Ron Gluckman
Forbes
Not so long ago Chinese visitors jokingly referred to Cambodia as "Qian Bu Zai." This not only sounded like the Chinese name for the country--Jian Bu Zhai--it summed up their assessment: "There is no money."
Now investors are arriving from Beijing, Boston and everywhere in between. In December a $30 million canning plant opened in the outskirts of Phnom Penh, providing capacity for not only domestic consumption but also exports. The country's largest cement factory went online last month, ending Cambodia's dependence on imports and keeping its massive construction boom on track. Also last month CB Richard Ellis announced plans for a Cambodia office, which will make it the first big realty firm lured to a market where property prices have doubled in two years.
Commodities are another bright area. Australian mining giant BHP Billiton (nyse: BBL - news - people ), with partner Mitsubishi (other-otc: MSBHY.PK - news - people ), has a large bauxite exploration project under way, while Australia's Oxiana is prospecting for gold in the northern jungle. Oil has been discovered off the southern coast. America's Chevron (nyse: CVX - news - people ) is a major player in fields that some estimate could yield up to $1 billion in annual revenue for the government.
Other lures include the ease of getting business licenses, low taxes and business-friendly investment rules. Bretton Sciaroni, an American lawyer in Cambodia since 1993 and chair of the International Business Club, notes that licenses often take only a week to obtain, and ventures can be 100% foreign owned. Foreign companies are often limited to minority stakes in ventures elsewhere in the region.
A big spur for the economy, business people say, was the constitutional change in 2006 that ended the fractious power-sharing agreement that the United Nations had negotiated in the 1990s. This deal brought peace after decades of war but resulted in regular stalemates over policy and endless red tape. "Having a strong, stable government is the key thing to investors," notes tycoon Kith Meng.
Not that all is glowing in Cambodia. Perhaps a third of the population of 14 million live below the poverty line. The economy is dependent on textiles, with 200 factories employing more than 300,000 people. "Trade diversification remains the big problem for Cambodia," conceded Prime Minister Hun Sen at a December trade conference. "We are too vulnerable."
Corruption is also a huge drawback, prompting widespread worries that future oil revenue will be squandered. U.S. Ambassador Joseph Mussemeli has been among the staunchest advocates of ensuring that commodities generate revenue to boost the entire economy and not to line the pockets of the wealthy elite.
Cambodia's prime minister--who is expected to win by another landslide in elections July 27--has repeatedly brushed aside such concerns, yet he has noted that good governance would be the main challenge over the coming decade.
Can Cambodia meet the challenge? "I think the will is there," says Mussomeli. "But the difference between will and action is profound. It's like you look at a mirror and want to lose weight. But then you sit at the table and eat."
Now investors are arriving from Beijing, Boston and everywhere in between. In December a $30 million canning plant opened in the outskirts of Phnom Penh, providing capacity for not only domestic consumption but also exports. The country's largest cement factory went online last month, ending Cambodia's dependence on imports and keeping its massive construction boom on track. Also last month CB Richard Ellis announced plans for a Cambodia office, which will make it the first big realty firm lured to a market where property prices have doubled in two years.
Commodities are another bright area. Australian mining giant BHP Billiton (nyse: BBL - news - people ), with partner Mitsubishi (other-otc: MSBHY.PK - news - people ), has a large bauxite exploration project under way, while Australia's Oxiana is prospecting for gold in the northern jungle. Oil has been discovered off the southern coast. America's Chevron (nyse: CVX - news - people ) is a major player in fields that some estimate could yield up to $1 billion in annual revenue for the government.
Other lures include the ease of getting business licenses, low taxes and business-friendly investment rules. Bretton Sciaroni, an American lawyer in Cambodia since 1993 and chair of the International Business Club, notes that licenses often take only a week to obtain, and ventures can be 100% foreign owned. Foreign companies are often limited to minority stakes in ventures elsewhere in the region.
A big spur for the economy, business people say, was the constitutional change in 2006 that ended the fractious power-sharing agreement that the United Nations had negotiated in the 1990s. This deal brought peace after decades of war but resulted in regular stalemates over policy and endless red tape. "Having a strong, stable government is the key thing to investors," notes tycoon Kith Meng.
Not that all is glowing in Cambodia. Perhaps a third of the population of 14 million live below the poverty line. The economy is dependent on textiles, with 200 factories employing more than 300,000 people. "Trade diversification remains the big problem for Cambodia," conceded Prime Minister Hun Sen at a December trade conference. "We are too vulnerable."
Corruption is also a huge drawback, prompting widespread worries that future oil revenue will be squandered. U.S. Ambassador Joseph Mussemeli has been among the staunchest advocates of ensuring that commodities generate revenue to boost the entire economy and not to line the pockets of the wealthy elite.
Cambodia's prime minister--who is expected to win by another landslide in elections July 27--has repeatedly brushed aside such concerns, yet he has noted that good governance would be the main challenge over the coming decade.
Can Cambodia meet the challenge? "I think the will is there," says Mussomeli. "But the difference between will and action is profound. It's like you look at a mirror and want to lose weight. But then you sit at the table and eat."
3 comments:
It's not a third, but two thirds that live below the poverty line. Just to set the record straight. It seems that this reporter was on a two-day stint to the country and wrote up a quick report. Phnom Penh is not the entire country. Don't be misled by the bustling life in the city. It's not all gloomy, but not all shiny either.
a khmer person say,
there's still a lot of works to do for cambodia; however, if one were to observe cambodia since from 1990s, it is getting better and better everyday, literally. there are so much room to improve, to grow, to develop, etc. great job cambodia gov't, please continue to make reforms in public services in order to raise the people's standard of living because this will help to push the economy forward as well. please adopt a 'can do' and 'just do it' attitude. Congratulations to the current gov't for a job well done. thanks for your service to the country.
oh, how i love that idea, an urban jungle in Phnom Penh. i love skyscrapers. it makes me so proud of development in PP.
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