Though businesses in Cambodia face logistical and infrastructural challenges and require institutional improvements to reassure investors, there is large potential for investment in agro-industry, Australia’s former treasurer Peter Costello told the Australian Business Association of Cambodia on Friday.
Speaking to the ABAC, Mr Costello listed a number of areas often raised as impediments to growth, such as Cambodia’s legal framework, and said that progress is critical to improving investment.
“The extent to which progress can be made is the extent to which you can reassure investors,” he said.
“As I said before, getting the institutional progress, so that foreign investors can be confident about their investment-secure title is absolutely critical. Enforceability of contracts, independent judiciary, absence of corruption, these are absolutely critical things for investors.”
But he also said Cambodia has a lot of advantages, such as ease of capital flow, a dollarized economy and a pro-business government.
Mr Costello, who served as Australia’s treasurer from 1996 to 2007, was visiting Cambodia in his capacity as a partner in Sydney-based BKK Partners. BKK is currently advising Indochina Gateway Capital Limited, which aims to raise a target of $600 million for agriculture investment in Cambodia.
“I think what BKK sees in relation to Cambodia is a country that has natural advantages in agriculture, natural advantages in terms of climate, in terms of soil, in terms of land,” Mr Costello told the ABAC.
Alastair Walton, chairman of Indochina Gateway, said the company, based in Phnom Penh, has not yet raised the proposed $600 million fund. But when the fund is realized, the plan is to invest in sugar, bananas, rice plantations and food processing plants.
“The size is 600 million, but the capital structure has not yet been determined,” Mr Walton said, adding that the planned investments would be spread out over several years.
“The investors are waiting for us to come back with the specifics of what we are going to do before they put their money in,” he said, noting that rice milling, irrigation and seed production will be a focus.
“Cambodia has all the natural resources-what it lacks is capital and technology,” he said.