Logo of Phnom Penh Post newspaper Phnom Penh Post - Japanese capital flooding in to Cambodia

Japanese capital flooding in to Cambodia

Employees file into Phnom Penh’s Japanese-owned Aeon Mall before the shopping centre’s soft-opening in 2014.
Employees file into Phnom Penh’s Japanese-owned Aeon Mall before the shopping centre’s soft-opening in 2014. Scott Howes

Japanese capital flooding in to Cambodia

Total Japanese investment in Cambodia under the Kingdom’s qualified investment project (QIP) scheme surged tenfold during the first half of the year, driven by Japan’s improved economy and a hefty capital injection by one of its biggest retail giants.

The Council for Development of Cambodia (CDC) approved a total of seven Japanese investment projects as QIPs during the first six months of the year, with total investment of $259.7 million, compared to just $22.3 million during the same period a year earlier.

Yasuhara Hiroto, head of the Japan Desk at the CDC, said while the number of approved QIPs was similar to last year, total investment soared as the result of Aeon Mall Co Ltd investing in construction of its second mall in Phnom Penh.

“This big investment in the first half is heavily dependent on the Aeon investment,” he said, declining to disclose Aeon’s share of the total. Aeon’s Cambodian office could not be reached yesterday for details on the investment amount, but the company previously said it sunk $205 million into building its first 108,000 square metre mall in Phnom Penh, which opened in June 2014.

Aeon’s second mall, currently under construction inside Pong Peay City on the northern flank of the capital, is set to cover more than 151,000 square metres of floor space.

Apart from Aeon’s investment in the shopping mall, the CDC also approved Toyota Tsusho’s project to develop an industrial park in Poipet, as well as a new hotel by Japanese conglomerate Starts Corporation. QIPs approved by the CDC are eligible for tax holidays and other investor incentives.

Hiroto, who is also a project formulation adviser for Japan International Cooperation Agency (JICA), said the new investment demonstrates Cambodia’s attractiveness as a destination for Japanese capital.

“Japanese companies see Cambodia as a promising market, thus we see many service industry investments in the first half,” he said.

In Channy, board chairman of the Cambodia-Japan Association for Business and Investment (CJBI), said the growing strength of Japan’s Yen currency and the Bank of Japan’s adoption of negative interest rates on bank deposits were pushing Japanese investors to look afield.

“With fewer and fewer growth opportunities at home, Japanese investors are turning to invest more overseas rather than locally,” he said. “There is a good return on investment in Cambodia. Japanese firms that are already here are getting returns of between 15 and 20 per cent, while they get 10 per cent at best in Japan.”

Hiroshi Suzuki, chief economist at the Business Research Institute for Cambodia (BRIC), said Japan’s investment in Cambodia tends to ebb and flow with changes in the yen’s exchange rate. Yet the continuous effort to improve the Kingdom’s investment climate has proven a magnet for Japanese FDI.

Suzuki said Aeon’s large investment in a retail project was a good sign, as it indicated Japanese investment in Cambodia was diversifying and extending the benefits to a broader section of society.

“It shows that not only manufacturing, but also the service sector, could be a good opportunity for investment,” he said.

Increased Japanese investment in the Kingdom also appears to be driving the growth of trade between the two countries. According to Japan External Trade Organization (JETRO), Cambodia exported goods valued at over $481 million to Japan during the first five months of the year, a 30 per cent increase over the same period a year earlier.

MOST VIEWED

  • Ministry mulls ASEAN+3 travel bubble

    The Ministry of Tourism plans to launch a travel bubble allowing transit between Cambodia and 12 other regional countries in a bid to resuscitate the tourism sector amid crushing impact of the ongoing spread of Covid-19, Ministry of Tourism spokesman Top Sopheak told The Post on

  • Courts’ decisions now published as reference source

    The Ministry of Justice has published 44 verdicts from civil litigation cases which can be used as models for court precedents and for study by the public and those who work in pertinent fields. Publication of the verdicts on December 31 came as the result of joint

  • ‘Kingdom one of safest to visit in Covid-19 era’

    The Ministry of Tourism on January 12 proclaimed Cambodia as one of the safest countries to visit in light of the Kingdom having been ranked number one in the world by the Senegalese Economic Prospective Bureau for its success in handling the Covid-19 pandemic. In rankings

  • Quarantine site in north Phnom Penh inaugurated

    A four-building quarantine centre in Phnom Penh’s Prek Pnov district was formally inaugurated on January 6. The centre can house up to 500 people, according to Phnom Penh municipal governor Khuong Sreng. At the inauguration ceremony, Sreng said the municipal hall had cooperated with the Ministry

  • China firm to develop Mondulkiri airport

    Tourism to the Kingdom’s northeast corridor could experience a remarkable metamorphosis after the government decided in principle of a Chinese company to study and develop a proposal to build a regional-level airport in Mondulkiri province, according to industry insiders. The Council of Ministers said

  • More than 5K workers rush from Thailand amid outbreak

    Following the recent outbreak of Covid-19 in Thailand’s Samut Sakhon province, Cambodian migrants working in Thailand were gripped by worry over the situation and many rushed to return to their homeland. Over the past 10 days, more than 5,000 migrant workers have returned from Thailand through