Cambodia has an opportunity to attract foreign investment (FDI) if it identifies its strengths and aggressively recruits investors, a United States-based international trade expert said during a webinar hosted by the US embassy.
James Loi, partner and chief operating officer at The Asia Group, a strategic advisory firm focused on promoting business in Asia, offered his perspective on best business practices to entice investments as part of a public speaker series organised by the embassy.
Loi, who spent 22 years working for the Department of State in economic, security and political policy roles in US embassies across Asia, said the US is the largest investor in Southeast Asia, but that Cambodia thus far has largely been out of the picture.
To make Cambodia more attractive to a variety of foreign private investors, Loi said it needs to create an environment conducive to private sector investment, which starts with creating a secure, predictable market with transparent and enforceable rules.
Loi said that a transparent process with clearly defined rules, timelines and criteria for decision-making would entice more competition for government-backed projects, such as infrastructure jobs. He said this process may include public hearings and involves civil society and stakeholders.
“At the end of the day, those [procedures] benefit companies that are bidding on those projects, but they also benefit governments and benefit the people,” he said.
Loi added that transparency allows governments to implement cost-effective projects while ensuring environmental and labour standards are met as well as community needs.
He said Cambodia has an opportunity to encourage investors when it chairs ASEAN next year because it will serve as a platform to reach key decision-makers including US politicians and business leaders.
“It’s an opportunity for Cambodia to almost reintroduce itself to the business sector,” Loi said. “There probably are perceptions about Cambodia and about the market itself and where the opportunities may lie. This would be an opportunity to try to make a fresh impression on those companies [attending ASEAN conferences].”
While political differences are sometimes viewed by some as a stumbling block for foreign investment, Loi said it doesn’t correlate to a lack of business interest.
He pointed to the fact that the US is the largest importer of Cambodian goods and that US companies have historically invested in countries with different politics, including China.
When asked about potential blueprints to follow in the region to attract more investment, Loi mentioned Singapore and Vietnam as examples.
Singapore has historically been very aggressive in recruiting companies, he said. He mentioned the early formation of the Economic Development Board as a key driver in attracting foreign investment. After recruiting companies to invest in Singapore, it would offer assistance in finding real estate or, in some cases, offer tax concessions for certain projects.
He said Vietnam likewise adopted aggressive recruitment strategies, including positioning itself as an ideal alternative for manufacturing hubs when many international companies looked to move their operations from China.
“It is not impossible for a smaller country like Cambodia to attract foreign investment. Many countries the same size or smaller, with fewer resources, have been able to do it. Cambodia has a strong geographic location, it has natural resources and a young population. It’s in the fastest growing part of the world,” Loi said.
The key, he added, is identifying which types of investment Cambodia desires, ensuring that it has the capacity to compete in that sector and then aggressively recruiting potential investors.