Coordination to boost revitalization

Cambodia is vying with its neighbors to draw foreign investment in a bid to revive its war-torn economy.

The Council for the Development of Cambodia (CDC), established in 1993 to facilitate investment inflow, is playing an increasingly important role in this respect. Investments in the country mainly come from official development assistance and private sources or FDI.

Unlike other government agencies, CDC does not have any specific sector task. "We are responsible for coordination," said Sok Chenda Sophea, CDC secretary-general and personal advisor to Cambodian Prime Minister Hun Sen.

He cited the example of a mining project, which needs to coordinate with authorities in several sectors, such as the Ministry of Industry, Mines and Energy, the Ministry of Land Management and the Ministry of Environment, if the project involves Cambodian national reserves. CDC helps investors handle such cross-sector issues.

"CDC is here to attract, promote and inform," Sok said. One of the key areas not fully highlighted in terms of the positive impact of the organization is the extent to which CDC can help the investor, he added.

CDC's strong leadership distinguishes it from investment promotion agencies in other countries, Sok noted.

The organization is chaired by Prime Minister Hun Sen and its three vice-chairmen are Senior Minister of Economy and Finance Keat Chhon, Senior Minister of Commerce Cham Prasidh, and the first Deputy of the Ministry of Economy and Finance Kong Vibol - all cabinet heavyweights.

All ministers and provincial and municipal governors are members of CDC.

"No project can be approved by CDC without the knowledge and the agreement of all the members," said Sok, hinting that the all-star cast of CDC should ensure a smooth implementation of investment projects.

Reciprocal opportunities

"When you talk about China to a Cambodian, it means something; many of the people you meet here may have had Chinese ancestors," Sok said.

There are about 500,000 Chinese immigrants in Cambodia, accounting for about 5 percent of the country's total population and serving as evidence of close people-to-people ties between the two nations.

"I never saw the rise of China as a threat," said the CDC secretary-general. "What are the risks? I do not see any."

Sok added that he is not surprised at China's rise as an economic powerhouse and its increasing global political influence.

"I was expecting this; I knew that it would happen," he said. He first became aware of this possibility as a student in France in the 1960s, when his attention was caught by a book entitled When China Will Wake up by Alain Peyrefitte, a late French journalist and cabinet minister.

In fact, Sok sees more opportunities for his own country arising out of China's economic boom.

As China becomes richer, more Chinese will visit Cambodia, spurring the country's tourism sector, he said.

Furthermore, with China's opening up policy and increasing imports, it is likely that the Chinese will develop greater appreciation for Cambodian agricultural products.

"For me, that is a market," said Sok.

"China represents an opportunity for our exports and also an opportunity for Chinese companies to come here and invest."

As an official engaged in promoting investment, Sok expressed his concern about high local production costs.

In spite of advantages like low labor costs and easier access to the ASEAN regional market, Cambodia is still weak in infrastructure construction.

"Cambodia strongly needs long-term investment in infrastructural facilities," Sok noted.

A soft loan worth $122 million provided recently by the Chinese government has helped start construction of a road and a bridge linking the northern region with the rest of the country.

Sok said two provinces in northeastern Cambodia are at present linked via neighboring Vietnam. The situation will change once the new road is completed.

"I am glad that China is here to help reduce energy costs," Sok said. Electricity costs in Cambodia are currently more than double that in neighboring Vietnam and Thailand.

A Chinese company is already building a hydropower plant in Cambodia while another has pledged to build one. These projects are expected to halve power costs in the country.

China first became Cambodia's biggest investing country in 2004.

Friendly environment

Drawing attention to Cambodia's "open and liberal" investment environment, Sok said: "The only difference between foreigners and nationals in terms of investment treatment is related to the ownership of land," he said.

"Technically, as far as equity is concerned, our law doesn't have any requirements for minimum local share holding."

Cambodia has a handful of State-owned enterprises, mainly engaged in the water and electricity sectors.

"Apart from this, everything is private," Sok said. This reflects the country's attempts to shift from the formerly centrally planned economy.

As the Cambodian government pushes reforms forward and seeks privatization in various sectors, CDC is expected to play a bigger role in securing overseas capital.

The organization is improving its work efficiency.

For instance, an applicant for "a routine project" like a garment factory will generally receive a response within three or four days of applying, though "the law requires that we provide a response within 28 days," Sok said.

However, if a project is "more sensitive environmentally or culturally, we have to take a bit more time," he added.

To have a full understanding of the private sector's needs, Prime Minister Hun Sen chairs a government forum every six months, attended by all cabinet members and provincial governors.

Three to four hundred representatives of the private sector are also invited to the biannual meetings.

The established public-private dialogue mechanism provides the private sector with an efficient platform to present problems it encounters, express its opinions, and participate in decision-making regarding related policies.

Sok said the Cambodian government has a "very pragmatic and realistic" attitude toward building the country.

He cited the Cambodian airport in Phnom Penh, a public-private partnership project involving a French and Malaysian consortium, and several electricity production projects as examples to illustrate how the government has borrowed money and expertise from the private sector.

The electricity production projects are run by independent public producers who sell to the State-owned Electricity Authority of Cambodia, which in turn distributes power to consumers.

Sok also mentioned that the government has so far built 19 special economic zones to further stimulate inflow of foreign investment.

"Come to Cambodia first, see for yourself and you will realize the opportunities and you will want to come back again," he asserted.

"Cambodia is really painted in an awful way," he said, referring to the international misconception of the country as being rife with corruption.

"When you come here, you will say, 'I should have come earlier'."

(China Daily 04/10/2008 page26)