Prime Minister Hun Sen delivered a speech on Wednesday highlighting Cambodia’s potential and its economic growth to court more Japanese investors to the Kingdom.
In a speech delivered on Wednesday at a seminar on Cambodia’s investment environment at the 25th International Conference on The Future of Asia, which was held in Japan, the prime minister highlighted some of the significant investment potentials found in the Kingdom.
“At this workshop, we will directly understand the progress of the Cambodian economy and the investment potential in Cambodia. [We will] know about the recent measures implemented by the government of Cambodia, which are aimed at improving the investment environment.”
According to the world’s major financial institutions, including the Asian Development Bank, Cambodia’s economy is projected to grow by more than seven per cent this year.
The prime minister said that the growth had firmly placed Cambodia in its position as one of the most prosperous economies in Asia for three consecutive years.
“This shows that Cambodia is on track to achieve high-income country status by 2030 as planned in its national policy agenda,” he said.
The prime minister also announced the removal of the one per cent withholding tax for the private sector, a move he considers a factor in attracting more investors to Cambodia.
“The withholding of tax is going to be cancelled because it is a kind of debt borrowed from a private company by the state,” he said.
“Ending the withholding of tax will end the state debt with private companies, which will further boost competition and increase Cambodia’s economy. It will also help the private sector retain additional capital to expand its businesses.”
Centre for Policy Studies director Chan Sophal echoed Hun Sen’s comment that the removal of the one per cent withholding tax is another of the government’s reforms to attract foreign investors.
“I think the removal of the one per cent withholding tax and a package of other reform measures will appeal to Japanese investors,” he said.
Business Research Institute for Cambodia (BRIC) CEO Hiroshi Suzuki said the prime minister’s efforts to attract Japanese investment to Cambodia are highly appreciated.
“This kind of effort is indispensable to get a good understanding of the current real situation and Cambodia’s potential,” he said adding that many Japanese, including large-scale companies, continue to have negative and old-fashioned stereotypical images of Cambodia – including landmines, civil war and poverty.
“It is critical to provide accurate information on the current situation and the advantages of Cambodia, such as connectivity with neighbouring countries and improvement of logistics infrastructure,” he said.
Data from the Council for the Development of Cambodia said that since 1994 until the first quarter of this year, the Kingdom had received more than $2.5 billion in investment from Japan. The data shows that there are now more than 1,700 Japanese companies operating in Cambodia.
The Kingdom is currently widely seen as dominated by Chinese investment projects.
When asked if government efforts to attract more Japanese investment would help balance Chinese influence in the Kingdom, Sophal said the more diversified the sources of investment and trade, the better it is for the Kingdom.
“I think Cambodia values investments from many countries and Japan is one of the most respected among them,” he said.
Suzuki said: “The major characteristics of Japanese investment are high quality, respect for human and labour rights, respect for the law, respect for ownership of the recipient country and respect for the environment. Also free from the Debt Trap.”
Currently, the Kingdom’s famous coastal province, Preah Sihanouk, is dominated by Chinese investments in nearly every sector, except Sihanoukville Autonomous Port, which is strongly supported by Japan.
Japanese Prime Minister Shinzo Abe and Hun Sen are set to witness a signing ceremony on Thursday where grants will be given for some projects, including scholarships, human resources development and a container terminal in Sihanoukville Autonomous Port.