2012 Cambodia Foreign Business Leaders survey

CAMBODIA2012

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The foreign business leaders survey rates the kingdom’s business environment

GettInG stArteDhow to do business in cambodia

ALL ABOUt AseAnshaping the region’s economic future

fACts & fIGUresthe region in numbers

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has been introduced, and the skies have opened be-tween Siem Reap and Sihanoukville. With Cambodia chairing Asean in 2012, more growth is definitely to be expected.

I believe optimism is in the air. Eighty percent of the business men and women we have interviewed feel confident the economic conditions of the country will improve over the next three to five years, while 51% of them see mid-term opportunities in the primary sec-

tor (agriculture, agribusiness, food processing, forestry and fishery).

Cambodia can count on its business friendly environment, as well as its labour force, to drive growth. The ease of starting a company is cited as a clear positive of doing business in the Kingdom, and cost and availabil-ity of labour are key business advan-tages, according to our survey.

Of course, it is not all rosy. Cam-bodia still has many challenges to address, as mentioned by our re-spondents. The legal system, access to domestic loans, energy or public utilities, among others, will have to improve. But this does not seem to be a deterrent to future invest-ments: 92% of the foreign business leaders expect to invest the same amount or more money in 2012.

On that note, let me conclude by sincerely thanking all survey par-ticipants. We know their time is pre-cious, and we are grateful for them having taken a moment to complete our questionnaire.

Cambodia is looking far into the future. So if you haven’t already, why don’t you come and ‘feel’ the country for yourself ? Z

Welcome to the 2012 edition of the Cambodian Foreign Business Leaders Survey. For the second year in a row, we have spoken to a broad range of foreign business leaders

working and living in Cambodia, asking them about their perceptions of doing business in the country. We have made some additions to our questionnaire, and we have introduced a new section (page 14), which should provide our readers with a valuable picture of the Cambodian labour market in terms of cost, existing skills and training needs from an employer’s perspective.

Last year, we tried to demonstrate that Cambodia was very much a country under construction and would remain at work for quite a long time, for there were many issues to tackle. But Cambodia is becoming more than just a blip on the radar: every year the country takes another step forward. I re-member when I first came to the country six years ago, I was struck by the country’s energy; despite all the worldwide turbulence in that time, this has not changed.

The Cambodian business land-scape has experienced impor-tant changes in the last year. For instance, the new European Union trade legislation offered increased access to Europe, the agri-business industry expanded significantly de-spite regional flooding, increased investment from Japan in particu-lar demonstrated a higher level of sophistication in the manufactur-ing sector, an anti-corruption law

propitious position

The second installment of the Foreign Business Leaders Survey shows

there is much reason for optimism in the Kingdom

By Laurent Notin, Indochina Research

“With cambodia chairing asean in 2012, more groWth is definitely to be expected

”

CAMBODIAoverview

Research by INDOCHINA RESEARCH, Cambodia The Questionnaires for the survey on pages 12 - 23 were sent by email to a pre-selected list of foreign business managers/decision-makers/

leaders working for private companies based in Cambodia. Research coordinated by Florence Pollet.

www.indochinaresearch.com [email protected]

12 | FocusAsean 2012 FocusAsean 2012 | 13

Taking the Asean chair for the second time, Cambodia will be keen to use this year to prove itself a force to be reckoned with. In its role as Asean chair, Cambo-dia has already said it wants to initiate six-party talks with North Korea and has expressed the need to fi-

nalise a first draft of the Asean Human Rights Declaration. This year’s Asean summits will strive to showcase the country as a viable investment destination.

Indeed, Cambodia has come a long way in the last 10 years. Economic growth of over 6% has become the norm. A stock mar-ket launched last year. Skyscrapers are gradually giving Phnom Penh a skyline, and the manufacturing sector is beginning to move beyond garments.

But while optimism in the economy is high, Cambodia, like most developing countries, still grapples with a host of matters that restrict the speed at which the country is developing and reduce the ease of doing business.

In order to perceive how foreign investors – particularly from Western countries – rate doing business in Cambodia, Indochina Research, a regional market research company, asked 66 for-eign business managers, decision makers and members of the private sector to answer questions on what it is really like to do business here.

