Free Trade Still Possible by 2015, Najib Says

Malaysian Prime Minister Najib Razak, who took office last April, concluded his first official visit to Cambodia yesterday. Mr Najib was accompanied by a retinue of over 100 businessmen, and his presence here coincided with the inking of more than $1 billion in investment deals between Malaysian and Cambodian companies. He spoke to Cambodia Daily reporter Julia Wallace and two other journalists on Monday night.

Question: Could you talk about Ma­laysia’s desire to help Cambodia become a full member of the Asean Free Trade Area by 2015, one of the stated purposes of your delegation’s visit? What are the chances of that happening on schedule? What does Cambodia still need to improve on?

Answer: I think Prime Minister Hun Sen is very positive about free trade within Asean, because his policies are gravitating towards that direction. I don’t see great difficulty in this happening by 2015. It’s a general political commitment by the other four Asean countries that they should move in tandem with the original six of Asean. Certainly Malaysian companies investing in Cambodia, for example, have helped in terms of the economic development of the country, particularly in terms of not only providing additional capital but management expertise, which is lacking in Cambodia…. So that is one way in which we can reduce the developmental gap between the Asean countries. I think once that is achieved, I am confident that the other four Asean countries will feel that it is not much of an obstacle for them to be committed to a more free trade regime within Asean itself.


Q: Is achieving free trade within Asean by 2015 realistic considering the political and economic diversity of the region?

A: It will be a challenge for us to achieve the Asean community by 2015. There are many, many line items that we have to attend to, particularly to make sure that some of our internal laws and regulations are reviewed and amended…. There are some bilateral problems as well between Asean countries. But we can take heart in the fact that as a regional grouping, we are probably the second most successful after the EU…. It may not be a perfect economic community, but there is a sense that Asean is here and is here to stay and can only get stronger and stronger as we move forward.


Q: Could Cambodia become a strong regional exporter of rice or other foodstuffs in the near future?

A: It’s only natural to expect Cam­bodia to develop its agricultural sector. Nothing is more evident than the fact that they have turned around the production of rice from a rice deficit nation to a rice surplus nation. Cambodia has 3.5 million tons of rice available for export but it’s mainly in the form of unpolished rice. Prime Min­ister Hun Sen did suggest to me that Malaysian companies look at investing in rice mills in this country so that the value of rice exported will be enhanced. This is something which one of the Malaysian companies which specializes in importation of rice, Bernas, will be looking into. Certainly it makes sense for us to import rice from countries like Cam­bodia be­cause it’s a lot cheaper than for us to try to plant our own rice…. So I see this as something quite promising. I will certainly look into the possibility of investing in rice mills in Cambodia.

Q: When might this happen?

A: I will ask a report from Bernas. I believe they sent a team here. I’d like to know what are their findings and if it’s positive I will encourage them to invest in rice mills here. Also, I do not know to what extent the package of proposals that we will get from the Cam­bodian government so all those things will have to be taken into account but certainly having an extra 3.5 million tons of rice sounds very appealing to us.


Q: What do you see as the ad­vantages and disadvantages of in­vesting in Cambodia right now, especially given the many problems that still plague the country such as corruption and poor infrastructure?

A: I have not spoken to every single Malaysian investor but to those I have spoken to, they seem to be quite pleased with the return on investment and their participation here in this economy. In other words, there are quite attractive returns to be expected. The government is pro-business, so that helps, and there are quite liberal policies, particularly in terms of foreign ownership…. Of course there are challenges for Malaysian companies here, one of which is to adapt to the different environment, the different cultural milieu, and some of the facilities here are not exactly what they expect at all, but Malaysians are quite adaptable…. Of course, businessmen look at business opportunities. There are some challenges but we believe that it’s better for us to be here at this stage of Cambodia’s development because they need us now. Cam­bodia sees itself as a nation that wants to take off in terms of economic development. So Malaysian companies are well poised to play their part in the future development of the Cambodian economy.

Q: Right now, roughly 90 percent of trade between Cambodia and Malaysia consists of Malay­sian exports. Do you see the balance of trade evening out anytime soon, and what Malaysian needs could Cambodia potentially meet in the near future to help right the imbalance?

A: Well, Malaysia is an open economy and it all depends on what kinds of products Cambodia can produce to export to Malaysia. If we buy Cambodian rice, that would help the figures somewhat. But bear in mind also that we are a positive investor into Cambodia, so, although the balance of trade favors us, we have injected huge amounts of capital into the Cambodian economy, not to mention the level of managerial expertise that we have contributed. Last of course some of the assistance we’ve provided, for example, under the Malaysian Technical Cooper­ation Program hundreds of Cam­bodians have been trained in Mala­ysia, our universities have provided scholarships for your students…and I made a plea to Malaysian companies to contribute even more towards the community here in Cambodia. You should not look at purely the bottom line but also what you can achieve in terms of corporate social responsibility here in Cambodia. So taken together in a comprehensive [manner], I think it’s probably quite positive for Cambodia, and I think Malaysia is actually a positive contributor towards your socioeconomic development.


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