S. Korea is Laying the Foundation for Accelerating Growth

Khmer Times/May Kunmakara

 

Sunday, 24 January 2016

 

Miho Jon, director of the Korea Trade-Investment Promotion Agency. KT/ Mai Vireak

The flow of Korean investment into Cambodia has been in the spotlight for more than a decade, primarily foreign direct investment in the construction and property sectors. Investment from the East Asian nation continues its rise, and in 2014 South Korean investment in Cambodia ranked among the top five, while bilateral trade has risen gradually. From 2006 to 2014, S. Korea's exports to Cambodia tripled, while Cambodian exports to S. Korea rose 40 fold. Miho Jon, director of the Korea Trade-Investment Promotion Agency (KOTRA), spoke to Khmer Times about the agency’s role as well as ties between the two countries.

KT: What role does KOTRA play in promoting trade and investment? 
 

Mr. Miho: Our work includes helping Korean companies export to Cambodia by conducting market research, partnering and communicating with buyers, supporting Korean companies to join exhibitions and inviting Cambodian companies to exhibitions in Korea. We also assist Korean companies’ to invest in the Cambodian market by surveying the investment environment, investment laws, commercial laws, and other related laws and regulations in Cambodia. We also provide consultations to help to solve problems in investing and marketing.
 

Along with this we support CSR [corporate social responsibility] activities of Korean companies, such as industrial and social development assistance projects and by incubating young Cambodian entrepreneurs.

 

KT:Korea is one of the largest economies in Asia, as well as the world. However, despite this, it seems bilateral trade seems relatively small. Can you explain why?
 

Mr. Miho: Generally, trade between the two countries is increasing. However, Korea’s main export items and Cambodia’s main import items don’t match well. Korea’s main export items are cars, semi-conductors, ships, mobile phones and computers.
 

Also, in the garment industry, Cambodia is focused on processing. So, it imports raw materials from neighboring countries, especially China, and exports the products to the USA or EU. Korea accounts for just a small portion of these exports.
 

Regarding Cambodia’s main export items such as agricultural products. Forest products are attractive items for Korea, and there is much demand. However, Korea’s import regulations, such as quarantines, remain difficult for Cambodian exports. As a result, Cambodia should be prepared for these regulations to boost export. Recently, Cambodia and South Korea signed a memorandum of understanding for developing a plan to export Cambodian mangos to Korea, which will lead to an increase in bilateral trade.
 

KT:What sectors are drawing Korean investment and what is the general perception among Korean investors about Cambodia’s investment climate?
 

Mr. Miho: As of 2014, the main investment sector was manufacturing followed by finance and banking, and then agriculture/forestry/fisheries. In 2014, Korea was the fifth largest investor in Cambodia. 
 

Cambodia has a good natural environment and climate, and also has an investor-friendly policy for the agriculture industry. With enough irrigation and processing infrastructure, the rice sector – which accounts for the most agriculture – is promising for export. As of 2014, the agriculture/forestry/fisheries sector ranked third in terms of investment from Korea.
 

KT:Cambodia’s government formulated a 10-year Industrial Development Policy (IDP) last August in order to diversify its economy. What do Korean investors think about this?
 

Mr. Miho: Regarding the industrial development policy 2015-2025, it can provide good guidelines to follow for Cambodia. It is also in line with Korean investors’ direction for the future. However, existing main industries need further development to be the driving force, and at the same time long-term and systematic investment is necessary. This is especially true, if government focuses on some sectors that have competitiveness by promoting them and removing barriers for investors. This would make Cambodia more attractive to Korean investors.
 

KT: How do you plan to enhance bilateral economic ties over the next two years?
 

Mr. Miho: Cambodia is one of Korea’s important development partners. As I mentioned, Korea is the fifth biggest investor in Cambodia. Korea is very active in cooperating in the infrastructure sector, and this will continue so that Cambodia can play an important role in the ASEAN community.
 

As a result of the good cooperation already established, a joint economic committee will be set up this year. Also, double tax avoidance was agreed between the two countries. So we expect cooperation to accelerate, with more efficient and effective systems for trade and investment.
Based on this official cooperation between governments, KOTRA will support Korean private companies’ investment and expansion in Cambodia for shared growth.Also, KOTRA will continue promoting their CSR activities, and support sustainable industry so that Cambodia and Korea can grow together. This includes KOTRA’s Bale and Paddy Art festivals for the scenic agriculture zone and our young entrepreneur incubation program.