The murder in Cambodia of Lee Chim-shin (
Many Taiwanese businessmen working in the county say that the case is an extreme example of the pitfalls of working in an environment hobbled by complicated investment rules and an undercurrent of corruption that pervades many transactions.
"There are many expenses that we have to pay that are difficult to justify with the main office back in Taiwan," said a businessman in the lumber industry who identified himself as Lin and has been in Cambodia for over eight years.
PHOTO: LIU SHAO-HUA, TAIPEI TIMES
"All of these costs are variable and of course you never get a receipt," Lin said.
According to Lin, one of these "hidden costs" is the money needed to grease the wheels of what many say is a corrupt government.
Another businessman, named Chang, who runs a shoe factory in Phnom Penh, said he must pay between US$3,000 and US$4,000 in kickbacks for a single container of goods -- regardless whether the shipment is being imported or exported.
"A shipment of 10 containers can set you back at least US$30,000," Chang said.
All businessmen in Cambodia speak of having had to pay money to carry out what are "normal" business transactions.
Given this, it is hard to understand why foreigners would be willing to invest in the country. But, as several businessmen pointed out, Cambodia is a place for the "adventurous."
BOOM TOWN
The first group of around 100 Taiwanese businessmen came to Cambodia in 1992 as the country was staggering out from the instability of a 20-year civil war.
"We thought a country like Cambodia would be a good place to invest because there was little in the way of infrastructure. It seemed like a good place to get in early and carve out a niche before other investors beat us to it," Lin said.
Cambodia is around five times the size of Taiwan with much of the land available for construction.
Natural disasters like earthquakes and typhoons are unknown occurrences and real estate prices are far cheaper than in Taiwan.
Many Taiwanese jumped at the chance to buy cheap land for its speculation value as well as possible sites for future factories.
Unfortunately, the dreams of many investors have been shattered.
"Most businessmen have left because they were cheated," said Lin, adding that the main problem was that foreigners could not buy land without having a Cambodian co-sign the purchase.
Because most of the citizens in Phnom Penh are of Chinese origin, Taiwanese coming to the country for the first time feel at home. "When they arrived in Cambodia and met locals who could speak Chinese, they felt that they could easily trust them," Lin said.
"Actually, after some Taiwanese businessmen cottoned on to the scams that were being used, they aided the locals in cheating fellow Taiwanese investors who subsequently arrived.
"When they persuaded a newcomer to buy a three-hectare plot of land, what they really meant was for the buyer to dig a three-hectare pit and then jump in it," he said.
Concrete and construction companies followed the land buyers to Cambodia. The idea was a sensible one: where there is business investment, there will be a need for infrastructure. The reality was that the political unrest in 1997 forced many investors to rethink their stay in the country.
In addition to land speculation and manufacturing, logging companies also rode the first wave into the country.
Cambodia had a completely open policy on logging before 1995. In April of that year, limits were imposed on the industry. After 1998 -- under pressure from the UN -- Cambodia pulled the plug on logging, forcing many Taiwanese logging companies to shut down.
One businessman in the logging industry suffered losses of over US$10 million and later relocated to China.
In 1995, after the government in Taiwan adopted the "go south" policy, the number of Taiwanese businessmen in Cambodia peaked at nearly 4,000.
"The newcomers multiplied like bamboo shoots after the rain," a businessman named Wang said. Wang arrived in 1996 and currently manages a shoe factory.
These were known locally as the "second group" whose investments were mainly in the garment and shoe industries.
"But only around 500 people were actually living in the country. Most of the businessmen were here just to have fun or to get a feel for the investment environment here," Wang said.
At present there are around 200 garment factories and 15 shoe factories in Cambodia, of which 37 garment factories and 12 shoe factories are Taiwanese-owned.
The main reasons for their investment in these industries were two-fold.
First, in 1993 Cambodia was given an enhanced trade status by 28 developed countries, including the US and Japan and was exempted from export quotas for garments and shoes.
Second, the garment and shoe industries are labor-intensive and Cambodian workers are prepared to work long hours for low salaries.
Many businessmen who had factories in China, Vietnam or Indonesia also set up factories in Cambodia.
Cambodia's garment products are mainly exported to the US and Europe, while shoes mostly go to Japan and Europe.
Prior to 1999, there was no limit to the amount of garments that could be exported to the US. Many garment factories took advantage of this fact and began to import semi-finished products to Cambodia for final assembly.
This, in turn, forced the US to put limits in place for certain items such as trousers and T-shirts. Many small factories which had a narrow product range suffered because of the quotas.