The businesses questioned operated in a wide range of sectors including consulting, trade, retail, banking, hospitality, manu-facturing and information technology. Asked to evaluate the ease of doing business in Cambodia by giving the country a score of between one and 10, the average score was 5.72.

Still, the vast majority of businesses are confident that Cambodia’s economic situation will improve in the near future. According to the survey, 38% of businesses are “very confident” that the economy will improve in the next three to five years, while a further 42% of businesses are “somewhat confident”. No businesses expressed zero confidence and only 5% were “somewhat not confident”.

“People I talk to not just in Cambodia but outside the coun-try are very optimistic about Cambodia,” said Faisal Ahmed, resident representative for the International Monetary Fund in Cambodia. “Obviously one big advantage of Cambodia is that it is starting later. You learn from the mistakes of others and your opportunity set is bigger.”

Ahmed added that more and more investors are viewing Cambodia as a potential market. A major reason for this is the competitive edge Cambodia now has when it comes to the cost of labour.

In Vietnam, wages have doubled in the last four years and the minimum salary in Ho Chi Minh City and Hanoi stands at two million dong (at the time of publication), or about $100, per month. Wages in China are also on the rise. Earlier this year a Chinese government report confirmed that the annual average growth of minimum wages should be at least 13% in the next three years. In February, minimum wages in China had already risen to 1,500 yuan ($240) per month in regions such as Shenzhen.

By Simon Marks

“The minimum monthly wage for an IT technician in Cambodia is $90 compared

to $500 in Thailand”

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Courting Cambodia Our signature Foreign Business Leaders Survey reveals what the country’s key players really think of the market

CAMBODIAINsIght

P Ease of Doing Business in Cambodia

On a scale of one to 10, how would you evaluate the ease of doing business in Cambodia at present?

1 2 3 4 5 6 7 8 9 10

1% 5% 11% 6% 16% 20% 24% 9% 5% 1%

Poor Excellent

Average: 5.72

Caught between tradition and modernity, Phnom Penh reflects Cambodia's economic development


Most of those attending higher education are doing so in subject matters such as business, management and finance. But the labour market is crying out for people with technical skills in areas such as agriculture, information technology, human resources and marketing.

According to the Cambodian Federation of Employers and Business Associations (Camfeba), more than 60% of Cambodian university students are graduating in either business or law. Only 2% of students graduate in agriculture even though the govern-ment is pushing for more exports in commodities such as rice, cassava and rubber.

“There needs to be a bigger focus on technical vocational training,” said Sandra d’Amico, managing director for HR Inc and vice president of Camfeba, adding that qualifying with voca-tional skills tends to take less time and put people into jobs at a much quicker rate than academic courses.

D’Amico said that too many parents and students look at university as a way to get people into white-collar jobs. What the job market really needs is engineers, factory supervisors and accountants.

“Those people come into the market and actually earn more money than university graduates,” she said.

Companies such as Japan’s Minebea, which makes small, motorised parts for items such as mobile phones, have found it difficult to find locals with the skills to operate its machin-ery. Banks also find it hard to hire locals with skills in risk man-agement and marketing. To curb the problem, the government has begun to at least talk about looking for investment in more vocational training schools. g

HR Inc's Sandra d'Amico pleads for a more balanced job market


Although trade unions in Cambodia would like to see the minimum wage rise to $96 per month – and the number of vio-lent protests by garment workers are on the rise – the minimum wage in Cambodia stands at just $66 per month (at the time of publication), considerably lower than other countries in the region. According to the Foreign Business Leaders Survey, the minimum monthly wage for an IT techni-cian in Cambodia is $90 compared to $500 in Thailand.

“The pull factors would be domes-tic ones like low wages and improving infrastructure,” noted Ahmed.

“The government is making efforts to improve some of the bottlenecks on infra-structure, and businesses are looking at the improvements made over the last five or 10 years,” he added when asked to explain rising levels of confidence in Cambodia’s economy.

