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Flood resistance leverage for foreign investment

Flood resistance leverage for foreign investment

120927_07
Minister of Commerce Cham Prasidth (L) looks at vehicles at a new Honda showroom in Phnom Penh yesterday at Honda’s 20th anniversary gathering. Photograph: Vireak Mai/Phnom Penh Post

Minister of Commerce Cham Prasidth (L) looks at vehicles at a new Honda showroom in Phnom Penh yesterday at Honda’s 20th anniversary gathering. Photograph: Vireak Mai/Phnom Penh Post

Cambodia's Commerce Minister Cham Prasidh said foreign investors with production bases in Thailand ought to consider Cambodia for future expansion because of the Kingdom’s greater resistance to floods.

Speaking at Phnom Penh Honda’s 20th anniversary yesterday, the Commerce minister said that while Cambodia faces floods each year, the floods did not seriously affect most factories and industries.

“Flooding affects only rice fields along the Mekong River – not factories. We also forecast that this year, the floods will be bigger than the last year, and we are trying to curb any negative effects to the economy. Cambodia’s industry sector, which is mostly located away from flooded areas, should not be affected,” he said.

“Cambodia has great business areas, offers a better investment climate and incentives for foreign investors. I do believe that it is a great opportunity for other Japanese companies that have factories in Thailand to consider Cambodia.”

Hiroshi Suzuki, CEO of Business Research Institute for Cambodia (BRIC) agreed that floods did not have a severe affect on Cambodia compared to neighbouring countries, stressing that infrastructure such as roads were little damaged, connections between Phnom Penh, Thailand and Vietnam were not seriously impaired and only the tourism sector in Seam Reap was seriously hampered.

“Fortunately, Cambodia’s industry sector is very resilient to floods. Last year’s floods were the biggest in the 10 years. However, almost all factories were free from damage. Main industries such as the garment and textile sector weren’t susceptible to flooding,” Suzuki said.

He said Japan’s Minebea had begun to expand their factory in Phnom Penh Special Economic Zone, as one example of an industry fairly impervious to flooding.

Suzuki said the damage by flooding didn’t compel the Japanese companies operating in Thailand to plan relocations of factories immediately to the Kingdom.

“In the middle term, some of those factories, especially the labour-intensive parts-manufacturing sector, would consider the transfer of a part of their operations to safer places such as Cambodia, as one of the measure of risk control,” he said.

Chairman of the General Insurance Association of Cambodia (GIAC) Chhay Rattanak said last year’s floods had delayed some construction projects in Siem Reap province as well as the railway project in Banteay Meanchey province worth around $1 million. He hopes that this year the government will be well-prepared to deal with floods.

Last year’s flooding in provinces along Mekong River damaged about 10 per cent of Cambodia’s total crop, compared to more than 60 per cent of crops that were damaged in Thailand.

The Cambodian government spent about US$200 million for the rehabilitation of infrastructure hit by the floods last year. Cambodia has set aside $90 million for 2012 from the national budget against the possibility of flooding.

To contact the reporter on this story: May Kunmakara at [email protected]

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