Prime Minister Hun Sen made the case for doing business in Cambodia Tuesday, telling investors that the country’s resurgent markets and economy represent rare opportunities.
Sponsored by virtually all the prominent corporations present in Cambodia, the two-day business roundtable, the fifth since 1996, attracted a capacity crowd of 600 business people from the oil and gas, tourism and finance sectors.
Attendance was twice that of the number who attended in 2005, according to organizers. And despite a steady stream of downcast assessments of Cambodia’s business environment from organizations such as the World Bank and World Economic Forum, both of which recently rated Cambodia as among the most difficult places in the world to do business, some participants at the forum said the outlook for Cambodia remained attractive.
Speaking at the forum, Hun Sen said Cambodia’s peace in the last decade has been key to the current prosperity and he inventoried the country’s robust economic indicators, saying the economy enjoyed low rates of inflation and had grown by nearly 10 percent every year since 1999 and was projected to do so again in 2007.
Per capita GDP more than doubled to $513 between 1994 and 2006 while the country’s foreign reserve holdings had grown by 40 percent to $1.5 billion in just the last year, Hun Sen said.
Real estate prices in the capital were the local face of this success, he added.
“Land value is very different than before,” he said. “Some pieces of land are of similar value to land in Hong Kong and some places maybe around the price of land in New York.”
Bretton Sciaroni, chairman of the International Business Club, one of the conference’s co-hosts, told the conference that its own record attendance by businesses demonstrated Cambodia’s allure for investors.
“Those of us who have lived and worked in Cambodia for many years used to think that Cambodia was one of the best kept secrets in Asia,” he said.
“It’s not a secret any longer.”
In addition to Cambodia’s steady growth, the country is in the process of normalizing its markets by passing laws on commercial arbitration, government securities, secured transactions and bankruptcy, he said.
More than a decade of political stability as well as welcoming and responsive government officials have raised investor confidence, he added.
Following his panel’s presentation, Sciaroni acknowledged that part of what is driving investor interest in Cambodia may have more to do with the global than the local economy.
Record profits in recent years have drawn investors in search of increasingly scarce opportunities to emerging markets, including neighboring Thailand and Vietnam.
Sciaroni said excess liquidity on the global markets was also a boon for Cambodia all the same.
“There is a large amount of international liquidity on the market,” he said. “I absolutely believe we are the beneficiaries from spillover from Vietnam.”
“We do well in Cambodia if the regional economies are doing well,” he added. “People are not going to come from Paris or New York just to see Cambodia.”
Wong Yit Fan, CEO for Vietnam and Indochina at DBS Bank and a panelist at Wednesday’s forum, sounded a note of caution for Cambodia’s business outlook.
“The US dollar is getting weaker and weaker and that implies a much looser monetary policy for countries that have an informal peg to the dollar,” he said in an interview.
Central banks eager to depress the value of their currencies in order to boost exports are likely to buy dollars and infuse their own markets with more liquidity, leading to a rise in the price of assets and goods and possibly to inflation, he said.
But this is not an immediate likelihood in Cambodia, he added.
“I think [economic growth in Cambodia] can go on for some time. There’s definitely much more room to run,” he said. “But it’s useful to start thinking about how to manage this risk if it becomes more threatening.”
The time was right to invest in Cambodia, said Wong Yit Fan, adding that DBS Bank is itself considering expanding into the country.
“I think it’s on a structural up trend. This is the best I have seen Cambodia in 15 years,” he added.