Foreign direct investment has fallen dramatically in Cambodia since 1996 because
the challenges outweigh the opportunities for investors.
This is the conclusion of four scholarship students - Saing Chan Hang, Thea Sophy,
Yi Makara and Kim Sokche. They presented their findings to an audience at the Australian
Centre for Education before leaving for Japan this week for postgraduate studies.
A key factor behind the decreasing investor interest, they said, was Cambodia's competitive
disadvantages against neighboring countries, such as Thailand and Vietnam. Operating
costs were generally higher in Cambodia; gasoline for example cost twice as much.
Unlike those countries, Cambodia lacks supporting industries. This means that raw
material and intermediate goods often have to be imported, at higher cost.
Another reason was the prevalence of bribes. Saing, Thea, Yi and Kim quoted a World
Bank survey claiming that 82 percent of 368 interviewed businesses operating in Cambodia
Together with further discouraging factors such as problems with smuggling, an unskilled
labor force and a long registration process for new businesses , the students concluded
that the challenges overshadowed the opportunities for the investors.
They urged the government to take the following measures to put the country back
on the track:
* Strengthen law enforcement.
* Simplify registration processes.
* Improve infrastructure.
* Maintain economic and political stability.
* Curb smuggling.
* Enhance human resource capacity.
* Encourage investment in supporting industries.