Japanese businesses have historically worked in Thailand, but that country’s political instability has caused the Japanese government to look for other suitors. Cambodia is the perfect location for Japanese businesses (abundant land, cheap labor, and few government regulations) as long as the country’s infrastructure improves. Enter Abe’s foreign policy of the “New Tokyo Strategy” that will build infrastructure like roads and bridges inside Cambodia. This is not only good for Japanese businesses looking for additional stability; it is also good for Abe’s strategy to confront China in Southeast Asia. The Khmer Times has an interesting piece related to this topic about Hun Sen’s special treatment after the Mekong-Japan Summit meeting:
Prime Minister Hun Sen returned Monday from a weekend in Japan that included a day-trip 1,000 kilometers south of Tokyo to Yamaguchi Prefecture, home base of Prime Minister Shinzo Abe.
The Cambodian leader’s trip out of Tokyo followed his participation in Prime Minister Abe’s summit on Saturday with leaders of five Mekong nations – Cambodia, Laos, Myanmar, Thailand and Vietnam.
But the Sunday outing to the Japanese prime minister’s homeland indicates Japan’s special courtship of Cambodia.
As in the dating game, it can be beneficial for a country to have two suitors.
Everyone knows about China’s massive aid, trade and investment with Cambodia. But Japan’s courtship is getting more and more serious.
This year’s example was the magnificent Tsubasa Bridge over the Mekong River, the longest bridge in the Kingdom. After opening in April, this Japanese-financed cable-stay bridge now speeds traffic between Phnom Penh and Ho Chi Minh.
Look ahead, and within five years, Japanese money will have paid for upgrading National Road 4. Trucks, buses and cars will speed between Phnom Penh and the Thai border.
Road work will include construction of a 47-kilometer bypass road around Battambang.
The key here is Thailand, a country with the highest wages, the oldest population, and the greatest political instability among the five nations of the Mekong region. Thailand’s per capita income of $5,390 is five times higher than Cambodia’s income of $1,018.
Japan is literally paving the way for Japanese investors to shift east, out of Thailand, to Cambodia.
From 2010 to 2012, Japanese investment in Cambodia soared 10-fold, from $35 million to $328 million.
In the first quarter of this year, 183 Japanese companies received investment licenses from Cambodia.
From a non-player a decade ago, Japan suddenly is Cambodia’s third-largest source of investment, after Vietnam and China.
Many of these Japanese companies come from Thailand, where Japan has long been the largest source of foreign investment.
So Cambodia has the enviable position of sitting between two rich suitors, each eager to win favor in the Kingdom.