Road connections with neighbouring countries are also improving. Money from countries such as China, South Korea and Japan has either built or is in the process of building more than 1,000 kilometres of new roads in the country. National roads four and five, which run between Phnom Penh and the Thai border were inaugurated in 2009. Work on a bridge over the Mekong in order to connect Phnom Penh with Ho Chi Minh City is scheduled to finish by 2015. Roads in Mondulkiri and Ratanakiri provinces that link with Vietnam have also been improved in the past two years.

These developments have all helped improve Cambodia’s ability to import and export goods. But what do investors in Cambodia really feel about the ease of do-ing business in a country that only 20 years ago had no investment law?

According to the Survey and more than a dozen interviews with economists, managers and observers of Cambodia’s economy, doing business here still has many challenges, from high levels of corruption inside the country’s tax and custom authorities to unclear regula-tions and a work force in desperate need of better training.

The Right Course

While 61% of businesses said the availability of labour and 69% said the cost of labour was supportive to doing business, 53% of those questioned said that the skills and education levels of the work force were not supportive to doing business.

P Workforce

What are the strengths in terms of education/qualification of the local workforce?

* Willing to improve, continuous learning, eagerness to learn by graduates, once immersed in industry

** Diligent, committed, passionate, receptive to new ideas/innovation, enthusiastic, full of energy, serious

Ambition/Desire to learn

Language skillsPositive attitude

26%*

18% 15%**

IMF's Faisal Ahmed believes Cambodia's late start can be an advantage

“There needs to be a bigger focus on technical

vocational training”

cambodiaINsIght


its Cambodia operation due to the risk of corruption in the customs department.

“Everyone knows that custom officials are among those who can become rich very quickly,” said Preap Kol, country representa-tive for Transparency International in Cam-bodia. “Every family wants their kid to be a custom official. It’s a very prestigious job.”

Kol said that the onus for the government to stamp out corruption had increased in recent years, especially with Cambodia vying to become a non-permanent mem-ber of the United Nations Security Council. But because most of the large investments still come from countries that also suffer from corruption, there is a lack of desire to make reforms quickly.

This scenario means that Western businesses looking to do business in Cambodia can find themselves at a com-petitive disadvantage when compared to companies from countries such as China, Malaysia or Vietnam.

Another issue brought up by businesses in the Foreign Business Leaders Survey is that local firms use their connections to gain favourable business conditions in areas such as tax.

“It’s very unfair when there is such practices as nepotism and politicians run-ning businesses,” said Kol. “It’s not a fair playing field, and serious businesses have to think about that before putting their feet into the country.”

For Ahmed at the IMF, creating an equal playing field allows countries to attract the most competitive companies and, there-fore, the most favourable for consumers.

“Even-handed treatment is always a positive factor for businesses to operate. I don’t know if that is not being practiced, but I think it is a general pre-condition to improving the business climate,” he said.

Although corruption and issues sur-rounding fair competition are high on the minds of foreign investors, others say that the business climate has seen major improvements over the last few years and that more and more companies are now playing by the rule book.

Martin Desautels, regional managing partner for DFDL Mekong, a pan-Asian law firm, believes the standard of companies entering Cambodia’s marketplace is im-proving all the time. The main advantage firms in Asia might have over firms in the West is that their governments tend to have closer connections, he noted.

“They operate a bit more often government to government and operate often through their embassies to get the initial contacts,” he said, adding that the Ministry of Com-merce is currently in the process of drafting a competition law to be in compliance with World Trade Organisation rules.

“It’s true that in certain circumstances the local company might have less strin-gent obligations in practice to comply with. But then again, if you talk to our tax guys, that is changing. The government is trying to broaden its tax base. It’s less and less true that it is possible to not pay tax,” he added.

To make the business environment more conducive to foreign investors, the gov-ernment is drafting more of the necessary legislation. For example, the new civil code, which came into force in December,

Transparency International's Preap Kol believes perception of corruption is also correlated to the country of origin of the investor

“The government is trying to broaden its tax base. It’s less and less true that it is

possible to not pay tax” g


DFDL's Martin Desautels says more companies are now playing by the rule book

Chevron Corp, which after years of exploration is one day expected to extract oil from Cambodian waters, is opening a centre to train workers to operate its pro-duction platform once oil starts to flow. The government also has plans to re-open the University of Geology and Mines, though an exact date had not been announced at time of publication.

