THE ROAD TO THE ASEAN ECONOMIC COMMUNITY 	   ANALYSIS | EXPERTISE | INSIGHT                                               ...
CAMBODIAoverview                                           propitious                                            position ...
CAMBODIAINsIghtCourting Cambodia                                                                                          ...
cambodiaINsIghtIMFs Faisal Ahmed believes Cambodias late start can be an advantage                                        ...
CambodiaINsIghtDFDLs Martin Desautels says more companies are now playing by the rule book                                ...
CambodiaINsIght                                                     The Foreign Business Leaders Survey                  t...
cambodiaINsIghtCanadia Banks Michael Lor believes a process of natural selection will apply to Cambodias crowded banking s...
cambodiaINsIght                                                                                                           ...
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2012 Cambodia Foreign Business Leaders survey


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Perceptions About The Cambodian Business Environment

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2012 Cambodia Foreign Business Leaders survey

  1. 1. THE ROAD TO THE ASEAN ECONOMIC COMMUNITY ANALYSIS | EXPERTISE | INSIGHT VOLUME 2 US$5CAMBODIA2012The foreign business leaders surveyrates the kingdom’s business environmentGetting startedHow to do business in cambodiaALL ABOUT aseanShaping the region’s economic futurefacts & FIGURESThe region in numbers
  2. 2. CAMBODIAoverview propitious position The second installment of the Foreign Business Leaders Survey shows there is much reason for optimism in the KingdomBy Laurent Notin, Indochina ResearchW “ elcome to the 2012 edition of has been introduced, and the skies have opened be- the Cambodian Foreign Business With tween Siem Reap and Sihanoukville. With Cambodia Leaders Survey. For the second year cambodia chairing Asean in 2012, more growth is definitely to in a row, we have spoken to a broad chairing be expected. asean in range of foreign business leaders 2012, more I believe optimism is in the air. Eighty percent of theworking and living in Cambodia, asking them about groWth is business men and women we have interviewed feeltheir perceptions of doing business in the country. We definitely to confident the economic conditions of the country will be expected ”have made some additions to our questionnaire, and improve over the next three to five years, while 51% ofwe have introduced a new section (page 14), which them see mid-term opportunities in the primary sec-should provide our readers with a tor (agriculture, agribusiness, foodvaluable picture of the Cambodian processing, forestry and fishery).labour market in terms of cost, Cambodia can count on its businessexisting skills and training needs friendly environment, as well as itsfrom an employer’s perspective. labour force, to drive growth. The Last year, we tried to demonstrate ease of starting a company is cited asthat Cambodia was very much a a clear positive of doing business incountry under construction and the Kingdom, and cost and availabil-would remain at work for quite ity of labour are key business advan-a long time, for there were many tages, according to our survey.issues to tackle. But Cambodia is Of course, it is not all rosy. Cam-becoming more than just a blip on bodia still has many challenges tothe radar: every year the country address, as mentioned by our re-takes another step forward. I re- spondents. The legal system, accessmember when I first came to the to domestic loans, energy or publiccountry six years ago, I was struck utilities, among others, will haveby the country’s energy; despite all to improve. But this does not seemthe worldwide turbulence in that to be a deterrent to future invest-time, this has not changed. ments: 92% of the foreign business The Cambodian business land- leaders expect to invest the samescape has experienced impor- amount or more money in 2012.tant changes in the last year. For On that note, let me conclude byinstance, the new European Union sincerely thanking all survey par-trade legislation offered increased ticipants. We know their time is pre-access to Europe, the agri-business cious, and we are grateful for themindustry expanded significantly de- having taken a moment to completespite regional flooding, increased our questionnaire.investment from Japan in particu- Cambodia is looking far into thelar demonstrated a higher level of future. So if you haven’t already,sophistication in the manufactur- why don’t you come and ‘feel’ theing sector, an anti-corruption law country for yourself ? Z Research by INDOCHINA RESEARCH, Cambodia The Questionnaires for the survey on pages 12 - 23 were sent by email to a pre-selected list of foreign business managers/decision-makers/ leaders working for private companies based in Cambodia. Research coordinated by Florence Pollet. cambodia@indochinaresearch.com10 | FocusAsean 2012 FocusAsean 2012 | 11
