National Bank of Cambodia (NBC) deputy governor Chea Serey has reiterated a call for Japanese players to explore the investment potential in the Kingdom’s financial and agritech (agricultural technology) sectors, given their increasing prominence over recent years.
Serey made the plea during a recent interview with Japan Up Close that touched on “Bakong”, a blockchain-based nationwide inter-bank payment system developed by the central bank in collaboration with Japanese tech firm Soramitsu Co Ltd that was launched in October 2020.
“Japan, as you already know is very well advanced in technological innovation. We are a developing country; we want new technology to enable us to jump to the next level. I definitely see that more cooperation could happen between the two countries in any space – whether it’s financial, or agritech. I do see it as a big opportunity for Japanese companies to explore,” she said.
“But the other important thing to highlight is that Cambodia, at the moment, is like a blank page and many new technologies can be tested here without any existing system. It is very interesting for Japanese companies to come and invest in Cambodia because there is nothing, and the best-case scenario is that you come and try, there are limited rules and regulations which can be good or bad, but you have to see the positive side that it will give plenty of opportunities to explore.
“Our approach is that we want to see what happens and then we regulate, rather than try to be perfect at the start by restricting innovative ideas that come in. I hope this is something the Japanese government and Japanese companies consider in their decision and try to find out which destination to go to.
“At last, I want to say because of the successful launch of Bakong, Soramitsu is propelled to find other projects in Southeast Asian countries and the Pacific region. So, we have to take credit for that,” she added.
On February 20, Serey shared that 8.5 million accounts “have been using” Bakong e-wallets, of which 0.5 million and eight million were direct and indirect users, respectively.
As of September, more than 0.5 million clients were behind two million direct or indirect transactions in the Bakong system, to the tune of $1.2 billion, she stated.
For comparison, Nikkei Asia reported that, through partnerships between the NBC and local banks to operate Bakong and boost adoption, the currency had reached 7.9 million Cambodians by November, directly or through apps offered by partner lenders. About 6.8 million transactions had been made through Bakong as of November, totalling around $2.9 billion.
Meanwhile, a senior investment official earlier this year made a similar request for Japanese investors to ramp up their commitments to the Cambodian market, recommending a Thailand or Vietnam “Plus One” business approach, amid a government-spearheaded push towards deeper integration into regional and global supply chains.
Council for the Development of Cambodia (CDC) secretary-general Sok Chenda Sophea was speaking at the 25th meeting of the Cambodia-Japan Joint Committee on February 21, the CDC noted in a statement that day.
The “Plus One” strategy mentioned by Chenda Sophea refers to the business model of extending supply chain networks developed in one nation to nearby countries.
For reference, a “supply chain” is an entire system of all the individuals, organisations, resources, technologies and processes involved in the creation, distribution and sale of a product or service, from the initial stage of sourcing or extracting raw materials to the final delivery to end-users.
Chenda Sophea called on Japanese companies to keep the Thai or Vietnam “Plus One” strategies firmly in mind, commenting that the government is committed to improving administrative procedures to further integrate Cambodia into regional and global supply chains.
He regarded Japanese investment activities collectively as a key driver of economic diversification and human resource development in Cambodia.
The government has promulgated the new Law on Investment – on October 15, 2021 – and unveiled the “Cambodia’s Automotive and Electronics Sectors Development Roadmap”, and will step up efforts to build a stronger and more resilient economy as well as create a more conducive investment environment, he assured.
The Cambodia-Japan merchandise trade volume reached $573.101 million in the first four months of 2023, down 9.8 per cent from the $635.613 million registered for the same time last year, according to provisional Customs (GDCE) data. Japan was the Kingdom’s fifth biggest trading partner for the period, after mainland China, the US, Vietnam and Thailand.
Cambodian goods exports to and imports from Japan amounted to $371.595 million and $201.506 million, respectively, down 4.55 per cent and down 18.19 per cent year-on-year, from $389.295 million and $246.318 million.
The Kingdom’s trade surplus – the amount by which a country’s exports exceed its imports – with Japan for the January-April period clocked in at $170.088 million, growing by 18.96 per cent on a yearly basis.
Japan accounted for 3.78 per cent of Cambodia’s total international merchandise trade volume in the first four months of 2023, which the GDCE put at $15.161 billion. This is up from 3.60 per cent in the year-ago period, when the total volume was $17.650 billion.