As the sixth largest foreign investors in Cambodia with more than $800 million worth of investment in 2011, Taiwanese investors play an important role in Cambodia’s manufacturing industry. The Post’s Mak Lawrence Li talked to the president of the Taiwan Commercial Association of Cambodia (TCAC), Lin Zhi Long, about business operations of Taiwanese companies in the Kingdom.
What is the TCAC’s role in Cambodia?
Currently we have more than 3,000 Taiwanese businessmen in Cambodia with a majority of them operating factories producing different kinds of products. Therefore, it is crucial to have a platform for Taiwanese to seek help and to offer help whenever they have any difficulties, and that’s why we are here in Cambodia. We are the first and the largest Taiwan-based business association in Cambodia, with about 300 companies as our members.
How did Taiwanese companies first emerge in Cambodia?
Many of the Taiwan companies produce garments or clothing in Cambodia, as they are the pioneering investors to come, including me. There are in total about 400 foreign-invested garment factories around Cambodia, and Taiwan account for 92, which is close to one-fourth of the total. Taiwan is the largest foreign investor and exporter of garments in Cambodia.
Why do so many Taiwanese investors come to Cambodia?
Of course, cheap wages of workers is the largest incentive for us to set up branches and factories in Cambodia. I came for more than 15 years ago, at that time, comparing the salaries of the Cambodians with those in China or Taiwan or other Asian countries, Cambodia is among the cheapest. The second thing is unlimited quotas. Some of the places such as Vietnam, Indonesia have quota restrictions for foreign manufacturers while Cambodia doesn’t, so we can have mass production here.
What are the main challenges for Taiwanese companies operating businesses in Cambodia?
When we first came here, everything was so different from our hometown, the languages, the weather, the infrastructure and the business situation. I once travelled to Kampong Cham province and it took me nearly seven hours, as the roads were not well-built at the time. We need to overcome the lack of logistics support, as the transportation is still in development, cost involving that may increase.
For now, things get better as Cambodia, especially Phnom Penh, strongly encourages foreign investment, and we are getting more support from the local government and cooperation with local companies. But with increasing investors from around the world, demand for workers are soaring and what comes next is the rise in wages. For example, the minimum wage here is $80 per month and almost all the factories are paying a lot more than that, maybe $100, $110, or even up to $130, to retain manpower for daily operation.
With more and more foreign investment in Cambodia, how do Taiwanese companies maintain their leading position in the manufacturing sector?
Well, competition is everywhere and of course we are concerned about that. The Korean and Japanese firms are coming; the Chinese are switching their product lines to Cambodia; even those from Europe want a share in the market.
Nonetheless, we are not worried about it. What we simply need to do is to cut costs, for instance moving factories into more inland areas which are cheaper in both the land and labour costs. The second thing is diversity and creativity, which include changes in our product design and enhanced quality control. Effective management style and technological advancement is also important for improving efficiency.
What do you think the future holds for Cambodia?
Cambodia is a developing country and there is a large potential in the economy. What I see is that in the next three to five years are the most important period for Cambodia in developing its infrastructure, transportation, banking and finance and also housing. Most of my workers now are from the countryside as people from Phnom Penh are getting wealthier.