Hong Kong-Cambodia: A story of unbroken decades-old trade ties

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Cambodia has been attracting investors from Hong Kong for the past 20 years.

Cambodia has remained a fertile ground for investors from Hong Kong for the past 20 years.

With its close proximity, ease of doing business, investment opportunities, dollarised economy, ready availability of manpower and resources, the Kingdom has the right combination to entice investors.

“One reason Hong Kong investors want to come to Cambodia is because it is a US dollar-based economy with investor friendly foreign exchange control. This is very important because a lot of business in Hong Kong is done in US dollars as well.

“Secondly, the government is very welcoming towards foreigners coming to do business in Cambodia.

“Even though certain costs are not the lowest, it is easy to do business,” Hong Kong Business Association of Cambodia (HKBAC) executive director Larry Shuen Fai Ng told The Post.

Investors from Hong Kong have ploughed their capital into the vibrant sectors – such as garment and shoe production, medicine and pharmaceuticals, real estate, retail and restaurants – that are fuelling the domestic economy, as can be seen in the membership of HKBAC.

“We can see the increase in businesses coming to Cambodia from Hong Kong to open restaurants to serve Hong Kong-style cuisine and open retail stores as well,” said Ng.

Cambodia, which is rapidly shaping its young economy, can obtain benefits from Hong Kong as a super-connector, particularly in connecting experts in the services sector, in areas such as architectural design, technical know-how, real estate planning and corporate funding.

Ng said the major international financial hub is continously looking at further ways to encourage trade between Hong Kong, China and Cambodia.

“The Hong Kong Trade Development Council has been organising government delegations and business seminars to bring investors from Hong Kong to Cambodia.

One of the services that can help boost the international trade is the use of the arbitration service in Hong Kong. Hong Kong has a very established arbitration system and a strong legal system, similar to Singapore’s.

The flourishing ties hit a snag with the Covid-19 pandemic, which has slowed trade and the cross-border movement of people, Ng noted.

“Before Covid-19, we could see a lot of investment coming in from China and Hong Kong.Hong Kong is a bit special because of its ties with China. Since returning to China, we can see that an increasing amount of Hong Kong companies that have invested in Cambodia also have close business relationships with China.

“Covid-19 did not actually deter people from investing in Cambodia, but it made it difficult for people to come to the Kingdom. Cathay Dragon had been operating 14 direct flights weekly between Cambodia and Hong Kong before the outbreak.

“Usually when investors decide to invest here, they want to visit the country to better understand the people and culture.

“But due to travel restrictions they are not able to come, so foreign direct investment has slowed,” he said.