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NEWS UPDATES Asean Affairs  6  April  2016  

Bringing Japan FDI into focus

Launched last week, the Cambodia-Japanese Business Investment (CJBI) group aims to facilitate a dialogue between the two countries to bolster investment, and to help guide Japanese businesspeople through Cambodia’s often murky investment climate. The Post’s Cheng Sokhorng sat down with Koem Oeurn, CJBI president, to discuss what the business association aims to accomplish against a backdrop of rising Japanese trade and investment.

There is already a business association for Japanese investors in Cambodia, so how does your association differ?

The existing Japanese Business Association of Cambodia (JBAC) is just a group for Japanese businesspeople to meet and discuss business in Cambodia and Japan. So everything that is discussed only comes from the perspective of Japanese businesspeople themselves, without a Cambodian counterpart.

We created the CJBI group in order for Japanese businesspeople to meet with Cambodians to solve issues and to find out more detailed information about the way of doing business here.

Who is eligible for CJBI membership, and how many members do you have?

The launch of the CJBI saw 200 participants attend. After the launch, around 20 participants registered as members, but we have yet to confirm them as official members because we need to do background checks on the companies and make sure they are in compliance with our board before they receive approval.

To be eligible for CJBI, businesses need to be operating in an honest environment because Japanese businesspeople are very cautious and any negative outcomes will cause Japanese investors to lose confidence in Cambodia’s business sector. So, we have to be very careful when we match Cambodian and Japanese businesses to discuss business issues and partnerships.

We encourage all legitimate businesses to have a clear financial report, and for Japanese CEOs or general managers to think about what kind of technology they can bring to Cambodia after expert consultations, because we know technology is currently lacking in Cambodia.

How many Japanese businesses are currently operating in the Kingdom and how big is the Japanese expat community?

Based on the data from the Japanese Embassy there are about 25,000 Japanese citizens here, and about 350 Japanese companies operating. Of that number, 222 companies are registered with the JBAC. Those companies are typically involved in manufacturing, banking and finance, commerce, construction, trade services and logistics.

Historically, Japanese investment has come to Cambodia in waves. What is driving the latest wave?

I think that there are a lot of factors behind the current wave of investment. One factor that is pushing investment here is that the cost of labour is increasing in countries where Japanese companies had previously invested in.

For example, the labour cost in China keeps increasing, so Japanese companies have to look for other opportunities for investment, especially for those companies that don’t want to be involved in China anymore.

As for pull factors, we see an increase in the capability of human resources in Cambodia and a lot of Cambodians have studied in Japan and have the skills to work with Japanese companies.

Also, Japan has supported and helped to establish the legal framework in Cambodia through cooperation with Japan International Cooperation Agency (JICA).

How has Japanese investment in Cambodia helped to develop infrastructure?

I think Japan has the philosophy that if it can improve infrastructure conditions in developing countries, private investment will follow. It is important to create a platform for Japanese companies to invest, while also playing an important role in connecting the region to help all businesses, especially with the ASEAN Economic Community (AEC) increasing cross-border trade.

What are some of the critical issues Japanese investors have raised about operating businesses in Cambodia?

The most critical issue is that Japanese investors put a lot of value on business ethics and transparency. They do not like the indirect way of doing business, such as bribes or paying money under the table. Japanese want to invest in a moral and ethical environment.

How will CJBI work to resolve this issue?

Cambodia businesspeople, as well as the government, should pay attention to Japanese investors and understand business ethics in order to attract more Japanese investors to Cambodia.

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