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Cablegate: American Business Community Informs Senator Webb That

VZCZCXRO6894
PP RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHPF #0607/01 2320846
ZNR UUUUU ZZH
P 200846Z AUG 09
FM AMEMBASSY PHNOM PENH
TO RUEHC/SECSTATE WASHDC PRIORITY 1090
INFO RUCNASE/ASEAN MEMBER COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC

UNCLAS SECTION 01 OF 02 PHNOM PENH 000607

SIPDIS
STATE PASS USTR - KLEIN
BANGKOK PASS FCS - GRIFFIN GREENE
HANOI PASS FCS
SINGAPORE PASS FCS

E.O. 12958: N/A
TAGS: ETRD EINV CB
SUBJECT: AMERICAN BUSINESS COMMUNITY INFORMS SENATOR WEBB THAT
CAMBODIA IS OPEN FOR BUSINESS

SENSITIVE BUT UNCLASSIFIED

1. (SBU) SUMMARY: During an August 18 meeting with Senator Jim
Webb, representatives from the American business community were
positive on investment and trade prospects in Cambodia. They
highlighted Cambodia's liberal and reforming legal regime, its
generally supportive government, and widespread admiration for the
United States as key factors which make Cambodia an attractive
destination for foreign investors. Challenges to doing business in
Cambodia include the weak judiciary, undeveloped human resources,
poor infrastructure, and lax rule of law. Senator Webb's brief
visit to Cambodia was an encouraging sign for members of Amcham, who
warmly welcomed greater U.S. engagement in the region and future
visits of the Senator, other U.S. representatives, or companies to
Cambodia to learn more about the country's often underappreciated
economic and commercial prospects. END SUMMARY.

Cambodian and U.S. Governments Supportive of U.S. Investors
---------------------------- -----------------------------

2. (SBU) During an August 18 luncheon hosted by the Ambassador,
Amcham members told Senator Webb about the Cambodian government's
constructive attitude toward the private sector and its steady
process of legal reforms after acceding to the World Trade
Organization (WTO) in 2004 as important factors underlying increased
interest by American companies. Amcham Chairman Brett Sciaroni
praised the Cambodian government's regular dialogue with the private
sector through the Government Private Sector Forum (GPSF), which
culminates in bi-annual meetings during which the Prime Minister
directly addresses the concerns of businesses in all sectors of the
economy. Sciaroni confidently asserted that "no Amcham has as much
influence on a government in Southeast Asia as [in Cambodia]."
(NOTE: Sciaroni has chaired the Amcham and the GPSF Working Group
on Law, Taxation, and Good Governance since their inceptions. END
NOTE.)

3. (SBU) Sciaroni also expressed appreciation for increased USG
engagement on economic and trade issues with Cambodia, which has
allowed Amcham to emerge as one of the most active and
fastest-growing business associations in Phnom Penh -- doubling its
membership to 65 members in only two years. He suggested the U.S.
Embassy's strong support to U.S. investors as another major factor
that has led to more U.S. companies doing business in Cambodia.

Weak Judiciary Tops List of Persistent Problems
--------------------------------------------- --

4. (SBU) Senator Webb cited a weak judiciary as a primary deterrent
to American investors in Vietnam when it was opening to American
companies in the mid-1990s. According to Sciaroni, American
companies are only beginning to take increasing note of Cambodia,
but as a practicing lawyer, he bleakly assessed the judiciary due to
corruption, inefficiency, and political interference. Because of
the Foreign Corrupt Practices Act, U.S. companies must rely on
political influence to resolve disputes that go to court, a
situation he deemed "undesirable" in Cambodia's small market.
Several businessmen were positive about the nascent National
Arbitration Center, one of a number of reforms underway to improve
the investment climate, which will be an alternative forum for
resolving commercial disputes. Challenges noted by the private
sector representatives also included weak human resources for
technical positions, unreliable energy supplies resulting in regular
brownouts, and lack of intellectual property right protections.

Commercial Opportunities Abound
-------------------------------

5. (SBU) According to Amcham Governor Curran Hendry, commercial
opportunities exist in mineral, oil and gas exploration (Cambodia
remains relatively unexplored by large U.S. and international
companies); agriculture; tourism; manufacturing; infrastructure; and
power generation and distribution. Dararith Lim, Country
Representative for GE, which inaugurated its office in 2009, said GE
is exploring opportunities in health care; water technology;
consumer and industrial lighting; renewable energy; oil and gas
development; transportation; and infrastructure. In addition, he
noted that the initiation of a commercial presence in recent years
by blue-chip American companies such as Microsoft, GE, Intel,
Dupont, and Crown Holdings demonstrate the commercial potential that
U.S. companies are beginning to perceive exists in Cambodia.

U.S. Community Wants More Visits
--------------------------------

6. (SBU) Sciaroni expressed his appreciation for the Senator's
visit, noting its importance in helping to raise awareness among
American investors about commercial opportunities in Cambodia.

PHNOM PENH 00000607 002 OF 002


Sciaroni predicted that Cambodia would be one of the first countries
in Southeast Asia to emerge from recessions induced by the global
economic slowdown, and expressed his hope that U.S. companies would
be able to capitalize on this recovery. Sciaroni expressed his hope
that the Senator's visit would be a catalyst for future visits by
other senior officials, laying the groundwork for further
exploration of commercial opportunities by American companies.

COMMENT
-------

7. (SBU) The Cambodian government recognizes foreign investment as
critical to developing the economy and maintains among the most
liberal investment regimes in Asia. While American companies are
increasingly aware of Cambodia's openness and are exploring the
market in increasing numbers, in general, U.S. perceptions about
Cambodia have not kept pace with the country's progress. Senator
Webb's visit and message of enhancing American engagement in
Cambodia's economy is a boost to the small, but growing, U.S.
commercial presence in the country. Such high-profile visits also
help to update perceptions of Cambodia and better inform potential
investors that Cambodia is open for business.

RODLEY

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