian countries are planning their next steps with one eye on Beijing. Concerns over China’s slowing economy have caused ripples throughout international markets. 

“Weaker growth in the People’s Republic of China has actually weakened the demand for manufactured goods in the region,” said Villafuerte. However some Southeast Asian countries are benefiting from a “China+1” strategy, where global manufacturers look to move production out of China to diversify supply chains and mitigate their risk. 

“As businesses seek geographic diversification and adopt the ‘China+1’ strategy, Southeast Asia will continue to gain market share,” said Murphy. “Southeast Asia currently accounts for about 8% of global exports – there is every reason the share can increase.”

China’s exports in June fell to their lowest levels in three years, with a worse-than-expected 12.4% slump from the year before. On the other side of the world, the U.S. also saw a 2.7% export drop at the beginning of the year. 

But for Southeast Asia, as trade between superpowers slows, there may be an opportunity to enter new markets and build new relations. As the U.S. and the E.U. have faded as top destinations for Chinese export markets, the East Asian giant has diverged towards other destinations, including Southeast Asia. Chinese exports to ASEAN – the country’s largest trading partner by region – spiked by 20% in October. 

For ASEAN’s own export markets, building on critical sectors such as garment manufacturing will help strengthen the bloc’s overall economic outlook despite the global slow-down.

“Excepting [Myanmar], governments in the region are strongly committed to growth, which is fundamental. And this is export-led growth which is even better,” said Gregg Huff, professor of economic development and economic history in Southeast Asia at Oxford University. “Productivity increase is what enables real wages to increase. And if these increase it contributes to political stability.”

Domestic markets 

Private consumption was the main driver for economic growth, due to improved labour conditions and income across the region. Some demographics saw an increase in  disposable income, according to Singapore’s DBS Bank. 

But Elizabeth Huijin Pang, a DBS equity research analyst, was quick to stress at a press briefing that some sectors felt the hit of rising inflation and prices more than others. 

“There are still vulnerable groups who have seen the opposite [to our median customers],” she said. “Boomers saw expenses grow faster than income.”

Gig workers were another demographic spotlighted by the bank. DBS data revealed these informal workers to be Singapore’s most financially vulnerable group, with an expense-to-income ratio of 112%, almost double that of a DBS median customer. 

“[Gig workers should not be] lagging behind the rest of the population in terms of their longer-term needs,” said Koh Poh Koon, Singapore’s senior minister of state for manpower,  at a press conference last week. The remarks come shortly after the government’s agreement to accept recommendations from a workgroup for better representation for gig workers’ needs. 

New sectors and opportunities 

As well as focusing on vulnerable communities, shifts into new sectors are also a key part of Southeast Asia’s economic recovery. The region is one of the most vulnerable to climate change, and despite a recent decrease in green investments, a shift towards more sustainable business structures will likely be a key part of the region’s growth in its next economic era.

ADB has recently pledged $1 billion (54.4 billion PHP) towards the implementation of electric buses in Davao City, the Philippines’ largest road-based public transportation project.

“I think transforming our growth model into a more environmentally sensitive and green model of growth is important,” said Villafuerte. “When we analyse actually some of these green industries, we realise they also generate a substantial amount of jobs. … These will again be investment opportunities and also opportunities for employment.”

For Murphy, the rise of the regional digital economy is another key focus area for growth.

“Given that more than 75% of its population is online it’s not surprising that businesses are transforming their business models to cater to changing customer behaviour,” she said. 

The rise of real-time payments and recent initiatives to facilitate cross-border transactions, such as QR code payment agreements between Singapore, Malaysia, Thailand, Indonesia and the Philippines, are helping to boost the region’s economic connectivity. 

“When intra-Southeast Asia real-time payments become a reality, we can expect a jump in the velocity of transactions, whether they are business-to-business or business-to-consumer, which in turn will lead to greater economic activity in the region,” said Murphy. 

Transitioning through growing pains

As global crises continue, it is up to Southeast Asia’s private and public sectors to proactively plan their own paths forward. 

“Three long-term trends that businesses cannot overlook if they want to capture the opportunities in Southeast Asia are what I would call the 3Ts: trade, transition to net zero, and digital transformation,” said Murphy. 

