Cambodia, favourable investment climate?

[SunSan]

IMF sees chances to grow

Rising production costs in countries like China and Vietnam may soon give rise to higher-value manufacturing in Cambodia, as investors are drawn to the Kingdom’s favourable business environment, the International Monetary Fund’s newest resident representative for Cambodia said yesterday.

Investors are showing increasing interest in the Kingdom’s lower costs and growing human capital despite a dreary global economic outlook, said Faisal Ahmed, who arrived in Cambodia two months ago from another IMF post in Washington, DC.

“The investor interest was a pleasant discovery. Some of the investors are actively interested in non-garment manufacturing,” he said, though he admitted it is for now “mainly just interest”.
“Lots of foreign businesses are looking into it,” he said.

The Kingdom exported $2.35 billion of its trademark garments between January and August, a nearly 20 per cent increase compared to the same period in 2010. But in May, Japanese ball-bearings manufacturer Minebea started production in the Phnom Penh Special Economic Zone.

It’s this piecemeal climb up the value ladder – from labour-intensive garments to light industry – that led other regional manufacturing hubs to success, Ahmed said.

Industry experts yesterday agreed, saying there were signs already that higher-skilled manufacturing was slowly revving up in the Kingdom.

Investment from Vietnam in plastics manufacturing is a bellwether of industry transition, Cambodian Institute for Development Studies president Kang Chandararot said yesterday. Products such as plastics that were once supplied by Vietnam are now being produced in the Kingdom.

“Soon, plastics will be a main focus of investment from Vietnam,” he said, adding Vietnamese house-hold appliance manufacturers are also eyeing Cambodia.

While Vietnamese manufacturers face soaring inflation at home – 23 percent, according to government statistics – Ahmed said improving infrastructure and its resultant lower costs are another attractive part of investing in Cambodia.

Several large-scale infrastructure projects are presently underway in the Kingdom, the majority built and funded by China. Shanghai Construction, one of China’s biggest construction firms, recently announced a plan to invest US$700 million in bridges and roads in Cambodia.

In December, the Chinese funded and run Kamchay Hydroelectric dam will start operations. Local garment manufactures have praised the launch as a means of drastically reducing one of Cambodia’s higher costs of business, energy.

The prospect of lower energy and transportation costs should attract more investment and as a result boost domestic employment, Ahmed said.

“When electricity costs are reduced by half or one third, that makes the new cost of manufacturing so much cheaper,” he said. “If you look at the net effect, good infrastructure projects will create jobs for Cambodia.”

That sentiment was shared by Kang Chandararot, who said proposed energy-buying deals with Laos and Vietnam should considerably lower the price of electricity in Cambodia.

He also pointed to the increased labour skill set of Cambodian workers as a result of the growing number of shoe manufacturers.

The product is another higher-level product that will be common in the Kingdom’s manufacturing future, he said.

Cambodia exported US$158 million in footwear in the first eight months of 2011, according to figures from the Ministry of Commerce.

http://www.phnompenhpost.com/index.php/ ... -grow.html

[barforsalecambodia]

the rich are set to get richer. who wants to pop a bottle of champagne??

[ken svay]

Will the cost of electricity really come down-I cant see it.
It is a major impediment to growth.

[vladimir]

ken, I'll buy you a beer if the prices come down.

Agree, I can't see people strangling the cash cow.It makes sense, but greed ignores sense.

[ChicagoGuy]

Will the cost of electricity really come down-I cant see it.
It is a major impediment to growth.

I have been attending the international business and investment conference here (wrapping up today) and one of the things discussed was the government's plan to bring new hydro and coal plants online within the next few years which will bring down electricity costs.

All-in-all, people in the region do seem pretty bullish on business growth in Cambodia in the near term. A generally favorable regulatory environment here along with Inflation problems in Vietnam and rising costs in China are driving SE Asian investment here. It will be interesting to see what happens with the market once some companies start listing. The government is offering some substantial tax incentives both for companies to list and for people to invest.

The biggest problem facing investors right now is the new anti corruption law. We had a speaker from the anti corruption unit come and talk about their plans for enforcing the law. It was interesting, if they are serious about what they said you might be seeing a major change in that department happening over the next 3 to 6 months or so. I'm prepared to wait and see what happens.

[Jacked Camry]

The biggest problem facing investors right now is the new anti corruption law. We had a speaker from the anti corruption unit come and talk about their plans for enforcing the law. It was interesting, if they are serious about what they said you might be seeing a major change in that department happening over the next 3 to 6 months or so. I'm prepared to wait and see what happens.

Me too. Let me know if you spot any flying pigs around Phnom Penh, then you'll know it's about to happen.

[bordeaux]

I'd like to invest in Cambodia. It has a promising economy. Consumer optimism is seemingly a good sign for new businesses to come in.

An I.T. school is a good investment, what do you think?

[cambod]

I'd like to invest in Cambodia. It has a promising economy. Consumer optimism is seemingly a good sign for new businesses to come in.

An I.T. school is a good investment, what do you think?

I think a "Facebook-for-dummies-university" would be a much better idea...

[ChicagoGuy]

I'd like to invest in Cambodia. It has a promising economy. Consumer optimism is seemingly a good sign for new businesses to come in.

An I.T. school is a good investment, what do you think?

There are a number of schools that offer various levels of computer training in PP. I would think your first step would be to survey the market to see what all is available and whether or not there is a potential need.

[vladimir]

If you got qualified foreign professionals, to open a new centre, it would be a good idea. The one IT guy I know told me the uni he got his degree from sucks, and that they are all the same.There are also thousands of small private schools/ whatevers offering very cheap courses -some less than $10/20 month.If one is studying Word, for example, I don't think a foreigner teaching it would make much difference, so students might not be willing to pay. However, if you ran foreign-accredited courses in more complex stuff (like using the quote button, LOL ), then I'm sure you could attract paying students.You would have to fail the students who didn't pass; if you just did what every other tinpot institution did, you would become irrelevant and no one would respect your certificates.

[bordeaux]

Thanks for your inputs... My investment is long-term since part of the curricula I intend to put up is a Digital Arts School and parts of it would be into real estate and resorts. I'min the middle of studying some options, proposals and research evaluations to detect which part is best for ROI to be maximized....I will need to drop by PP more in the coming months.

[Uncle Monty]

If you got qualified foreign professionals, to open a new centre, it would be a good idea. The one IT guy I know told me the uni he got his degree from sucks, and that they are all the same.There are also thousands of small private schools/ whatevers offering very cheap courses -some less than $10/20 month.If one is studying Word, for example, I don't think a foreigner teaching it would make much difference, so students might not be willing to pay. However, if you ran foreign-accredited courses in more complex stuff (like using the quote button, LOL ), then I'm sure you could attract paying students.You would have to fail the students who didn't pass; if you just did what every other tinpot institution did, you would become irrelevant and no one would respect your certificates.

Word is studied at degree level too. I was told of a case where the students didn't want to learn Word 2010 as it was too difficult and wanted to learn 2000 or 2003.

[OnCore]

Is the problem the schools or the students?
The bit of paper seems to be more important than actually acquiring the skills.
So many jobs are awarded via family/social network, I suppose it's understandable students only care about checking the boxes educationally.

[flying chicken]

I think I.T is a booming and potential market in the capital. The problem is though once your business is established is how to market it among lots of less than qualified ones.

[BirdBrain]

I wouldn't exactly consider studying word I.T. Nor would I think any one could teach a Ms office application better then the online tutorials.