The B2B team asked experts and leaders across a range of industries in the Kingdom about their views on how the newly-established ASEAN Economic Integration (AEC) will change the process of starting a business in Cambodia.
On the ground…
We sat down with a select group of well-established entrepreneurs who have been through the sometimes arduous process of starting a business in Cambodia. We asked them all the same question, with answers ranging from optimism to caution.
“How do you think AEC alters the process of starting a business in Cambodia?”
Robert Esposito – Coco Khmer
“I do not believe the AEC will change the process of starting a business in Cambodia. Business in Cambodia has been developing quickly without the effects of the AEC and I believe they will continue to do so in the same manner after 2015.”
Jonathan Livingston – Alchemy Designs
“On the surface it seems like a positive for doing business in Cambodia. We are hopeful that entering the AEC will bring improved access to capital and materials, easier access to new export markets, and a more standardized set of regulations.”
Michael Chai – Westec Media and Legend Cinema
“I think it’s going to help substantially. There are a lot of local specificities here that make it really expensive to do business. I’ll give you an example: importing raw products is way more expensive here than in neighboring countries. With AEC, I am of the mind that proper regulations and taxation will set in, making everything much clearer and easier to understand, including imports. Right now, the economy in Cambodia relies heavily on the import of goods. AEC will make everything easier: I believe it will lower the cost of a lot of goods. This is quite a good thing, because I find the cost of living here quite exorbitant; it’s actually more expensive than Bangkok!
As far as my business is concern, AEC will facilitate the process of bringing content and shows to other countries, which, for us, is an important area of interest. There is a lot of talk of intraregional mobility that will ease the movement of content within ASEAN.”
In the Chambers…
We also had a chance to discuss the process of starting a business under AEC with notable representatives of some of the most influential business chambers in Cambodia.
Jose B. Collazo – (Formerly) American Chamber of Commerce in Cambodia (AmCham)
“After all is said and done, Cambodia’s business climate will benefit from it for the simple reason that many of what the AEC aims to accomplish is already present in the Kingdom.
Cambodia is one of the few ASEAN countries that allows 100% foreign ownership of a business. It also has no restrictions on the transfer of funds into or out of the Kingdom through its financial institutions. These features make Cambodia highly attractive. These forward thinking policies will attract companies from within ASEAN to set up shops in Cambodia and use it as a springboard into Vietnam and Thailand, and for companies doing business in the Asia-Pacific to establish their first foothold in the ASEAN region.”
David Tibbott – British Chamber of Commerce in Cambodia (BritCham) and Hongkong Land
“The topic of ASEAN economic integration (AEC) is foremost on everyone’s mind right now, and much has been said and written about the change this can bring about to Cambodia.
On the issue of the business climate here, some concerns have been raised over Cambodia’s level of competitiveness vis-à-vis its regional neighbours. With the freer flow of goods and services between ASEAN countries after the AEC, the level of competition will undoubtedly increase and businesses are likely to be wary of this fact. Right now for example, it takes about 22 days to export goods from Cambodia and this of course can have an impact on the competitiveness of local businesses. That said, according to the latest figures, Cambodia’s share of total inter-ASEAN trade stands at 44.5%. As such, the country is already in a strong trading position and the AEC may help to strengthen this further.
With or without the AEC, it is important to note though that Cambodia is already taking steps to change the business climate in the country, as well as the process of opening up a business. Both the Ministry of Commerce and the Ministry of Economy and Finance are currently automating a lot of key processes from business registration to trademark searching that will address current challenges. A number of reforms are also being implemented by the Ministry of Education to tackle Cambodia’s skills gap.
Moreover, Cambodia continues to offer on the whole, an open business climate and the country’s encouragement to foreign investors is very good when compared to its neighbours. The relevant government bodies are approachable and happy to engage in discussions on issues, especially on those not fully covered as yet. My experience has been that a focus on delivering quality is well received and the best way to differentiate your business in the market. We – Hongkong Land – are taking a long-term view on our returns in Cambodia.
The potential that the AEC could have for Cambodia is perhaps in making the country a regional hub for international companies. This could become a very real prospect for the country as it continues to work to improve the business climate and ease of doing business, and thanks to its geographical location.”
In the books…
Finally, we look at what some of the most respected law firms in the country have to say on the subject.
Bretton Sciaroni – Sciaroni & Associates
“Actually, integration into AEC is going to be easier for Cambodia than for a number of other countries. The reason is we already have a very free market economy to begin with. This is a very user-friendly environment in terms of the business climate. The government has from the first days of the first mandate made this a good place to do business, so there is going to be fewer problems for us than for other people in ASEAN.”
Sujeet Karkala – BNG Legal
“With the integration of AEC we can expect great changes for IPR, Banking, Taxation and Corporate law. Cambodia is making all its efforts to assist — and make changes pertaining to — business successful on integration. Recently signing for MOU with Singapore on an industrial patent is one such example. Further, Cambodia should prepare and start its efforts to have a Double Taxation Avoidance Agreements (DTAA) with its neighbours and other important business countries. Such treaties can change Cambodia a lot, as Cambodia has a corporate allowance of 100% foreign holding, which itself is a good move for attracting foreign investment. With DTAA, it will attract double the investments.”