Japanese firms consider Kingdom as new option

via CAAI

Monday, 07 March 2011 15:00 May Kunmakara

SOME Japanese companies in Vietnam are seeking an alternative country in which to invest due to rising labour costs and regular electricity blackouts in Cambodia’s neighbour, a representative said.

Yoshida Sakae, managing director of Japan External Trade Organisation’s Ho Chi Minh Office, met with officials at the Council for the Development of Cambodia, Phnom Penh, on Friday. “We are here in order to study the investment possibilities, as Vietnam currently has rising labour costs, constant power cuts, and difficulty in currency convertibility,” he said.

“Cambodia is close to Vietnam, so it will be favourable for us to consider investment [here].”

Yoshida Sakae represents 15 Japanese companies that currently invest in the information technology manufacturing industry, garment factories and automobile assembly plants in Vietnam. Last month, Vietnam’s Ministry of Finance said electricity prices would go up by an average 15 percent starting on March 1.

Sok Chenda, CDC’s secretary general, told the Japanese representative the Cambodian investment law is beneficial for investors.

“We do not expect Japanese companies will move their factories from Vietnam, Thailand and Malaysia into Cambodia,” he said.

“But we hope that they will consider investing in, for example, spare parts plants in Cambodia to supply their factories in those countries.”

According to CDC data, approved Japanese investments in Cambodia totalled US$5 million in 2009, while there was no investment in Cambodia approved last year.

Several Japanese firms, however, have expressed interest in the Kingdom.

Late last month, Sumitomo Electric Industries, a Fortune-500 company, told media it was interested in building a plant in Cambodia.

In December, $2-billion Japanese precision components company, Minebea, said it would set up a production facility in Cambodia.

Its plan for expansion includes building a component manufacturing plant estimated to cost ¥5 billion ($60 million) and employing 5,000 people in the Phnom Penh Special Economic Zone. Operations are due to start in April.