Last year, Hungary opened a trade representative office in Cambodia. Both countries signed an agreement on mutual investment protection as well. These recent steps give Hungary a physical presence in the kingdom and a direct connection with businesses in Cambodia, which counterbalances the fact that Hungary hasn’t had an embassy in Cambodia since 1996.
Hungary has also announced it plans to boost its investment in the kingdom from the current $1 million a year to more than $5 million in 2019.
In an interview with Khmer Times’ Sok Chan, Thourn Sinan, country director of the Hungarian Cambodian Trading House, discusses the achievements made in 2017 in pushing forward the trade relation between both nations and what lies in store for 2018.
KT: How would you qualify the current relationship between Hungary and Cambodia? What have been the most important recent milestones in the development of this relation?
Mr Sinan: There hasn’t really been any notable achievements since the opening of the trade representative office in Phnom Penh last year. It will take time for bilateral trade to increase; after all, Hungary is more than 10,000 kilometres away from the kingdom, which is at least a 10-hour flight.
What we are seeing, however, is that Hungarian products are increasingly available in Cambodia. We pretty much cut off ties since Hungary closed its embassy here in 1996. But now we are re-establishing those ties. Not only are we purchasing products from Hungary, we are also studying the possibility of exporting Cambodian products to Hungary.
Now we are working on exporting soybeans, rubber, sesame seeds and pepper to Hungary. We are studying the price of exporting these products with the help of the private sector.
For soybeans, we would need to ship about 10,000 tonnes per year which is a big amount for us, so we are carefully studying the price first. The price of agricultural products is hardly ever stable in the international market, so we need to consider this.
We are hard at work on these projects and I believe a lot of progress will be made in 2018.
KT: How are trade and politics going to be balanced since there is no embassy, only a trade representative office in Cambodia?
Mr Sinan: The Hungarian government recently announced that it will open a diplomatic office in Cambodia in February 2019. We are truly entering a new chapter in diplomatic relations.
Next month, Prak Sokhonn, the Foreign Affairs Minister, will visit Budapest to further that diplomatic relation. They will discuss development loans, cooperation in agriculture and trade.
KT: What’s your plan to increase the number of Hungarian investors putting their money in the kingdom?
Mr Sinan: We’ve been working hard on this, but it is no easy task. It is not like working with Chinese investors, which are much more willing to invest here. Before investing here, Hungarians want to see a closer diplomatic relation between the governments.
I can say, however, that in 2016, the Council for the Development of Cambodia (CDC) signed an agreement on mutual investment protection. With this deal in mind, we will continue to work hard to attract Hungarian money into Cambodia. Many of them are already considering building factories in Cambodia for processing soybeans, pepper and sesame seeds.
KT: As you know the government is pushing contract farming across the nation. Does contract farming play a role in your plans to export agricultural products to Hungary?
Mr Sinan: My experience tells me that implementing a contract farming scheme to grow products to be shipped to Europe is not as easy as it sounds. For instance, farmers do not care about agreements, to them, they are just pieces of paper. They care about the price their products fetch abroad. If we can secure a good price for them, they will be involved.
We are now working on soybeans, sesame seeds, pepper and rice – we have sent rice samples to Hungary many times – but the big obstacle continues to be the price of agricultural products in the international market.
KT: Tell me about the tourism market between Cambodia and Hungary.
Mr Sinan: Our government opened a consular office in Budapest two years ago. Since then, we have seen a rise in tourists from Hungary.
Last year, we hosted a forum in Phnom Penh with 65 Hungarian companies that were invited to come to promote their products. We are working closely with Hungarian authorities to increase the flow of tourists. Minister Prak Sokhonn will discuss signing a memorandum of understanding on the subject when he visits Budapest in February.
KT: Is Hungary interested in buying garments and footwear from Cambodia?
Mr Sinan: Cambodian garments are already available in Hungary. However, it is true that Hungary continues to overwhelmingly favour China when placing orders for garments and footwear. We are working on this issue, and hope that in February or March, two or three local companies will be shipping their products to Hungary.
KT: What is the general sentiment among Hungarian businesses regarding the upcoming elections here in Cambodia?
Mr Sinan: News about the Cambodian elections have made headlines all around the world, and, naturally, Hungarian investors are concerned. There are always issues when elections approach. The way this shows is that, besides trade, there has been no concrete plans to invest in the kingdom. If the political situation improves, investors will come.
KT: What do you expect will happen in the next five year as far as Cambodia-Hungary relations are concerned?
Mr Sinan: I am working hard to bring both nations together. Now Hungary wants to open a diplomatic office in Cambodia, and a Cambodian official has been invited to Budapest. These are all very encouraging signs.
In the next five years, bilateral trade and investment will thrive. We are working hard to make this happen.
I’m also encouraging local companies to look at the Hungarian private sector and try to learn from them as they have higher quality standards and more advance technology.