The investment of Japan in Cambodia

Phnom Penh, Cambodia (03 March 2011)

In view of Cambodia’s political stability, liberal investment policies and potential advantages of a huge labor force, Japan is seeking to increase its investment in Cambodia in order to tap into Cambodia’s most favored investment strategies. Recently, investment from Japan is increasing from year to year in Cambodia.
Mr. Juji Imamura, Investment Environment Improvement Advisor of Japan International Cooperation Agency (JICA) and a Japanese Investment Expert, said that Japanese government is encouraging Japanese companies to invest in Cambodia and also helping increase Japanese investment in Cambodia since Japanese investment is far behind investment of other foreign countries.

According to the Cambodian Development Council (CDC), data show that, compared to other foreign countries investment, Japanese investment in Cambodia is less than one percent, and it is far behind from other foreign countries investment even thought the amount of investment has increase from year to year. From 1994 to 2003, Japanese investment was topped out at 14 percent in amount of US$20 million, which comes to 7,404 total investments. Afterward, the investment rapidly grew from US$2.2 million in 2004 to US$113.1 million in 2007. For that time till now, US$148 million from Japan was invested in Cambodia.
Currently, Japan has become 12th largest investor in Cambodia. Others are China (US$7,719 million), South Korea (US$3,894 million), Malaysia (US$2,379 million, EU (US$1,402 million), U.S.A (US$1,140 million), Taiwan (US$766 million), Thailand (US$746 million), Singapore (US$636 million), Vietnam (US$580 million), Hong Kong (US$310 million and Israel (US$304 million.).
Mr. Imamura said that in order to not lag behind other countries in Japan, the Japanese government start encourage Japanese companies to invest in Cambodia. “In the future, Japan is not only provide aid, but also suggest to more Japanese companies to invest in Cambodia, and also strengthen the bilateral cooperation between both countries.”

He continued to say that a total of 34 Japanese companies invested in Cambodia at the end of last year, covering areas such as food processing, clothing, footwear, and motorcycles industry. In addition, under the Japanese government’s encouragement, over a hundred Japanese companies have come to Cambodia to visit in the first 2 months, and expressed interest in investment in Cambodia. As a result, 17 companies have decided to invest in Cambodia with a total estimated investment
amount of more than 100 million U.S. dollars. It shows the intention of Japan to expand investment in Cambodia.

He optimistically said, “As more and more Japanese companies to invest in Cambodia, I believe the next few years, Japan, China, South Korea and the United States and other countries will become the largest investor in Cambodia”
He noted that there are more than 200 Special Economic Zone (SEZ) in Vietnam, which has more than 1200 companies, but Cambodia has only 21 SEZ. Therefore, Cambodia needs to continue create more SEZ to attract more investors to Cambodia.
Mr. Hiroshi Uematsu said that 10 Japanese Companies among 27 companies already invested in Phnom Penh Special Economic Zone (PPSEZ). They are Tiger Wing, Clean Circle, Ajinomoto Cambodia, Haru Phnom Penh Comic Center, Dischells Cambodia, FST PP, Minebea, Proceeding Cambodia, O & M Cambodia and Yamaha Motor.
He told the Southeast Asia Weekly that more than 10 Japanese companies expected to invest in PPSEZ this year. They are mainly electrical and mechanical assemblers. “All of them feel secured and confident in invest in Cambodia as well as PPSEZ”. Among them, two famous Japanese companies invest in Cambodia: Yamaha Motor is already ongoing factory construction and Minebea will start construction operation in April.
He added that quality infrastructure and management of PPSEZ is the main factor to attract Japanese investor to invest in Cambodia.
Mr. Ichiro Nishimura, President of Ajinomoto (Cambodia) Co., Ltd, said that his company has invested 6 million U.S. dollars for the construction of the packaging plant and installation of packaging equipment.
He continued that Cambodia market is 2,000 tons MSG of monthly demand, but his company sales is nearly 1,000 tons average monthly sales. He believes that his company becomes the lead GMS Company in the future.
He mention that Cambodia environment investment is good such as law, benefit and tax holiday. “It is one of best country to invest and run business”. He optimistically said his company can expand business in coming short time.
In investing in Cambodia, there are also some problems, which are the barrier of investor to invest in Cambodia. Mr. Imamura explained that investment in Cambodia is not widely publicizing the information, in which many Japanese companies do not know Cambodia’s investment environment. One more reason is electricity prices are still high, pushing up the cost of production that lead products cannot compete within countries.
He continued that current legal regulations in Cambodia is gradually improving, social stability, infrastructure construction accelerated, the countries offer investors new opportunities and challenges. However, he admits, although with great potential for investment in Cambodia, but Cambodia’s investment information is not extensive and costly power problems, which restricts the Japanese investors to invest in Cambodia.

He called on the Cambodian government attaches importance role to improve these issues in order to attract more Japanese investors to invest to develop country.


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