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Kingdom of Opportunity

The First Commercial Bank’s Phnom Penh branch offers internship opportunities to local university students. (Photo by Oscar Chung)

The First Commercial Bank’s Phnom Penh branch offers internship opportunities to local university students. (Photo by Oscar Chung)

Cambodia’s flourishing economy and welcoming environment are attracting growing numbers of Taiwan enterprises.

David Hsu (許富賢) was quickly struck by Cambodia’s economic potential when he first visited the nation in 2015. Owner of Wintime Co., which produces Christmas lights for the U.S. market, the Taiwan entrepreneur was so impressed by the country’s vibrancy and openness to foreign investment that he began to consider relocating his company’s manufacturing base from China.

“I spent a long time mulling over the decision, and meanwhile the costs of doing business continued to rise. The U.S.-China trade war is what ultimately spurred me into action,” Hsu said. Initially concerned about infrastructure, he was convinced after seeing the Manhattan Special Economic Zone (MSEZ) developed by Taipei City-headquartered health care products provider Medtecs International Corp. in eastern Cambodia’s Svay Rieng province, where one of his factories is now based. With the new location having operated smoothly since March, Wintime’s owner is planning to move all the company’s production to the Association of Southeast Asian Nations (ASEAN) member state within three years.

According to Hsu Tsun-tzu (徐遵慈), director of the Taiwan ASEAN Studies Center under Taipei-based Chung-Hua Institution for Economic Research, businesses like Wintime are increasingly looking to emerging economies in the region for expansion. “Cambodia is becoming one of the most appealing new options for investors,” she said.
 

Vehicles drive past the Independence Monument in Phnom Penh, built to mark Cambodia’s independence from France in 1953. (Photo by Oscar Chung)

Vehicles drive past the Independence Monument in Phnom Penh, built to mark Cambodia’s independence from France in 1953. (Photo by Oscar Chung)

Big Business

Taiwan government statistics reveal that 15 companies invested a total of about US$180 million in Cambodia in 2018. Both figures are record highs, a clear sign of the increasingly attractive environment for businesses.

While investors from around the world are now turning to Cambodia, Taiwan enterprises have been working in the country since the former French colony began to emerge from decades of conflict and instability in the early 1990s.

“Export-oriented garment manufacturers came first, quickly capturing a sizeable share of the domestic market,” said Wang Mei-hui (王美蕙‬), president of Taiwan Commercial Association in Cambodia, which has been based in the capital Phnom Penh since 1996. According to Wang, Taiwan businesses started to face rising competition from other overseas investors around 2010. They now account for about 20 percent of local garment production, down from almost one-third in 2001.
 

Employees make Christmas lights on the factory floor of Wintime Co.’s facility in the Manhattana Special Economic Zone in eastern Cambodia. (Photo courtesy of David Hsu)

Employees make Christmas lights on the factory floor of Wintime Co.’s facility in the Manhattana Special Economic Zone in eastern Cambodia. (Photo courtesy of David Hsu)

Taiwan firms remain influential despite the presence of other regional players. This is evident in the 2005 development of the MSEZ. Measuring 500 hectares and offering incentives like one-stop services and tax exemptions, it is home to factories employing about 30,000 workers.

“Although the proportion of Taiwan garment manufacturers today is lower than a few decades ago, we have retained a significant market share because of our focus on quality control,” said Willy Wang (王榮章‬), head of overseas operations for Taipei-headquartered King Star Garment International Co., which engages in garment manufacturing at its two factories in Phnom Penh. “We are constantly investing in new equipment to boost production efficiency and raise standards,” he added.

Cambodia has posted impressive annual gross domestic product growth of around 7 percent for the last eight years, and Taiwan entrepreneurs have helped facilitate this increased prosperity. Huang Chao-ching (黃朝晴‬), co-founder and general manager of TCM Engineering Co., has been building roads and bridges in the country since the mid-1990s. Today, the 63-year-old is proud to say his company was involved in constructing the majority of thoroughfares in Phnom Penh.
 

