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Feature - 21 March 2005 (CRN Australia)

Thirty years of a vicious civil war saw a quarter to a third of Cambodia’s population murdered or starved to death.

Cambodia today is at peace, but remains one of the world’s least developed nations. It suffers from extreme poverty, a structurally weak economy and lack of capacity for growth and development.

None of these facts has stopped the irrepressible Khmer people from leaping into technology with both feet. Cambodia has one of the highest mobile phone-to-landline ratios in the world – reason being that there are not many landlines.

Meanwhile, newer technologies such as wireless networking are also making inroads in the kingdom.

Sop Heap is sales executive at PSC Computer Centre, a Cambodian IT retail chain with outlets springing up all over the country. PSC in Phnom Penh employs about 50 staff.

"Business is quite good. We have a lot of customers. They buy for themselves and also have deals that they buy from us to sell to resellers," she says.

Sales in the past year have definitely gone up since the previous year and the demographic of customers is broadening.

PSC – a decade-old company – is large enough not to rely on Cambodia’s higgledy-piggledy local distribution network.

It does buy locally sometimes, but also buys direct from overseas centres of IT production, Sop says.

"We have a regular supplier in Singapore, and they ship to us directly," she says. "But we install the software and put it into the case here."

PSC stocks hi-fi equipment, WLAN, printers, peripherals, storage hardware, cameras and PCs from leading brands in China, Malaysia, Indonesia and Taiwan.

"Clone PCs are most popular,’ Sop says. "We do networking and repairs as well, for any computer they want us to repair for them."

Getting quality trained staff  is not always easy, however. Phnom Penh has various vocational schools, but few offer suitable courses.

Most people learn from their IT providers or via their own private studies. And, just like in Australia, it can be hard to keep good staff.

"People want to improve their job position. Maybe they stay one to three years and go on – to get more experience from different types of job," Sop says.

Most of Phnom Penh’s oldest businesses are less than 10 years old, a figure that dovetails neatly with Cambodian history.

Khmer Rouge, Vietnamese and Cambodian government officials had signed the Paris Peace Accord in 1991 that officially brought peace to the long-suffering nation.

Vietnam withdrew its troops and the United Nations Transitional Authority for Cambodia (UNTAC) was moving in to help rebuild the shattered state. In 1994, the recovering land took its first tottering steps alone.

Mohit Rajvanshi is general manager at Thakral Cambodia, a subsidiary of century-old Singapore multinational Thakral Group.

Thakral Cambodia, with headquarters in Phnom Penh and a year-old office in regional centre Siem Reap, provides IT hardware, services and solutions for local and multinational customers across Cambodia, including non-governmental organisations (NGOs).

Integrator arm Neeka accounts for 60 to 70 percent of its business. Today, Thakral has 40 Cambodia-based staff.

"When we started in 1992, foreign companies were not allowed to own their own business. So, at that time, we formed a joint venture," Rajvanshi says. "There was a rule to only work with locals."

Thakral’s operations are a litany of 'difficult’ business environments, including developing countries (Laos), war zones (Sudan) and junta-afflicted communist states (Myanmar/Burma).

So does Thakral follow the United Nations’ lead? "The UN follows us, sometimes!" Rajvanshi quips.

Certainly, for ten years NGOs have been a major contributor to Thakral Cambodia coffers. Aid agencies need modern communications and efficient infrastructure.

"We’re working with a lot of NGOs and multinational agencies, including US AID and a lot of UN organisations," he says. "And SMBs also."

Rajvanshi, an expat from India, has been with Thakral Cambodia since it began.

Cambodians, he says, love technology, and foreign influence – propagated partly by NGOs – brings in lots of new ideas and products, particularly from Singapore and Malaysia.

Thakral even has an assembly plant. Sadly, the project was shelved following the Asian currency crisis of 1997.

"Our plan was to export to some of those nations where Cambodia has an advantage," he says.

"We lost our competitiveness. People can buy TVs from Thailand and Indonesia at half the price."

The plant still exists and could be started up again if things change. Thakral has leased it to some investors in the short term, Rajvanshi says.

Thakral moved from "simple hardware, sales and service" in 1994 after realising that Cambodian computing was mainly desktop-based. The company started networking and integration, initially at a LAN level.

It worked with partners like Compaq – and later, HP – IBM and Microsoft, and more recently, Toshiba and Sun.

"And since our group has significant presence in India as well as in the region, we are working towards some low-cost solutions for ERP, something in Cambodia that we haven’t come across," Rajvanshi says.

Wireless networking is really picking up now in Cambodia. "Cambodia tries to keep pace with all the latest things, although it’s very difficult because the infrastructure is not there," he adds.

Other obstacles exist, such as getting the right people to do a job the right way. Human capital is critical for business, and so is a helpful political climate.

Prime minister Hun Sen has put some business-friendly policies in place but much more needs to be done, Rajvanshi points out.

"It’s easy to say, difficult to do," he says.

"But it’s not a level playing field for business. Certain people have great advantages. And the government should try to make things more transparent."

Hun Sen – who lost his left eye serving in the Khmer Rouge, from which he later defected – has been criticised, but it is generally agreed he has steered Cambodia firmly through the transition years following his first accession to the prime ministership in 1984.

Rajvanshi says many laws are being enforced "most strictly" now. All in all, things are steadily improving.

Hun Sen has promised to strengthen the legal framework, in exchange for US$504 million pledged globally for Cambodian development in 2005.

The IT supply chain is also coming along. Thakral works with the Japanese and achieves just-in-time, back-to-back ordering, he says.

However, the banks could be better. "If you borrow something from banks and pay about 18 percent interest, it’s not easy to make money because the volumes are not there," he says.

