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Kingdom lags behind Asean partners in luring tech firms

Sorn Sarath / Share:
Children playing with their phones. Mobile technology is one of the industries Cambodia is losing out to ASEAN rivals. KT/Pann Rachana

The US-China trade war last year already pushed some manufacturers to move out of China to avoid tariffs imposed by the US.

Although Cambodia was among ASEAN member destinations to lure the companies, mostly in the garment and textile industries, it lagged far behind its ASEAN neighbours Vietnam and Thailand as technology investment destinations.

The Coronavirus pandemic has severely disrupted global business chains. Some companies were forced by their governments to pull out of China and look for economic avenues elsewhere, blaming China for spreading the virus.

The Japan government has announced a $2.2 billion economic stimulus package to help manufacturers quit China, according to a Nikkei Asian Review report.

Hong Vannak, a business researcher at the Royal Academy of Cambodia, said that the news of companies moving out of China because of COVID-19 is still at the planning stage and it is more about politics than business.

However, he said if the move eventually occurs, Cambodia is not exactly an option for attracting technology-based investment.

Vannak said international political geography is the major underlying motive for conducting business and trade but it is also related to population numbers. China has about 1.45 billion people while Cambodia has about 16.5 million.

“It is related to the economic size of one country. Moreover, the South China Sea dispute between China and some ASEAN members would see Vietnam as a potential destination to attract US companies, while Thailand is already a US puppet in ASEAN,” he said, adding that also in terms of criteria, Cambodia has not yet developed support for this kind of investment.

“Long-lasting peace and stability is basic to supporting intensive industries, especially technology companies, but our population is smaller than Vietnam’s and Thailand’s. Before investors decide to put money into a country, they need to think about both local demand and exports,” he said.

Cambodia has limited infrastructure, skills and a high cost of electricity, which create higher production costs. It is more involved in light industry at the moment.

“We could attract more in the garment and textile sectors with investment mostly from China, which has a good relationship with Cambodia. Our labour costs are cheap and the goods can be exported to the US and EU markets duty-free. Consequently, China is more likely to come to Cambodia.”

Hiroshi Suzuki, CEO of the Business Research Institute for Cambodia (BRIC), told Khmer Times by email earlier this month that for the near future, the industry with most potential for Cambodia is parts-manufacturing for automobiles and electronics.

“It would be necessary for the government to make an effort to attract Japanese manufacturers to invest in Cambodia and possibly shift from neighbouring countries,” he said, adding that for the future, innovation is an important target.

“IT (information technology), fintech (financial technology) and 5G have huge potential. The higher education and training, support for innovation and startups would be necessary,” he said.

There are reports that Google and Microsoft are looking at Vietnam and Thailand rather than China to manufacture their new phones, personal computers and other devices amid

the Coronavirus pandemic. Google is set to begin the production of its low-cost smart phone Pixel 4A and its flagship smartphone Pixel 5A in Vietnam. Google has also asked a long-time manufacturer to help ready production lines in Thailand for its smartphone-related products and the first batch of the merchandise is expected to be shipped in the first half of 2020,while Microsoft is scheduled to begin production of its notebook and personal desktop computer in northern Vietnam in the second quarter of this year.

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