Southeast Asia is one of the most desirable and risky regions in the world for foreign investment, according to a recent survey of 670 business leaders worldwide, half of whom represent businesses reporting annual revenues of more than $500 million.
But whether Cambodia is seen as a prime place for investment is debatable, said analysts from Marsh, Mercer and Kroll, the three risk and insurance organizations that commissioned the survey, which was released April 14 by The Economist Intelligence Unit.
The survey reported that 57 percent of the executives—in businesses ranging from automobiles to pharmacies—expressed “significant interest” in investing in China, India and Southeast Asia over the coming 18 months.
This interest is greater than in any other part of the world, the survey said.
But business leaders also identified the region as second only to Africa in terms of risk, because of corruption, bureaucracy, protectionist sentiment, cultural differences and problems with intellectual and environmental liabilities.
“People like Vietnam and look around and might see Cambodia as the next Vietnam,” said Chris Leahy, managing director of the Singapore office for Kroll, a New York-based risk-consulting company with offices in more than 33 countries.
But Cambodia is still on the fringe regionally as a target for major foreign investments, Leahy said.
“I don’t think you’re going to see some kind of deluge of portfolio investors. The infrastructure is just not there yet,” Leahy said. “Cambodia is, at best, in the early stages of that process.”
Chea Vuthy, at the Council for the Development of Cambodia, disagreed, saying that Cambodia is already seeing a lot of major foreign investment.
“So many companies are
coming,” said Chea Vuthy, CDC’s deputy secretary-general of the Special Economic Zone Board.
“Look what’s happening,” he said by telephone, listing Phnom Penh, Siem Reap and the coast as places where foreign companies are investing.
Chea Vuthy added that he is meeting next month with 42 foreign companies, many from China, Korea and Japan, that want to invest here.
Peter Walther, a managing director at Marsh, said by e-mail Wednesday that Cambodia, like many other countries, has political and “reputational” risks for inward investors.
“Much is still to be done in terms of political risk and infrastructure development to attract and retain foreign investment,” he said.
Despite the unknowns about investing in Cambodia, Kroll’s Leahy said strong interest in the region will not be stifled by a US recession or a fading US dollar.
“I think the area is still where the strongest [gross domestic product] growth lies,” Leahy said. “I don’t think that’s going to slow.”
