In the nearly two decades since the Khmer Rouge attempted to turn Cambodia into a
pre-industrial age paradise, the manufacturing sector has produced little more than
plows, rubber tires and some building supplies.
Infrastructure has deteriorated to an almost unusable state, regular power is non-existent
and the labor force has lost most of its skilled workers.
Nevertheless, Industry Minister Pou Sothirak, a U.S.-educated computer engineer who
has been handed the job of laying the groundwork to rebuild Cambodia's war and revolution-decimated
industrial base, remains undaunted.
"I think we have the right atmosphere. The government has already called for
a free market system. We are in the liberal democracy framework very much aligned
with the rest of the world and so this should open up Cambodia and I think Cambodia
has a good chance to prosper and develop," he said.
The minister said he believed foreign investment held the key to industrial development
and that if the government could guarantee peace and stability, the country was well
placed among Asean's booming economic tigers to attract businessmen.
"I have been receiving quite a few investors from Singapore and Japan and Taiwan
recently and I am encouraged by the trends," he said.
Sothirak said that in the initial stage, Cambodia would use its low labor costs to
bid for subcontracting work from regionally-based multinationals. The government
would concentrate on developing small to medium sized manufacturing industries in
sectors such as energy, construction, textiles, food processing, and cottage industries
which he forecast "would be fairly important in the Cambodian context."
The minister, who is a member of the constitution drafting committee and also the
Board of Investment said the newly elected government would lay the legal framework
to guarantee investments and allow for the repatriation of assets. He said the charter
would reflect the government's commitment to multi-party democracy and a market economy.
"For the immediate recovery I think only the private sector, and this includes
domestic and foreign investors, can help a poor country like Cambodia move to the
development take off stage," he said.
The minister said the government would continue to sell off state-owned enterprises
but warned that "transparency would be an important criteria." The Ministery
of Industry, however, has little left to privatize. The former State of Cambodia
administration sold off or leased 58 of the ministry's 68 state enterprises. The
firms were not public utilities and were badly in need of rehabilitation but their
urban real estate was often particularly attractive.
Sothirak, while not being specific, said the new government would "have to concentrate
on cleaning up the house, and make the department as efficient as it can be".
Vietnam, with its large local market, industrious workforce and cheap labor looms
as the biggest rival for foreign funds. Sothirak said he was confident, however,
that Cambodia's democratically-elected government would give it the edge.
"This is something an investor will pay quite a bit of attention to. If Cambodia
can move into a free market system and I hope that if we can provide a good law on
investment, foreign investors will think of Cambodia as a first stop before Vietnam,
We are in the middle so we can export to Vietnam and we don't have the cumbersome
bureaucracy to deal with."
He said the government was also making plans to turn Kompong Som into free trade
zone, to take advantage of the southern province's deep sea port so Cambodia could
serve as an entrepot to Laos and Vietnam.
The minister noted that while the existing administration was only an interim body
he believed 90 per cent of the ministers would retain their portfolios when a constitutionally
elected government takes office in mid-September.
Sothirak, who previously worked for aircraft manufacturing giant Boeing, said he
had a long term vision that would see Cambodia move into self sufficiency and then
aggressive development as part of the global economy.
"Cambodia must go through the steps, we have to start at the beginning, even
before the beginning...In my lifetime Boeing is not going to be coming to Cambodia
but maybe light manufacturing like Intel, Motorola," he said.
"The first thing though, is to see Cambodia move off the less developed country