Pan Sorasak: the Belt and Road Initiative Harmonizing With Cambodia’s Industrial Development Policy

Written by Li Yizhi and Liu Yiying / Translated by Wu Sheng

China-Cambodia economic and trade relations are one of the closest relations between China and ASEAN countries. The year 2018 marks the 60thanniversary of the establishment of diplomatic ties between China and Cambodia. Looking back,what achievements have been made in mutually beneficial cooperation between the two countries? At present, what are the favorable conditions of investing in Cambodia? And looking forward, in what areas will China-Cambodia cooperation promise a broader prospect?

The year 2018 also celebrates the 15thanniversary of China-ASEAN Expo (CAEXPO), and Cambodia will be the Country of Honor of CAEXPO for the second time since 2008. This year, what is Cambodia going to show at CAEXPO to businesspeople and audiences?

With these questions in mind,China-ASEAN Panoramahad a face-to-face interview with H.E. Pan Sorasak, Minister of Commerce of Cambodia.

China-ASEAN Panorama:The year 2018 marks the 60thanniversary of the establishment of diplomatic ties between China and Cambodia. Over the past 60 years, China and Cambodia have constantly upgraded the level of their trade and investment cooperation.Could you elaborate on some important achievements in China-Cambodia economic and trade cooperation?

Pan Sorasak:The year 2018 is a very special year for both Cambodia and China, as we are celebrating the 60thanniversary of our diplomatic relations.

Cambodian and Chinese governments agreed on the total bilateral trade target of US$ 5 billion by 2017.However, it already reached US$ 5.16 billion in 2016.So we are looking forward to a higher trade number.

Cambodia’s exports to China reached US$ 609 million in 2016 (increasing by 50% compared to 2015), while China’s exports to Cambodia hit 4.55 billion the same year (increasing by 16% compared to 2015).

The major export of Cambodia to China is rice.Cambodia and China signed a Memorandum of Understanding (MoU) on rice trade with 200,000 metric tons for 2017, and 300,000 metric tons for 2018.These agreements were made during the official visit of President Xi Jinping in October 2016, and during the official visit of Premier Li Kejiang in January 2018,respectively.

Following the Belt and Road Initiative, Chinese investors have increasingly come to invest in Cambodia. There are about 600 projects with investment capital of more than US$ 14.3 billion.Chinese investment ranked first in Cambodia in the last three years, from 2015-2017. Cambodia have greatly benefited from the Belt and Road Initiative and Asia Infrastructure Investment Bank (AIIB) initiated by the Chinese government. It has contributed significantly to the development of infrastructure,trade and investment projects in Cambodia.

China has been a very good friend and one of the most important strategic partners of Cambodia in the region. Cambodia’s economic development has been growing steadily in the past decade. We have managed to maintain an annual average GDP growth at around 7%, thanks to the support from our friend, China, in terms of grants and loans on various fields such as infrastructure, energy, and so much more.

Overall, we can see the positive impacts from Cambodia-China cooperation, especially in economy,trade as well as our political relations. We expect to see even closer cooperation in the coming years.

China-ASEAN Panorama:The Belt and Road Initiative has received positive response from countries along the routes since its proposal. In the development of the Belt and Road, in what areas can China and Cambodia strengthen their economic and trade cooperation? And what are the priorities of Cambodia in attracting foreign investment?

Pan Sorasak:The Belt and Road Initiative was launched in 2013. Since then, it has been playing a very important role in regional economic integration for ASEAN countries.

Cambodia, as one of the countries located along the routes of this initiative, understands its strategic importance, and has received many benefits from this initiative, including tourism, trade and economic cooperation, infrastructure connectivity, digital trade, transportation, agriculture, science and technology, maritime and so on. We have received so many benefits by taking advantage of the Belt and Road Initiative.

Among these, the priority should be given to those in line with theCambodia Industrial Development Policy 2015-2025, which aims to transform and modernize Cambodia’s industrial structure from a labor-intensive to a skill-based industry by 2025.

So it (the Belt and Road Initiative) harmonizes with ourCambodia Industrial Development Policy 2015-2025.

