VZCZCXRO9550
PP RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHPF #0348/01 1191005
ZNR UUUUU ZZH
P 281005Z APR 08
FM AMEMBASSY PHNOM PENH
TO RUEHC/SECSTATE WASHDC PRIORITY 9523
INFO RUCNASE/ASEAN MEMBER COLLECTIVE
RUEHHM/AMCONSUL HO CHI MINH 0137
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC

UNCLAS SECTION 01 OF 02 PHNOM PENH 000348 
 
SIPDIS 
 
SIPDIS 
STATE PASS USTR - BISBEE 
BANGKOK PASS FCS - BACHER 
SINGAPORE PASS FCS 
 
E.O. 12958: N/A 
TAGS: ETRD EINV CB
SUBJECT: AMCHAM SINGAPORE MISSION SPURS CORPORATE INTEREST 
 
PHNOM PENH 00000348  001.2 OF 002 
 
 
¶1. (U)  Summary:  An 18-member delegation from the American Chamber 
of Commerce in Singapore led by Ambassador Herbold recently 
concluded a successful three-day trip to Phnom Penh.  Through 
meetings with government, private sector, and U.S. Embassy 
officials, mission delegates learned about Cambodia's strong 
economic growth, political stability, and legal reforms as well as 
the challenges of widespread corruption, weak rule of law, and poor 
infrastructure.  Several companies came away from the mission with a 
positive impression and took further steps to establish a presence 
in Cambodia.  The trip and follow-up actions of companies such as 
Dupont, United Technologies, and General Electric demonstrate 
growing American investor interest in Cambodia, a rapidly developing 
country dominated by Asian investors, and highlight the need to help 
facilitate a more business-friendly environment.  End Summary. 
 
Bluechip Companies Explore Cambodian Opportunities 
--------------------------------------------- -- 
 
¶2. (U)  U.S. Ambassador to Singapore Patricia Herbold recently led a 
delegation of nine companies on a business mission to Cambodia.  The 
delegation, sponsored by the American Chamber of Commerce in 
Singapore (AmCham Singapore), consisted of American companies in the 
chemical, agriculture, energy, finance, technology, and consulting 
industries including Dupont, United Technologies, General Electric, 
Central Asia Development Group, Pioneer Hi-Bred, P.A.E. Group, 
Insight InterAsia, and L.E.K. Consulting.  Mitsui, a diversified 
Japanese company, was also included in the delegation by virtue of 
its AmCham Singapore membership. 
 
Government Touts Growth, Stability, Reforms, and Incentives as 
Reason for Investment 
--------------------------------------------- --- 
 
¶3. (U)  In separate meetings with the AmCham Singapore delegation, 
officials from the Ministry of Commerce, the Council for the 
Development of Cambodia (CDC), and the Ministry of Economy and 
Finance identified sustained economic growth as one reason for 
growing investor interest in Cambodia.  The Cambodian economy grew 
at 9.8 percent in 2007, and has grown at an average rate of 11 
percent since 2004.  According to Sok Chenda Sophea, Secretary 
General of the CDC, economic growth has led to increased investment 
from Asian countries, but U.S. and other Western investors have 
lagged behind the trend, accounting for a small fraction of total 
investment in Cambodia.  He said "now is the time" for companies 
involved in services to come to Cambodia, and that in three to five 
years many current opportunities will already have been taken.  He 
highlighted projects in agriculture, tourism, infrastructure, and 
mining as examples of potential investments. 
 
¶4. (U)  Government officials echoed members of the 
American-Cambodian Business Council -- the local version of the 
American Chamber of Commerce -- in also highlighting political 
stability, the relatively liberal investment regime, and government 
support for investors as reason for investment in Cambodia.  During 
a luncheon, Commerce Minister Cham Prasidh highlighted the openness 
of virtually all sectors of the economy to 100 percent foreign 
ownership.  Sitting across from the Ambassador, the minister 
furthered his point by commenting that the legal profession had been 
steered in the "right direction," referring to action taken by the 
Commerce Minister, following intervention by the U.S. Embassy, in a 
recent dispute wherein the Bar Association of Cambodia apparently 
tried to restrict participation of foreign lawyers in the local 
market.  Sok Chenda also highlighted the liberal investment regime 
and noted that the only non-national treatment of foreign investors 
is that they cannot own land. 
 
Corruption a Major Concern for Investors 
--------------------------------------------- ---- 
 
¶5. (SBU)  Local private sector participants identified corruption as 
among the biggest obstacles to doing business in Cambodia, and the 
AmCham Singapore delegation noted their strict adherence to the 
Foreign Corrupt Practices Act as a factor which influences their 
ability to invest overseas.  Firth Griffin, Senior Advisor to 
Mitsui, asked the Minister of Commerce how the government intends to 
address the corruption issue.  In his response, Prasidh identified 
actions within his ministry to combat corruption by limiting the 
number of interactions government officials have with businesses 
through e-services systems, such as the streamlining of customs with 
the web-based ASYCUDA system.  He did not refer to the long-stalled 
draft anti-corruption legislation which the U.S. and other donors 
have been pushing for several years.  Furthering his points about 
reforms and the Cambodian investment climate, Prasidh suggested that 
the delegates read the recently concluded USAID-funded Southeast 
Asia Commercial, Legal, and Institutional Reform - Trade Diagnostics 
(SEA CLIR-Trade) report which assesses the current commercial, 
legal, regulatory, and institutional framework for trade in Cambodia 
as part of a regional program encompassing five ASEAN countries. 
 
PHNOM PENH 00000348  002.2 OF 002 
 
 
 
¶6. (U)  Jean-Boris Roux, General Manager of RM Asia, an 
American-owned Cambodian company which manages brands such as Ford, 
John Deere, 3M, and Swensen's, reported that his company had its 
"best year ever" in Cambodia but echoed comments of the business 
community in identifying risks which affect their businesses such as 
weak rule of law, excessive bureaucracy, undeveloped legal system, 
poor infrastructure, and undeveloped human resources. 
 
Companies Moving Ahead on Investment Plans 
--------------------------------------------- ----- 
 
¶7. (SBU)  Despite the institutional obstacles, in the end, several 
AmCham delegates appeared optimistic about Cambodia, and were taking 
steps to further their interests. 
--  Dupont Singapore Director of Finance Cher Tong Lim told Econ 
Assistant that during the mission his team interviewed and hired 
staff for a new Cambodia representative office; 
--  Central Asia Development Group Business Manager Michael Lambert 
told Econ Assistant that his local business partner was close to 
securing 6,000 hectares of agricultural land while he was working 
with a delegate from Dupont on potentially financing part of the 
plantation project; 
--  United Technologies (UT) President for South Asia and the 
Pacific Kristin Paulson joined Otis Elevator Managing Director for 
Vietnam and Cambodia Michael Griffin on a follow-up mission in March 
to prepare to convert Otis Elevator's representative office into a 
branch office; 
-- General Electric's recently hired Cambodian Market Development 
Director is exploring opportunities discovered through the mission. 
 
Comment: 
 
¶8. (U)  This business mission conforms to a broader trend of 
accelerated investor interest in Cambodia, a market currently 
dominated by Asian investors.  U.S. investors are finally becoming 
aware of opportunities in the Cambodian marketplace.  U.S. agencies 
attuned to this emerging interest are beginning work with the 
Cambodian government to address obstacles to U.S. investors such as 
weak rule of law, corruption, excessive bureaucracy, undeveloped 
legal system, poor infrastructure, and undeveloped human resources. 
 
MUSSOMELI