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Publication Date : 20-08-2013
A country once torn apart by war is emerging as a key investment destination for small and medium enterprises
It was once home to a great civilisation. In the 12th century, the Khmer empire was South-East Asia’s largest. Angkor was the centre of its power and a series of capitals were constructed during the empire’s zenith.
Researchers concluded that Angkor was once the largest pre-industrial city in the world, and probably supported a population of up to one million people. Angkor Wat, the most well known and best preserved religious temple at the site, still serve as reminders of Cambodia’s past as a major regional power.
However, in the 1970s the former French colony experienced one of the deadliest civil wars known to mankind. The strive led to the deaths of approximately two million people through the combined result of political executions, disease, starvation, and forced labour in just four years.
Those days behind it, Cambodia today is ready to return to its former glory.
Cambodia joined the Association of South-east Asian Nations in 1999 and the World Trade Organisation in 2004 and has experienced an economic boom over the last fifteen years. Its gross domestic product grew at 7.2 per cent last year.
According to the World Bank, this growth momentum is expected to continue with projected growth rates of 6.7 per cent this year and 7 per cent in 2014. It is driven by strong exports, private investment, agriculture, diversification, and a solid macroeconomic position.
Often overshadowed by its neighbours from the Greater Mekong area such as Vietnam, Thailand and, most recently, Myanmar, Cambodia has been undergoing a quiet transformation.
After more than a decade of growth — with just one hiccup during the global crisis in 2008 — the newest member of Asean has begun attracting serious investment.
Investor interest has been driven more by business growth than by the country’s promotion efforts, unlike other emerging markets. For many labour-intensive manufacturing operations, Cambodia has become an attractive option almost by accident.
Bangladesh has lost its charm with a series of disastrous factory fires and collapses, bureaucracy weighs down Vietnam, while growing awareness of wage inflation in China has companies looking elsewhere in Asia.
Cambodia, renowned for its relatively light-touch regulation of foreign investors, has emerged as a prime choice.
Former Cambodian prime minister Ung Huot said, with Cambodia’s current investment policies, Malaysian small-medium enterprises (SMEs) should capitalise by investing in the country.
“Cambodia is suitable for SMEs that are looking to expand or to set up shop overseas. Wages are competitive and it is good to come in early,” he said.
“Plenty of opportunities are available here, mainly in the agriculture sector. The government has been pushing for this sector to grow,” he added.
One Cambodia-based company has been luring Malaysian investors, both individuals and SMEs, to look at the investing prospects in the country.
“Increased domestic demand and growing imports of flour, starches, and sugars provide an opportunity for investors and cassava has been competitively processed into these items,” said Valley of Wealth Pte Ltd chief executive Clement Woo.
Valley of Wealth acts as consultants for investors who are interested in agriculture investment in Cambodia.
Cassava, or tapioca, is one of Cambodia’s biggest agricultural products. It is one of the most important tropical root crops as its starchy roots are a major source of dietary energy for more than 500 million people and it is known to be the highest producer of carbohydrates among staple crops.
According to the United Nations Food and Agriculture Organization, cassava ranks fourth as a food crop in the developing countries, after rice, maize and wheat.
Nigeria is currently the world’s largest producer of cassava.
Cassava is a staple food in many rural communities because of its tolerance to drought and poor soil conditions and because it can be cultivated in generally difficult crop environments.
“In Cambodia, cassava can grow and produce high yields in areas where maize and other crops will not grow well. It can tolerate drought and can be grown on soils with a low nutrient capacity, but responds well to irrigation or higher rainfall regions and to the use of fertilisers,” said Woo, who is working with Marco Robinson Sdn Bhd in Malaysia to facilitate investment in Cambodia.
Besides cassava, Kampot pepper has been also attracting plenty of foreign investors into Cambodia.
The pepper is the first Cambodian product to receive “geographical indicator status” awarded by Cambodia’s Ministry of Commerce. Based on WTO guidelines, the status regulates every aspect of a product’s properties to assure both its high quality and regional distinctiveness – values that have been known among the growers for decades.
Regarded as the “King of Peppers” due to its complex flavours and pungent aroma, Kampot pepper is highly sought after by chefs and food connoisseurs.
It was considered an essential spice in any respectable restaurant in France during the mid 20th century, but faded from the world market due to the turmoil of the 1970s.
According to a report in a local Cambodian daily, demand for Kampot pepper is outpacing current supply even as areas of cultivation are expanding.
“Pepper farms increased from 20 hectares in 2012 to 41 hectares this year. Moreover, crop yields have increased from 23 tonnes in the whole of 2012 to 27 tonnes in just the first three months of this year,” the newspaper said.
“We see vast potential in Kampot pepper and this is something that Malaysians should look at,” said Woo.
Cambodia still faces numerous development challenges. In particular, the effective management of natural resources and land, and environmental sustainability and the pursuit of good governance.
Although poor public services and corruption curently hinder development, the country is working hard on addressing the issues it faces. Even with the challenges, one thing is clear, as Cambodia’s development continues, it is set to become a serious regional contender.