Cambodia a major draw for Malaysian businesses
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THE local economic downturn, government’s change in foreign labour policy, and lack of manpower have all seen Malaysians looking elsewhere to conduct business.
One Asean country that has been a major pull in recent years is Cambodia.
For years, Cambodia has been perceived as a closed market and an economically backward country. However, it is catching up with its regional peers, and in some cases, even surpassing them.
As one of the least-developed countries in the region, Cambodia is given preferential treatment by 28 developed nations and the European Union.
With zero tariffs imposed by the US and other favourable conditions, the country has proven to be an attractive market for Malaysian small and medium enterprises (SMEs).
Malaysia SME Association president Kang Hua Keong said in the past two years, local small and medium businesses have been outsourcing production to Cambodia and other Southeast Asian countries.
“For the past few years, Malaysian businesses have been expanding to Cambodia, especially in the food-and-beverage industry, followed by some furniture manufacturers.
“The manufacturing industry needs to be in a labour-intensive market, especially if it’s cheap, and we noticed that Malaysian investors are also heavily investing in the Cambodian property market,” he told The Malaysian Insight.
He said SMEs previously invested in Vietnam, but have pulled back due to increased labour costs there.
“Starting this year, several businesses are turning towards Cambodia, Myanmar and Laos.
“Most of the businesses that remain in Malaysia are high-tech and not labour-dependent.”
Kang added that Cambodia, along with Myanmar, offer preferential policies for foreign investors, especially those looking to open factories in those countries.
“They can get leases of 30 to 50 years.”
Malaysia-China Chamber of Commerce vice-president Siah Teong Chein, who has invested in Cambodia for 15 years, said land and property prices there are low compared to other Asean nations.
Siah said Cambodia’s economic development is at a stage comparable to the 1980s in Malaysia, but many businesses that entered the market early have received a good response.
Malaysian Ambassador to Cambodia Eldeen Hussaini Mohd Hashim was reported as saying Malaysian trade in Cambodia increased 45% in the first half of 2018, or US$336 million (RM1.4 billion).
A total of 59 companies are registered with the Malaysia-Cambodia Business Council, including Maybank, KFC, Public Bank, CIMB Bank and Hong Leong Bank.
The main reason that Malaysian businesses are shifting from Vietnam to Cambodia is the saturation of foreign investments in Vietnam. On the other hand, Cambodia’s economy is taking off.
Another factor is the pro-business policies adopted by the Cambodian government, including openness to foreign investments, investment incentives, adequate investment protections and allowing the use of EU patents.
Siah said the Cambodian capital is densely populated, fuelling growth in the property sector.
Out of Cambodia’s total population of more than 16 million, about two million live in Phnom Penh. It is the country’s busiest city in terms of commerce, attracting investors due to the high demand for properties there.
Siah added that another advantage of investing in Cambodia is the use of the US dollar in trading, making it convenient for foreign companies to conduct business. – September 23, 2019.