Yesterday, the Sofitel Phnom Penh Phokeethra was filled with speeches, round tables, meetings and themed workshops as part of the opening day of the second France-Cambodia Business Forum. Here is a first extract from this information-packed day.
Oknha Kith Meng, Cambodian businessman and head of the Royal Group, was the first to take the floor to inaugurate the event. Mr Meng is also President of the Cambodia Chamber of Commerce (CCC) and Chairman of the ASEAN Business Advisory Council for Cambodia.
In his opening speech, the businessman said once again he was delighted to be taking part in and supporting this forum "designed to strengthen the socio-economic ties between France and Cambodia by highlighting the many opportunities offered by the Kingdom".
Strategic partner
He went on to recall the success of the business forum held in Paris in January 2024, "which enabled us to take a new step forward in the relationship between the two countries and also led to the signing of several memorandums of understanding. It also promises to be a powerful catalyst for new partnerships". Oknha Kith Meng went on to point out that France had gone from being a colonial power to the artisan of the peace agreements in 1991, and had subsequently become a development partner, particularly in the areas of water supply, infrastructure, culture, education, peacekeeping and so on.
In his view, France is now becoming a strategic economic partner that can contribute its know-how in a number of areas, including innovation and technology. Mr Meng went on to point out that in recent years the Royal Government has been working hard to create a favourable economic environment for foreign direct investment (FDI).
"Cambodia has all the conditions to become a genuine investment destination, with incentives, a suitable legal framework and a stable political situation," he said, adding:
"FDI allows us to consolidate our economic system while offering real prospects to those who wish to join us. We want to create more partnerships with France, but also with Europe, in a spirit of prosperity, sharing and ambition.
Favourable context
For Cyril Girot, President of the France-Cambodia Chamber of Commerce and Industry, "this forum and the presence of Prime Minister Hun Manet are a demonstration of the vitality of the relationship between Cambodia and France", he said, also inviting the potential investors present in the room "to join Cambodia's business community because of the extremely favourable investment climate built up over many years by the Kingdom". These arguments were also underlined by François Corbin, Vice-President of the Mouvement des Entreprises de France International (MEDEF International) who, like the first edition of the forum in 2022, made the trip to Phnom Penh.
Targeting ASEAN
This was followed by the opening panel on the theme of "Cambodia - A strategic gateway to ASEAN”.
This was moderated by Mr Arnaud Darc, President of the French Foreign Trade Advisors (CCEF) Cambodia Committee, and attended by H.E. Sun Chanthol - Vice-President of the Council for the Development of Cambodia (CDC) and H.E. Huot Pum, Secretary of State at the Council of ministers' Office.
To Arnaud Darc's question about the (good) reasons for investing in Cambodia, H.E. Sun Chanthol, with his usual verve and enthusiasm when it comes to promoting the Kingdom, gave a long and well-argued answer:
"First, there have been many reforms at different levels, particularly with the new investment law that was enacted in 2021 to provide additional incentives to facilitate investment in the country. What's also important for investors is the country's peace and stability. If peace and stability prevail in the country, investors will be confident about putting their money there. You don't invest in a country that isn't stable", he continued:
"But in Cambodia, since 1998, we have changed completely. For the first time, Cambodia has achieved total peace throughout the country. One constitution, one king, one government. People can move around freely and without fear 24 hours a day, 7 days a week throughout Cambodia. So it's not just about peace and stability, but also a great deal of flexibility. Also, you can't invest in a country if inflation is too high. In Cambodia, inflation has remained stable at around 2% a year. The exchange rate is also important. You can't invest in a country where the exchange rate fluctuates. Cambodia's exchange rate has been stable for 20 years”.
"Cambodia's GDP grew by an average of 7% a year for 20 years, until the COVID-19 pandemic. Then the world economy contracted. Today, we're on the up again. Last year we grew by 5%. This year, we're forecasting 6%.”
"Cambodia also has a low debt-to-GDP ratio. We are well below the World Bank's 40% rule of thumb. It's also important to invest in a country with a business-friendly government. We want to play the role of facilitator for the private sector. We will not be the manager of the private sector. This is important, and I would stress that we only play the role of facilitator for your investments. The Cambodian government has also set up 16 technical report groups, co-chaired by government ministers and the private sector. For example, working groups on banking, taxation, infrastructure, agriculture, tourism and so on. These groups meet regularly to examine the issues and concerns of the private sector. And if we can't resolve the issues within these groups, we refer them to what we call the government/private sector forum, chaired by our Prime Minister".
