Cambodia, next powerhouse for Asean investors

The Gulf Times

13 July 2013

By Dr Arno Maierbrugger

investvine.com

The success Qatar’s Ooredoo had with being issued a mobile phone licence in Myanmar is an encouraging development for Middle East investors who are looking into the possibility of entering a venture or opening a business in Southeast Asia.

While some Asean countries are already saturated with investments in certain sectors, there are still the second-tier countries such as Cambodia and Laos, and partly the Philippines, that still hold opportunities from scratch.

Let’s take a look at Cambodia. Qatar Airways launched its first flight from Doha to Cambodia’s capital Phnom Penh (albeit with a stop in Ho Chi Minh City) in February 2013 not without a reason. The country’s tourism numbers are expected to increase significantly over the coming years, and Qatar Airways took the chance to be the first Middle Eastern airline to serve Phnom Penh.

Furthermore, the two countries seem to become increasingly engaged to foster closer ties with each other. In June 2013, HE Sheikha al-Mayassa bint Hamad bin Khalifa al-Thani, chairperson of Qatar Museum Authority and Qatar Foundation-funded initiative Reach Out To Asia, has been visiting Cambodia together with the Qatari Minister of Business and Trade, HE Sheikh Jassim bin Abdulaziz. They met with Cambodian King Norodom Sihamoni and talked about not only educational projects in the country, but also about possibilities to enhance trade between the two countries.

So, what are the opportunities there? Cambodia is one of the poorest countries in Asean and one that lacks many things, starting from rural infrastructure, a broader manufacturing basis apart from the omnipresent garment sector, energy networks and power plants, as well as know-how and investments in the commodity sector. There is also a widespread underutilisation and non-usage of arable land, which is a huge deterrent to the farming industry’s growth.

On the other hand, Cambodia’s GDP has been growing around 7% in 2012, according to World Bank figures, and should grow 7.2% in 2013 and 7.5% in 2014.

Investors so far mainly came from China, Japan, South Korea and surrounding Asean nations, but advantages are certainly there for Middle Eastern companies. Cambodia is sandwiched between the two larger, more developed economies — Thailand and Vietnam, which facilitates economic spill-over.
Its location along the Gulf of Thailand provides the country with easy access to maritime trade. The political climate is stable and is expected to remain so after the July 28 elections. 100% foreign ownership is allowed, except for land which can be leased for 99 yeras, there are attractive investment incentives in a largely dollarised economy with minimal foreign exchange risks, labour costs are low but the literacy rate high.
The country has fertile land for production and processing of agricultural commodities, a high aquaculture and livestock farming and processing potential, abundant mineral deposits that await mining and a number of off-shore oil and gas reserves.

Do you think Cambodia wil be the next powerhouse of Asean? Should Middke East ready their investments to venture into the country? Let us know through Twitter: @insideinvestor using hashtag #gulftimes.

Our columnist Dr Arno Maierbrugger is Editor-in-Chief of www.investvine.com, a news portal owned by Inside Investor focusing on Southeast Asian economic topics as well as trade and investment relations between Asean and the GCC. The views expressed are his own.