Seven years ago, when foreign investors were taking a hard look at the Vietnamese economy, Cambodia came up in conversation as an alternative site for cheap factory labour. Among those talking were Taiwanese factory owners.
The business people known for fanning out around the world in search of low-cost production bases were trying then to escape the country’s depreciating currency and wildcat labour strikes in Vietnam.
Vietnam has cleaned up those issues, but Cambodia is still drawing more Taiwanese investors now than ever.
Taiwanese investment in impoverished, once war-torn Cambodia is growing because Labour there still costs less than those in Vietnam.
The impoverished Southeast Asian country is gaining further attention today because China has developed its infrastructure.
Those improvements would ease doubts that Taiwanese investors had in 2012 about the high costs of sending in raw materials and exporting finished goods due to the lack of roads and port facilities.
“Cambodia offers an attractive combination of low salaries, less than China, and now decent infrastructure,” says Stuart Orr, a professor of strategic management focused on China at Deakin University in Australia.
“Ten years ago, the lack of commercially viable road transport and the lack of rail transport, as well as the high cost of shipping from its only international cargo port, would have made it unattractive as a manufacturing investment location.”
Numbers tell the Taiwan-Cambodia Story
Cambodia-bound investment from Taiwan over the past six years totals about $568 million and most of that poured in just the past two years, according to figures from the Economic Affairs Ministry’s Investment Commission in Taipei.
Taiwanese companies invested about $171 million in 2017 and $181 million last year, a record high, the data show. There were 15 projects by Taiwanese companies last year in Cambodia, a six-year high.