US Seeks Infrastructure Deals in Cambodia

By Simon Lewis
The Cambodia Daily
January 20, 2013

Looking to compete with Chi­nese influence in the region, the U.S. government is making plans to help American companies win large-scale infrastructure projects in Cambodia, U.S. officials said on Thursday in Phnom Penh.

The plans, which come as part of a strategic and economic em-bracing of Asia by the administration of U.S. President Barack Obama, look to challenge China’s near monopoly on big undertakings, such as roads and hydro­power dams in the country.

“The pivot to Asia…is not only a security focus, it’s an economic focus because in order for us to be successful in the long term, we have to be economically in­volved in this region,” said Lor­raine Hariton, U.S. State De­part­ment special representative for commercial and business affairs, who spoke to reporters during a round-table meeting at the U.S Embassy in Phnom Penh. Her visit followed a meeting in Hanoi on Monday to discuss infrastructure in the region as part of the U.S.-led Lower Mekong Initiative.

“We are concerned that Amer­ican companies are not involved in this region—Cambodia as well as the general Lower Mekong region—especially in this area of infrastructure,” Ms. Hariton said. “We are looking to get some good winds here and work on some deals that will allow us to play a larger role in this region.”

Hong-Phong Pho, the desk officer for Cambodia, Vietnam and Laos within the U.S. Department of Commerce, said U.S. government agencies—including the Export-Import Bank of the United States, the U.S. Overseas Private Invest­ment Corporation and the U.S. Trade and Development Agen­cy—were ready to help develop infrastructure in the region.

“That’s the tools that we have, but before we can apply those tools, we need an actual concrete project. Whether it’s an investment project, like an airport where there’s a demand for goods and services, or just great sales [of U.S. products and technologies].”

He said American firms could be involved in projects such as power plants, and that one un­named U.S. company present at the meeting in Hanoi was interested in building a new airport in Cambodia.

“For me, deals are what’s im­portant,” Mr. Pho said. “As a re­sult of our meetings in Vietnam, we found a certain [U.S.] company that has the capability not only to operate and build airports, but also bringing financing. Now that’s really important.”

“It’s that kind of connection that can make things happen. And we will be right there facilitating it,” he added.

While some U.S. companies have made inroads into Cambo­dia’s economy—U.S. brands like Ford and Dairy Queen entered the market in 2012—American firms have not been granted any of the country’s larger projects in the in­frastructure and energy sectors.

Currently, Chinese companies with close links to the Chinese government dominate Cambo­dia’s infrastructure sector, building roads, bridges and hydro­power dams, with Chinese banks also providing funding.

Just last month, two Chinese companies announced that they would spend $9.6 billion building a brand-new seaport in Koh Kong province, and a 400-km railway connecting it to a steel mill in Preah Vihear province.

According to the most recent figures from the Cambodian In­vestment Board (CIB), which cov­er 2012 up to the end of No­vember, new Chinese investment totaled more than $250 million in the 11-month period.

Only one large investment in Cam­bodia during the period came from the U.S.—a 49 percent stake in a $10.9 million tour­ism development on an island off the coast of Koh Kong province.

Although the CIB figures only represent pledged investment agreed with the government, U.S. Embassy deputy political and economic section chief David Myers said no better data for U.S. investment was available.

Also speaking at the embassy, Bretton Sciaroni, chairman of the Cambodia chapter of the Ameri­can Chamber of Commerce, said that multinational corporations from the U.S. had taken an interest in Cambodia of late.

“For major corporates, it’s unrealistic to think that you’re going to have them come one day and the next day decide to invest,” he said. “What I view this as is putting seeds in the ground and it will grow later.”

He also said many companies op­erating in China were interested in setting up part of their operation in Cambodia “to hedge their bets because the Chinese economic en­­­vironment is more un­certain for international companies.”

Daniel Mitchell, a board member at the American Chamber of Com­merce, who has been doing business in Cambodia for 12 years, said the main considerations for such firms coming into Cambodia would be the cost and reliability of electricity and tele­communication services.

He also said that, rather than putting investors off, the human rights situation and difficulties over land in Cambodia could be helped by U.S. investment, which is subject to higher standards. Some of those standards come from the fact U.S. firms must com­ply with regulations on foreign bribery found within the Foreign Corrupt Practices Act.

“One way of addressing the hu­man rights issues is to promote the investment of responsible capital,” he said.

“I’ll let you draw the conclusions of where responsible capital comes from, and the U.S. is definitely on that list, and where oth­er capital comes from—places where there just aren’t those standards and it isn’t something that’s important.”

The State Department’s Ms. Hariton said Cambodia’s main problem in garnering investment from the U.S. was its image.

“I think we need to do a better job of marketing Cambodia especially to the United States,” she said.

“There [are] percep­tions­…about how the country might have been 20 years ago, not what it is today.”