"All cabinet members are invited to participate. It's what we call an extended cabinet meeting. More than 1,000 participants are invited to attend this government/private sector forum. The World Bank conducted a survey to determine which forum was the most productive and effective, and Cambodia came out on top”.
"What about the investment regime? The World Bank said, and I quote, that Cambodia has the most liberal investment regime in Asia. Why does the World Bank say that?”
"Because in Cambodia, all of a country's economic sectors are open to foreign investors. There is no discrimination between a local investor and a foreign investor. There is no restrictive law on foreign companies in Cambodia. In other countries, certain sectors are reserved for local investors or you are obliged to take on a local partner who will hold the majority of the company. This is not the case in Cambodia. Tell me which country in the world or in ASEAN allows foreign investors... there are 100% banking licences, telecommunications licences, agricultural licences and many other sectors, all 100%. You don't have to look for a local partner”.
"We are very liberal and Cambodia can be considered as a small open economy. Cambodia doesn't need to restrict any sector and the investment law protects all companies, local or foreign, very well. The private sector also benefits from generous investment incentives."
Young population
"Secondly, can I use local labour? The answer is yes. Can we train them? The answer is also yes. We have a very young population. Generation Z, under the age of 25, represents 60% of the country's population, with the highest rate of young workers in Asia. They are ready to be trained, eager to learn and willing to work hard. The royal government has also set up a vast programme to recruit young Cambodians from poor families into high-quality technical and vocational training".
Infrastructure
"What about infrastructure? Can we transport our goods throughout Cambodia? Can we export our products? The answer is yes. Some roads have been upgraded from 2 to 4 lanes. For example, the road linking Thailand to Cambodia and Vietnam, which is part of ASEAN Highway 1, has been upgraded from 2 to 4 lanes. We are also building the first expressway linking the capital Phnom Penh to our major seaport. We are also modernising the border railway line to Thailand. We have an airport in Sihanoukville and the new Phnom Penh airport will open next year.
"The seaport is undergoing a major expansion. The first phase of the expansion will see the construction of a new 14.5m-deep container port that will allow access to 93% of ships operating in the Asia-Pacific region. By 2028, we will be building a second terminal that will enable ships from Korea, Europe, the United States and other countries to unload or load their goods without having to tranship at another border.
Logistics
"When we talk about logistics, we're not just talking about transport, we're also talking about warehousing. So last year we adopted the overall master plan for intermodal transport and logistics for the period 2023-2033. This master plan provides for investment of 40 billion US dollars in 174 projects. All these projects have been identified in this master plan. I therefore invite the companies present here today to consult us to see what projects we can work on together. We have also signed a framework agreement with a Singaporean company to build a logistics complex in Phnom Penh.
Techo Funan
"On 5 August, we will be laying the foundation stone for a project we are calling the Game Changer Project. This is the Techo Funan Canal, which will link our river to the sea without passing through a third country. This is not a new canal; it has been in use for 2,000 years, having been built by the Kingdom of Funan. We are simply going to extend the canal by 200 metres to allow 3,000 tonne ships to enter and leave the canal. This will reduce the seaway by 200 kilometres.
"Imagine the number of tonnes of CO2 that this project will save, not to mention the savings in shipping costs. In addition, the 1.6 billion Cambodians who live around the canal will benefit from irrigation, water and farming and fishing opportunities".
Conclusion
Why choose Cambodia? When you invest in the country, don't just think of Cambodia with its 17 million inhabitants. The Kingdom is at the heart of the Greater Mekong Sub-region, which includes Cambodia, Vietnam, Laos, Thailand and Myanmar. If you extend that to include ASEAN, it will make 650 million, but let's go even further: let's widen our scope even further with ASEAN + 5, the regional economic partnership, free trade agreements, duty exemptions with certain major countries, etc.".
"Overall, then, I think Cambodia is the ideal country in which to invest, and that's what the Cambodian government wants. We are convinced that the private sector is the beating heart of our economic growth. We are going to build the country, but we need your help. So, with the participation and commitment of the government, the participation of the private sector, we can build a better future for our people, all together. So again, I invite you to seriously consider Cambodia as your next investment destination and let us know what we can do to convince you”.
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