‘Regional Economic Integration’ Chapter in the ‘Cambodia 2040′ Series

Cambodia Textile Factory

Cambodia has experienced drastic change since the signing of the Paris Peace Accords in 1993. Twenty-five years later, Cambodia is a lower-middle-income country with consistently high GDP growth rates with concomitant improvements in human security as measured by the Human Development Index (HDI). The question that Cambodia confronts today is a seemingly simple but in fact a remarkably complex one: What is the likely future of Cambodia? As a relatively small country in a region of growing, global geopolitical and economic importance – how will Cambodia respond to various global trends (e.g., the continued rise of China, climate change, digitalization, etc)? My chapter on Regional Economic Integration in a book titled ‘Cambodia 2040: Economic Development’, published by the Future Forum, offered perspectives on how Cambodia would diversify its strategic partnerships to support its economic interests in the future.

“JapanCorp” is a Japanese multinational corporation that produces machinery components and electronic devices. The company owns multiple production plants in several countries in Asia, including Cambodia. The decision to open their factory in Cambodia was driven by a combination of the firm’s risk diversification program, enhanced market access in the region, and the availability of skilled Cambodian labor. In addition, the operation was at minimal cost due to the government’s pro-trade and pro-investment policies.

The completion of all legal procedures necessary to get the factory up and running was smooth and swift. Employing over 1,200 Cambodian workers, JapanCorp built its production facilities in a special economic zone on the outskirts of Phnom Penh. The zone boasts a liberal business environment, an effective administrative system, and efficient infrastructure.

A large number of the workers are sourced from a number of national TVET institutions. These institutions are in partnership with multiple industry players, including JapanCorp, to build human resource capacity corresponding to the needs of the industry. Frequently, these firms send their technical staff to provide training to students at various educational institutions. Workers at the plant also have access to the company’s different in-house training programs. High-level technical and senior management staff are frequently sent to the firm’s Thailand plant for senior technical training.

JapanCorp’s Phnom Penh plant focuses on assembling small- and medium-sized motors, household electrical appliances, and digital equipment. It sources most parts from plants in Thailand and Vietnam, in addition to domestic factories owned by Cambodian, Japanese, and Chinese manufacturers. Most of the assembled finished products are exported to ASEAN markets, China, Japan, and India. These are among the markets with whom Cambodia has bilateral free trade agreements.

The plant’s financial transactions with business partners are done digitally through a swift and secure online banking platform. The firm commissions a partnered customs broker to deal with import and export procedures. Thanks to the firm’s ‘Authorized Economic Operator’ status and an improved customs process with full-fledged automation, the import and export process is fast and efficient. Inbound and outbound logistics are supported by the inter-connected infrastructure developed under China’s Belt and Road Initiative (BRI) and ADB’s Greater Mekong Subregion (GMS) Economic Corridor Program in addition to Japan-backed port capacity expansions.

The description above represents a snapshot of the culminating vision for the next twenty years. It is motivated by Cambodia’s anticipated impressive growth within both regional and global value chains (GVC).

excerpt from the chapter. Thanks and cheers to team #Cambodia2040, esp to the editorial team for their support and all the hard work. This publication was featured in the Envision Cambodia, one of the first podcasts by Voice of America (VOA), where I had a great time discussing and sharing with the VOA journalist what the country would be like in the future.

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