Myanmar’s economic opening should not threaten Cambodia [... but it will if democracy in Burma take hold]

Sat, Mar 31st, 2012
By Rithy Chey
Thailand Business News

Still, Cambodia’s advantages as an investment destination are debatable.Analysts at US financial services company Standard and Poor’s have called Prime Minister Hun Sen’s hold on power a cause for concern about – rather than a sign of – political stability.

Myanma’s moves toward economic and political reform would not subtract from Cambodia’s regular stream of foreign investment, experts and insiders said – at least not in the short run. Word of an investor-friendly Myanmar has spread quickly with the US’s partial waiver on trade sanctions in early February, and some of the region’s business players have called the country “ground zero for investment”.

But Cambodia’s more than decade-long claim to political stability should eclipse Myanmar’s piecemeal reform, which a regime change in late 2010 set into motion after nearly 50 years of military rule.

“Political stability is the hot button for Cambodia, where they have gotten it right for foreign investors, and that’s a place where Myanmar can’t really compete yet,”

Gordon Peters, manager at Emerging Markets Consulting in Cambodia, said this week.

Myanmar may be turning some heads, but there will not be a flight of investment dollars that were originally destined for Cambodia, he said. If Cambodia were to lose foreign direct investment (FDI) to Myanmar, it would likely be from the Kingdom’s garment manufacturing sector, worth US$4.25 billion in 2011, or 32.1 per cent of gross domestic product.

“This is a place where you could see some long-term change,” albeit at a slow pace, Peters said. Some changes in milled-rice investment could occur as reforms in Myanmar progress, but “that’s not going to be a big loss in investment dollars for Cambodia”, he said.

An increase in tourists to Myanmar would inevitably translate into more tourist dollars to Cambodia, Peters said. Angkor Wat will remain one of the main destinations for tourists in the region, whether travellers land in Yangon or Phnom Penh.

Still, Cambodia’s advantages as an investment destination are debatable.Analysts at US financial services company Standard and Poor’s have called Prime Minister Hun Sen’s hold on power a cause for concern about – rather than a sign of – political stability.