A Change of Guard

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Monday 11 May 2015

A Mission to Expand Bilateral Trade and Investment


US military assistance effectively condones and facilitates rights violations in the kingdom through its corrupt and ill-disciplined armed forces - School of Vice - Image reproduced.


School of Vice: The US and most of its western allies can do a lot better beside preaching the gospel of trade and the growth of the middle classes as a route to ameliorating human rights abuse and fostering democratic institutional reform in a country such as Cambodia. Economic success and the emergence of affluent middle classes in many nations in the region have not always been in tandem with the strengthening of democracy or political liberty for the citizens at large.  

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Published: 10-May-15 09:24AM | By William E. Todd

I continue to be amazed by the response to this column each week, including from those who read it on the U.S. Embassy Facebook page.  This column is not just a way for me to communicate with the Cambodian public; it’s also an opportunity for you to share your thoughts with me and my team.  For instance, this week on Facebook Fong Sin wrote to wish me good luck on my upcoming reverse trade mission to the United States.  Since I will already be traveling when this column goes to print, I would like to take some time to tell you what the trade mission is about and how it will support economic growth in both Cambodia and the United States.  Along with my top priority of promoting human rights, encouraging economic development has been an area of emphasis for me as Ambassador, and I am optimistic that if Cambodia can continue to introduce smart reforms and strengthen its democracy that economic growth will follow.

For the U.S. Embassy, reverse trade missions are carefully organized visits to the United States that introduce business delegates to U.S. companies, products, business practices, and manufacturing techniques.  It is called a reverse trade mission because the foreign delegates are coming to the United States to meet with U.S. companies, instead of the other way around.  During reverse trade missions, U.S. companies and Cambodian delegates have the opportunity to explore investment opportunities, discuss partnerships, and negotiate trade deals.  In meetings with government officials, the business delegates also develop a better understanding of U.S. trade policy and goals related to Bilateral Investment Treaties, Free Trade Agreements, and the importance of intellectual property rights protection.  The experience and the lessons learned from a reverse trade mission also have the potential to help foreign countries achieve key development goals.  


This will be my third reverse trade mission to the United States as U.S. Ambassador to Cambodia.  The first was in July 2013, with 50 Cambodian business representatives traveling with me to Long Beach, California and Washington, D.C., connecting with many American companies and promoting business opportunities in Cambodia.  A key achievement from this trip was a new business deal between world- famous American wine producer Ernest & Julio Gallo and Cambodia’s Hung Hiep Group, opening up the path for the exclusive distribution of Gallo’s products in Cambodia.  

Building on that success, in 2014 I led a second reverse trade mission to Los Angeles, California; Seattle, Washington; and Washington, D.C.  On that mission, I had the great honor to be accompanied by Senior Minister and Minister of Commerce Sun Chanthol and American Chamber of Commerce in Cambodia Chairman Brett Sciaroni.  U.S. companies sold millions of dollars of agriculture equipment through that second mission, and the business delegates had the opportunity to meet with such outstanding American companies as Microsoft, Bechtel, and General Electric.

This latest reverse trade mission is even more ambitious.  Once again Minister Chanthol and Chairman Sciaroni will join me, along with 20 representatives of leading Cambodian companies and the Cambodian business community.  In the past few years, the Ministry of Commerce has taken significant steps to enhance the business environment in Cambodia.  The presence of the Senior Minister during the reverse trade mission is an excellent opportunity for the Royal Government to show the United States and the world that Cambodia is “open for business.”

The delegation will meet with representatives from some of the largest and most respected companies in the United States, including Google, Coca-Cola, Intel, Cisco, and General Electric.  The trade mission is expected to highlight the potential rewards – and risks – for American investors looking to do business in Cambodia.  Based on my talks with U.S. and Cambodian officials, I expect three key points of discussion during the trip:  Cambodia’s pro-business framework; diversification of the business environment; and barriers to increased trade and business development. 

For U.S. businesses, there are plenty of reasons that Cambodia might be an attractive place for investment – particularly the pro-business framework that has been put in place here over the past decade.  For instance, foreign companies can own 100 percent of their own businesses in Cambodia – there is no requirement to have a local partner.  The economy is dollarized, which reduces exchange rate risks, and it is relatively easy to repatriate profits.  There are also many tax advantages.  Cambodia offers tax incentives for qualified investments, and the corporate tax rate is tied for second lowest in all of ASEAN.  These and other progressive policies send a clear message that foreign investment is welcome in Cambodia.

Cambodia has put a lot of effort into attracting foreign investment in recent years, but it needs to attract new kinds of business to boost the economy and shield the country from shifts in the markets.  A good deal of foreign investment to date has been in the unskilled manufacturing sector.  For Cambodia’s economy to reach its potential, it must gradually shift to higher-value production, which will create more jobs and boost the middle class.  One significant advantage that Cambodia has to offer is its large youth population.  As young Cambodians go out into the job market they will start to earn money and become consumers, increasing the nation’s overall buying power.  More importantly, Cambodia’s youth bulge has the potential to be a large source of skilled labor that can help Cambodia to break out of a cycle of low-wage manufacturing jobs.  Fulfilling this potential will take a significant investment in training and education, but it is crucial to Cambodia’s continued development.

Although there are many reasons to be encouraged about the investment climate in Cambodia, the members of the reverse trade mission will need to be prepared to address concerns such as labor rights, a limited pool of skilled labor, poor transportation infrastructure, and corruption.  These are long-standing issues that require comprehensive solutions, and in some cases political compromise.  If Cambodia is going to present itself as a world-class destination for foreign investment, it will need to show that it is making progress in addressing these challenges.

It's particularly important for the Cambodian government to understand the strong link between human rights and economic development.   A strong and free civil society is also a powerful engine for growth.   The work that is being carried out by Cambodian civil society promotes good governance, efficiency, and transparency – all critical elements of a healthy economy.  That is why it is so important to embrace a healthy debate of the announced draft NGO law, including a discussion about whether NGO legislation is needed in the first place.  Similarly, reports that legislation to regulate cybercrimes is under consideration have raised concerns from those who see promise in Cambodia's digital future, as I do.  E-commerce has the power to multiply business opportunities, and therefore it is important both for business and civil society that any regulation of cyberspace needs to occur in an open and transparent manner.

Before I conclude, I would be remiss if I did not mention the many contributions of the private sector in promoting economic growth, including the American Chamber of Commerce in Cambodia and the U.S.-ASEAN Business Council, both of which are very active in this trade mission.  Organizations like these play a valuable role by partnering with us to develop bilateral trade relations between the U.S. and Cambodia.  AmCham Cambodia and the U.S.-ASEAN Business Council understand, as I do, that increased U.S. investment in Cambodia can benefit both of our countries.  It brings quality, high-paying jobs to Cambodia and opens up new markets and revenue streams to U.S. business.  Trade is a fundamental aspect of the U.S.-Cambodia relationship, and increased trade can only bring our two nations closer together.

U.S. and other international businesses have a choice of where to invest – Cambodia competes for foreign direct investment with other ASEAN countries, including Vietnam, Burma, and Thailand.   As recent investments by leading companies like Coca-Cola, Tiffany & Co., and American Licorice show, more and more U.S companies recognize Cambodia’s potential.   As I embark on this third reverse trade mission, I sincerely hope that the relationships we build on this visit will continue to expand U.S.-Cambodia bilateral economic ties for years to come. 

Thank you for reading my column this and every week.  Feel free to send me questions in English or Khmer at AskAMBToddPP@state.gov and follow my blog at http://blogs.usembassy.gov/todd/.

William E. Todd is U.S. Ambassador to the Kingdom of Cambodia.

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