Looking ahead to the future, Southeast Asian nations will have to take a proactive approach to adapt to these growing sectors. Moves are already being made at government level. Both Singapore and the Philippines both recently announced their first sovereign ESG (environmental, social and governance) bond and in April, Singaporean finance minister and Deputy Prime Minister Lawrence Wong revealed the Monetary Authority of Singapore’s finance plan for Net-Zero. 

For Vilafuerte, looking forward involves looking back. Governments and market response to the Philippines’ onion inflation earlier this year was almost immediate and prices and supply regulated. 

“These are temporary shocks and there are natural stabilisers,” he said. “Higher prices and inflation are a sign of a strong recovery. So I think this is just an adjustment period.”

The post As global economy slows, SEA growth fights on appeared first on Southeast Asia Globe.

Located in the heart of Cambodia’s bustling capital, the 50-room Vignette Collection Phnom Penh Odom will provide guests with an exclusive Luxury & Lifestyle destination and joins a family of distinctive, elegant, and intriguing luxury and lifestyle hotels. Created for the next generation of luxury travellers, each property is unique yet connected by a shared vision to make a positive change for people, place, and planet.

The second IHG Hotels & Resorts property to open in Cambodia – following Six Senses Krabey Island – Vignette Collection Phnom Penh Odom joins one of the world’s largest luxury and lifestyle portfolios with more than 450 open hotels and over 100,000 rooms. Vignette Collection is IHG’s first collection brand and joins Six Senses, InterContinental Hotels & Resorts, Regent Hotels & Resorts, Kimpton Hotels & Restaurants and Hotel Indigo.

Patrick Finn, Vice President, Development, South East Asia & Korea, IHG Hotels & Resorts said: “Vignette Collection is IHG’s newest Luxury & Lifestyle brand, and already growing quickly in many markets. It’s the perfect choice for partners seeking a distinctive identity for their hotel, while benefiting from our global scale, systems, and expertise as the second largest Luxury & Lifestyle hotel operator in the world.

“It’s been wonderful to work with Odom to bring Vignette Collection hotel to Cambodia’s capital city. Since launching in 2021, Vignette Collection has opened six properties in destinations including Brisbane, Bangkok, Porto and Washington, and grown a pipeline of 15 outstanding hotels. Over the next 10 years we anticipate a rapid expansion of Vignette Collection, reaching 100 properties globally, attracting guests who seek authentic, experiential and considerate stays.”

Kim Leang Kean, Odom Board Chairman and Founder of real estate developer ULS added: “Phnom Penh is a vibrant city with a rich history, incredible architecture, mouth-watering food and a unique culture, and we believe that Vignette Collection Phnom Penh Odom will further enhance its status as a must-visit destination.

“The Vignette Collection brand experience of authentic one-of-a-kind stays, each with its own distinct outlook and story to tell, is perfectly suited to attracting the next generation of travellers to this thriving city. Surrounded by an exciting mix of upmarket retail outlets, office spaces, hotel and residences, it will quickly become the place to be for visitors and locals alike.”

Located on the top seven floors of Odom Tower – the 45-storey office component of the mixed-use development ODOM, Vignette Collection Phnom Penh Odom is conveniently situated along Preah Norodom Boulevard, a major road in Central Phnom Penh. With its central location within the Tonle Bassac district, it will be close to many international embassies and Cambodian government agencies, as well as international businesses and non-government organisations.

Vignette Collection Phnom Penh Odom will feature 50 rooms and suites and facilities including two restaurants, a rooftop bar, a lobby lounge, a swimming pool, fitness centre, a members-only private club and four meeting rooms.

The brand has expanded quickly in Southeast Asia, with the opening of Sindhorn Midtown Hotel Bangkok, Vignette Collection in 2022, with the rebrand of Dinso Resort & Villas Phuket, Thailand following later this year and two further hotels in The Aquatique Pattaya and Bangkok Chinatown.

Vignette Collection, IHG’s first collection brand, is a family of one-of-a-kind properties in sought-after urban and resort locations where the next generation of Luxury & Lifestyle travellers can indulge in stays that weave responsibility, community and locality together, backed by the reassurance of the company’s trusted reputation and leading loyalty offer.

About IHG Hotels & Resorts 

Held under the umbrella of InterContinental Hotels Group PLC holding company, IHG Hotels & Resorts is a global hospitality company, providing True Hospitality for Good. With a family of 18 hotel brands and IHG One Rewards, one of the world’s largest hotel loyalty programmes, IHG has over 6,000 open hotels in over 100 countries, and more than 1,800 in the development pipeline.

