Prime Minister Hun Sen and Japanese Prime Minister Shinzo Abe have signed an agreement in Tokyo to promote and protect Japanese firms doing business in Cambodia, the Japanese Embassy said in a statement.
While Japan is Cambodia’s largest bilateral donor—pledging over $100 million in aid last year—Japanese investment has so far been tiny in comparison. Japan invested $22 million between 1994 and 2006, which accounted for only for 0.2 percent of the foreign direct investment in Cambodia, Japanese newspaper Daily Tomiuri reported Thursday, citing figures from the Council for the Development of Cambodia. South Korea invested $2.36 billion and China invested $1.58 billion during the same period, according to the paper.
In the document signed Thursday, Hun Sen and Shinzo Abe agreed to support the “liberalization, promotion and protection of investment” by Japanese firms in Cambodia, the embassy said, adding that Cambodia would enhance its Special Economic Zones to create a more favorable investment climate.
Mao Thora, undersecretary for the Commerce Ministry, said Sunday that Cambodia is now ready to court the Japanese private sector.
Japanese businessmen have had high standards for investment and have refrained from coming to Cambodia until they were fully confident, he said.
“When our infrastructure and judiciary were weak, Japan focused on grants and assistance,” he said. “The Japanese private sector makes clear and serious investments…. They would not come unless the investment policy is clear.”
Officials at the Japanese Embassy could not be reached for comment.
Hironobu Kurata, the Japanese owner of the Kurata Pepper Corporation in Phnom Penh, said that more Japanese investors could now be interested in coming to Cambodia, noting that they have heavily invested in Vietnam.
Japan is one of the biggest foreign investors in Vietnam, where Japanese foreign direct investment has topped $800 million, according to Japan’s Foreign Affairs Ministry Web site. Japanese companies may choose Cambodia over China because it is less expensive and is not a communist country, said Hironobu Kurata, who launched his company in 1994.
“[Investors] have already come to research here—they’re already invested in Vietnam and are looking for the next place,” he said. Japanese investors might be interested in heavy industry, manufacturing automobile parts and agriculture, he said.