PHNOM PENH – Japan External Trade Organization (JETRO) is officially opened in the impoverished Southeast Asian nation, the move aimed to boost the bilateral trade of the two Asian nations given the growing interests by the Japanese businesses toward investment in the Kingdom are in “rapid upward trend”, said Cambodian commerce minister and Japanese officials on Wednesday.

The activities of JETRO, which is a Japanese government-related organization, is to provide information on investment climate or business environment, researches on specific issues for those who are expanding their businesses in the receiving country as well as providing services to firms with business-related difficulties in the foreign markets.

Yasuo Hayashi, Chairman and CEO of JETRO, said “we will use the newly opened JETRO as a base for pro-actively providing Japanese businesses with information about the advantages of investing in Cambodia.”

The Cambodian geography and human resources are also intriguing the Japanese trade office to set up in Phnom Penh.

Both sides said that the establishment of the China-ASEAN free trade area (FTA)—which  went into effect began January 1, 2010 under which most goods traded between China and the 10-member Association of Southeast Asian Nations (ASEAN) attach zero or little tariff—also lured Japanese investors to see Cambodia as centre location for exporting to the region.

“Cambodia is situated in the centre of the southern economic corridor linking Bangkok to Vietnam’s Ho Chi Minh and is rich in hard-working and excellent human resources.”

Hayashi said “because of this, we expect that interest in Cambodia will further grow as a base for labor-intensive manufacturing and exports.”

He said Japanese investment, which is now ranked far below among the foreign direct investment (FDI) at between 10th- 15th, would increase in the long-term given the country’s investment potential and political stability.

The number of Japanese companies increased to 57 as of January this year from 36 in April, 2008.

Hayashi said the Japanese investment in Cambodia was recorded so far was $4.76 million, which is a low level in the total amount of approved investment in Cambodia.

Japan has invested another more than $6 million in the Cambodian Special Economic Zone (SEZ).

For investment projects in the future, “we have high expectations for further entry of Japanese businesses into the SEZ in Phnom Penh and Sihanoukville Port to be completed in 2011 by Japanese loan,” said Hayashi.

“With the advantages of Cambodia in investment environment and its pro-Japanese people, it can be expected that both large and small sized Japanese companies will come to the Cambodian market,” Hayashi said at the opening ceremony.

Cambodian cheaper labor cost compared to China and Thailand is another factor that encouraged the Japanese trade group turned to look into Cambodia as their investment radar in the region, they said.

“The Cambodian low labor cost and the long term political stability are attracting not only the Japanese investors, but others too,” commerce minister Cham Prasidh told reporters at the ceremony.

“Like the political situation in Thailand made Japanese businessmen moved to Cambodia if they are not completely pulled out, they are partially pulling out from Thailand,” said the minister.

Prasidh also said that for those Japanese investors, who are operating in China, would see Cambodia as an investment destination as China’s authority are calling foreign investment to invest in the rural areas rather than the coastal ones.

“So there will be a possible number of Japanese investment assets would be transferred to invest in Cambodia.”

“So in the future if Japanese investor will not be leading foreign investment in Cambodia, it would be the second large investment here,” said Prasidh.

Cambodia has received 98 percent items tax exemptions for exporting products to Japan.

Hayashi said that the total two-way trades between the two Asian nations have greatly increased to $255 million last year from only $104 million in 2000.

Japan’s main exports to Cambodia are vessels, machines and transportation equipment and Tokyo’s key imports are footwear and sewn products from Cambodia.

“By having the office here, we hope to double our bilateral trade,” said the Commerce Minister Prasidh said at the opening remark.

He also said the JETRO permanent office in Phnom Penh will serve the Japanese investors the reliable sources about investing in this Southeast Asian nation and would bridge the partnership between the local investors and the Japanese businesses.

Both sides said the relevant combined factors have contributed JETRO to open its permanent office in Phnom Penh, which included the political turmoil in Thailand has partially driven the Japanese investors to look into this Southeast Asian nation as investment radar.

Cambodia and Japan signed in July 2008 the Memorandum of Understanding (MOU) on the protection and promotion of Japanese investment in the Kingdom.

Prime Minister Hun Sen, during his visit in Japan in October last year, called Japanese Prime Minister to encourage JETRO to open the office in Phnom Penh.

JETRO, which is a Japanese government-related organization established in 1958 for the main purpose of trade and investment promotion and economic cooperation, has 38 offices in Japan including the Tokyo headquarters and has another 72 overseas offices in 55 countries including in Cambodia.

Japan, which is a key Cambodian donor, has injected Cambodia more than $2 billion in grant and loan for the country’s infrastructures development, human resource training and many other areas since early the 1990s.

Tokyo also pledged, during the Mekong-Japan Summit in November 2009, to offer $5 billion assistance for three-year plan for the Mekong sub-region development including Cambodia.