VZCZCXRO0172
PP RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHPF #0196/01 0850615
ZNR UUUUU ZZH
P 260615Z MAR 09
FM AMEMBASSY PHNOM PENH
TO RUEHC/SECSTATE WASHDC PRIORITY 0541
INFO RUCNASE/ASEAN MEMBER COLLECTIVE
RUEHHM/AMCONSUL HO CHI MINH 0145
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC

UNCLAS SECTION 01 OF 02 PHNOM PENH 000196 
 
SENSITIVE 
SIPDIS 
STATE PASS USTR - BISBEE 
BANGKOK PASS FCS - GRIFFIN GREENE 
HANOI PASS FCS 
SINGAPORE PASS FCS 
 
E.O. 12958: N/A 
TAGS: ETRD EINV CB
SUBJECT: U.S.-ASEAN BUSINESS COUNCIL CONCLUDES THIRD SUCCESSFUL 
BUSINESS MISSION TO CAMBODIA 
 
PHNOM PENH 00000196  001.2 OF 002 
 
 
SENSITIVE BUT UNCLASSIFIED.  NOT FOR INTERNET DISTRIBUTION. 
¶1. (SBU) SUMMARY:  The U.S.-ASEAN Business Council (USABC) recently 
concluded its third consecutive business mission to Cambodia 
consisting this year of six multi-national corporations and a 
maternal health NGO.  During the mission, Abbott, Chevron, 
ConocoPhillips, General Electric (GE), JHPIEGO, Time Warner, and 
Qualcomm highlighted issues of concern and received a very positive 
reception from a range of high-level government leaders.  The range 
of issues raised by the delegates included development of the oil 
and gas sector and resolution of the Cambodian-Thai maritime 
overlapping claims area, medical regulations, and intellectual 
property rights.  A number of the participants including Abbott, 
Chevron, GE, JHPIEGO, and Time Warner also highlighted their 
corporate social responsibility activities benefitting Cambodia. 
The companies also offered specific technical assistance on a 
variety of issues, and the government further requested additional 
assistance from the USG and the U.S. private sector to improve the 
investment climate.  In a sign of support for American commercial 
activity in Cambodia, Prime Minister Hun Sen welcomed further USABC 
missions, including another mission next year.  END SUMMARY. 
Cambodia Open for Business 
-------------------------- 
¶2. (SBU) During the U.S.-ASEAN Business Council's (USABC) third 
consecutive mission to Cambodia, six American corporations and a 
maternal health NGO learned about Cambodian investment opportunities 
and discussed their companies' interests in Cambodia.  Abbott, 
Chevron, ConocoPhillips, GE, JHPIEGO, Time Warner, and Qualcomm were 
warmly welcomed by a broad range of Cambodia's top leadership 
including the Prime Minister; Deputy Prime Minister and Foreign 
Minister; Deputy Prime Minister and Minister in charge of the 
Council of Ministers; Deputy Prime Minister and Minister of Economy 
and Finance; Minister of Commerce; Minister of Posts and 
Telecommunications; and Minister of Health. 
¶3. (SBU) Prime Minister Hun Sen welcomed the delegation and declared 
that Cambodia is open for business, highighting Cambodia's open 
market economy and liberal foreign investment regime, where 100 
percent foreign ownership is possible.  He also expressed optimism 
at the prospects for negotiating a resolution of the issue of joint 
development with the Thai government of oil and gas fields in the 
maritime overlapping claims area.  He was still optimistic about 
economic growth for the coming year, despite the global economic 
downturn, but acknowledged that it will take hard work to achieve 
the RGC's goals.  Acknowledging the contributions of Time Warner in 
improving access to information in Cambodia, the Prime Minister 
likened being without information to being without food. 
¶4. (SBU) During their other meetings with senior RGC officials, the 
delegates learned about Cambodia's political stability, liberal 
investment regime, and record of foreign direct investment and 
strong economic growth.  Foreign Minister Hor Namhong and others 
noted that Cambodia benefits from investment through the transfer of 
technology and increased employment and skill development for the 
labor force, which is growing by at least 200,000 workers per year, 
according to Deputy Prime Minister Sok An. (NOTE:  Cambodia's 
largest industry, the garment industry, currently employs 
approximately 300,000 people, down from around 350,000 in mid-2008. 
END NOTE.) 
Companies Raise Issues... 
-------------------------- 
¶5. (SBU) While most companies were interested in learning about 
Cambodian investment opportunities, some had specific issues to 
discuss with the Cambodian government.  USABC delegates raised the 
following: 
--  Abbott, which opened a Cambodian representative office in 
November 2007 and recorded $11 million in 2008 sales, sought greater 
cooperation with the Ministry of Health on compliance with new 
product registration and label regulations, as well as greater IPR 
protection. 
--  ConocoPhillips and Chevron encouraged the Cambodian government 
to continue to work with the Royal Thai Government to resolve the 
maritime overlapping claims area (OCA) in the Gulf of Thailand which 
likely has exploitable reserves of oil and gas.  ConocoPhillips was 
awarded exploration rights within the OCA in 1998, and Chevron owns 
exploration rights within a portion of Cambodia's territorial waters 
where it discovered undisclosed amounts of oil and gas. 
--  Time Warner which currently distributes CNN, HBO, Cartoon 
Network, Time magazine, and Fortune magazine in Cambodia urged 
greater protection of intellectual property rights of content 
provided via pirated satellite signals. 
...Tout Contributions... 
------------------------ 
¶6. (SBU) In the delegation's initial meeting with Foreign Minister 
Hor Namhong, Ambassador Rodley stated that while American companies 
seek to make a profit, they also strive to create a better life for 
people in local communities.  Several of the delegates seized upon 
this observation and highlighted "win-win" deals as well as their 
 