  3. 3. CAMBODIAINsIghtCourting Cambodia By Simon Marks T aking the Asean chair for the second time, Cambodia will be keen to use this year to prove itself a force toOur signature Foreign Business Leaders Survey reveals what be reckoned with. In its role as Asean chair, Cambo-the country’s key players really think of the market dia has already said it wants to initiate six-party talks with North Korea and has expressed the need to fi- nalise a first draft of the Asean Human Rights Declaration. This year’s Asean summits will strive to showcase the country as a viable investment destination. Indeed, Cambodia has come a long way in the last 10 years. P Ease of Doing Business in Cambodia Economic growth of over 6% has become the norm. A stock mar- ket launched last year. Skyscrapers are gradually giving Phnom On a scale of one to 10, how would you evaluate the ease of doing business in Penh a skyline, and the manufacturing sector is beginning to Cambodia at present? move beyond garments. Poor Excellent But while optimism in the economy is high, Cambodia, like most developing countries, still grapples with a host of matters that restrict the speed at which the country is developing and 1 2 3 4 5 6 7 8 9 10 reduce the ease of doing business. 1% 5% 11% 6% 16% 20% 24% 9% 5% 1% In order to perceive how foreign investors – particularly from Average: 5.72 Western countries – rate doing business in Cambodia, Indochina Research, a regional market research company, asked 66 for- eign business managers, decision makers and members of the private sector to answer questions on what it is really like to do business here. The businesses questioned operated in a wide range of sectors including consulting, trade, retail, banking, hospitality, manu- facturing and information technology. Asked to evaluate the ease of doing business in Cambodia by giving the country a score of between one and 10, the average score was 5.72. Still, the vast majority of businesses are confident that Cambodia’s economic situation will improve in the near future. According to the survey, 38% of businesses are “very confident” that the economy will improve in the next three to five years, while a further 42% of businesses are “somewhat confident”. No businesses expressed zero confidence and only 5% were “somewhat not confident”. “People I talk to not just in Cambodia but outside the coun- try are very optimistic about Cambodia,” said Faisal Ahmed, resident representative for the International Monetary Fund in Cambodia. “Obviously one big advantage of Cambodia is that it is starting later. You learn from the mistakes of others and your opportunity set is bigger.” Ahmed added that more and more investors are viewing Cambodia as a potential market. A major reason for this is the competitive edge Cambodia now has when it comes to the cost of labour. “The minimum monthly wage for an IT technician in Cambodia is $90 compared to $500 in Thailand” In Vietnam, wages have doubled in the last four years and the minimum salary in Ho Chi Minh City and Hanoi stands at Photo: Chor Sokunthea/Reuters two million dong (at the time of publication), or about $100, per month. Wages in China are also on the rise. Earlier this year a Chinese government report confirmed that the annual average growth of minimum wages should be at least 13% in the next three years. In February, minimum wages in ChinaCaught between tradition and modernity, Phnom Penh reflects Cambodias economic development had already risen to 1,500 yuan ($240) per month in regions such as Shenzhen. g12 | FocusAsean 2012 FocusAsean 2012 | 13
  4. 4. cambodiaINsIghtIMFs Faisal Ahmed believes Cambodias late start can be an advantage HR Incs Sandra dAmico pleads for a more balanced job market Although trade unions in Cambodia Road connections with neighbouring The Right Course Most of those attending higher education are doing so inwould like to see the minimum wage rise countries are also improving. Money from subject matters such as business, management and finance. Butto $96 per month – and the number of vio- countries such as China, South Korea and While 61% of businesses said the availability the labour market is crying out for people with technical skillslent protests by garment workers are on Japan has either built or is in the process of labour and 69% said the cost of labour in areas such as agriculture, information technology, humanthe rise – the minimum wage in Cambodia of building more than 1,000 kilometres of was supportive to doing business, 53% of resources and marketing.stands at just $66 per month (at the time new roads in the country. National roads those questioned said that the skills and According to the Cambodian Federation of Employers andof publication), considerably lower than four and five, which run between Phnom education levels of the work force were not Business Associations (Camfeba), more than 60% of Cambodianother countries in the region. According Penh and the Thai border were inaugurated supportive to doing business. university students are graduating in either business or law. Onlyto the Foreign Business Leaders Survey, the in 2009. Work on a bridge over the Mekong 2% of students graduate in agriculture even though the govern-minimum monthly wage for an IT techni- in order to connect Phnom Penh with P Workforce ment is pushing for more exports in commodities such as rice,cian in Cambodia is $90 compared to $500 Ho Chi Minh City is scheduled to finish by cassava and Thailand. 