“Today, competition is based on knowledge. The biggest matter that needs resolvement is human resources because we need them to compete with other countries.”
A year on, Cambodia has gained little from the AEC integration
Phnom Penh Post | 15 December 2016
This month marks the one year anniversary of the integration of the ASEAN Economic Community (AEC).
Inaugurated in December 2015, the open economy initiative among the
10 ASEAN countries aims to strip away trade and tariff barriers, and
facilitate a more free flow of services, goods, skilled labour, and also
capital.
Such a feat involving these various nations of different political
and economical stances could take years to show progress. One year on,
Cambodia’s real estate insiders disclose their opinions on how the AEC
has yet to show any remarkable impact on the real estate market.
This, however, is expected, according to a report by Swiss Re – a
global risk transfer analysis company – which noted that “the
establishment of the AEC is another step to closer ties, but progress to
deeper integration and associated liberalisation of markets will likely
take many years yet.”
Contrary to Cambodians’ initial expectations, Kim Heang, president of
Cambodian Valuers and Estate Agents Association, said he has not seen
any fruitful contributions to the real estate industry since the
integration.
“I’ve observed and have seen that foreigners have continued to buy more condo units than before,” he said.
“This integration has two faces. The advantage would be Cambodia
being able to boast to the world that we are not just a country of 15
million people but part of a community of over 600 million.
Nevertheless, the drawback is that we are mostly consumers instead of
manufacturers.”
Heang also noted that the initial influx at the beginning of the year
from Chinese and foreign investors took a turn for the quiet side
towards the end of 2016.
“However, we’ve seen quite numerous changes in terms of job scopes as
workers from overseas in the real estate sector are either mostly
skilled or take over in managerial positions, as opposed to our own
people who hold lower skill roles.”
Thida Ann, director of CBRE Cambodia, also highlighted that, after
one year of the integration, not much has progressed on the frontline.
A concern she singled out was that of residential oversupply, leading
to investors taking more caution before bankrolling in property
projects here.
“What’s important right now would be that the government invest more
in improving the country’s infrastructure, create more income sources
for its people, and tighten law enforcement across all sectors.”
On a more optimistic note, Century21 Cambodia’s CEO, Kuy Vat said
that since the AEC integration, Cambodia has seen a fair number of
changes in terms of the increase in employment and number of jobs thanks
to a variety of foreign investors.
Traditionally, Korean investors had held the baton, but times now see many more Singaporean, Japanese, and Chinese financiers.
“It, of course, has been more competitive when some companies come to
partner with [Cambodian companies] while some others come to stand on
their own feet,” noted Vat.
Sear Rithy, chairman of Worldbridge Land, who recently attended an
international press conference event which focused on land market value
growth since the AEC initiative, said that researchers speaking at the
event had found that Cambodia, which is still trekking slowly behind
Thailand, has more advantages to draw from the integration in terms of
land and property.
The conference concluded that Cambodia’s real estate market will engage and maintain more sustainability in the next few years.
“From what I’ve seen, more investment companies are coming to
Cambodia after the integration. And when they are here, they will
naturally need more office space and residence. I can’t find any big
change yet, but there are a lot of positive aspects with more and more
international investors keeping a watchful eye on Cambodia to open
branch offices here,” Rithy explained.
Economist at the state-run Royal Academy of Cambodia, Ki Sereyvath,
voiced that expectations of the AEC have fallen short within this first
year. He drew parallels to the 2008 global financial crisis, with the
observation of many more buy-to-let property investors now – which could
consequently lead to a jammed market when they are unable to resell
their homes, thus urging investors to suspend or scrap any prospective
or ongoing projects.
“There are many investment companies from Thailand, Malaysia and
Vietnam. The Vietnamese companies do not require much labour force,
while Thai and Malaysian companies need our local workers and some
skilled workers from their countries.
Simultaneously, Cambodian workers are flowing into Thailand to find
jobs as there are many more opportunities there,” Sereyvath said.
While this migration to Thailand has eased up financial issues for
Cambodian workers there, the hitch could be that the overflow of labour
forces would cause investors to hesitate injecting funds into projects
in Cambodia, as they realise the inverse decline of labour forces and
production rate compared to neighbouring countries.
Mey Kalyan, senior advisor to the Supreme National Economic Council,
said that Cambodia has been an open country for trade and business for a
long time, therefore, opening the gate for the ASEAN Integration is not
as big of a change as some commentators hyped it to be.
At this stage, Kalyan said the Kingdom needed to go the extra mile in
advocating human resources to pave the way for more investments.
“Today, competition is based on knowledge. The biggest matter that
needs resolvement is human resources because we need them to compete
with other countries.”
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