Melissa Juried Kriebel
Japan External Trade Organization will introduce Cambodia at the Bangkok seminar to be held in January 2023 as an investment destination and underline incentives being offered by the Cambodian government.
Last week Minister of Commerce Pan Sorasak held talks with Chairman and Chief Executive Officer of Japan External Trade Organization (JETRO) Nobuhiko Sasaki and his colleagues to improve trade relations between Cambodia and Japan.
Highlighting the Cambodia-Japan trade relations, the Minister urged JETRO to attract more Japanese investors to Cambodia, and explore the possibility of supporting the “One Village, One Product” movement, especially organisation of exhibitions and sale of Cambodian products in the Japanese market. JETRO is a government-related organization that works to promote mutual trade and investment between Japan and the rest of the world.
In an exclusive interview with Khmer Times, Marisa Haruta, Chief Representative of JETRO in Phnom Penh touched upon various aspects of the Japan-Cambodia ties. Excerpts:
Q: What are the most favourable conditions for Japanese businesses in Cambodia?
A: Some of the favourable conditions for investors include that there are not many restrictions on FDI, relatively easy to repatriate profits to headquarters in other countries, most transactions being in the US dollar, and to attract and facilitate foreign direct investment the Government of Cambodia announced investment law in 2021, including tax incentives and better transparent system for investors in specific sectors.
While the investment of Japanese companies has increased, especially in manufacturing, the trade volume will continue to grow accordingly.
Q: What is the main objective of the Thailand-Plus-One seminar for Cambodia?
A: We plan to do the seminar in Bangkok in January 2023. The main objective is to introduce Cambodia as a Thailand-Plus-One investment destination, especially in the border area. For example, when Japanese companies, especially in car manufacturing or electronics sectors, shift to another level, Cambodia may be able to offer manufacturing products prepared in Thai factories. During the seminar, we will talk about opportunities, incentives, and facilitations by the Cambodian government and related organizations to let the audience think of Cambodia as their next candidate to do business in. It is not about relocating the factory from Thailand to Cambodia. The Thailand-Plus-One will be one of the options for risk management, and also companies in Cambodia will support companies in Thailand as a win-win to grow together.
Q: What about the plans for the sale of cosmetic and food products in the Cambodian market?
A: As the economy grows, people start spending more on better products, and caring more about health and beauty. We are now accelerating to the introduction of Japanese products into Cambodia. It is a good time to start thinking of Cambodia as a market.
Japanese products tend to be seen as “expensive”. But in early 2021 we started introducing cosmetic products of Japanese SMEs in Cambodia and linking both exporters and importers. We collaborated with the Ministry of Commerce, the Cambodia Chamber of Commerce, and the Young Entrepreneur Association (YEAC). We got permission from the General Department of Customs and Excise (GDCE) to import samples so that Cambodian importers can test the products while talking online.
In the food-related sector, we have received some offers from buyers who want to import health products, like food supplements, baby food, beauty care-related drinks, etc. Other than that, inquiries from restaurants serving Japanese food, such as Omakase style restaurants to daily use restaurants, are increasing and we can find a range of Japanese food now in Cambodia. The market for both cosmetic and food-related products in Cambodia is growing.
Q: What are the challenges of doing business in Cambodia?
A: Facilitation and incentives will be in a better stage after the implementation of the Sub-decree of law on investment. We need more companies especially to:
a) Attract investors to come for a wider selection of local procurement. According to our Japanese companies’ survey in 2022, local procurement of raw materials in Cambodia is only about 7 percent, and it is worst in the ASEAN region. To attract more factories in Cambodia, the local procurement rate will have to improve soon. Auto industries and the electronics-related sector should be one of the options to promote. (The Council for the Development of Cambodia is already preparing the framework).
b) Facilitate better logistic prices, time schedules, and choices.
As manufacturing companies doing business in Cambodia, almost all of them need to import raw materials from overseas. There are incentives of free tariff rates for raw materials for QIP companies, but if the logistic cost and timeline cannot match the price or schedule of the production, it will be a serious problem for companies in Cambodia. We have discussed this with the government, CLA, and other stakeholders to find a solution as soon as possible.