China Eximbank provides RMB 250 million government concessional loan for Code Division Multiple Access (CDMA) Mobile Communication Network Project

Project narrative

On April 20, 2004, the Chinese Government and the Government of Cambodia signed an RMB 250 million ($30 million) preferential loan framework agreement. Cambodian Finance Ministry Secretary of State Ouk Rabun and Chinese Vice Commerce Minister An Min signed on behalf of their respective governments. The agreement stipulated that China Eximbank would provide a concessional loan worth up to RMB 250 million to the Government of Cambodia (with a 2% interest rate and 20 year maturity). The agreement was signed with Cambodian Prime Minister Hun Sen during his 5-day visit to China (19-23 April 2004). Then, on April 8, 2006, China Eximbank and the Government of Cambodia signed an RMB 250 million government concessional loan (GCL) agreement — based upon the terms and conditions specified in the April 20, 2004 preferential loan framework agreement — for the Code Division Multiple Access (CDMA) Mobile Communication Network Project. The proceeds of the GCL were used by the Government of Cambodia to on-lend to a private company called AZ Distribution Co Ltd (also known as AZ Communication Company and Azcom) — headed by a ruling party (CPP) parliamentarian named Ung Bun Hauv (Ung Bun Hov) — in order to establish a new mobile phone service in Cambodia. AZCOM was then supposed to use the loan proceeds to finance a $30 million commercial contract that it signed with with Huawei Technologies on September 28, 2005. The purpose of the project and the commercial contract was to supply and install CDMA (Code Division Multiple Access) equipment and thereby support Azcom’s expansion efforts. At the time that the loan agreement was signed, opposition lawmaker Son Chhay argued that the deal risked wasting government funds. He said: “It’s a private company. We don’t understand the reason behind the government’s commitment to borrowing money from the Chinese for that company. We’re doubtful of how we’re going to benefit from it.” He also noted that Azcom appeared to be the “right hand” of the government. AidData has not identified any evidence that this project was implemented.