PHNOM PENH 00000196  002.2 OF 002 
 
 
corporate social responsibility policies and contributions already 
underway in Cambodia including: 
--  Abbott has donated over $1 million in nutritional supplies and 
medicines to needy individuals, partially in the treatment of 
HIV/AIDS; 
--  Chevron has initiated research on drug-resistant strains of 
tuberculosis; 
--  General Electric recently signed an MOU with the Ministry of 
Health to provide x-ray, ultrasound, and anesthesia machinery to 
hospitals in 24 provinces in the near future; 
--  JHPIEGO is assisting the Ministry of Health and local 
stakeholders to improve the availability of and access to 
high-quality, sustainable, maternal and newborn health services; 
and 
--  Time Warner has partnered with the NGO Room to Read to build 
libraries. 
...and Offer Technical Assistance 
--------------------------------- 
¶7. (SBU) Several companies also offered assistance to the Cambodian 
government to improve the investment environment.  Abbott offered 
technical assistance on identifying counterfeit medicines; 
ConocoPhillips offered to advise on the OCA negotiations; Chevron 
offered to help the Cambodians develop a Petroleum Law; and Time 
Warner and Qualcomm offered to comment on draft IT and IP laws. 
 Cambodian Government Open for... Assistance 
-------------------------------------------- 
¶8. (SBU) While welcoming the offers of foreign assistance, the 
Cambodian government also requested further technical assistance. 
During the mission, the Cambodian government requested assistance in 
vocational training for some of the 200,000 graduates per year; 
training/recruiting of mid-wives; enhancing tourism-related 
regulation, marketing, and internet technology; developing renewable 
energy including bio, solar, hydro, and wind; building capacity in 
conducting and evaluating environmental-impact assessments and 
preserving biodiversity; and improving telecommunication and 
internet infrastructure, content, and governance. 
Tough Times Ahead 
----------------- 
¶9. (SBU) While highlighting Cambodia's openness to foreign trade and 
investment, available investment opportunities, and Cambodia's solid 
record of economic growth averaging over 10 percent for the past 
four years, Cambodia's leaders acknowledged difficult times ahead, 
but still optimistically estimated economic growth to range from 
three to seven percent in 2009.  Government predictions 
notwithstanding, the IMF the following week released a report 
predicting negative economic growth for the first time since 
Cambodia introduced a free market economic system in 1991.  Minister 
of Economy and Finance Keat Chhon acknowledged three of the four 
pillars of Cambodia's resurgent economy - garments, tourism, and 
construction - are likely to face significant challenges, thus 
putting achievement of Cambodia's Millennium Development Goals at 
risk.  As an ominous warning sign, he revealed that tax revenues 
were down 20 percent from the comparable two-month period a year 
ago.  Recently Commerce Minister Cham Prasidh reported the value of 
garment exports dropped 50 percent since January 2009, tourism was 
down 2 percent, and both accounted for an estimated 60,000 lost 
jobs. 
¶10. (SBU) According to the Minister of Economy and Finance, the 
government will try to stimulate the economy by offering incentives 
to support key sectors.  For example, tax incentives to assist the 
garment industry; reduced visa and ticket fees to encourage tourism; 
loosening of credit to boost construction, and investment in 
infrastructure to support agriculture. 
¶11. (SBU) COMMENT:  Despite the tough economic times, American 
companies continue to seek opportunities in Cambodia, and the 
Cambodian government is more open than ever to a greater American 
commercial presence.  The broad range of high-level meetings showed 
that the Cambodian government values the skills and technology 
companies bring to the underdeveloped Cambodian market, and the 
willingness to discuss and resolve problems shows that the 
government is pragmatic and eager to attract and retain investment. 
The economic downturn may shock the Cambodian government into 
accelerating reforms to improve the business environment.  By 
working with the Cambodian government on issues raised during the 
mission, U.S. companies can facilitate greater American 
participation in, and influence upon, Cambodia's economic 
development and assist Cambodia as it struggles to withstand effects 
of the global economic crisis.  END COMMENT. 
RODLEY