AHK Vietnam and EuroCham Cambodia signed an agreement last week that aims to bolster trade and investment ties between German companies in Cambodia's industrial landscape.

The Memorandum of Understanding (MoU) was signed at the ASEAN-Cambodia Business Summit held at Hyatt Regency Phnom Penh on September 29.

Marko Walde, Chief Representative of AHK in Vietnam, Myanmar, Cambodia, and Laos, said that the MoU would help German companies in Cambodia's factories.

He added that as AHK does not have any presence in Cambodia, such as an office or staff, it sought a suitable partner and selected EuroCham, whose chairman is also German.

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Walde said that this partnership allows AHK to take initial steps into the Kingdom with the goal of attracting German companies for investment, particularly in the areas of production and distribution.

“We also aim to support Cambodian companies interested in doing business in Germany, such as participating in trade fairs or exhibitions,” Walde stated.

The MoU also aims to further attract trade investment from Germany across Cambodia through cooperation, technical assistance and experience sharing between AHK Vietnam and EuroCham Cambodia, stated a press release.

“Cambodia is becoming an increasingly attractive investment location from now on, especially for Vietnam plus one or China or Thailand plus one strategy.”

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Walde added, “German companies that are already active in Thailand or Vietnam may seek additional investment opportunities in ASEAN, where Cambodia can be a valuable addition. It offers a favorable business environment and opportunities for diversification.”

In terms of sectors, Marko said Cambodia is well-suited for light industries, such as electronics and textiles. However, he acknowledged some challenges, including the shortage of skilled workers and the need for a robust vocational training system in the country.

“If a German company decides to invest in Cambodia, they come with a long-term perspective and advanced machinery. To effectively utilize this equipment, skilled workers are essential.”

Walde suggested that there is a high demand for industrial mechanics and electronics professionals, which necessitates a proper vocational training system.

He added that investing more in education, particularly vocational training, is crucial, noting that Cambodia needs to focus on developing technical skills to meet the requirements of German companies.

Walde said that the first step is to provide information about Cambodia’s market conditions to German companies, especially those operating in Vietnam or Thailand.

If there is interest, the next step could involve organizing a delegation of German companies to visit Cambodia on a two- or three-day business mission. This would allow them to gain a first-hand impression of available opportunities.

Among the areas of cooperation listed in the MoU, the two sides will share best practices and knowledge to better attract more investment and trade opportunities between the two countries.

Walde highlighted that in Vietnam, there are currently 450 active German companies, of which 87 are involved in production investments.

He suggested that some of these businesses may also consider investing in Cambodia. However, it is difficult to determine the exact number of German companies that will pursue opportunities in Cambodia.

“I think some of them could also be interested in investing in Cambodia. But how many we will see." He shared his thoughts that all of the companies are looking for a scenario that makes their business more stable. Therefore, there is a huge demand for diversification.

This means that Cambodia could be a good additional option. “To have operations in several countries and invest in multiple countries allows for the possibility of switching operations if issues arise in one country,” he stated.

EuroCham Cambodia said through the partnership, it will benefit from increased market knowledge in Vietnam as well as the expertise offered by AHK’s staff and network.

EuroCham’s Executive Director, Martin Brisson, said, “We cannot act alone in ASEAN and it's important that we collaborate with our neighbors to help us achieve our shared goals.”

He added, “The MoU will allow us to learn about the intricacies of the Vietnamese market and hopefully attract business across the border to Cambodia. AHK has been a strong presence in Vietnam for close to a decade, and together we can work to create stronger business ties between German companies and Cambodia, as the Kingdom's economy continues to diversify and grow.”