Taken together, a less-than-ideal business environment in an industry where high volume sales are limited and overall margins are tight makes for a certain degree of difficulty, Rajvanshi says with a smile.

Just two percent of Cambodia’s 13 million people actually contributes to GDP.  Outside Phnom Penh, even basic infrastructure – roads, sanitation, electricity – is largely non-existent, he points out.

"Yet ICT is really growing quite OK. In communications, there’s been a lot of interest by mobile operators here and a lot of scope for networking," Rajvanshi says. "We will stick to our own plan. We will not venture where we don’t have the expertise."

As for foreign investment, few big names have dared enter Cambodia as yet. "We’ll have to wait and see," Rajvanshi says.

Lim Vanna, general manager at another long-running Phnom Penh reseller, Info-Tech Computer System, agrees with much of what Rajvanshi says.

"This country is not linked to the outside world for business yet. And it’s still a very small market in Cambodia," he says.

"Phnom Penh itself is just 10 square kilometres, but it looks like we’re going OK."

The market is also very tough, he says, and corruption is a major cause.

In south-east Asian terms, Cambodia is a ‘very free’ country, Lim points out, but sometimes that means people are free to do less desirable things – such as bribery and extortion.

"Anyone might come and get US$10 or US$20. The fire department, the police," Lim says. "And, actually, we are willing to pay. So that is a problem."

Cambodian police, it is jokingly said, are the best that money can buy. Few businesses are exempt from regular ‘protection’ payments to local police or other enterprising officials.

Even hospitals and ambulance services have been known to request payment on the side.

The government has officially admitted that corruption – even at the highest levels – is a problem. Moves are being made to address the issue at all levels but change will come slowly, commentators agree.

Lim says taxation is also heavy. In neighbouring Vietnam, the equivalent of GST or VAT is a paltry five percent. Cambodia’s government charges 15 percent tax plus 10 percent VAT – a total 25 percent.

"You can’t make big money in Cambodia. Just enough to survive for our people," Lim says.

Info-Tech started in 1994 as a broad-based distributor of computer hardware and peripherals, but expanded into services and support for NGOs, government and companies all over Cambodia.

Info-Tech is as modern in its approach as many similar Australian resellers.

Besides importing, selling and servicing global brands like TSI, Toshiba, IBM, HP, Compaq and Dell, it specialises in network design, WAN and LAN deployment, network trouble-shooting, security services, internet and email solutions, consultancy and outsourcing, using its team of 15 qualified engineers.

It also has a sideline in services for QuickBooks accounting software, and property consultancy. Extra support can be sourced from an associated Singapore company and it expects to open an office in London soon.

"The only difference is, we are selling [also] but in Singapore they don’t sell," Lim says.

Like in Australia, the customer is king. Info-Tech gives 24-hour support, and although hardware might need to be sent to Singapore for repairs, Info-Tech lends customers replacement systems while they wait.

"Our commitment to customers is very strong," Lim says. "We don’t do much advertising. Friends employ friends."

And it is needed, because Cambodian customers, he says, tend to take shortcuts. A second-hand car can be patched up and sent back out to do sterling service. So why not a computer?

Lim sees his job as partly to educate people about the different and complex needs of IT infrastructure.

Yes, a second-hand computer is cheaper and can often be fixed. But users need to know the hardware and software they invest in will actually support the kind of infrastructure required to run their business efficiently.

"They don’t understand that with computing, there are other factors, such as what application you are going to use," he says.

"They’re trying to save money, so second-hand gear is quite popular. I can give them a price like US$500, but there is no warranty. I try to convince them.

"For selling a computer is just like selling a banana. You have to eat the whole banana, you can’t wait for next week," Lim says.

And what about Phnom Penh life outside business?

Thakral’s Rajvanshi says that, all said and done, his family is quite happy here. His children – a girl, Tanvi, aged 11 and a boy, Aditya, aged six – attend the International School.

The family all like to play sports, but clubs are expensive in Phnom Penh.

"I like this place for one single reason. Good hours for work, and good numbers of hours for your personal life and family," he says.

"Life is not so difficult now. In the early years, it was not so good."

"But there’s no cricket," Rajvanshi says. "We had to organise cricket ourselves on a weekly basis and even had a Boxing Day match about two years back. There were quite a few Australians at that."

Cambodia timeline

1954  Cambodia gains independence from France. 1967  The Khmer Rouge begins its Maoist insurgency, led by Brother Number One – failed radio engineering student Pol Pot. 1975  ‘Year Zero’. Khmer Rouge forces take Phnom Penh and proceed to abolish money, destroy schools, banks and hospitals, and execute dissidents, ethnic groups and intellectuals. Millions of urban dwellers forced out of their homes and into the countryside to work in labour camps. 1977  Fighting breaks out with Vietnam. Hun Sen defects from the Khmer Rouge. 1979  Vietnamese overthrow the Khmer Rouge, who escape into the countryside to wage guerrilla war. 1984  Hun Sen becomes prime minister for the first time. 1989 Paris peace talks begin. Vietnam begins withdrawal. 1991  Paris Peace Accord signed. King Sihanouk reinstated. 1992  UN enters Cambodia. 1993  UN holds first general election. Royalists win, followed by Hun Sen’s Cambodian People’s Party. 1997  Pol Pot overthrown by his military chief Ta Mok, after Pol Pot has another Khmer Rouge leader, Son Sen, and his family, brutally murdered and their bodies run over by trucks. Hun Sen stages a bloody coup in Phnom Penh, overthrowing Royalists. 1998  Pol Pot dies. Last Khmer Rouge surrender to Cambodian Government. Hun Sen wins second election. 2002  Third general election. Hun Sen wins, but takes a year to form a government. 2004  King Sihanouk abdicates in favour of his son, Prince Sihamoni.


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