Vietnam Investments in Cambodia Balloon

The Vietnam’s total value of US$900 million investment in Cambodia in 2009 is considered “impressive” because the figure was only US$7.5 million in 2008 and the value of fixed assets was US$20.86 million, ranking the 10^th out of 17 countries investing in Cambodia. Vietnamese firms injected a total of US$211.2 million in 39 projects in the first three months of 2009 US$700 million in the next eight months.

 

On December 21, Nguyen Xuan Trung, Deputy General Director of Foreign Investment Agency under the Ministry of Planning and Investment, said: 63 projects of Vietnamese companies in Cambodia have involved in many industries. Three largest projects are involved in aviation, telecom and banking.

Particularly, flag carrier Vietnam Airlines has contributed 49 % of capital to establish Cambodian national airline Air Angkor, the Bank for Investment and Development of Vietnam (BIDV) has established the subsidiary bank and the military-run Viettel Corp has opened telecommunications networks called Metfone in the neighbouring country.

 

He also said several other major investment projects of Vietnam into this country are involved in the production of fertilisers, export rice, sugar, thermal power and construction stone with a combined capital of US$315 million and three projects with a total value of US$147 million in the areas of telecommunications and forestry.

Mr Trung analysed that in previous years Vietnam’s investment projects in Cambodia were mainly focused on mining and planting industrial trees; thus, the amount of needed capital was smaller. Moreover, there are many problems confronting Vietnamese businesses, making them hesitant to invest in Cambodia, he said, given inconsistent policies and complex administrative procedures.

 

A representative from the Vietnam National Coal - Mineral Industries Group (Vinacomin) said that human resources in Cambodia are limited, so Vietnamese enterprises are facing difficulties in recruiting their employees due to the limits set by foreign investment laws in this country. Besides, infrastructure conditions, medical system, culture and society of Cambodia are considered of low levels. Hence, investment costs are rather high, causing more production and business difficulties for investors in Cambodia.

 

Nonetheless, both officials of the Ministry of Planning and Investment and Vietnamese enterprises highly appreciated the significant improvement in the investment environment in Cambodia in recent years. Mr Trung said, previously, the money transfer to Vietnam was very difficult because there is no Vietnamese representative bank in Cambodia. The presence of several Vietnamese banks in Cambodia have been partially solved this difficulty.

 

Vinacomin Group remarked that untapped mineral resources, which are proven very rich in Cambodia, are very attractive to investors from Vietnam.

 

Trung added Vietnamese enterprises should also boldly invest in areas of high needs in Cambodia such as infrastructure, irrigation, health and education. In particular, they should also invest in Vietnam-Cambodia border areas to promote geographic advantages. Moreover, when investing in the neighbouring country, Vietnam will enjoy many preferences in line with WTO, ASEAN and GMS agreements.

 

With the aim of further strengthening the comprehensive cooperation relationship between Vietnam and Cambodia and promoting investment of Vietnamese enterprises, the Ministry of Planning and Investment of Vietnam held a conference on investment promotion into Cambodia on December 26 in Ho Chi Minh City. This is the first time the two countries co-organised such a large-scale investment promotion event.

At this conference, leaders of the two countries exchanged and discussed with business representatives about strategies to attract foreign investment as well as new mechanisms and policies to lure and manage foreign investment capital, especially from Vietnam.