But most of the initiatives to improve the workforce are still in the pipelines and could take years to accomplish. There is also still very little effort to inform peo-ple in the countryside, where most of the population lives, about how to find jobs. With more than 300,000 people entering the labour force every year, more simply needs to be done.

“In Cambodia where our biggest focus is agriculture, there are hardly any agricul-ture graduates. So this is the challenge,” d’Amico said. “We are not doing the right marketing. We are not telling people that if you study agriculture you will get a job.”

Despite the dearth of skills in the work force, most businesses said that the youthfulness of the country – 32% of the population is still under the age of 15 –

means there is an enthusiasm and ambition to learn in Cambodia that is unparalleled elsewhere in the region. Nonetheless, the Foreign Business Leaders Survey found that 37% of companies expect their staff to be more proactive and develop abilities such as critical thinking, analytical and logical thinking as well as creative thinking.

Graft Grievances

An issue that is equally as troublesome when doing business here, according to investors and the Foreign Business Leaders Survey, is corruption. In all walks of life, businesses in Cambodia are confronted with corruption, from the court system to the customs office. The survey found that 58% of businesses considered the legal system to be not sup-portive to doing business, while only 12% voiced an opinion to the contrary.

A quarter of companies found that firms with connections to the government had advantages in terms of paying taxes and following regulations. And 55% of busi-nesses felt that the anti-corruption law, which was implemented in 2010, bore no influence in stamping out graft.

For years, Cambodia has ranked as one of the most corrupt nations in the world on Transparency International’s Corruption Perceptions Index. For Western companies, corruption is high on the list of deterrents to doing business. Committing corrupt acts when abroad is also more severely punished than in the past.

Both the United States and the United Kingdom have implemented legislation, the Foreign Corrupt Practices Act and the

Bribery Act respectively, that sets much tougher conditions and punishments for businesses found guilty of bribing a foreign public official.

Such laws, including Cambodia’s own anti-corruption law, which forbids any pay-ment to public officials that does not receive a receipt, have already deterred companies from doing business here. Last year, the gi-ant US logistics company FedEx scaled back

“Everyone knows that customs officials are among those who can become rich

very quickly”

CambodiaINsIght

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Tel. + 855 23 214359-61 Ext 102-106or your preferred travel agent


regulates all corporate contracts. A com-mercial contract law, which will regulate things such as franchises, is also being drafted. What is more, an arbitration cen-tre is due to be launched this year as a way for businesses to resolve disputes outside of the court system.

Those looking to invest in Cambodia will welcome these initiatives. Still, 46% of busi-nesses questioned by the Foreign Business Leaders Survey said that the intellectual property law is not supportive of doing business. Companies in Cambodia have a tendency to copy already successful busi-ness models, which creates “a climate of suspiciousness”, they said.

“It’s difficult to enforce, there is no doubt about it. This being said it is possible to enforce. There is a department at the Min-istry of Commerce who can help you en-force your intellectual property,” Desautels said, adding that any company looking to protect their intellectual property rights would need to take a “proactive approach”.

Constructing a Community

Having experienced more than 10 years of economic growth after decades of war and political instability, Cambodia still has a massive job to do before key infrastruc-ture meets the expectation of investors. More advanced manufacturers from Japan have only just started entering the market in the past couple of years since the gov-ernment opened special economic zones that provide businesses with a reliable en-ergy source and the ability to trade goods through a so-called one-stop service.

The Foreign Business Leaders Survey found that 70% of businesses still believe that the supply of energy in Cambodia is unreliable and too expensive. A further 49% said that public transportation was not supportive of business, with traffic jams and heavy congestion becoming more and more of a problem. There is still no public bus service in any of Cambodia’s major cities. Though a slightly different view was given of communication services with 65% of businesses stating that inter-net and phone services in the country were supportive of doing business.

