Cambodia offers new opportunities
I heard the following opinion from an acquaintance, a vice president of a Cambodian commercial bank, on a business trip to the Southeast Asian country last month.
``Why is it difficult to find regional specialists on Cambodia in Korea, one of the largest foreign investors in Cambodia? The key success factor for entry to Cambodia, an amazing market, is localization,” he said.
``Korean corporations that I observed and experienced at a working-level saw a decline in efficiency and stability in establishing and managing their foreign business compared with major investors such as Japan, Singapore, and Malaysia.’’ This was because of a lack of localization.”
Korea established diplomatic relations with Cambodia in 1997. The cumulative investment amounted to nearly $3.9 billion as of late 2010. The biggest yearly investment, $1.27 billion, was recorded in 2010.
It is expected that Korean investment in Cambodia will become more active. Standard & Poor’s rated Cambodia as investment grade. This will encourage a steady influx of foreign capital into Cambodia.
The implementation of the Korea-ASEAN free trade agreement and the opening of the Cambodian stock market this year will lead to an expansion of Korean direct and indirect investment.
Now, many Korean companies sounding out an entry into Cambodia have complained of difficulties in establishing businesses in the beginning due to Cambodia’s different and unusual investment environment. Therefore, it is necessary to establish efficient and effective guidelines on investing there.
This should be based on guidance by regional specialists with a deep understanding of the local language and culture. In other words, the internal and external management environment should be analyzed to establish successful strategies for sustainable results.
I learned Cambodian's unique win-win negotiation culture. Foreigners can negotiate in a flexible and constructive way once they grasp Cambodian culture. There are a few Korean specialists in Cambodian history and culture. It is still difficult to find a curriculum for Khmer, the local language, in Korean colleges and universities.
Labor force and relevant information on the government and investment inter-agencies are scarce. This is a serious impediment to Korea’s entry into the country. It is, however, encouraging that Korea Trade Promotion Corporation has published working-level guidelines for investment to open up the Cambodian market. This is valuable information which should stimulate Korean companies’ interest in the Southeast Asian country.
I hope that many firms start a successful business in Cambodia, one of the emerging markets, this year. For this, the government should provide Korean corporations with information on Cambodia in a timely and updated basis. It has become urgent to establish the business information system on Cambodia. Moreover, from a long-term perspective, it should implement a variety of educational programs to cultivate regional specialists on Cambodia. It is not far geographically from Korea but it is a distant nation in the minds of Koreans. This should change. Cambodia is a land of opportunity.
The writer is CEO of Competition Consulting Company & U.S.CPA. Contact him at email@example.com.