US Businesses Optimistic

KHMER TIMES
SOK CHAN

A variety of doughnuts is displayed at a Krispy Kreme store. The franchise in Phnom Penh has plans for expansion due to Cambodia’s positive business climate. Reuters

Half of US businesses operating in Cambodia believe that political stability in the country is such that they are confident in expanding their operations, according to an annual report by the American Chamber of Commerce in Singapore and the US Chamber of Commerce’s International Affairs division.

The Asean Business Outlook Survey 2017 interviewed almost 500 representatives from US companies operating in all 10 Asean countries, with the general outlook being a positive one of growth and increasing profits.

For businesses in Cambodia, 100 percent of respondents anticipated their profits to increase this year, with 83 percent signaling that they would expand their operations.

Tep Viarak, general manager of Express Food Group Co., Ltd., and the franchisee for US-based Krispy Kreme doughnuts, told Khmer Times that business conditions in Cambodia were indeed looking good.

In addition to the current store in Phnom Penh, he said that the company would open one more at this end of this month at Aeon Mall, and two more in the capital by the end of the year.

“How successful it is, it is difficult to say since we only started bringing Krispy Kreme to Cambodia a few months ago, but I noticed that initially there is more demand and customers continue to support Krispy Kreme, so things are looking good,” Mr. Virak said.

According to the survey, 67 percent of respondents cited Cambodia’s low labor costs, 56 percent the positive relations between the two countries, and 44 percent the low office lease costs, as the main factor for attracting investment and businesses to the country.

However, the survey highlighted that lack of trained personnel, customs restraints, infrastructure issues, corruption, and concerns over the legal system and rule of law, were all areas of concern for businesses.

The positive outlook for profits and expansion expressed by businesses in Cambodia were far higher than for Asean as a whole, with the report finding that 76 percent forecasting increased profits for next year, and 63 percent expecting to expand their operations.

The US government recently announced the expansion of its General System of Preferences program to include travel goods made in Cambodia.

Jay Raman, a spokesperson for the US Embassy told Khmer Times that under this expansion, travel goods such as luggage, backpacks, handbags, and wallets made in Cambodia can be exported to the US duty free. This trade preference gives Cambodia a competitive edge to other producers, who will have to pay duties of up to 20 percent.

“The new GSP announcement creates opportunities for Cambodia to export travel goods duty free to the United States, which could [as our Ambassador has said] help to “diversity Cambodia’s economic base, spur economic growth, and alleviate poverty,” Mr. Raman said.