2015. Roads in Mondulkiri and Ratanakiri What are the strengths in terms of education/ “There needs to be a bigger focus on technical vocational provinces that link with Vietnam have also qualification of the local workforce? training,” said Sandra d’Amico, managing director for HR Inc been improved in the past two years. and vice president of Camfeba, adding that qualifying with voca- “There needs to be a These developments have all helped Ambition/Desire to learn tional skills tends to take less time and put people into jobs at a bigger focus on technical improve Cambodia’s ability to import and much quicker rate than academic courses. vocational training” export goods. But what do investors in Language skills D’Amico said that too many parents and students look at university Cambodia really feel about the ease of do- Positive attitude as a way to get people into white-collar jobs. What the job market ing business in a country that only 20 years 26%* really needs is engineers, factory supervisors and accountants. “The pull factors would be domes- ago had no investment law? “Those people come into the market and actually earn more 18%tic ones like low wages and improving According to the Survey and more than a 15%** money than university graduates,” she said.infrastructure,” noted Ahmed. dozen interviews with economists, managers Companies such as Japan’s Minebea, which makes small, “The government is making efforts to and observers of Cambodia’s economy, doing motorised parts for items such as mobile phones, have foundimprove some of the bottlenecks on infra- business here still has many challenges, from * Willing to improve, continuous learning, eagerness it difficult to find locals with the skills to operate its machin-structure, and businesses are looking at the high levels of corruption inside the country’s to learn by graduates, once immersed in industry ery. Banks also find it hard to hire locals with skills in risk man-improvements made over the last five or 10 tax and custom authorities to unclear regula- ** Diligent, committed, passionate, receptive to new agement and marketing. To curb the problem, the government ideas/innovation, enthusiastic, full of energy,years,” he added when asked to explain rising tions and a work force in desperate need of has begun to at least talk about looking for investment in more seriouslevels of confidence in Cambodia’s economy. better training. vocational training schools. g14 | FocusAsean 2012 FocusAsean 2012 | 15
  5. 5. CambodiaINsIghtDFDLs Martin Desautels says more companies are now playing by the rule book Transparency Internationals Preap Kol believes perception of corruption is also correlated to the country of origin of the investor Chevron Corp, which after years of means there is an enthusiasm and ambition For years, Cambodia has ranked as one of its Cambodia operation due to the risk of “It’s very unfair when there is such Martin Desautels, regional managingexploration is one day expected to extract to learn in Cambodia that is unparalleled the most corrupt nations in the world on corruption in the customs department. practices as nepotism and politicians run- partner for DFDL Mekong, a pan-Asian lawoil from Cambodian waters, is opening a elsewhere in the region. Nonetheless, the Transparency International’s Corruption “Everyone knows that custom officials ning businesses,” said Kol. “It’s not a fair firm, believes the standard of companiescentre to train workers to operate its pro- Foreign Business Leaders Survey found that Perceptions Index. For Western companies, are among those who can become rich very playing field, and serious businesses have entering Cambodia’s marketplace is im-duction platform once oil starts to flow. The 37% of companies expect their staff to be corruption is high on the list of deterrents quickly,” said Preap Kol, country representa- to think about that before putting their proving all the time. The main advantagegovernment also has plans to re-open the more proactive and develop abilities such to doing business. Committing corrupt tive for Transparency International in Cam- feet into the country.” firms in Asia might have over firms in theUniversity of Geology and Mines, though as critical thinking, analytical and logical acts when abroad is also more severely bodia. “Every family wants their kid to be a For Ahmed at the IMF, creating an equal West is that their governments tend toan exact date had not been announced at thinking as well as creative thinking. punished than in the past. custom official. It’s a very prestigious job.” playing field allows countries to attract the have closer connections, he noted.time of publication. Both the United States and the United Kol said that the onus for the government most competitive companies and, there- “They operate a bit more often government But most