Italian businesses are keeping a closer eye on Cambodia as an emerging market to increase trade and knowledge-sharing opportunities, and industry leaders expect the business relationship between the two countries to grow in the near future.
The bilateral relationship was the topic of discussion for a webinar organized by the European Chamber of Commerce in Cambodia (EuroCham) Thursday, during which diplomats, business leaders, and scholars discussed potential opportunities in Cambodia’s growing economy.
Cambodia’s location within the ASEAN community, its rapidly growing middle class, and the new investment opportunities provided by the Law on Investment were viewed as prime reasons why Italian companies and businesspeople could make more of an impact in Cambodia.
The developing infrastructure in the Kingdom, including the new Sihanoukville deep seaport, was also viewed as a favorable factor as logistics operations within the country improve.
EuroCham Chairman Tasilo Brinzer said Cambodia already benefits from excellent Italian products and services, and beyond that, cultural exchanges could be supported by increased tourism between the two countries.
He added Italy also represented a prime trading partner for Cambodian exports, which EuroCham is working to support.
Sok Chenda Sophea, the secretary general of the Council for the Development of Cambodia, said the Law on investment opens up opportunities for Italian businesses to thrive in the Cambodian economy.
To read more about Cambodia’s economic outlook click here.
The only difference foreigners face when running a company in Cambodia, he said, was that they cannot own land. Other than that, he said, all sectors are open for business, foreigners can own the entirety of their business, and business owners can easily send their profits back to their home country.
He added Cambodia needed more private sector influence to continue to develop and a country is an attractive place for Italian investors and business people to do business.
“Don’t think of Cambodia as this market of 16 million consumers, think of Cambodia as part of the Mekong region, 250 million consumers. All of those countries are emerging markets. Think of Cambodia as a member of ASEAN. Cambodia is part of ASEAN, 650 million consumers,” he said.
Vice President of the Italy-ASEAN Association Romeo Orlandi agreed, saying it would be a mistake to view Cambodia as only a single market of about 16 million people.
He said Cambodia is one of the last Asian countries to follow the path of the “Asian tigers,” and its growing infrastructure capacity, political stability, and open investment environment will only continue to spur its development.
“Not only can Italy contribute to the growing middle class with consumer goods to Cambodia, but also for technology, capital goods, intermediate goods, quality. If you see the trade flows between the two countries, there is a kind of overlapping. Italy can export products like textiles and leather to be finished in Cambodia and to be reimported in Italy,” he said.
Italian investors have reasons for optimism
On the entrepreneurial front, Khmer Green Charcoal, a company that produces sustainable charcoal, is an example of an Italian success story in Cambodia. Carlo Figá Talamanca, the company’s CEO, said opening a business was relatively easy and its continued development over the last ten years has helped increase his business’s capacity.
“All the administrative procedures, the first registration, the re-registration of the company, it’s a quite straightforward process and I would say almost easier than Italy,” he said.
He said the environment has only improved with digitalization and human resources development, making it easier to find skilled workers and perform administrative services like paying taxes online.
Carlo Santoro, an associate professor of art, architecture, and urban design at American University said Italian architects and engineers could offer their expertise in design and regulatory practices in Phnom Penh to help contribute to its sustainable growth.
He said in the next ten years, Phnom Penh’s population is expected to rise from two million to three million people and that Italian expertise in urban planning and design could provide value to the continued development of the city.
Noë Schellinck, EuroCham’s advocacy manager, explained the benefits of the Law on Investment, highlighting the law’s different tax incentives and how they could be utilized.
To read more about EuroCham’s assistance with Cambodia’s garment sector click here.
He said while there are undoubtedly benefits to the law, it would be important to check with legal professionals before jumping into the market from the perspective of an Italian businessperson.
He mentioned that Italy does not have a bilateral investment treaty with Cambodia, which could mean it would be easier to set up a business elsewhere as an alternate method to enter the market.
“It could be perhaps beneficial to set up a company first in Germany or Thailand and use that as an investment vehicle to enter Cambodia. Not only for tax reasons – that’s, of course, important, check for double taxation agreements—but also for reasons for investment protection which you will also typically find in these investment treaties.”
Cambodia and Italy strengthen economic ties
Advisor to the Italian-Cambodian Business Association (ICBA) and CSR Project Consultant at EuroCham Luisa Gentile said the ICBA had several main goals to help foster a stronger business and cultural connection between Cambodia and Italy.
One of ICBA’s goals is to put every Italian product under the same umbrella and spread information about Italian products and culture through digital media.
Concerning the retail sector, recent success stories of Italian businesses also include the emergence of Italian fashion brand OVS, the resurgence of Vespa, and the growing popularity of Modestore, a fashion store that primarily features Italian luxury products.
To read more about made in Cambodia online exports market click here.
Gentile said the ICBA also wanted to promote Italian restaurants in Cambodia and distinguish between Italian-style restaurants and Italian-managed restaurants. She said most Italians in the food and beverage sector are small businesses and the ICBA will work to promote this community as it attempts to recover from the impact of the pandemic.
Fostering B2B connections between Italy and Cambodia is another ICBA priority.
“We believe that Cambodia should be on the radar of prospective Italian investors, Italian companies looking for business partnerships, and Italian companies already operating in the region,” she said.
Lastly, promoting gender diversity and championing both Italian and Cambodian female professionals in Cambodia is another ICBA goal, as well as developing talent in Cambodia via internship exchanges with Italian universities.
Lorenzo Galanti, the ambassador of Italy to Thailand, Cambodia, and Laos, said bilateral relations between Italy and Cambodia have strengthened over the years and trade should only continue to increase in the post-pandemic period.
“While the Italian business community in Cambodia is growing, I’m confident that economic reforms undertaken by Cambodia will attract more and more business operators,” he said.
Trade between Italy and Cambodia recorded a 12 percent year-on-year increase in 2021, reaching 460 million euros.
“I trust that this trade will exceed the 500 million euro mark, and return to the level of 2019,” he added.
Leading exports to Italy from Cambodia are apparel-related goods while the leading import to Cambodia from Italy are spark-ignition engines.
“Italian companies have plenty to offer. They can offer their consolidated experience and know-how on a wider range of sectors, such as agro-industry, manufacturing, energy, and infrastructure,” he said.
“This will help to sustain the long-term growth and sustainable development of Cambodia. We look forward to cooperating with Cambodia in those sectors while we look towards a green, digitally inclusive recovery from the pandemic and its social impact.”