For IHG’s latest news, visit their Newsroom and follow them on LinkedIn, Facebook and Twitter.

About Vignette Collection 

Vignette Collection is IHG Hotels & Resorts’ first collection brand. A family of one-of-a-kind properties in sought-after urban and resort locations where guests can indulge in a growing passion for stays that are authentic, experiential and considerate. Here for the next generation of luxury travellers seeking both discovery and purpose, Vignette Collection weaves responsibility, community and locality together for stays that are as distinct as our hotels.

For more information, visit  vignettecollectionhotels.com. 

About ODOM

Nestled in central Phnom Penh, ODOM is a world-class mixed-use development comprising two towers: the 45-storey Odom Tower, offering 40,000 sqm of Grade A offices; and Odom Living, featuring 22 floors of spacious one to four bedrooms apartments for modern families and professionals. The towers are connected by Odom Square, a five-storey podium with green and commercial space for communities to thrive.

ODOM’s lead developer is Urban Living Solutions (ULS), a Cambodian-owned company focused on community-centered development.

www.odomphnompenh.com

www.urbanlivingsolutions.com

The post IHG Hotels & Resorts’ Vignette Collection débuts in Phnom Penh appeared first on Southeast Asia Globe.

Much as the protagonist in the 17th century Spanish epic, the E.U. sees itself as a knight seeking to do good – and, in the process, finding enemies where there may be none. On a quest to limit the ecological impacts of E.U. commodities imports, this regulation is tilting at windmills, attacking illusionary foes.

The windmills right now in the E.U.’s case are countries that export commodities such as timber, palm oil, coffee, cocoa and rubber to Europe, which has long called for greater monitoring of the environmental impact of this kind of trade.  

At its core, the new legislation, which entered into force on 29 June, holds that firms importing goods into Europe need to prove they did not originate from land cleared since 31 December, 2020. Companies must also confirm imported commodities are produced in compliance with the “relevant laws” of their country of origin.

Trade partners such as Indonesia and Malaysia, which together produce about 83% of the world’s palm oil supply, share many of the ecological goals and declarations as stated by E.U. lawmakers.

But in May, the two sent a mission to Brussels arguing the Deforestation Regulation discriminated against their palm-oil-dependent economies and would harm their agricultural sectors. Both have long perceived the E.U. as taking unfair advantage of palm oil to stifle competition against its own oilseed crops, particularly rapeseed, and view the new regulation as yet another act of economic protectionism pressed under the cover of environmental concern.

In 2018, when Europe banned palm oil from biofuel use under the E.U. Renewable Energy Directive (RED), palm-oil-producing states lobbed accusations of ‘crop apartheid’. They soon appeared vindicated when the International Union for Conservation of Nature (IUCN) published a report acknowledging the land efficiency and productivity of palm oil as a crop – as compared to other seed-oils, including those preferred by Europe – meant there were “no easy solutions” to regulating its role in deforestation.

“Palm oil is decimating South East Asia’s rich diversity of species as it eats into swathes of tropical forest,” said Erik Meijaard, the report’s lead author and then-chair of IUCN’s Oil Palm Task Force. “But if it is replaced by much larger areas of rapeseed, soy or sunflower fields, different natural ecosystems and species may suffer. To put a stop to the destruction we must work towards deforestation-free palm oil, and make sure all attempts to limit palm oil use are informed by solid scientific understanding of the consequences.”

The new Deforestation Regulation are unconvincing on that last point, which should concern conservation-minded readers. To their credit, the E.U. Commission has set up a Joint Task Force with Malaysia and Indonesia to address issues related to palm oil smallholders and other challenges of the regulation’s implementation. 

But they’ll have to work quickly on that front. European importers now have 18 months or less to find a way to comply with this new legislation. The only sure way for them to meet this target is if the E.U. acknowledges certification programs for targeted commodities. For the palm oil industries, national programmes such as the Malaysia Sustainable Palm Oil (MSPO) scheme and its Indonesian counterpart (ISPO), must be counted in as credible enablers towards meeting the regulatory deadline.

Though these domestic sustainability schemes are not perfect programmes, they have greatly developed in recent years and have made tangible advancements in reigning in deforestation.

This would seem to be evidenced by the World Resources Institute (WRI) in its latest report on Global Forest Review. The report found that Indonesia and Malaysia marked near-record low levels of deforestation even as tropical forest loss elsewhere worsened in 2022, making specific mention of the MSPO and other domestic, industry-focused measures of recent years.