of the initiatives to improve Graft Grievances Kingdom have implemented legislation, to stamp out corruption had increased in fore, the most favourable for consumers. to government and operate often throughthe workforce are still in the pipelines the Foreign Corrupt Practices Act and the recent years, especially with Cambodia “Even-handed treatment is always a their embassies to get the initial contacts,”and could take years to accomplish. There An issue that is equally as troublesome when vying to become a non-permanent mem- positive factor for businesses to operate. I he said, adding that the Ministry of Com-is also still very little effort to inform peo- doing business here, according to investors “Everyone knows that ber of the United Nations Security Council. don’t know if that is not being practiced, merce is currently in the process of draftingple in the countryside, where most of the and the Foreign Business Leaders Survey, is But because most of the large investments but I think it is a general pre-condition to a competition law to be in compliance withpopulation lives, about how to find jobs. corruption. In all walks of life, businesses in customs officials are among still come from countries that also suffer improving the business climate,” he said. World Trade Organisation rules.With more than 300,000 people entering Cambodia are confronted with corruption, those who can become rich from corruption, there is a lack of desire to Although corruption and issues sur- “It’s true that in certain circumstancesthe labour force every year, more simply from the court system to the customs office. very quickly” make reforms quickly. rounding fair competition are high on the local company might have less strin-needs to be done. The survey found that 58% of businesses This scenario means that Western the minds of foreign investors, others say gent obligations in practice to comply “In Cambodia where our biggest focus is considered the legal system to be not sup- Bribery Act respectively, that sets much businesses looking to do business in that the business climate has seen major with. But then again, if you talk to our taxagriculture, there are hardly any agricul- portive to doing business, while only 12% tougher conditions and punishments for Cambodia can find themselves at a com- improvements over the last few years and guys, that is changing. The government isture graduates. So this is the challenge,” voiced an opinion to the contrary. businesses found guilty of bribing a foreign petitive disadvantage when compared to that more and more companies are now trying to broaden its tax base. It’s less andd’Amico said. “We are not doing the right A quarter of companies found that firms public official. companies from countries such as China, playing by the rule book. less true that it is possible to not pay tax,”marketing. We are not telling people that with connections to the government had Such laws, including Cambodia’s own Malaysia or Vietnam. he added.if you study agriculture you will get a job.” advantages in terms of paying taxes and anti-corruption law, which forbids any pay- Another issue brought up by businesses To make the business environment more Despite the dearth of skills in the work following regulations. And 55% of busi- ment to public officials that does not receive in the Foreign Business Leaders Survey is “The government is trying conducive to foreign investors, the gov-force, most businesses said that the nesses felt that the anti-corruption law, a receipt, have already deterred companies that local firms use their connections to to broaden its tax base. It’s ernment is drafting more of the necessaryyouthfulness of the country – 32% of the which was implemented in 2010, bore no from doing business here. Last year, the gi- gain favourable business conditions in less and less true that it is legislation. For example, the new civilpopulation is still under the age of 15 – influence in stamping out graft. ant US logistics company FedEx scaled back areas such as tax. possible to not pay tax” code, which came into force in December, g16 | FocusAsean 2012 FocusAsean 2012 | 17
  6. 6. CambodiaINsIght The Foreign Business Leaders Survey to government data – but rice mill factories found that 70% of businesses still believe often have to grapple with high energy costs that the supply of energy in Cambodia is through the use diesel-powered generators. unreliable and too expensive. A further 49% said that public transportation was not Appraising Cambodia supportive of business, with traffic jams and heavy congestion becoming more During the financial crisis, which strongly and more of a problem. There is still no impacted Cambodia’s economy in 2009, public bus service in any of Cambodia’s the construction sector was badly affected major cities. Though a slightly different and has struggled to recover since. Hous- view was given of communication services ing prices, which had in some cases risen with 65% of businesses stating that inter- ten fold since 2005, have fallen by 50%. Pro- net and phone services in the country were jects such as Gold Tower 42, which is being