In order to rectify the energy problem, the government has set out on a plan to build more than 20 hydropower dams on rivers all over the country. The 338-mega-watt Kamchay dam in Kampot province was the first of those to come on line last year, and its energy is expected to provide additional power to Thailand as well as Phnom Penh, Sihanoukville and Kampot. Although environmentalists warn the dams could seriously jeopardise the coun-try’s fisheries, the government appears set to push forward with its policy of building more dams.

An argument in favour of the dams is that they will provide rural areas with more electricity. The government has a target to reach exports of one million tonnes of milled rice by 2015 – exports of milled rice reached 200,000 tonnes in 2011, according

to government data – but rice mill factories often have to grapple with high energy costs through the use diesel-powered generators.

Appraising Cambodia

During the financial crisis, which strongly impacted Cambodia’s economy in 2009, the construction sector was badly affected and has struggled to recover since. Hous-ing prices, which had in some cases risen ten fold since 2005, have fallen by 50%. Pro-jects such as Gold Tower 42, which is being developed by South Korea’s Yon Woo Co, have ground to a halt. Plans to build three more towers in Phnom Penh’s Chamkar Mon district were also scrapped in 2010 by South Korea's GS E&C company.

Investors are now looking more toward real estate projects in the tourism sector. Cambodia expects to have seven million visitors per year by 2020, up from less than three million presently.

“What we’ve always specialised in is tourism-related resorts, hotels and luxury villas. That’s the sector that year-by-year is growing, and parts of Thailand have be-come oversaturated,” said Tom Sterling,

director at Sterling Project Management, a real estate company with operations in Thailand and Cambodia.

High value office and residential property in Phnom Penh is still limited. “There will be an oversupply coming on line this year,” Sterling said.

Still Japan’s Aeon Mall announced last year it would start building a giant shop-ping complex this year. Hongkong Land, a subsidiary of Jardine Matheson, is also set to break ground soon on two projects (yet to be identified at time of publica-tion) on prime real estate in Phnom Penh. Capital going into the manufacturing and agriculture sectors is also expected to rise.

Perhaps sensing that Cambodia in the next few years will have developed its in-frastructure and improved its overall busi-ness climate, foreign direct investment is increasing. According to figures released by the central bank in the first part of the year, foreign direct investment in Cambodia reached $632m in 2011, a 14% increase compared to the previous year.

One of the major plus points for Cambodia’s economy over the past year has been in ex-ports. Despite economies in North America

CambodiaINsIght

P Business Environment

Cost of labour69%

Domestic demand

54%

Communication services

65%

Rate of corporate income tax

47%

Commercial contracts law

32%

Political stability of government

65%

Support Challenges

Access to domestic loan

38%

Education and skills of labour

53%

Anti-corruption law

55%

Legal system/conflict resolution

58%

Energy 70%

“Cambodia expects to have seven million visitors per year

by 2020, up from less than three million presently“

Real estate developer Tom Sterling is betting on tourism facilities

g


and Europe slowing, orders from those markets for Cambodian-made garments re-mained high. Exports to the US and Europe rose to more than $4 billion last year, dwarf-ing 2010’s total of just $2.88 billion. Much of that growth was spurred by a new trade agreement that dropped tariffs on all items except weapons exported to the EU.

Another sector that experienced ample activity over the past year was the bank-ing sector. This year alone, Japan’s Bank of Tokyo-Mitsubishi opened a representa-tive office in Phnom Penh, and Vietnam’s Saigon-Hanoi Commercial Joint Stock Bank and Military Bank have both opened branches, bringing the total number of commercial banks to 32 in March 2012. A host of other banks from countries such as China and Malaysia also joined the pack last year.

The influx of banks over the past three years is one of the most obvious signs that in-vestors are eyeing up the potential in Cambo-dia, a country where gross domestic product is still only equivalent to about $12 billion.

“If you look at the emerging markets in Southeast Asia today, this is the place to be,” said Michael Lor, who arrived in

Cambodia to take on the position of CEO for Canadia Bank in late 2011. “You have countries that have moved ahead of the pack – countries such as Thailand and Indonesia and to a certain extent Vietnam. These countries today are overpriced.”

“Barriers to entry have been erected and the countries themselves have become a little bit more selective,” he added.

