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Cambodia pins hopes on foreign investors for growth
 

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24-Aug-2005
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"The immortal gods, when they intend to punish some men for their sins, sometimes grant them temporary prosperity and prolonged immunity to make them suffer more severely from a change of fortune." -- Julius Caesar

POIPET, Cambodia, March 19,2004  (Kyodo) - Cambodia, a battlefield for more than two
decades until the early 1990s, is accelerating efforts to transform itself into
a genuine market economy that would bring with it a peace dividend for its
populace.

Following the winning of approval for its accession into the World Trade
Organization (WTO) last year, the country appears assured of expanding overseas
markets for its products, garments in particular.

The target now is to turn one of the world's least-developed countries with a
per capita gross domestic product of $280 into one less dependent on foreign
government aid but more on direct investment by foreign companies.

"Our WTO entry will be a positive factor for those considering investing in
this country," Commerce Minister Cham Prasidh said. "Our investment environment
is better than that of other poor countries."

To attract more fixed investment from abroad, Phnom Penh has mapped out a new
strategy that would have export-processing zones built in three western cities
on the border with Thailand -- Koh Kong, Pailin and Poipet -- and another near
the southern port city of Sihanoukville.

The concept is to draw manufacturers from Thailand and other nations and have
them manufacture products for export with various incentives such as free trade
conditions and liberal regulatory frameworks, with the aim of creating jobs and
alleviating poverty in Cambodia.

"If Toyota (Motor Corp.) constructs a factory in the border region, produces
cars and exports them to Europe, for example, they will be exempt from import
duties," Cham Prasidh said in a meeting with Japanese businesspeople in Phnom
Penh.

Under the government program, construction of an export processing zone will
get under way as early as later this year at a 400-hectare site in Poipet,
which faces the eastern Thai city of Aranyaprathet across the border.

According to Thon Virak, deputy director of the Cambodian Commerce Ministry's
Foreign Trade Department, some 380 Thai companies have so far expressed
interest in investing in projects in the export processing zone.

Other officials said those prospective Thai investors are from such industries
as food processing, artificial flower making, garment and paper manufacturing.

Despite Phnom Penh's efforts and expectations, however, the project appears to
be a distant dream.

While downtown Poipet is home to big casinos, the site for the export
processing zone is in a vast wilderness devoid of necessary infrastructure,
including electricity and water supply.

The government, which hopes to procure electricity and water from Thailand,
insists the location is ideal as a highway sponsored by the Asian Development
Bank is expected to run nearby. The highway, called Southern Economic Corridor,
would extend from Bangkok through Phnom Penh to Ho Chi Minh City and Vung Tau
in southern Vietnam.

Thon Virak said the government is also scheduled to start construction of an
international airport near the site chosen for the export processing zone next
year.

Toyota Motor Thailand Co. President Ryoichi Sasaki, who heads the 1,200-strong
Japanese Chamber of Commerce, Bangkok, was cautious about Cham Prasidh's
suggestion that Japan's largest automaker set up assembly lines in Poipet.

"We wouldn't be able to have a competitive edge if we just brought parts and
assembled cars at a place where there is practically no domestic market," he
said. "Nobody would venture to do that."

A Japanese businessman who recently inspected Cambodia's investment potential
with Sasaki and others from Japanese business circles in the Thai capital
proposed that Cambodia take a long view of industrial development in the
country.

"It's too ambitious to bring in assembly lines. The better approach for now
would be to process food or textiles to some extent and bring them over to
Thailand to produce and sell finished goods," he said.


03/18/04 21:25 EST

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