This kind of data will be instrumental in the E.U.-Malaysia-Indonesia task force’s work to resolve the palm oil problem, which stands in the way of trade deals between the three entities. If the E.U. refuses to acknowledge the ongoing efforts to make the industry more sustainable, it will effectively discourage its further advancement – instead incentivising producers to turn their backs on the European market as they seek less discriminating trade partners in Africa and Asia. 

Major exporting countries such as Brazil, the world’s biggest exporter of soy, have chosen to brush off the demands of the new E.U. regulation by quoting national laws as being compliant with global commitments. It is worth noting at this point that the expansion of soy plantations is the second-largest direct driver of deforestation and conversion, after the expansion of pasture for cattle farming and land speculation. 

Brazil’s confidence in maintaining its exports is bolstered by China and – as a further disregard of what the E.U. is demanding in terms of deforestation – these two countries have made a joint commitment to end illegal deforestation. This is very different from what the E.U. is demanding, which is that all imported commodities must be free of deforestation, whether legal or illegal.

Back in Southeast Asia, E.U. Member of Parliament Bernd Lange has appealed for understanding of the E.U.’s position in an opinion published in The Jakarta Post. The European Parliament in ASEAN tweeted in support, urging a constructive and result-oriented negotiation with Indonesia towards a trade agreement. 

Such negotiations are in everybody’s best interest, especially when compared to a more Quixotic approach. But the European Parliament should note that consensus on the regulation can only be reached when the E.U. stops making one-sided demands on its trade partners and engages with them as part of the solution to greener supply chains – not as the problem. 

Robert Hii is an independent industry monitor whose focus is on the sustainability of palm oil. He was born in Sarawak, Malaysian Borneo, and later moved to Canada. He now runs CSPO Watch, a platform that monitors the palm oil industry with a focus on sustainability.

The post Opinion: E.U. is tilting at windmills with new Deforestation Regulation appeared first on Southeast Asia Globe.

Perched on a long bench in Singapore’s Woodlands Station, the slight elegant retiree doesn’t seem in a rush. The close links between her home country and neighbouring Malaysia allows her to build a base across both sides of the border. 

A shuttle train leaves 13 times a day from Singapore’s Woodlands station and arrives in the Malaysian city of Johor Bahru just five minutes later. A bus takes one hour, and non-residents are currently allowed to stay in each country for up to 30 days without a visa.

“I go for a holiday, to see friends, or just to relax,” Ma said. “These links are important because [Singapore and Malaysia] used to be one family. In a way, we still are one family.”

Once part of the same country, these neighbours remain close trading partners with increasingly intertwined economies. As ASEAN states deepen their connections through schemes like the bloc’s Single Window customs programme and cross-border QR payments arranged through central bank collaborations, Malaysia and Singapore may soon draw even closer together with a transnational special economic zone between the city-state and the state of Johor 

The combined GDP of their two intertwined economies is already predicted to exceed $1 trillion within the next five years, more than a quarter of the total ASEAN bloc. The special zone is still in tentative stages, first proposed unofficially by Malaysia’s Economic Minister Rafizi Ramli in May, but could mark a significant step in the countries’ integration. 

While details of what such a collaboration would entail remain scarce there are plans to raise it at an upcoming Malaysian Cabinet meeting before bringing it to the annual meeting of a Malaysia-Singapore joint committee for economic cooperation, expected to be held in mid-July.

“Malaysia and Singapore enjoy strong ties in terms of trade and investment flows, tourism and labour movement,” said M. Niaz Asadullah, a professor of development economics at Monash University Malaysia. “But there is untapped potential for mutual economic gains if Singapore can leverage its close proximity to natural resources rich Malaysia.”

Thousands of Singaporeans cross into Malaysia every day by the 1,056-kilometre rail and motorway causeway that has linked the two over the Johor Strait since 1924. Bus fare for the crossing starts from about $1.48 (SGD 2).

The convenience of travel has created a longstanding symbiotic exchange of labour, trade and people between the two regions. As of 2014, it was estimated that about 5,000 Singaporeans live and work in Johor Bahru. The ringgit’s recent depreciation against the comparatively stable Singaporean dollar has made the cost of living in the Malaysian region comfortable compared to the expensive city-state. 

