The chief economist at the Economic Research Institute for ASEAN and
East Asia says Cambodia needs to attract greater numbers of multinational
companies and treat them well, in order to establish production networks that
will transfer technology to smaller Cambodian businesses.
In an interview with the Post,
Professor Fukunari Kimura said that once multinational companies established
manufacturing centres in Cambodia, a critical mass would develop and benefit
smaller Cambodian businesses.
Kimura said Cambodia’s reputation
as an investment destination was a key factor in attracting multinationals to set
up factories here.
“Responding to complaints from
foreign investors, Cambodia can improve the investment climate substantially.
Now how many factories are here and it is easy to have hundreds more.
The decision to have factories in
Cambodia is generated by reputation.
Cambodia needs to polish its reputation as a good business environment,”
he said.
“Hosting ASEAN-related meetings
is really good for Cambodia.
“Not just talking about domestic
issues, but looking at neighbouring countries. Cambodia is relatively small,
and they have to look outside.
Hosting these meetings is a good
opportunity to look at the positioning of Cambodia in the region.”
Kimura said Cambodia, already
growing rapidly, was now coming into a new stage beyond simply hosting garment
factories.
“A starting point is inviting
multinationals piece by piece and then, once a critical mass of factories is in
place, local firms have a chance to come in,” he said.
“Multinationals are not
charities, so they must have an incentive to locate themselves in Cambodia.”
Kimura said it was less important
to worry about the regulatory environment during this stage of Cambodia’s
development, and more important to establish production networks.
Regulatory development would
naturally follow as problems were gradually solved, he said.
“Cambodia can’t wait to clear the
governance issues. Cambodia has to start inviting multinationals to come and
put in production networks.
“They will learn how to deal with
foreigners, and that will gradually improve governance, but it takes time.
“The multinationals need to find
out what the problems are and troubleshoot them one by one.
“Then Cambodia will develop a
reputation that they are taking care of multinationals.
The government has to have good
communication with them. What’s important is not so much tax incentive as
business environment. Overall regulatory reform takes time.
“We have to improve the
environment, starting from special economic zones.”
Kimura gave the opening address
at yesterday’s Cambodia-ERIA-Harvard Symposium at the Sofitel, which continues
today.
Prime Minister Hun Sen opened the
event.
Stuart Alan Becker
Business & Investment Opportunities
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