Japanese investment growing in Cambodia

June 13, 2011

PHNOM PENH (Kyodo) -- Despite a troubled economic slowdown at home, Japanese investments in Cambodia are growing, with nine companies starting businesses in the country in the first five months this year, a report said Monday.

According to investment statistics provided by the Japan International Cooperation Agency, by the end of May nine Japanese companies, mostly manufacturers, had Cambodian approval to invest $142 million and another 14 other companies are applying for approvals.

In 2010, only six Japanese companies applied for and got approval for investments.

Yuji Imamura, a JICA expert who is also an advisor to the Investment Environment Improvement to the Council for the Development of Cambodia, told Kyodo News that Cambodia is one of the four Asian countries attractive to Japanese investment, along with Bangladesh, Laos and Myanmar.

He said political stability, low labor costs, labor-intensive export processing and domestic market import substitution are attractive factors for Japanese investors.

Last month, Minebea Co. joined with other Japanese companies to construct a main factory in Phnom Penh with capital investment of $59 million.

When compared to investors from China and South Korea, Japanese direct investors are considered small, late comers, but are welcome particularly with their emphasis on manufacturing such as electrics, home appliances, garments, sports and medical goods and automotive parts.

Chinese and South Korean investors have mostly focused on energy, real estate and construction.

By yearend, Japanese companies are expected to invest $211 million into Cambodian operations and will employ as many as 36,000 workers, according to figures provided by JICA.

Chinese investment in Cambodia to date amounts to $7.74 billion and South Korean investment is at $3.9 billion.

Although much Japanese foreign investment in Asia has been in China, Malaysia, Thailand and other more developed countries, Imamura said Japanese manufacturers now need to find "new locations to survive and Cambodia is one of the promising countries."

Among Japanese manufacturers already in Cambodia are Yamaha Motor Co., Suzuki Motor Corp., Ajinomoto Co. and Sumitomo Wiring Systems Ltd. and assemblers such as Sony Corp., Nikon Corp., Olympus Corp., and Brother Industries Ltd. are also interested in investing in Cambodia, Imamura said.

Since the early 1990s, Japan has been the largest donor-country to Cambodia, if not the biggest direct investor.