A Change of Guard

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Sunday 12 October 2014

Investing for Cambodia’s Future

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By William E. Todd, U.S. Ambassador to the Kingdom of Cambodia

As I write this column, I am in the United States participating in the U.S.-ASEAN Business Council (USABC) Ambassadors’ Tour along with several colleagues – the U.S. Ambassadors to Indonesia, Malaysia, and Singapore.  Our goal on this tour is to strengthen the economic ties between the United States and the ASEAN region.  Over the past two and a half years, my team and I have been promoting mutually beneficially trade and investment between Cambodia and the United States.  The USABC tour is yet another opportunity to do that by providing the American business community an up-to-date assessment of business and economic conditions, and to highlight the many positive changes that are happening in Cambodia.

This week, I would like to answer a question from Virak from Phnom Penh, who asked, “Many American companies are leading the world in innovation and productivity.  How can Cambodia attract them to invest and start operations here?”  To Virak and many other readers who understand the important role foreign investment can play in Cambodia’s economic development, the good news is that the region and Cambodia are already receiving significant interest from many U.S. businesses.  The USABC, my host during the Ambassadors’ Tour, is an American trade association that has been promoting mutually beneficial trade and investment relationships between the United States and the countries of Southeast Asia for thirty years.  Its members include many industry leaders in the U.S. business sector.  Presidents and CEOs of some of America’s best companies participate in the USABC because they see the tremendous growth potential in the ASEAN region.  

As I meet executives, students, policymakers, and academia during this USABC tour, the message is clear: ASEAN and the U.S. are important and enduring partners.  First of all, there is little doubt about the rise of ASEAN’s economy or the region’s importance to the United States.  Over the past 30 years, the combined gross domestic product (GDP) of the region has grown by 1000 percent, totaling $2.4 trillion last year.  The strong economic ties between ASEAN and the United States are evidenced by the $100-billion annual U.S. exports to the ASEAN, and the fact that the United States invests more in ASEAN than in any other market in Asia.  U.S. investment in the ASEAN region is even greater than all of our investments in China, India, South Korea, Hong Kong, Taiwan, and New Zealand combined.  As the powerful statistics illustrate, the regional economy is on remarkable upward trajectory.  

Cambodia can benefit from its strategic location in the heart of this most dynamic region if it continues ongoing reform efforts to ensure long-term stability and inclusive growth.  Cambodia is already a perfect example of the growth opportunities the region presents.  In a report published just days ago, the World Bank heralded Cambodia as one of the “Olympians of Growth,” a title designating countries that have had growth rates that ranked among the top forty in the world every year for the past two decades.  Ongoing reform efforts in Cambodia will lead to greater long-term stability and investor confidence.

As I promote the benefits of doing business in Cambodia to U.S. companies, 
I was glad to see Cambodian leaders also working actively to increase foreign investment in Cambodia.  At the investment conference of the International Business Chamber of Cambodia held in Phnom Penh this past week,  Prime Minister Hun Sen said that in order to encourage greater investment, Cambodia must address the challenges of combating corruption, implementing legal, judicial, and financial reforms, and aligning education and vocational training with the demands of the job market.  The Prime Minister was absolutely right that progress in those areas will significantly boost investor confidence, as those concerns were often mentioned during my discussions with business leaders in the United States and in the ASEAN region.  Serious efforts to implement those reforms will attract more foreign investment, which in turn will lead to more business creation and better paying jobs in Cambodia

Foreign investment will also facilitate economic diversification, a key objective in Cambodia’s strategy to advance to the next stage of development.  As the Prime Minister pointed out, Cambodia can expand its economy beyond the traditional production base consisting of agriculture, tourism, and the garment industry by cultivating higher-value manufacturing such as electronics, agro-processing, and machinery.  U.S. companies are some of the world’s leaders in these sectors, and I look forward to the prospect of welcoming new American investors to Cambodia to expand the country’s industrial base.  

Cambodia can also count on the United States’ support in further improving the country’s business climate.  Last week, U.S. Secretary of State John Kerry highlighted the importance of supporting a new generation of entrepreneurs and leaders in Southeast Asia who will tackle many of the current challenges and drive development in the coming decade.  Nowhere is this more important than in Cambodia, where seventy percent of the population is under the age of thirty-five.  Secretary Kerry expressed great optimism for continuing progress in the region:  “U.S. trade and investment has the potential to create shared prosperity up and down the food chain – growth that’s sustainable and environmentally friendly, wealth that lifts up communities and creates opportunity.”

I share Secretary Kerry’s optimism and vision for greater U.S. investment in the region.  In particular, I believe that greater U.S. investment can introduce practices that would enhance the overall business standards in Cambodia.  Unlike enterprises that solely focus on profits, many U.S. companies must pay close attention to their customers’ demand for more environmentally sustainable production methods, as well as protection for their worker’s rights and sustainable corporate social responsibility projects.  
Because U.S. companies are expected to meet high ethical, business, and industry standards, they not only bring new investment dollars to Cambodia, they also inject new ideas and promote business responsibility leading to smart growth and higher-paying jobs.  I am confident that more U.S. investment can support the growth we all envision, and I look forward to working closely with the Royal Government of Cambodia as it addresses the obstacles to investment outlined by the Prime Minister.

Thank you very much for giving me this opportunity to answer your important questions.  Please continue to send me your questions at AskAMBToddPP@state.gov and leave comments on my blog at http://blogs.usembassy.gov/todd

William E. Todd is U.S. Ambassador to the Kingdom of Cambodia.

- See more at: http://www.thecambodiaherald.com/opinion/investing-for-cambodia%E2%80%99s-future-1169#sthash.Z5bkEWFd.dpuf

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