The lemmings principle
When many of these smaller factories shut down, rumors spread that the entire investment climate had gone cold -- causing a knock-on effect for other, apparently healthy companies.
The 1997 coup in Phnom Penh also convinced many businessmen to leave the country. The problem of security became a pressing concern, and it was more than a year before the country was able to project an image of stability again. After that, the third wave of Taiwanese investors came to Cambodia, many to pick up the pieces left by those who had fled.
The new group of Taiwanese were minor players and opportunists who had little or no support from the government in Taiwan.
Many such businessmen complained to the Taiwan government about the unfair treatment they received in Cambodia and demanded low-interest loans for following the government's "go south" policy.
"The interest rate on loans from the partially state-owned First Bank in Phnom Penh is as high as 18 percent," one businessman said. "What is the government in Taiwan to me here in Cambodia?" he asked.
According to an official at First Bank, the lowest interest rate available is 10 percent, but the bank looks at borrowers on a case-by-case basis.
According to last year's statistics released by the Council for the Development of Cambodia, Taiwan was the second-biggest investor in the country with total capital injection of about US$140 million.
This figure was confirmed on July 1 by officials from the Taipei Economic and Cultural Office in Ho Chi Minh City after they arrived in Phnom Penh seeking answers to the murder of Lee Chim-shin.
But many Taiwanese snubbed the statistics. "If we are so big, why are Taiwanese still powerless?" one businessman asked.
"It's a big joke," said Chen Chi-li (
Jason Chang (
"But many other countries invest in Cambodia with government capital or in the name of aid support. These won't be listed in the investment statistics," Chang said.
Many businessmen complain that they were encouraged to seek investment opportunities outside of Taiwan but that the government has done nothing to help them.
"We can only rely on ourselves," said one businessman.
In fact, Taiwan did have a representative office in Phnom Penh in 1995 staffed by five officials from the Ministry of Foreign Affairs and the Ministry of Economic Affairs.
This office was shut down by Hun Sen, who was co-prime minister at the time, after he launched a coup against his counterpart, Prime Minister Norodom Ranariddh.
The re-establishment of Taiwan's governmental office has been brought up again in the wake of the murder of Lee Chim-shin.
"But we have to wonder what is the meaning of re-establishment," Chang said.
"If officials come here to cash in on the corruption and bureaucracy, they might as well stay in Taiwan," he added.
Taiwanese businessmen in Cambodia see little reason for the establishment of a new governmental office, except maybe to issue visas.
Ironically, Hun Sen announced last year that Taiwan could re-establish an office in the country at any time, but it would not be authorized to issue visas.
"Flying directly to Cambodia is better than opening a new office, Chang said.
A BRIGHT FUTURE
On June 18, around 200 garment workers demonstated in Phnom Penh to call attention to their low salaries. They wanted a raise from US$40 a month to US$70 a month.
Such actions may benefit workers, but have been met with resistance from employers.
"We came here for the cheap labor. If salaries are too high, Cambodia will definitely lose its appeal to foreign investors," Wang said.
"The skill level of the Cambodians is lower than that of the Vietnamese and the Chinese, but they still want more money," said a shoe factory owner, identified only by his surname Lee. "If I could choose again, I wouldn't come to Cambodia," he said.
"I am used to the surroundings and have spent a great deal of time here. I don't think I could do well if I had to start over in Taiwan," said Hsieh Ming-hsiun (
Even though there have been setbacks for many, Cambodia still holds a fascination for Taiwanese investors, Hsieh said.
"We should give Cambodia more time to develop," Wang said, adding that the country has only been back on its feet for seven years and that there is still much room for improvement.
Businessmen have been left with a bitter taste in their mouths -- that the country did not have a clear sense of professionalism, he said.
"The number of garment and shoe factories is on the increase -- showing that there must still be opportunities available," Wang said.
The Manhattan Textile and Garment Corp -- funded by Taiwanese capital but registered in the US -- recently signed a 70-year contract with the Cambodian government to develop the Manhattan Textile Industry Park with an estimated capital of over US$50 million, said Manhattan's general manager Larry Kao (
Kao said his conglomerate also has investments in the Philippines, China and Vietnam.
"I've been to many countries to manage businesses. There is no perfect place," Kao said. "Most businessmen who fail didn't look at their problems from an outside perspective, instead they focused on what they considered to be wholly local troubles.
"This is not the right attitude for long-term investors to have," Kao said.
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