The Japanese embassy is reporting a $280 million drop in Japanese investment last year, but officials were quick to say that the numbers don't necessarily reflect slumping investor confidence in Cambodia.

Japanese investment in the Kingdom reached about $47.5 million in 2013, compared to $328 million in 2012, according to Takayoshi Kuromiya, counselor at the embassy of Japan in Phnom Penh.

Kuromiya said yesterday that the drop was natural after the “exceptionally large” investment amount seen in 2012, which included Phnom Penh’s soon-to-be-completed Aeon Mall on Sothearos Boulevard. Due to open in June, Aeon is valued at $205 million.

Last year, major investments by Japanese companies came in the form of factories that produce eye drops, watch parts and garments, he added.

He said that Cambodia’s competitive labour costs had helped to maintain Japanese interests, while labour in “traditional investment destinations” such as China and Thailand had rapidly increased.

But garment sector wage disputes had companies concerned, and future investment levels were uncertain.

“In light of the current situation, we cannot precisely foresee the future trend of Japanese investment in Cambodia as private companies’ investment decisions depend on various factors, including some unpredictable ones,” he said.

While Japanese funds have fallen, Cambodia’s prime minister announced a 250 per cent increase in Vietnamese investment during an official visit by his Vietnamese counterpart on Monday. At a conference held at the Peace Palace, Prime Minister Hun Sen presented figures showing that Vietnamese investment had reached $302 million in 2013. The increase promises to leave Japan even further down the list of Cambodia’s top investors.

Statistics presented by the Council for Development of Cambodia during a December 2 and 3 seminar with Japanese investors showed that between 1994 and October this year, Cambodia approved Japanese foreign investments of $593 million. Nearly half of that came in 2012 alone.

That figure, however, placed Japan in 11th position on the list of Cambodia’s top foreign spenders, behind South Korea, the European Union, the United States, Vietnam and Thailand. China led the way with more than $9.5 billion invested in Cambodia between 1994 and October 2013.

Aeon Mall, which is still being built over 68,000 square metres next to the Sofitel, is attracting additional Japanese money, according to the mall's managing director, Makoto Yajima.

On track for its opening, the mall will house about 190 brands, including Nojima, a Japanese home appliances store, and Thai-owned cinema operator Major Cineplex. It also boasts a 10-lane bowling alley.

“We aim to attract 10 million visitors in the first year,” Yajima said.