supportive of doing business. developed by South Korea’s Yon Woo Co, In order to rectify the energy problem, have ground to a halt. Plans to build three the government has set out on a plan to more towers in Phnom Penh’s Chamkar build more than 20 hydropower dams on Mon district were also scrapped in 2010 by rivers all over the country. The 338-mega- South Koreas GS E&C company. watt Kamchay dam in Kampot province Investors are now looking more toward was the first of those to come on line last real estate projects in the tourism sector.Real estate developer Tom Sterling is betting on year, and its energy is expected to provide Cambodia expects to have seven milliontourism facilities additional power to Thailand as well as visitors per year by 2020, up from less than Phnom Penh, Sihanoukville and Kampot. three million presently. Although environmentalists warn the “What we’ve always specialised in isregulates all corporate contracts. A com- dams could seriously jeopardise the coun- tourism-related resorts, hotels and luxurymercial contract law, which will regulate try’s fisheries, the government appears set villas. That’s the sector that year-by-yearthings such as franchises, is also being to push forward with its policy of building is growing, and parts of Thailand have be-drafted. What is more, an arbitration cen- more dams. come oversaturated,” said Tom Sterling,tre is due to be launched this year as a way An argument in favour of the dams is thatfor businesses to resolve disputes outside they will provide rural areas with more “Cambodia expects to haveof the court system. electricity. The government has a target Those looking to invest in Cambodia will to reach exports of one million tonnes of seven million visitors per yearwelcome these initiatives. Still, 46% of busi- milled rice by 2015 – exports of milled rice by 2020, up from less thannesses questioned by the Foreign Business reached 200,000 tonnes in 2011, according three million presently“Leaders Survey said that the intellectualproperty law is not supportive of doing P Business Environment director at Sterling Project Management,business. Companies in Cambodia have a a real estate company with operations intendency to copy already successful busi- Support Challenges Thailand and Cambodia.ness models, which creates “a climate of High value office and residential propertysuspiciousness”, they said. in Phnom Penh is still limited. “There will “It’s difficult to enforce, there is no doubt be an oversupply coming on line this year,”about it. This being said it is possible to Sterling said.enforce. There is a department at the Min- Still Japan’s Aeon Mall announced lastistry of Commerce who can help you en- year it would start building a giant shop-force your intellectual property,” Desautels ping complex this year. Hongkong Land,said, adding that any company looking to Cost of labour a subsidiary of Jardine Matheson, is also 69% Access to 38%protect their intellectual property rights domestic loan set to break ground soon on two projectswould need to take a “proactive approach”. (yet to be identified at time of publica- tion) on prime real estate in Phnom Penh. Communication 65% Education and 53%Constructing a Community services skills of labour Capital going into the manufacturing and agriculture sectors is also expected to rise.Having experienced more than 10 years Perhaps sensing that Cambodia in the Political stability 65% Anti-corruption 55%of economic growth after decades of war of government law next few years will have developed its in-and political instability, Cambodia still has frastructure and improved its overall busi-a massive job to do before key infrastruc- ness climate, foreign direct investment is Domestic 54% Legal system/ 58%ture meets the expectation of investors. demand conflict resolution increasing. According to figures releasedMore advanced manufacturers from Japan by the central bank in the first part ofhave only just started entering the market the year, foreign direct investment in Click to fly as smooth as silk Rate of corporate 47% Energy 70%in the past couple of years since the gov- income tax Cambodia reached $632m in 2011, a 14% thaiairways.comernment opened special economic zones increase compared to the previous year.that provide businesses with a reliable en- One of the major plus points for Cambodia’s Commercial 32%ergy source and the ability to trade goods contracts law economy over the past year has been in ex- Tel. + 855 23 214359-61 Ext 102-106through a so-called one-stop service. ports. Despite economies in North America g or your preferred travel agent18 | FocusAsean 2012 FocusAsean 2012 | 19
