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Business Insider: China investment boon comes with a price

Ho Vandy sits in his private tour agency’s office in Phnom Penh last week.
Ho Vandy sits in his private tour agency’s office in Phnom Penh last week. Heng Chivoan

Business Insider: China investment boon comes with a price

As Chinese investment has flooded into the Kingdom, many local business owners have seen their profits start to fall. The Post’s Cheng Sokhorng sat down with Ho Vandy, adviser to the Ministry of Commerce and former president of the Cambodia Association of Travel Agents, to discuss the current state of investment in Cambodia and the recent challenges posed by the influx of Chinese cash and businesses.

How do you see the state of investment in Cambodia currently?
There are many types of investment, which are defined by Cambodia’s FDI [foreign direct investment] regulations. Currently, Chinese investment is the most outstanding in the Kingdom across almost every single industry. This is because of the good relationship between the Cambodian and Chinese governments, as well as the encouraging FDI policies Cambodia has adopted which have attracted a lot of investment from large Chinese companies for the past four years.

There was a boom of Chinese investment in the Kingdom just last year, especially in Sihanoukville province. This investment is not only a result of increased Chinese tourism, which has seen around 10 Chinese tour agencies enter the Kingdom as well, but also in the hotel and entertainment industries as well as large-scale projects like airports and dams.

What has been the impact of this growing investment?
The growth of incoming investment, spurred on by encouraging laws adopted by the government, has had many different impacts. Some positive results will be immediately evident, while others will become obvious in the long term.

But there are negative impacts, too, mostly caused by poor enforcement of regulations by government bodies in the region. For example, we already know that there are many Chinese people who overstay their visas in Cambodia. There are also problems between Cambodians and Chinese that have resulted from the increased Chinese investment, including fights and even kidnappings, which are the challenges.

What actions should Cambodia take to solve these challenges?
In order to successfully meet these challenges, Cambodia’s ministries and relevant authorities should enforce existing regulations and strengthen their presence by creating more policies, which should more explicitly detail what businesses can and cannot do in Cambodia. All businesses should respect the law and follow all future regulations in order to put an end to these issues.

The government recently created a task force to ease tensions between Cambodian and Chinese business owners in Sihanoukville. Do you think it will be effective?
First of all, we should have basic laws to identify and manage all businesses that are investing in the Kingdom, and we should keep track of what percentage of these investments have been absorbed by the local labour force. Chinese investment in the Kingdom has also come in the form of foreign labourers, and this is where we lose the benefit of the investment to our country.

Our poverty reduction policies depend on locals being employed as human resources. We need to implement more transparency laws, and we also need to create more regulations that prioritise local labourers. Currently we are trying to promote our human resources sector by providing locals with technical training that will teach standard skills and promote locally produced products.

This interview has been edited for length and clarity.

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