Monday, July 11, 2011

Cambodia's appeal grows

Jul 11, 2011
Source: Bangkok Post

Thailand needs to maintain political calm to regain the confidence of foreign investors as Cambodia has emerged as a promising investment location in Asean, says the International Institute for Trade and Development (ITD).

A window of opportunity had opened for Thailand as political tensions were easing after a relatively trouble-free election campaign that resulted in a Pheu Thai majority, said ITD, a unit of the United Nations Conference on Trade and Development (Unctad).

As well, it noted, Cambodia has welcomed the Pheu Thai victory and hopes strained relations between the two countries will improve.

"But we have to maintain this peaceful situation and proceed with political reconciliation amid the global shift of foreign direct investments into Asia," said ITD executive director Weerasak Kowsurat, a former Tourism and Sports minister in Thailand.

Geneva-based Unctad is preparing to release its World Investment Report 2011 late next month. A key finding in the report is the expansion of FDI in the services sector in China and Asean as the number of middle-income consumers grows and spending rises in proportion.

Chinese investors, meanwhile, have stepped up their outbound investments in the region including the Greater Mekong Sub-region (GMS).

Mr Weerasak said Thailand's border dispute with Cambodia had bothered foreign investors who have been looking forward to benefiting from regional integration under the Asean Economic Community (AEC) in 2015

"But this concern seems to be easing as the Cambodian government favours Pheu Thai [more than the previous Democrat-led government]," he said. "We should never let internal politics intervene in international relationships with other countries."

Unctad research has found that Cambodia is becoming increasingly attractive among non-Thai investors, thanks to the country's greater market openness to free trade.

While Vietnam and Laos have some constraints related to labour issues, foreign investors have found Cambodia an attractive location, which also has a lower risk of monsoon rains, said Mr Weerasak.

Thailand, he said, should focus more on the creative economy, sustainable or green investments, as well as quality services such as tourism.

Unctad also found that declining raw materials might affect the competitiveness of Thailand's food processing industry.

The garment industry, meanwhile, could attract more foreign investment if new ideas of the creative economy are applied.

Electrical home appliance producers can also benefit but they need to focus less on original equipment manufacturer (OEM) business because global brand owners could easily switch to lower-wage destinations, he added.

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