Indonesia Looks to Invest More in Cambodia

It is time for Cambodia and Indonesia to develop their economic ties after decades of lackluster cooperation, a top official from Indonesia’s Chamber of Commerce and Industry said in late February in Phnom Penh during a seminar on the two nations’ diplomatic relations.

Indonesia is ranked 12th among countries investing in Cambodia, a surprisingly low position for an Asean neighbor so heavily populated. Total Indo­nesian investments here account for only 1.06 percent of overall investment.

Secretary-general of the Indo­nesian chamber, Damayanti Siahaan, said that Cambodia’s gross domestic product growth, steady inflation rate and apparent political stability merit enhanced trade and investment.

But she added that recent local crises had harmed Indonesian companies already here. She also criticized Phnom Penh for its impulsive issuance of memorandums of understanding that are rarely implemented.

“It would be best if a comprehensive business proposal was prepared for the consideration for both [Indonesia and Cambodia],” Damayanti Siahaan said, adding that, “This proposal must be based on countable data analysis and reliable research.”

Damayanti Siahaan proposed that links between the Web sites of the two capitals’ chambers of commerce be established to assist the research of potential investors. She also said that Indonesia should arrange for direct flights between Phnom Penh and Jakarta to encourage business travel between the two cities.

“We are trying to attract Indonesian investors, but I have not seen new companies register at the Council of Development for Cambodia, especially between 2001, 2002,” said Hing Thoraxy, the deputy director of the Project Monitoring Department of the Cambodian Investment Board at the CDC.

“We have imported more from Indonesia than we have exported. [We can’t] export more unless we have high-quality goods and low prices. This is the problem we face,” he said.

Hing Thoraxy said that within seven years, only about a dozen investment projects had originated in Indonesia, with their capital invested totaling $63.2 million.  Malaysia, the top investor in Cambodia, spent 30 times that—about $1.8 billion—over the same period.

Nonetheless, Damayanti Siahaan reported that there are some positive trends in the relationship. Total trade between January and August of 2002 jumped in value to $51.18 million from $43.08 million for the same period in 2001—an 18.79 percent increase.

However, Indonesia is clearly benefiting more than Cambodia from the partnership as it now stands. Indonesia’s exports to Cambodia for those first eight months of 2002 were valued at $50.72 million, while Cambodia’s exports were valued at $450,000, according to Siahaan. Indonesian exports to Cambodia for all of 2001 were valued at $72.12 million, while Cambodian exports to Indonesia were valued at $130,000—a figure that dropped from $660,000 in 2000.

Indonesia’s exports include paper, monosodium glutamate, cooking oil, beer, cement and other building supplies, automotive parts, soap, tissue and assorted foodstuffs, Siahaan said.

Cambodia provides Indonesia with textiles such as yarn, she said.

The dozen or so companies in Cambodia backed by Indo­ne­sians include the Camintel telecommunications company, President Airlines, a hotel, three garment factories, two pharmaceutical trading companies and a number of shoe manufacturers.

Lamenting Indonesia’s weak presence in the local business community, Medrido Anwar, Camintel’s managing director, said Thursday he hoped his countrymen would take advantage of Cambodia’s improved tariff system and look to develop Cambodia’s transportation and shipping sector.

But Medrido Anwar also said investing in Cambodia could be difficult because of poor regulations and the lack of a direct transport link to Indonesia.

Hing Thoraxy reported late last month that overall foreign direct investment is still growing, de­spite slowing down over the last four years.

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