Cambodia is gaining traction with top Hong Kong business executives scheduled to join the city leader’s trip to the country as they look forward to more “aggressive” preferential policies from the country’s new Western-educated leader.
The financial hub’s business sector said on Monday it hoped a fresh direction under new Prime Minister Hun Manet would make the country a viable alternative manufacturing base to neighbouring Vietnam.
Lo Kam-wing, the president of the Chinese Manufacturers’ Association of Hong Kong and a delegation member, said he was keen to find out more about Cambodia and Laos as Vietnam has been a favourite destination for manufacturers that have moved production from mainland China.
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He highlighted the “China Plus One” strategy, adopted by manufacturers to spread investment away from the country to boost supply chain resilience and minimise risks linked to the US-China trade war.
“Many of our buyers are now asking us to adopt the China Plus One strategy or else they would not place new orders,” Lo said.
“Our current approach is to keep core technologies as well as the research and developments on the mainland, while moving the production to these places [in Southeast Asia].”
Lo added Hong Kong manufacturers were interested in the more than 50 industry-specific economic zones set up in Cambodia, where labour costs are only about two-thirds of that in Vietnam.
Chief Executive John Lee Ka-chiu will lead a delegation of industry leaders to explore business opportunities in Cambodia, Laos and Vietnam next week.
Phnom Penh, the Cambodian capital, is among four cities on the six-day itinerary.
“Cambodia has great potential because its political situation has been very stable in recent years, the use of US dollars is common there, and it offers the most abundant preferential policies among these three countries,” Lo said.
Vietnam, with a population of just over 100 million, is the largest economy Lee’s group will visit.
The country was also Hong Kong’s second-largest trading partner among 10 Asean members last year, with a total trade volume of US$31.5 billion.
The financial hub was also Vietnam’s third-largest source of foreign direct investment last year with registered capital of US$4.68 billion, behind Singapore and Japan.
Total trade between Hong Kong and Cambodia, however, stood at just US$894 million in 2023.
Jonathan Choi Koon-shum, the chairman of Hong Kong’s Chinese General Chamber of Commerce, said that although Cambodia had a smaller economy and population of about 17 million the nation was keen to catch up under its new leader.
Hun Manet trained at West Point, the United States military academy, and took over the helm as leader from his father Hun Sen last August.
He said the Association of Southeast Asian Nations country wanted to reduce its dependence on the textile industry and bring in fresh foreign investment to drive the green and digital economies.
“Though the former prime minister was known to be more conservative, the new prime minister is different,” Choi, whose Sun Wah Group has had a presence in Vietnam and Cambodia for decades, said.
“All cabinet members are young and educated in foreign countries and they all have a global vision.”
His companies are expected to sign new deals in Vietnam and Cambodia during Lee’s visit.
“Cambodia has lagged behind due to the limits in the past,” Choi added.
“Now the new leadership is restless, hoping to become more open and more connected with the world in their way of thinking and approach.
“They will be more aggressive in interacting with foreign businesses.”
Choi said there was still a gap between Cambodia and Vietnam in infrastructure and skilled labour supply, but that it had narrowed because of Chinese help to improve transport infrastructure.
He singled out a new highway connecting the Phnom Penh with the deep-sea port of Sihanoukville.
Brian Wong Yue-shun, an assistant professor in political philosophy at the University of Hong Kong, backed Choi’s optimistic view of Cambodia.
He added that despite political constraints he expected Hun Manet to take a more pro-trade, pro-business approach compared with his father.
“I wouldn’t expect too much when it comes to political reform, but there’s certainly an ongoing effort to reform the civil service coming from Hun Manet,” Wong said.
“Whether it be in terms of lowering legal and administrative barriers or improving transparency and accountability, Hun Manet would certainly be adopting a policy regime that’s more conducive to Hong Kong businesses, but also businesses from the rest of the world.
“So it’s not just about Hong Kong.”
The new Cambodian prime minister appears to want better relations with Washington, but Wong said he expected Hun Manet – who has just named a main road in the Cambodian capital Xi Jinping Boulevard in honour of the president – to maintain close links with Beijing.
“Cambodia is just going to behave more like Indonesia and Malaysia, so, on one hand, still incredibly interconnected with China economically, on the other hand, diversifying beyond conventional partners, so seeking to engage the EU and US as well,” he explained.
“I think there will be a significant uptick in interest from the international business sector in Cambodia.”
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