Relations between Cambodia and Japan are getting stronger, as the two countries have been strengthening diplomatic ties and increasing economic co-operation.
On the occasion of the 20th anniversary of the Japan International Cooperation Agency (JICA) involvement in the Kingdom, the Post’s Hor Kimsay talked to the aid agency’s chief representative for Cambodia, Izaki Hiroshi, about bilateral cooperation between the two nations.
What is JICA’s role here?
JICA, since the establishment of its office in Phnom Penh in 1993, has been implementing a major part of Japan’s ODA [official development assistance] to Cambodia, with the following three broad objectives: building the foundation for economic growth, promoting social development, and good governance.
Our projects have been taking place all around the country, including projects on large-scale infrastructure, private sector development, agriculture and rural development – among others.
How much has Japan supported Cambodia in terms of ODA since starting bilateral relations?
Japan is one of the largest bilateral ODA providers for Cambodia, with the total contribution of $2.25 billion since 1992 and the average annual delivery of over $120 million in recent years.
What are the main areas JICA wants to further develop in Cambodia?
Recognising the aspiration of the royal government of Cambodia to become a middle-income country and to successfully achieve economic integration into the [Association of Southeast Asian Nations], JICA will increasingly focus on the promotion of industrial development and private sector development, while continuing assistance in other areas.
How do Japanese investors perceive Cambodia’s current investment environment?
Although we are not an investor ourselves, the current trend shows that the number of firms in automobile parts [manufacturing areas] and electronic parts manufacturing areas, as well as [in the] garment [sector] is growing. In addition, the service sector – such as shopping malls, consulting services, restaurants, etc – also seem to be drawing their interest.
As far as we know, there are issues ranging from difficulties finding skilled labour to high electricity costs, especially in the manufacturing sector, to [informal] commission charges. Therefore, [the Cambodian government’s] strong initiative and efforts are needed in order to solve [those issues].
Last year, Japan became the third-largest investor in the Kingdom. What are the reasons for this jump?
This is an external condition related to the global supply chain management trend, rather than to the factors of Cambodia. Currently, potential Japanese manufacturing firms are forced to shift their operations [from their traditional sites, such as in China] to other locations, especially in Asian countries, due to the drastic increase of wages, land and lease prices for factories. And this shift might be accelerating more and more in the future.
What areas attract Japanese investors to Cambodia?
We would like to emphasise that the major increase of Japanese investment is in the manufacturing sector. Manufacturing firms create huge employment opportunities and contribute to the spillover of technology to local firms.
Do investors consider entering the Kingdom for the long term?
It is obvious that the private sector focuses on the future benefits, but not with a short-term point of view. Once Japanese companies come to the country, they stay there and try to grow up with that country by developing the local people’s capacities on the long-term point of view.
What should Cambodia do to get more benefits from an increase in investment?
In order to attract more and more Japanese companies to Cambodia, it might be necessary for Cambodia to objectively define its comparative advantages and to utilise several incentives such as policy tools in order to keep improving the investment climate continuously.