US firms eye new markets in the Kingdom

Prime Minister Hun Sen met with a delegation of U.S-Asean Business Council.

Monday, 05 September 2011
Don Weinland
Phnom Penh Post

VISA, Mastercard, Dell and Cisco Systems have been added to a growing list of US companies looking to enter the Cambodian market, according to Frances Zwenig, counsellor of the US-ASEAN Business Council.

The financial services and information technology companies joined GE, Chevron, Johnson & Johnson and several other big US companies during the council’s visit to the Kingdom last week, challenging what Zwenig said was the perception that US companies were interested solely in the Kingdom’s energy sector.

“It’s oil and gas, but people think that’s all. It’s also health care. It’s IT. It’s Mastercard and Visa,” she said.

“To me, that says that people think the Cambodian economy is developing.”

Dell and Cisco are eyeing Cambodia’s IT consulting sector, an area industry insiders say is primed to absorb foreign investment.

Customer service and product branding in Cambodia’s technologies industry were poor, Pheang Sokveasna, a project manager at local IT consulting firm PCSP Group, said yesterday. He claimed warranty disputes and slow service, coupled with inferior yet expensive products, were common in the local market.

Investment from foreign compan-ies had proved effective elsewhere in the region, he said.

“Other countries like Thailand are doing well in [the IT sector] after getting help from US companies.”

Although the rapidly growing tourism industry had caught the attention of Visa and Mastercard, Zwenig said the prospect of facilitating payments between the growing number of Western companies in Cambodia had also attracted the financial service providers to this year’s visit.

At the same time, a rising middle class was ushering in new investment in Cambodia’s consumer market, University of Cambodia business and economics lecturer Chheng Kimlong said yesterday.

Companies were experiencing increased demand for products and services in once-destitute areas of the country, but growth in demand for many new products – focused in cities – would require patience, he said.

“They see the opportunity here, but it will take a long time for some of these companies to get established,” Chheng Kimlong said.

Along with the relatively small size of the Cambodian market, Zwenig highlighted income disparity as a large challenge.

The council did not attract investors looking to manufacture products in Cambodia.

Chheng Kimlong said the manufacturing industry in surrounding countries was far more attractive to big investors from the United States.

“Why not just go to Vietnam? Their labour skill is much higher, electricity costs are lower, and the market is much bigger.”

Returnees on the council’s visit, such as GE and ConocoPhillips, were continuing to look into the Cambodian market, Zwenig said.

GE established a representative office in Phnom Penh in 2007. The company sells medical equipment to the burgeoning number of hospitals cropping up in the country and is looking to enter the renewable energy and hydropower sectors.

Chevron and ConocoPhillips are waiting for Cambodia and Thailand to find a resolution to the Overlapping Claims Area in the Gulf of Thailand, which is believed to be rich in oil and gas.

“Our companies are ready to do business. We’re waiting for the political issues to be sorted out,” Zwenig said.

The US-ASEAN Business Council is in Lao today and will arrive in Vietnam tomorrow for a two-day visit. Eleven companies visited Cambodia this year, up from seven last year.