But while more casual travel is a breeze, the closeness for commercial purposes is still marred by long queues, traffic bottlenecks and customs checks. Recent complaints reveal some Singaporean bus passengers spent up to seven hours waiting at the Johor-Bahru customs checkpoint, a delay a special economic zone could ease.  

Strengthening inter-ASEAN ties

The announcement of the proposed region comes as part of a concerted push by Malaysian Prime Minister Anwar Ibrahim to strengthen his country’s inter-ASEAN ties and reduce reliance on Western economies. 

As its closest neighbour, the city-state is a regional economic hub and a natural trading target for Malaysia. 

The two countries have deep historical connections – Singapore was originally part of the Federation of Malaya after the two countries achieved independence from the U.K. but split in 1965. A January meeting with Singaporean leaders secured $4 billion in foreign direct investment from the Lion City. 

“[Anwar’s] latest effort to renew bilateral ties with Singapore could be motivated by … a ‘look East’ philosophy,” said Asadullah. “By strengthening economic ties with Singapore, this can help Malaysia accelerate its transition to a high income nation status by 2028.”

For its part, Singapore benefits from the resources and labour available in the Malaysian state, with many Singaporean companies already choosing to locate their assembly and production lines in Johor.

Johor: a cornerstone of trade

Johor’s role as a cornerstone in the regional trade between Singapore and Malaysia has been a longstanding part of both countries’ economic history. In 1988, the border state announced a policy ‘twinning’ with Singapore that led to a 200% increase in investment from its neighbour that same year. 

Since then, the relationship between the two has only deepened – especially amidst broader economic recovery efforts after two years of pandemic-related border issues. 

“The two-year Singapore lockdown really had an impact on Johor,” said James Chin, professor of Asian studies at the University of Tasmania. “Now people are really looking for new impetus to push this Johor-Singapore growth triangle.”

Another motivating factor of this deepening network of economic relations would be renewable energy, as announced by minister Ramli.

This follows a May announcement to lift a Malaysian ban on renewable energy exports, part of the government’s ambitious aims to double renewable energy capacity by 2050. But the country’s renewable energy sector is still nascent, with coal and natural gas currently meeting 75% of Malaysia’s power demands. 

Over the border, Singapore is also trying to boost its renewables with limited success. Experts believe a symbiotic partnership between the neighbours could unlock new potential for both.

“The limited land area is a big challenge for Singapore to develop large-scale renewable energy projects,” explained Kim Jeong Won, research fellow at Energy Studies Institute of National University of Singapore. “Importing renewable electricity through regional power grids can help Singapore’s energy transition and the deployment of low-carbon solutions in the region.”

Professor Asadullah also hopes the new proposed economic region will help meet growing regional demand for energy while encouraging a mutually beneficial trade between Malaysia and Singapore.

“Land and natural resource-poor Singapore is particularly keen to develop a sustainable pan-ASEAN power grid,” she said. “This will not only pave the way for greater bilateral trade in clean energy, it’ll also encourage FDI from Singapore into Malaysia’s renewable energy sector… and overall development of green infrastructure.”

Smoother trade and transactions

The practicalities of how the two countries’ different economies, currencies and markets would interact could raise hurdles to seamless trade within the region. For Asadullah, the success of the economic region would rely on lowering cross-border transaction costs and harmonising labour and environmental standards. 

Singapore and Malaysia’s central banks have linked their countries’ smartphone QR systems to facilitate cross-border financial transactions.

“The key challenge is to coordinate the necessary institutional reforms,” said Natalya Ischenko, CEO of Robocash Group, a financial group specialising in providing financial services in Asia and Europe, adding that the effects of the QR developments should be “significantly manifested” in the coming year. 

She estimated that cross-border QR payment systems could facilitate trade between the two countries of at least 0.5% and e-commerce in Singapore by at least 2% a month.

“[If so], the foreign trade between Singapore and Malaysia will be between $136.9 billion and $147.3 billion by the end of 2024,” she said. 

For Chin, the latest proposed economic tie is a continuation of a history of two countries linked by politics, geography and ambitious economic goals. 

“Of course this is good for the region. It is a win-win situation,” he said. “[But] the way to understand the economic relations between Johor and Singapore is that they are tied to each other. Whether they like each other or not, it really doesn’t matter, they have to work together for prosperity.”

The post Proposed special economic zone could strengthen special Singapore – Malaysia ties appeared first on Southeast Asia Globe.