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New program to reverse FDI slide

New program to reverse FDI slide

Cambodia should be better equipped to turn around its foreign investment woes once

a United Nations-sponsored program starts training government officials next year.

The aim of the UN Economic and Social Commission for Asia and the Pacific (UNESCAP)

program is to help the public sector understand exactly what foreign investors want.

Promoting Cambodia as a place to invest could reverse the country's dismal performance

in generating foreign direct investment (FDI).

"I think it's an interesting project - trying to develop understanding and build

the bridges," said Dr Peter Brimble, CEO and president of policy research at

the Brooker Group.

Brimble was recruited by UNESCAP to design courses tailored to examine FDI in Cambodia,

Laos and Vietnam as part of the Indochina Investment Biennium. He was recently in

Cambodia on a fact-finding mission.

Staff from the government's investment body, the Council for the Development of Cambodia

(CDC), will join their counterparts from the Cambodian Investment Board, the Ministry

of Commerce, the Ministry of Tourism and local government offices in a five-day workshop

in November 2003.

FDI has plummeted since 1998 when $230 million was invested in the Kingdom. It dropped

to $113 million last year, and predictions are that this year will be even worse.

Many observers complain of "high hidden costs" - more commonly known as

corruption - for creating an unfavorable investment climate.

The FDI slide could derail the country's development drive. The 2001 economic review

by the Cambodia Development Resource Institute showed that fewer than 20,000 new

formal jobs were created in that year, only one-tenth the number of young people

who entered the labor market.

Sok Chenda, secretary-general of CDC, was optimistic the program would instill a

new approach among civil servants at investment promotion agencies (IPAs).

"I hope that at the end of the course, officials at IPAs will understand there

are two steps: the first is to understand that we should provide as much information

and assistance as possible to potential investors," he said. "The second

is the notion of after-sales [service]: the best way to promote your country is to

satisfy the one who's operating."

Brimble said he planned to use customized case studies that would prove of interest

to officials. The course would develop materials and exercises in Khmer, and include

towns as potential sites for investment rather than simply concentrating on cities.

He said one challenge was to determine the course of action the government should

take once the garment industry - which employs around 200,000 people - loses preferential

trade tariffs with the US in 2005.

Cambodia had "a number of interesting regional development stories" that

could provide investment opportunities. One possibility was using the Asian Development

Bank's southern economic corridor project to link Sihanoukville with Thailand and

Vietnam.

Another was revealed by a feasibility study the Brooker Group carried out on the

Emerald Triangle, the northern area bordering Cambodia, Laos and Thailand.

"If you think about the potential for development of tourism and agribusiness

in those areas, it's tremendous," he said, adding that it was important that

officials kept learning about FDI beyond the five-day training course.

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