ALTHOUGH Cambodia's application for Most Favored Nation (MFN) trading status with
the United States has been delayed by the US Congress' summer recess, a visit by
a representative of the Overseas Private Investment Corporation (OPIC) to Phnom Penh
last week hinted that more US businesses are already headed for Cambodia.
After a five-day fact-finding mission, OPIC Senior Vice President Susan Levine said
her visit had been a successful one, and she saw no major snags in providing American
investments in Cambodia with the same financing and insurance enjoyed by US companies
in Indonesia, Malaysia and Thailand.
"It sounds like there have been some positive developments in recent days,"
Levine said, specifically noting the fracturing of the Khmer Rouge and the National
Assembly's progress on the draft Labor Law. "Sure there is some risk to investment
here, but at least you have a government committed to reducing that risk."
OPIC is a US government agency that provides long-term financing and risk insurance
for American investments abroad. A bilateral agreement signed during US Secretary
of State Warren Christopher's visit last year paved the way for US businesses in
Cambodia to apply for OPIC benefits.
With several companies expected to file for benefits in the coming months, Levine
said she had come to Phnom Penh to make sure all the necessary requirements had been
met before approving any applications. OPIC will not support projects that damage
a host country's development or environment, violate international labor rights standards
or result in the loss of US jobs.
"I met with the Minister of Environment here, and he assured me that environmental
laws are being put into place," she said. "[And] they now have a draft
Labor Law that meets the labor standards."
OPIC can provide US investments with up to $200 million in risk insurance that covers
damage due to political violence, expropriation or difficulties with currency exchange.
In 1995 OPIC provided $8.6 billion of coverage to US-backed firms worldwide.
Another $200 million in long-term loans is available through OPIC, but a company
must prove at least 25 percent of its investment's equity is American in order to
Beacon Hill's planned $20 million power plant in Phnom Penh is expected to receive
OPIC assistance, and Caltex Cambodia Limited has already applied and been approved
for insurance on an $8 million fuel depot in Sihanoukville, Caltex General Manager
John Raeside said.
But Caltex-a multi-national oil giant-still has not decided whether it wants OPIC
coverage or not.
"We're not 100 percent sure we're going to take it because it's expensive,"
Raeside said. "A company as big as Caltex can take on the risk itself or go
Levine said the presence of OPIC in Cambodia will prove beneficial to both countries
by increasing US investment abroad and stimulating the local economy.
""That's how you get people to come into a developing country. If they
weren't worried about the risk, they wouldn't need the insurance," she said.
"We're helping US firms, but we're also helping Cambodia."