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US investors remain positive

Michael Michalak, regional managing director of the US-ASEAN Business Council, speaks to The Post in Phnom Penh late last week.
Michael Michalak, regional managing director of the US-ASEAN Business Council, speaks to The Post in Phnom Penh late last week. Heng Chivoan

US investors remain positive

The US-ASEAN Business Council, which organised last week’s visit to Cambodia by a high-level delegation of US business representatives, is one of the most active bodies promoting US investment in the Kingdom. The Post’s Kali Kotoski sat down with Michael Michalak, the council’s regional managing director and a former ambassador to Vietnam, to discuss the current investment climate and changes in the US attitude towards ASEAN under the new Trump administration.

What did the delegation that the US-ASEAN Business Council brought to Cambodia achieve?
Well, we brought 14 companies, and this is the largest delegation we have brought to Cambodia so far. The total market cap of these companies is greater than $2 trillion. That is a pretty amazing statistic. They came to meet the movers and shakers. So, we started a lot of conversations that we hope will grow into collaborations, and collaborations that turn into partnerships. And that is how we get down to real investment.

Are there still concerns over unfair competition, corruption and political instability in Cambodia?
Certainly corruption always factors into decision-making, but I am not getting the feeling that corruption is any worse here than it is in the rest of Southeast Asia. In fact, some of the American companies here said that it was getting a little bit better. But yes, it is a major concern.

The main challenge that I see is that bureaucracy in some parts of the Cambodian government won’t change, and certain government institutions are set in their ways. I see that particularly in the electricity sector, where trying to figure out how to integrate renewables into the overall energy mix and get that power into the grid seems to be going very slowly. I hear that five out of nine special economic zones have blackouts at least once a week, which simply just should not happen.

But overall, we believe that there are a lot of brilliant ministers and secretaries of state, but by the time you get down to the director-general level, they do not have the depth of knowledge or technical experience for the speed and direction in which Cambodia is going.

With the Trans Pacific Partnership effectively dead, how has that changed business sentiment towards the region?
There is still a push from TPP countries that want the deal, and there is still momentum. The US-ASEAN Business Council is still recommending to the Trump administration that they need to somehow take advantage of this momentum. They don’t have to do the TPP if they think that multilateralism is bad. But the US business community wants trade liberalisation, and they will take trade any way they can get it.

How receptive do you think President Trump is to discussions about the liberalisation of trade?
That’s a big question. It does seem that he is very much interested in bilateral deals, which is fine. But multilateralism is more efficient, and it can build coalitions on certain issues that can attack global problems. We will continue to transmit to Trump that being a leader in Asia means that you have to be here. If he wants to negotiate bilateral trade agreements that is fine. But we hope that he will at least expose himself to the multilateral world because, frankly, I don’t think he has that much experience with that yet.

What concerns has the business community raised about recent changes in Cambodia’s laws that threaten democracy?
I think it is too early to tell right now. Most American businesses feel like the access of reliable information coming out of Cambodia is not very good. They have to rely on anecdotal information. We just have to wait and see. All I can say is that I am just glad I am not the US ambassador here.

The Cambodia government has become increasing reliant on China. What is your take on that?
In terms of China, they have a lot of money to throw around and will be very influential no matter what happens. But what the Cambodian officials are telling us is that they are more impressed with the collaborative relationships they have with Japan and South Korea, rather than China. They say, yes China invests a lot, but when you ask them about who is actually helping the country, they say Japan and Korea.

This interview has been edited for length and clarity.

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