Workers from TCM Engineering Co., co-founded by Taiwan entrepreneur Huang Chao-ching, pave a section of road in Phnom Penh earlier this year. (Photo by Huang Chao-ching)

Workers from TCM Engineering Co., co-founded by Taiwan entrepreneur Huang Chao-ching, pave a section of road in Phnom Penh earlier this year. (Photo by Huang Chao-ching)
 

“There were a lot of business opportunities when we first arrived because the country was rebuilding after a difficult period in its history,” Huang said. “My company slowly established its reputation, and today we’re busier than ever.”

Adaptability has been key to the success of Taiwan entrepreneurs in Cambodia as the country has undergone enormous changes. This is evident in the experiences of Wu Ching-liang (吳景亮), who in 1996 set up a factory manufacturing women’s shoes in central Phnom Penh.

Wu once employed more than 3,000 workers producing 3 million pairs of shoes annually, but when the city government decided to undertake an urban renewal project in 2014, he had to shut his business. It was then that he decided to try his hand in a new field. “The local economy was strengthening and diversifying, and I had to change with it,” Wu said.
 

Taiwan-based King Star Garment International Co. employs thousands of people at its factory in Phnom Penh. (Photo by Oscar Chung)

Taiwan-based King Star Garment International Co. employs thousands of people at its factory in Phnom Penh. (Photo by Oscar Chung)
 

The entrepreneur entered the property development industry by commencing construction on Sky Tree, a modern high-rise complex comprising one high-end hotel and two apartment buildings, on the site where his shoe factory once stood. Wu has also branched out into offering consultancy services to other investors seeking opportunities in the fast-growing economy, as well as microfinancing for individuals and small businesses in Cambodia.

Foreign enterprises play an important role by bringing new standards and concepts to the local market, Wu said. The Sky Tree project, scheduled to open before the end of the year, features safety practices that are commonplace in Taiwan but rare in Cambodia, such as installing comprehensive fire suppression systems. Consequently, numerous architecture students at Royal University of Phnom Penh, the nation’s top tertiary institution, volunteered to intern at the building site to study the techniques used.

Banking on Growth

Manufacturing and construction are not the only sectors in which Taiwan businesses have found success in Cambodia. In 1998, First Commercial Bank (FCB), one of the largest financial institutions in Taiwan, opened a branch in Phnom Penh. While it was not until 2011 that another Taiwan bank followed suit, there are now seven operating in the country.
 

Cambodian university students are given a tour of the Sky Tree construction site. (Photo courtesy of Wu Ching-liang)

Cambodian university students are given a tour of the Sky Tree construction site. (Photo courtesy of Wu Ching-liang)
 

With numerous subbranches, FCB is still expanding its presence and plans to open two more locations in the capital by the end of the year. But the bank has had to battle to retain talented employees as competition from other institutions entering the market grows, said Chien Chih-kuang (簡志光), general manager of FCB’s Phnom Penh branch. “Competitors are willing to splash the cash with some sizeable offers to our employees. This has resulted in us losing several of our most experienced staff members in Cambodia.”

In response, the bank has worked hard to maintain its status as an attractive option for local talents. Top performers among its workforce in Cambodia are given the chance every year to train at FCB’s headquarters in Taipei and attend tours around Taiwan organized and funded by the company. FCB has also signed pacts with two universities in Phnom Penh to provide students with internship opportunities in its branch.

The company’s local reputation has been enhanced by organizing an annual charity activity as part of efforts to give back to Cambodian society, Chien said. This year, 25 FCB employees visited a primary school with nearly 400 pupils in Svay Rieng province to donate laptops, money and solar equipment.
 

FCB workers hand out donations at a primary school in eastern Cambodia in June. (Photo courtesy of First Commercial Bank)

FCB workers hand out donations at a primary school in eastern Cambodia in June. (Photo courtesy of First Commercial Bank)
 

Former factory owner Wu has also worked hard to improve quality of life for local people through the JL Cambodia Charity Association, which he founded last year to provide support across a range of fields, including financial and medical assistance for those in poverty. “It’s great to see the country develop alongside my business,” he said.

In the nearly 30 years that Taiwan enterprises have worked in Cambodia, their host nation has recovered from a traumatic past to become one of Southeast Asia’s best-performing emerging economies. “It may not be as well-known as some of its neighbors in the region,” Wu said, standing on the roof of his Sky Tree development overlooking the planned venue for the biennial Southeast Asian Games in 2023. “But it’s catching up very fast. Every enterprising investor and businessperson can see its potential.”