China-ASEAN Panorama:In recent years, more and more Chinese enterprises tend to invest in Cambodia in various areas. How are the major China-Cambodian cooperation projects going? Do you have any advice on how Chinese enterprises should invest in Cambodia?

Pan Sorasak:We have a lot of China-Cambodian cooperation projects in the past few years. Most of them are already in the operational stage. For instance, the Sihanoukville Special Economic Zone,Cambodia’s largest special economic zone established in 2008, is currently in operation.

The Morodok Techo National Sport Complex, which will host 2023 Southeast Asian Games, is under construction, under China’s support.

The biggest hydropower plant, the lower Sesan II Dam Hydropower plant, will be fully operational this year while a number of other hydropower dams are already in operation.

The Morodok Techo National Sport Complex

We also have a number of projects which will be implemented in the near future, such as the national highway from Phnom Penh to Sihanoukville, the bridge construction project across the Mekong River Kroch Chmar-Stueng Trang, new Phnom Penh and Siem Reap International Airports, Air Transports and other agriculture development projects.

These infrastructure and energy projects will help Cambodia improve its connectivity across the country, ensure sufficient supply of electricity, attract investment and foster economic development.

For Chinese enterprises who wish to invest in Cambodia, I have simple advice, just pack your stuff and come here. We have a very attractive incentive package for investment, for example,100% ownership without joint venture, full import duty exemption, low labor wage, no capital control, in which you can bring your revenues out of the country, tax holiday up to 9 years plus the Generalized System of Preference(GSP) program that we are enjoying as a least developed country. You can export your goods to other countries, like Europe countries and USA, with special preference. So that’s a way for Chinese enterprises to make more profits.

We have a lot of other potentials, so we warmly welcome all Chinese investors and look forward to working closely with them.

We have a lot of similarities. We have some of the same food. Some of us have Chinese ancestry. Also some of us speak Chinese. So it is easy for you to feel like home.

China-ASEAN Panorama:Since CAEXPO was first held 15 years ago, Cambodia has actively involved in it. What do you think are the positive impacts of CAEXPO on Cambodia? As this year’s Country of Honor, what highlights is Cambodia going to show at the 15thCAEXPO?

Pan Sorasak:Cambodia has been involved in CAEXPO since the beginning. Our Prime Minister Hun Sen went to Nanning for CAEXPO more than ten times. Now he becomes an Honorary Citizen of Nanning, where there are so many Cambodians.

Cambodia has seen significant impacts of CAEXPO on our economy and trade.

Since Cambodia joined in this important expo, our bilateral trade cooperation under the framework of the China-ASEAN Free Trade Area (CAFTA) has been strengthened. Cambodia has received many Chinese investment projects in many fields, particularly in agriculture, real estate and tourism through CAEXPO. The expo has created a lot of investment opportunities and trade promotion activities.

Due to the success of CAEXPO, Cambodia has been able to expand our markets and promote economic integration in the region, with our products now widely recognized in the world.The political and diplomatic cooperation and friendship between our two countries have also been strengthened to a new level.

To Cambodia, CAEXPO is a platform to widely disseminate our culture, civilization, traditions and at the same time promote investment projects and services and attract tourists.

This year, as the Country of Honor, Cambodia will have a lot to show at CAEXPO. We are planning to organize our cultural performance at the official opening ceremony, and at the Cambodian pavilion, there will be a replica of Sambor Prei Kuk Temple, a pre-Angkorian temple which has just been listed as a World Heritage.

We will also be organizing a seminar on the trade and investment opportunities in Cambodia to attract potential investors, which is going to be held on September 13, 2018. Besides, we will be holding the 3rdChina-Cambodia Business Forum in Nanning and arrange the signing ceremony of the Memorandum of Understanding(MoU) there.

As usual, we will be displaying Cambodian products, especially agricultural and agroindustry products, and showcasing investment and services. So there are many events by Cambodia as the Country of Honor.

Cambodia is honor to be the Country of Honor,and I am sure I will also be there in Nanning.