The chief economist at the Economic Research Institute for ASEAN and East Asia says Cambodia needs to attract greater numbers of multinational companies and treat them well, in order to establish production networks that will transfer technology to smaller Cambodian businesses.
In an interview with the Post, Professor Fukunari Kimura said that once multinational companies established manufacturing centres in Cambodia, a critical mass would develop and benefit smaller Cambodian businesses.
Kimura said Cambodia’s reputation as an investment destination was a key factor in attracting multinationals to set up factories here.
“Responding to complaints from foreign investors, Cambodia can improve the investment climate substantially. Now how many factories are here and it is easy to have hundreds more.
The decision to have factories in Cambodia is generated by reputation. Cambodia needs to polish its reputation as a good business environment,” he said.
“Hosting ASEAN-related meetings is really good for Cambodia.
“Not just talking about domestic issues, but looking at neighbouring countries. Cambodia is relatively small, and they have to look outside.
Hosting these meetings is a good opportunity to look at the positioning of Cambodia in the region.”
Kimura said Cambodia, already growing rapidly, was now coming into a new stage beyond simply hosting garment factories.
“A starting point is inviting multinationals piece by piece and then, once a critical mass of factories is in place, local firms have a chance to come in,” he said.
“Multinationals are not charities, so they must have an incentive to locate themselves in Cambodia.”
Kimura said it was less important to worry about the regulatory environment during this stage of Cambodia’s development, and more important to establish production networks.
Regulatory development would naturally follow as problems were gradually solved, he said.
“Cambodia can’t wait to clear the governance issues. Cambodia has to start inviting multinationals to come and put in production networks.
“They will learn how to deal with foreigners, and that will gradually improve governance, but it takes time.
“The multinationals need to find out what the problems are and troubleshoot them one by one.
“Then Cambodia will develop a reputation that they are taking care of multinationals.
The government has to have good communication with them. What’s important is not so much tax incentive as business environment. Overall regulatory reform takes time.
“We have to improve the environment, starting from special economic zones.”
Kimura gave the opening address at yesterday’s Cambodia-ERIA-Harvard Symposium at the Sofitel, which continues today.
Prime Minister Hun Sen opened the event.
To contact the reporter on this story: Stuart Alan Becker at [email protected]