  7. 7. cambodiaINsIghtCanadia Banks Michael Lor believes a process of natural selection will apply to Cambodias crowded banking sector CIMBs Bun Yin is keeping an eye on Cambodias stock exchange with a view to future involvementand Europe slowing, orders from those Cambodia to take on the position of CEO “Barriers to entry have been erected and with a choice between Cambodia, Laos and “They bring in the capital, they bring of the recently launched stock market,markets for Cambodian-made garments re- for Canadia Bank in late 2011. “You have the countries themselves have become a Myanmar. Though showing many signs of in the technology and they bring in the investors hope that more businesses willmained high. Exports to the US and Europe countries that have moved ahead of the little bit more selective,” he added. reform in the right direction, political stabil- expertise,” said Lor. “Over a period of time adopt more stringent financial standards.rose to more than $4 billion last year, dwarf- pack – countries such as Thailand and When looking to make an investment in a ity in Myanmar is still not assured, he said. by a process of natural selection, you will Other aspects that could help grow theing 2010’s total of just $2.88 billion. Much Indonesia and to a certain extent Vietnam. market with fewer competitors and cheap- He added that as domestic demand is small- notice that those players who find them- banking sector further is a credit bureauof that growth was spurred by a new trade These countries today are overpriced.” er prices, Lor said investors are now left er in Laos than it is in Cambodia, it would selves too small or not viable, will move where borrowers’ credit history can beagreement that dropped tariffs on all items take longer for the landlocked country to out on their own. But at this moment of viewed as well as an interbank market,except weapons exported to the EU. P Future Economic Situation emerge as an investment hotspot. time there is no reason to restrict.” which still does not exist in Cambodia. Both Another sector that experienced ample “For anybody who is looking for a market are currently being designed by the NBC.activity over the past year was the bank- to go in, and you realise that by way of de- “A significant amount of trade in Cambo- 60% “If you look at the emerginging sector. This year alone, Japan’s Bank leting what is not possible, you are now left dia today is still done on a cash basis. Butof Tokyo-Mitsubishi opened a representa- 53% with only Cambodia,” Lor noted. markets in Southeast Asia you realise that as the business gets largertive office in Phnom Penh, and Vietnam’s 50% Sharing his enthusiasm is Bun Yin, Head today, this is the and the demands become more sophisti-Saigon-Hanoi Commercial Joint Stock 39% 42% of Commercial Banking and Deputy Gen- place to be” cated, there is a need for an entity in be-Bank and Military Bank have both opened 40% 38% eral Manager at CIMB Bank. “Since our tween the arbitrage,” Lor explained.branches, bringing the total number of arrival in autumn 2010, results have ex- Despite the high numbers of banks, the Forty-two percent of businesses felt thatcommercial banks to 32 in March 2012. A 30% ceeded all of our targets, both in terms of Foreign Business Leaders Survey found that Cambodia’s new bourse would have a 25% 24%host of other banks from countries such as deposits and loans," he said. CIMB plans 38% of businesses thought access to credit positive effect on business. Still, membersChina and Malaysia also joined the pack 20% to open four new branches in Cambodia was not supportive of doing business, of the opposition and economists have 16% 15% 15%last year. 14% this year. compared to 21% who found it supportive. warned that a culture of greed and corrup- The influx of banks over the past three 10% 9% It is views like this that are fast making Bankers say part of the reason for this is be- tion mean regulators need to be extremelyyears is one of the most obvious signs that in- 4% 5% Cambodia’s banking market extremely cause small and medium-sized enterprises vigilant to fight against illegal activities.vestors are eyeing up the potential in Cambo- 0% 0% competitive. Though some insiders be- in Cambodia still have poor accounting and The regulators “are very much aware of 0%dia, a country where gross domestic product lieve the market is overcrowded, oth- financial reporting standards, a necessity these risks… and that is why they are tak- over the next 6-12 months Over the next 2-3 years Over the next 3-5 yearsis still only equivalent to about $12 billion. ers say the National Bank of Cambodia’s for those looking to borrow money. ing their time to prepare the ground. But “If you look at the emerging markets (NBC) policy of bringing in banks with a Still, credit is growing at rate of about 25% it’s always a learning process. There is no Not confident at all Somewhat not confident Neutral/Unsurein Southeast Asia today, this is the place proven track record will hold the country per year, a level that the IMF has said is at textbook that tells you for Cambodia you Somewhat confident Very confidentto be,” said Michael Lor, who arrived in in good stead. Cambodia’s upper limit. With the existence need to do these 32 things. So there is a g20 | FocusAsean 2012 FocusAsean 2012 | 21