When looking to make an investment in a market with fewer competitors and cheap-er prices, Lor said investors are now left

Canadia Bank's Michael Lor believes a process of natural selection will apply to Cambodia's crowded banking sector

60%

50%

40%

30%

20%

10%

0%

4%

16% 15%

39%

25%

0%

9%14%

53%

24%

0%5%

15%

42%38%

over the next 6-12 months

Not confident at all

Somewhat confident

Somewhat not confident

Very confident

Neutral/Unsure

Over the next 2-3 years Over the next 3-5 years

P Future Economic Situation

cambodiaINsIght


CIMB's Bun Yin is keeping an eye on Cambodia's stock exchange with a view to future involvement

with a choice between Cambodia, Laos and Myanmar. Though showing many signs of reform in the right direction, political stabil-ity in Myanmar is still not assured, he said. He added that as domestic demand is small-er in Laos than it is in Cambodia, it would take longer for the landlocked country to emerge as an investment hotspot.

“For anybody who is looking for a market to go in, and you realise that by way of de-leting what is not possible, you are now left with only Cambodia,” Lor noted.

Sharing his enthusiasm is Bun Yin, Head of Commercial Banking and Deputy Gen-eral Manager at CIMB Bank. “Since our arrival in autumn 2010, results have ex-ceeded all of our targets, both in terms of deposits and loans," he said. CIMB plans to open four new branches in Cambodia this year.

It is views like this that are fast making Cambodia’s banking market extremely competitive. Though some insiders be-lieve the market is overcrowded, oth-ers say the National Bank of Cambodia’s (NBC) policy of bringing in banks with a proven track record will hold the country in good stead.

“They bring in the capital, they bring in the technology and they bring in the expertise,” said Lor. “Over a period of time by a process of natural selection, you will notice that those players who find them-selves too small or not viable, will move out on their own. But at this moment of time there is no reason to restrict.”

Despite the high numbers of banks, the Foreign Business Leaders Survey found that 38% of businesses thought access to credit was not supportive of doing business, compared to 21% who found it supportive. Bankers say part of the reason for this is be-cause small and medium-sized enterprises in Cambodia still have poor accounting and financial reporting standards, a necessity for those looking to borrow money.

Still, credit is growing at rate of about 25% per year, a level that the IMF has said is at Cambodia’s upper limit. With the existence

of the recently launched stock market, investors hope that more businesses will adopt more stringent financial standards.

Other aspects that could help grow the banking sector further is a credit bureau where borrowers’ credit history can be viewed as well as an interbank market, which still does not exist in Cambodia. Both are currently being designed by the NBC.

“A significant amount of trade in Cambo-dia today is still done on a cash basis. But you realise that as the business gets larger and the demands become more sophisti-cated, there is a need for an entity in be-tween the arbitrage,” Lor explained.

Forty-two percent of businesses felt that Cambodia’s new bourse would have a positive effect on business. Still, members of the opposition and economists have warned that a culture of greed and corrup-tion mean regulators need to be extremely vigilant to fight against illegal activities.

The regulators “are very much aware of these risks… and that is why they are tak-ing their time to prepare the ground. But it’s always a learning process. There is no textbook that tells you for Cambodia you need to do these 32 things. So there is a

“If you look at the emerging markets in Southeast Asia

today, this is the place to be”

g


Today his company provides IT solu-tions for many businesses from banks to telecommunication companies and em-ploys more than 300 people, of which 10% are expatriates from India, Singapore and Malaysia. He said that after already expand-ing into Laos, his firm was now looking at other countries in Asean.

Foreign companies researching Cambodia should realise that although local firms may have the advantage in terms of knowing the local market and systems, access to the mar-ket in Cambodia is one of the most open in the region, according to Eyra. He also noted that a foreigner can wholly own compa-nies in Cambodia, which is not the case in Vietnam, Myanmar, Thailand and Laos, where investors must find a local partner.

He also stressed that before investors set up shop in Cambodia they should conduct thorough market research and be aware it remains a relatively small domestic market.

“Definitely the local firms have more advantages because they know how to get around with the system and processes,” he said. “You need a niche to compete. Your business has to have advantages that others do not.”

