Thursday, 11 November 2010 21:07 David Boyle
CHINA’S commercial influence has grown in Cambodia with the signing of a refinancing deal for mobile provider Mobitel, according to international commentators, who said the People’s Republic may leverage its business interests for political advantage.
Last Thursday, Cambodian conglomerate The Royal Group signed a US$591 million deal to refinance its subsidiary Mobitel with the Bank of China. It will enable The Royal Group to pay off a $421 million debt as well as fund future capital expenditures.
One week on, political and economic commentators said there were likely political considerations with the agreement – a viewpoint government and company officials rejected yesterday.
“At the moment anything China does is viewed as having ulterior motives,” Carlyle Thayer, a politics professor at the Australian Defence Force Academy, a school managed by the University of New South Wales, told The Post.
“China has always manipulated loans to suit larger political purposes,” he said, highlighting the potential for a power play between Vietnam and China in the telecommunications sector.
Ministry of Posts and Telecommunications statistics show Mobitel is the largest mobile provider by subscriber numbers, while Metfone – a subsidiary of the Vietnamese military – has grown to become the second biggest.
China and Vietnam had been engaged in “something of a tussle” over influence in Cambodia since the 1991 Paris Peace Agreements, Thayer said.
“China may leverage its commercial interests to gain political influence … and also to use that influence to block [Metfone’s] drive to increase market share,” he said.
Nick Owen, Shanghai-based editor at the Economist Intelligence Unit, a research and analysis resource, said the Mobitel deal “underscores China’s growing influence in Cambodia”.
“Long-term, low-interest loans make little sense commercially in what is still a relatively risky market,” he said.
The loan deal should not be viewed in isolation from a $500 million agreement The Royal Group signed with China’s Huawei Technologies, he said.
Yesterday, officials within Cambodia dismissed such suggestions.
Ministry of Foreign Affairs spokesman Koy Kuong said he “totally rejected” claims that there was political motivation behind the deal.
The Royal Group said it was purely a business decision to refinance with Bank of China. Chairman Kith Meng said yesterday it was “a commercial deal”.
Chief Financial Officer Mark Hanna wrote: “The deal that we have signed is a commercial transaction that has no political angle.” He said it improved the Kingdom’s image with international bankers.
“This refinancing raises the profile of Cambodia on the international debt market,” he said.
Chinese Embassy spokesman Qian Hai said the agreement was entirely business related.
ADDITIONAL REPORTING BY SOEUN SAY