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Cambodia-Japan joint venture boost

Sok Chan / Khmer Times Share:
Mel Kalyan, chairman of the Cambodia-Japan Association for Business and Investment. KT/Khem Sovannara

A representative of the Cambodia-Japan Association for Business and Investment (CJBI), vowed to boost the number of joint-ventures between Cambodian small and medium-sized enterprises (SMEs) and their Japanese counterparts.

CJBI is the only association in Cambodia which consist of Japanese and Cambodian members and it aims to encourage business-matching between Cambodian and Japanese SMEs.

CJBI’s Chairman Mey Kalyan said, “By 2020 we want to have at least two or three Cambodian SMEs and Japanese SMEs to create ventures per year. We focus mainly on the agro-processing sector and technology investment.”

Mey added that the CJBI is an essential platform to bring Cambodian and Japanese investors together and also a platform to provide training to local SMEs up to Japanese standards regarding management, accounting, taxes, culture and to exchange experiences and provide an open, pro-active forum, to provide important information to local and Japanese investors.

Mey added that so far CJBI has 30 local and four Japanese members, but it will soon have six to seven Japanese members joining the association because they have already submitted their applications.

The move also aligns Cambodian and Japanese government policy, said Mey. He said that at present the Japanese government is also directing its SMEs to foreign countries while, Cambodia is also pushing its local SMEs to partner with foreign investors.

The CJBI will not replace government policy, but its main job is to assist the government effort to strengthen SMEs, Mey said. “We are just a part of the government. We want to focus on the agro-processing, high added-value products and bring in modern technology,” Kalyan added.

Mey added that Cambodia’s economic structure is dominated by micro-enterprises, has few SMEs, but more foreign direct investment, so the structure is not stable. “We want more joint-venture between Cambodian SMEs and Japanese SMEs because we have many raw material, but we do not have skills needed in processing, technology, funding, marketing and other management knowledge. However, if we both work together, it will be a win-win solution,” said Kalyan.

“We are the raw material supplier. The Japanese SMEs have technical know-how, capital, management and existing markets. We can work with them and learn from them. Development will come from lessons learned. This is the way to solve the SME problem in Cambodia,” Kalyan added.

Onishi Yoshifumi, JICA chief adviser to the Cambodia-Japan Cooperation Centre (CJCC), said that Japanese big companies can do business overseas on their own, but Japanese SMEs cannot come here without assistance. It is difficult. Now, the Japanese government is also assisting and accelerating the Japanese SMEs to come from outside, not only just from Cambodia.

“Japanese companies have the option to go to either Vietnam, Thailand, India or China, but Cambodia is one of the options. If both Japanese and Cambodians work together, the CJBI will find the support. Both can invest in each other’s country and trade with each other. A joint-venture is one of the options and the establishment of a trading relationship is another,”  Onishi said.

“Cambodia has the potential and we would like Cambodian companies to be chosen and we hope Cambodian companies choose Japanese companies. This is also important in a bilateral relationship,” he added.

Onishi said of course that Japanese SMEs would like to be in a win-win relationship. He added They (Japanese SMEs) want to join with the locals. The Japanese characteristic is that once they come, they want to grow together, think together, survive together and enjoy together.

Miyao Masahiro, chief representative of the Phnom Penh Office of the Japan External Trade Organisation (Jetro), told the Khmer Times that the joint-venture with Japanese businesses are an ideal way of boosting the local SME sector, particularly in agriculture.

“We have a good example already in LyLy Food Industry,” he pointed out. “LyLy is one of the largest rice cracker manufacturers in the Kingdom and it is a joint venture with a large Japanese manufacturer.

“Its products are exported to Australia and other countries,” Mr Masahiro said.

He was referring to LyLy Kameda Co Ltd, a recently-formed joint venture between Japanese firm Kameda Seika and local business LyLy Food Industry, that started with capital of about $16 million.

Keo Mom, LyLy Kameda chairwoman, said that ventures with Japanese companies help local SMEs grow faster, with the Japanese contributing their expertise in quality management and providing capital.

“By joining forces with a big company, Cambodian firms can quickly expand,” she said.

However, she warned that such partnerships would require Cambodian firms to meet higher financial reporting standards.

“To build trust with new partners, particularly Japanese companies, Cambodian companies need to strengthen their standards of quality and hygiene and conduct excellent bookkeeping and accounting practices,” she said, adding that Japanese investors demand well-kept financial records before investing in a firm.

Partnering with Japanese firms enables local entrepreneurs to process raw materials into more valuable products, said Jetro’s Masahiro. Selling milled rice directly to a buyer abroad is not as lucrative as exporting rice crackers, which sell for much more.

“It is good to work with Japanese manufacturers who know about quality and safety standards and can help locals increase the value of Cambodian agriculture products. This is a good example of what we want to do,” Masahiro said.

Taking advantage of the skills and know-how of Japanese manufacturers will be beneficial for everyone, particularly Cambodian SMEs and farmers, he added

Small and medium enterprises (SMEs) are the backbone of most emerging economies. Cambodia is no exception. Out of 510,000 enterprises, 40 percent are involved in commercial (retail) trade, 30 percent are industry- and manufacturing-based (mostly food and beverages), 22 percent (agriculture) and 8 percent are involved in services and other areas.

As for micro SMEs, 83 percent to 86 percent of 150,000 businesses are involved in handicraft and micro trades, 9 percent – 20,000 enterprises are small and medium manufacturing – and less than 1 percent (2,000 registered factories) are medium-sized manufacturers.

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