In 2011, President Obama, recognizing the ever-growing importance of East Asia, outlined a new policy that became known as the rebalance towards Asia. This new policy recognized what businesses on both sides of the Pacific have long known – that Asia and the United States depend on each other. East Asian economies have grown rapidly in the last half century, lifting hundreds of millions of people out of poverty and fostering dynamic, innovative economies that are now the engine of the global economy. The interconnectedness of the world’s economies makes Asia’s continued growth and prosperity crucial to U.S. economic growth. To put this into context, the annual flow of U.S. investment into East Asia nearly doubled from $22.5 billion in 2009 to $41.4 billion in 2011. U.S. exports to the Asia-Pacific totaled over $320 billion in 2012 after growing nearly eight percent a year since 2008.
While it is true that East Asian economies have seen incredible growth, we all know that this is not true of all countries in the region. Some have grown beyond all expectations – Japan, South Korea, and Singapore – while others have been left behind. Cambodia falls somewhere in the middle. It is astonishing to think of how far and how fast this country has developed in the last 20 years, but many Cambodians continue to live in extreme poverty, college graduates have difficulty finding jobs, and economic growth continues to lag behind many of Cambodia’s neighbors.
Through the rebalance, the United States is more engaged in the region in a way that directly benefits Cambodia. Our security presence and our network of partners reinforce the regional stability necessary to enable economic growth. Our work with multilateral organizations like ASEAN and the Lower Mekong Initiative is helping to create both educational and business opportunities. Our efforts to preserve freedom of navigation help ensure the flow of trade within the region, enabling Cambodian exports to reach markets around the world.
How will the rebalance affect Cambodia’s economic well-being? This rebalance will enable increased U.S. investment in Cambodia, which will create jobs, raise the wealth of the average Cambodian, and facilitate the exchange of goods and services between our two countries. This all sounds extremely promising, but some factors must be taken into consideration for Cambodia to realize these benefits, or as we say in the United States, “The devil is in the details.”
A significant part of my job as U.S. Ambassador to Cambodia is to create an environment that will allow this process to happen. Earlier this month, I hosted a webinar to educate U.S. businesses on how to enter the Cambodian market and successfully do business here. According to U.S. government statistics, U.S. companies worldwide hold nearly $5 trillion that they are seeking to invest. The U.S. government cannot direct companies to invest in or trade with a certain country; U.S. companies make those decisions based on viability and profitability. They spend a lot of time and money trying to figure out where and how much to invest. For example, the popular American fast food restaurant chain, McDonald’s, has tens of thousands of franchises worldwide and specializes in evaluating the investment potential of emerging markets like Cambodia. Many people would love to see McDonald’s set up shop here, but before any business can establish its operations in Cambodia, it needs to complete due diligence that makes investment sense.
One of the key factors in assessing the investment potential in a given country is political risk. History tells us, that in the long run, free and open countries are more stable and prosperous than closed societies, which stifle innovation and limit opportunity to an elite few. This fact is not lost on companies that are trying to decide whether or not to invest in Cambodia. Transparency, free elections, and a predictable, fair, judicial system are all factors that are highly correlated with political stability. These are all areas in which we are working closely with counterparts in the government, the opposition, and civil society to improve.
Koytry and some other readers have commented that the United States has focused too heavily on the promotion of human rights and democracy in Cambodia at the expense of advancing economic interests in which other countries have succeeded. Some even believe that our call to these issues have fallen on deaf ears within the Cambodian government. Our commitment to human rights is not motivated by an attempt to preserve our own economic well-being. Our democratic traditions form the core of our government’s policies both at home and abroad. We cannot and do not want to impose our system on other countries, but we do believe that certain values are universal and those values are intrinsic to stable, peaceful, and prosperous countries. Secretary of State John Kerry, during his trip last month to Asia, called for us – the United States and our partners – to commit to four principles: strong growth, fair growth, smart growth, and just growth.
The Obama administration’s policy of a rebalance towards Asia means a renewed commitment to aiding development in Southeast Asia, including Cambodia. This shift is not the decision of one political party, but in fact has strong bipartisan support. We are committed, we are engaged, and we are here to stay. We cannot move forward, however, to deepen and broaden our bilateral relationships until the political and business environment includes respect for human rights and the rule of law. In many countries – Cambodia included – democratic reforms remain a challenge, but it is a challenge worth embracing. I look forward to continuing the discussion and the debate with my friends in the Cambodian government, civil society, and in the business community. Together, I know we can make a difference and build a more prosperous future.
Thank you very much for your engagement in this forum. I hope that my weekly column is making the U.S.-Cambodia relationship more effective. I look forward to future opportunities to answer important questions that are on the minds of the Cambodian people. Please continue to send me your questions in English or Khmer at AskAMBToddPP@state.gov and follow my blog at http://blogs.usembassy.gov/todd/.
William E is Todd, U.S. Ambassador to the Kingdom of Cambodia
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