Japan's Sumi Wiring Systems Co Ltd launched production of automobile wiring this month, a company official said yesterday.

Japanese companies such as Sumi and Minebea, a ball-bearings maker, have helped Cambodia’s manufacturing industry diversify away from garments, the country’s main manufacturing product and export, and Prime Minister Hun Sen seems intent on continuing to attract higher-end investment from the East Asian nation.

During talks with Japanese Prime Minister Yohishiko Noda last weekend in Tokyo, Hun Sen pledged to upgrade Cambodia’s business environment to attract more Japanese investment, Kyodo News Agency reported.

While industry insiders said there were already many incentives for Japanese companies in place, more clarity surrounding the country’s business regulation, as well as better transportation between countries, would be needed to see a continued increase in Japanese investment.

“So far, there are no big issues between Japan and Cambodia on law and regulation. But regulations are very new in Cambodia and many Japanese companies don’t get lots of information about them,” Suzuki Hiroshi, CEO and chief economist at the Business Research Institute for Cambodia, said yesterday by phone.

Better communication between governments on customs regulations could help boost trade, he said.

Companies such as Minebea are reliant on transportation routes between Cambodia and Thailand, Suzuki Hiroshi said.

The company ships in parts from Thailand to be assembled and then ships them back.

Heightening connectivity between the countries could get regional investors looking toward the Kingdom, he said.

Tax- and duty-free treatment, as well as cheap labour were the main factors that brought Sumi to Cambodia, the company’s general manager Kenichi Onogi told the Post yesterday.

Transportation at the Phnom Penh Special Economic Zone was another important factor, he said.

A widely acknowledged skill shortage still affects Cambodia.

The Asian Development Bank’s annual report on the country pinpointed problems companies face in finding competent labour.

ADB’s senior country economist said this month that, although Cambodia has managed to attract companies such as Minebea, a continued skill shortage would stop similar companies from investing in the future.

Japan invested about US$6.2 million in fixed assets in Cambodia in 2011, according to data from the Cambodian Investment Board, or about 0.09 per cent of total foreign direct investment last year.

To contact the reporter on this story: Don Weinland at [email protected]