  8. 8. cambodiaINsIght P Recommended Mid-Term Opportunities # Agriculture, Forestry and Fisheries # Food processing/agribusiness 51% # Export # High-end consumer goods # Automobiles # Garment and footwear industry development 33% 29% # Global development of the e-economy # Solar 20% 20% 18% 18% # Oil # Gas 13% 9% 7% 7% 7% 2% 2% Primary sector Secondary sector development development Tourism/Hospitality Transportation/Logistics Insurance/Banking & Finance industry Communication Energy Construction/ Real estate Infrastruture Education Health Service industry Green economy Special economic zoneTaking a long-term approach to business has brought Dominique Catry of Comin Khmere successtrial and error process that all countries the 1990s when relative peace was restored “We have built over the years, sourcing Today his company provides IT solu- “Definitely the local firms have moreneed to go through,” said IMF’s Ahmed. to the country, Catry has had to negotiate and identifying the most competitive tions for many businesses from banks to advantages because they know how to get many of the above hurdles. sources. That gives us an advantage,” he telecommunication companies and em- around with the system and processes,”Long-term Investment As chairman of Comin Khmere, an engi- said. “When we got a fresh engineering ploys more than 300 people, of which 10% he said. “You need a niche to compete. neering company with offices in Vietnam graduate ten years ago, he didn’t know are expatriates from India, Singapore and Your business has to have advantages thatOne man who has seen Cambodia evolve and Cambodia, he has overseen projects anything. Today we can find people with Malaysia. He said that after already expand- others do not.”over the years is Dominique Catry. Hav- that have built transformers for the nation- experience [in Cambodia] and experi- ing into Laos, his firm was now looking at Still, First Cambodia experiences manying lived in Phnom Penh as a businessman al grid and provided hardware for Vattanac ence oversees and that makes a lot of other countries in Asean. of the same challenges that many foreignprior to the Khmer Rouge regime in the Tower, a new 38-storey building on Phnom difference,” he added. Foreign companies researching Cambodia businesses face. Workers with the most1970s and then returned to Cambodia in Penh’s Monivong Boulevard. It is a development other companies are should realise that although local firms may talent can sometimes leave to start their Catry also helped found the French keen to exploit. According to the Foreign have the advantage in terms of knowing the own businesses or get snapped up by P Future Investment Cambodian Chamber of Commerce and is Business Leaders Survey, almost half of local market and systems, access to the mar- larger companies. a co-founder of the newly formed European the businesses questioned said they were ket in Cambodia is one of the most open in “Retaining key staff is the biggest chal- What is your What is your Chamber of Commerce in Cambodia. He said planning to increase their investment in the region, according to Eyra. He also noted lenge,” he said. “A lot of multinational expectation expectation in terms the Kingdom is currently nicely poised to see Cambodia over the next year. Moreover, that a foreigner can wholly own compa- companies are taking our staff.” regarding further of recruitment for sustained economic growth in the future. almost 60% of the businesses said they would nies in Cambodia, which is not the case Still, he believes that as the economy con- investments in your the next 12 months? Catry said while Vietnam is struggling recruit more staff in the next 12 months. in Vietnam, Myanmar, Thailand and Laos, tinues to grow there will be more need for business for the with high inflation and slower economic A company that fits into that bracket is where investors must find a local partner. IT services. coming 12 months? growth, Cambodia economy is better posi- First Cambodia, a local information tech- He also stressed that before investors set “Before you could never sell them a dol- tioned to attract investors at it capitalises nology company that has also started doing up shop in Cambodia they should conduct lar’s worth. And now they start to invest on strong growth above 6%. business in Laos. thorough market research and be aware it a million.” 0% Reduce drastically 2% Still, he said that building a successful After working for MobiTel, Cambodia’s remains a relatively small domestic market. Last year he said his company received 8% Reduce somewhat 2% business in Cambodia has taken time and largest telecommunications company, a $2m-contract to provide technology so- a lot of effort. In the early days employees and then for British American Tobacco, lutions to a new brewery opened by Chip 45% Same 38% in senior positions were almost exclusively Houn Heng Erya realised there was a lack “Before you could never Mong Group, a local firm with businesses 39% Increase somewhat 50% expatriates. Finding reliable sources for of companies providing IT solutions for sell them a dollar’s worth. in the construction sector. 8% Increase drastically 9% importing machinery and construction Cambodia’s growing private sector. He And now they start to “It’s just the beginning,” he said. “It’s got materials was also a challenge. started First Cambodia in 2002. invest a million” to go up from here.” Z22 | FocusAsean 2012 FocusAsean 2012 | 23