Still, First Cambodia experiences many of the same challenges that many foreign businesses face. Workers with the most talent can sometimes leave to start their own businesses or get snapped up by larger companies.

“Retaining key staff is the biggest chal-lenge,” he said. “A lot of multinational companies are taking our staff.”

Still, he believes that as the economy con-tinues to grow there will be more need for IT services.

“Before you could never sell them a dol-lar’s worth. And now they start to invest a million.”

Last year he said his company received a $2m-contract to provide technology so-lutions to a new brewery opened by Chip Mong Group, a local firm with businesses in the construction sector.

“It’s just the beginning,” he said. “It’s got to go up from here.” Z

P Recommended Mid-Term Opportunities

51%

Prim

ary

sect

or

Ener

gy

Tran

spor

tatio

n/Lo

gist

ics

Educ

atio

n

Seco

ndar

y se

ctor

Cons

truct

ion/

Real

est

ate

Insu

ranc

e/Ba

nkin

g &

Fin

ance

indu

stry

Heal

th

Gree

n ec

onom

y

Tour

ism/H

ospi

talit

y

Infra

stru

ture

de

velo

pmen

t

Com

mun

icatio

n de

velo

pmen

t

Serv

ice in

dust

ry

Spec

ial e

cono

mic

zon

e

33%

29%

20% 20%18% 18%

13%

9%7% 7% 7%

2% 2%

# Agriculture, Forestry and Fisheries # Food processing/agribusiness

# Export # High-end consumer goods # Automobiles# Garment and footwear industry development

# Global development of the e-economy

# Solar# Oil# Gas

“Before you could never sell them a dollar’s worth.

And now they start to invest a million”


trial and error process that all countries need to go through,” said IMF’s Ahmed.

Long-term Investment

One man who has seen Cambodia evolve over the years is Dominique Catry. Hav-ing lived in Phnom Penh as a businessman prior to the Khmer Rouge regime in the 1970s and then returned to Cambodia in

the 1990s when relative peace was restored to the country, Catry has had to negotiate many of the above hurdles.

As chairman of Comin Khmere, an engi-neering company with offices in Vietnam and Cambodia, he has overseen projects that have built transformers for the nation-al grid and provided hardware for Vattanac Tower, a new 38-storey building on Phnom Penh’s Monivong Boulevard.

Catry also helped found the French Cambodian Chamber of Commerce and is a co-founder of the newly formed European Chamber of Commerce in Cambodia. He said the Kingdom is currently nicely poised to see sustained economic growth in the future.

Catry said while Vietnam is struggling with high inflation and slower economic growth, Cambodia economy is better posi-tioned to attract investors at it capitalises on strong growth above 6%.

Still, he said that building a successful business in Cambodia has taken time and a lot of effort. In the early days employees in senior positions were almost exclusively expatriates. Finding reliable sources for importing machinery and construction materials was also a challenge.

“We have built over the years, sourcing and identifying the most competitive sources. That gives us an advantage,” he said. “When we got a fresh engineering graduate ten years ago, he didn’t know anything. Today we can find people with experience [in Cambodia] and experi-ence oversees and that makes a lot of difference,” he added.

It is a development other companies are keen to exploit. According to the Foreign Business Leaders Survey, almost half of the businesses questioned said they were planning to increase their investment in Cambodia over the next year. Moreover, almost 60% of the businesses said they would recruit more staff in the next 12 months.

A company that fits into that bracket is First Cambodia, a local information tech-nology company that has also started doing business in Laos.

After working for MobiTel, Cambodia’s largest telecommunications company, and then for British American Tobacco, Houn Heng Erya realised there was a lack of companies providing IT solutions for Cambodia’s growing private sector. He started First Cambodia in 2002.

P Future Investment

What is your expectation regarding further investments in your business for the coming 12 months?

What is your expectation in terms

of recruitment for the next 12 months?

Reduce drastically

Reduce somewhat

Same

Increase somewhat

Increase drastically

0%

8%

45%

39%

8%

2%

2%

38%

50%

9%

Taking a long-term approach to business has brought Dominique Catry of Comin Khmere success

cambodiaINsIght

Documents

2012 Cambodia Foreign Business Leaders survey