By Craig Guthrie
The Mekong Times
The Japanese Embassy announced yesterday that an investment protection agreement with Cambodia, which has taken almost a decade to hammer out, will finally come into force at the end of this month.
Diplomatic notes on the trade pact, labeled the Agreement for the Liberalization, Promotion and Protection of Investment (JCBIA), were exchanged between the two nations in Phnom Penh July 1 and it will come into force July 31, said the embassy statement.
The agreement is hoped to “improve Cambodia’s investment environment and further strengthen the economic relationship between the two countries,” it added.
Cambodia hopes the deal will attract investment from a corruption-wary nation which Prime Minister Hun Sen has personally visited 15 times — the possibility of concluding an agreement on investment protection and promotion was first raised by him during a visit to Tokyo in 1999.
Japan, which has the world’s second largest economy, has been the top aid donor to Cambodia since the early 1990s, but has lagged far behind other Asian nations in terms of investment.
China and South Korea have invested US$1.7 billion and US$1.5 billion respectively in Cambodia since 1994 while Japan has invested just US$135 million, according to figures released earlier this year by the Council for the Development of Cambodia.
According to the 76-page JCBIA, Japanese firms seeking to invest in Cambodia will be treated equally to local firms in terms of regulations and taxation, while Cambodia is obliged to build a more favorable investment environment.
“[T]hese objectives can be achieved without relaxing health, safety and environmental measures… [Both parties] shall ensure that measures and efforts are undertaken to prevent and combat corruption,” according to the JCBIA.
Hun Sen’s last visit to Tokyo in mid-2007 was marked by his promise to tackle graft, an issue which was identified as the top concern for Japanese investors interested in Cambodia in a 2006 survey carried out by the Japanese Chamber of Commerce in Bangkok.
Keiji Miyauchi, the CEO of Maruhan Bank, which earlier this year became the first Japanese commercial bank to open its doors in Cambodia, believes that the trade pact will encourage more Japanese investment.
“I believe it will. Since last year Japanese individuals and company owners have been studying Cambodia’s investment environment and have become more active here,” he said, adding that high land prices in Vietnam spiked their interest.
“Japanese investors take time before making a final decision, but once they come, they stay for a long time,” said Miyauchi.
But Hiroshi Uematsu, finance and accounting director of the Phnom Penh Special Economic Zone (PPSEZ) — a vast US$90 million joint Japanese-Cambodian venture, fears that Japanese investors may still be loath to come.
“[The agreement] may not be enough,” he said. “I hope it is, but Japanese companies are not so familiar with the Cambodian government’s structure, they will hold detailed studies first.”
Opposition lawmaker Son Chhay said that investment from developed nations like Japan is good for Cambodia.
“I believe when nations like Japan invest in Cambodia it strengthens our rule of law, because these nations will not accept corrupt business deals,” he said. “This type of investment strengthens our institutions and brings about change.”
Son Chhay added, however, that the current government has too many “bad habits,” which Japanese investors will not accept.
Japan announced in May that 2009 will be Japan-Mekong Exchange Year, through which it hopes to bolster ties with Mekong-situated nations already heavily invested in by principal economic rival China.
The Mekong Times
The Japanese Embassy announced yesterday that an investment protection agreement with Cambodia, which has taken almost a decade to hammer out, will finally come into force at the end of this month.
Diplomatic notes on the trade pact, labeled the Agreement for the Liberalization, Promotion and Protection of Investment (JCBIA), were exchanged between the two nations in Phnom Penh July 1 and it will come into force July 31, said the embassy statement.
The agreement is hoped to “improve Cambodia’s investment environment and further strengthen the economic relationship between the two countries,” it added.
Cambodia hopes the deal will attract investment from a corruption-wary nation which Prime Minister Hun Sen has personally visited 15 times — the possibility of concluding an agreement on investment protection and promotion was first raised by him during a visit to Tokyo in 1999.
Japan, which has the world’s second largest economy, has been the top aid donor to Cambodia since the early 1990s, but has lagged far behind other Asian nations in terms of investment.
China and South Korea have invested US$1.7 billion and US$1.5 billion respectively in Cambodia since 1994 while Japan has invested just US$135 million, according to figures released earlier this year by the Council for the Development of Cambodia.
According to the 76-page JCBIA, Japanese firms seeking to invest in Cambodia will be treated equally to local firms in terms of regulations and taxation, while Cambodia is obliged to build a more favorable investment environment.
“[T]hese objectives can be achieved without relaxing health, safety and environmental measures… [Both parties] shall ensure that measures and efforts are undertaken to prevent and combat corruption,” according to the JCBIA.
Hun Sen’s last visit to Tokyo in mid-2007 was marked by his promise to tackle graft, an issue which was identified as the top concern for Japanese investors interested in Cambodia in a 2006 survey carried out by the Japanese Chamber of Commerce in Bangkok.
Keiji Miyauchi, the CEO of Maruhan Bank, which earlier this year became the first Japanese commercial bank to open its doors in Cambodia, believes that the trade pact will encourage more Japanese investment.
“I believe it will. Since last year Japanese individuals and company owners have been studying Cambodia’s investment environment and have become more active here,” he said, adding that high land prices in Vietnam spiked their interest.
“Japanese investors take time before making a final decision, but once they come, they stay for a long time,” said Miyauchi.
But Hiroshi Uematsu, finance and accounting director of the Phnom Penh Special Economic Zone (PPSEZ) — a vast US$90 million joint Japanese-Cambodian venture, fears that Japanese investors may still be loath to come.
“[The agreement] may not be enough,” he said. “I hope it is, but Japanese companies are not so familiar with the Cambodian government’s structure, they will hold detailed studies first.”
Opposition lawmaker Son Chhay said that investment from developed nations like Japan is good for Cambodia.
“I believe when nations like Japan invest in Cambodia it strengthens our rule of law, because these nations will not accept corrupt business deals,” he said. “This type of investment strengthens our institutions and brings about change.”
Son Chhay added, however, that the current government has too many “bad habits,” which Japanese investors will not accept.
Japan announced in May that 2009 will be Japan-Mekong Exchange Year, through which it hopes to bolster ties with Mekong-situated nations already heavily invested in by principal economic rival China.
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