Building on a history of developmental investment, a new policy strategy sparks renewed interest in Cambodia as a destination for Australian business
As a regional neighbour, trade and investment in Southeast Asia have been key elements of Australia’s economic strategy for years. Two-way trade between Australia and ASEAN reached $183 billion AUD in 2023, surpassing trade with Japan and the United States. Investment between Australia and the regional bloc totaled nearly totaled $282 billion AUD the same year. Singapore, Malaysia, Thailand, Vietnam and Indonesia all made it into Australia’s top 15 trading partners in 2022.
Looking to expand on these regional relationships, the Albanese administration launched Invested: Australia’s Southeast Asia Economic Strategy to 2040, a report from Special Envoy for Southeast Asia Nicholas Moore. Laying out practical steps to improve two-way trade between Australia and the region, the strategy builds on existing policies as well as establishing a new organisational structure that emphasises inter-agency cooperation.
Focus Cambodia sat down with First Secretary and Head of Trade and Investment Office of the Australian Embassy in Cambodia Carolyn Bagster to discuss the new strategy, how Australia can expand its economic footprint in Cambodia and what the future holds for this growing bilateral relationship.
Australia’s new Southeast Asia Economic Strategy 2040 is a departure from past economic frameworks. What makes this strategy different from past investment policies focused on the region?
There are a couple of new things about the initiative. What we call the Investment Deal Teams initiative is encouraging Australians to invest outside of Australia. This is a first. Australia has always attracted investment into the country; the government has never really said to businesses and institutional investors that you should look abroad. Australian investors are now sort of flying out of the country looking at new destinations.
The other, which is quite new for the Australian government, is that the initiative consists of three different government agencies. The Department of Foreign Affairs and Trade (DFAT), which is me, the Australian Trade and Investment Commission is our trade promotion and investment attraction agency. The other agency is Export Finance Australia.
Export Finance Australia has never posted people overseas before. Having these teams in the region with people on the ground for the first time, able to understand the operating environments in the region, understanding the businesses and the players, that’s going to be quite a game changer in terms of support and connections and the things that the government can provide, along with financial backing.
What do you feel holds the most positive implications for Cambodia in terms of expanding Australian investment in the country?
I think there’s certainly an element of looking at the way that Australia uses technology in some sectors that is quite important. Another thing is, for lack of a better word, the standard setting that Australia can bring. For example, my understanding is that Cambodia’s mining law is based on West Australian mining law.
So Cambodia doesn’t have to start from scratch; there are models that they can look at where a lot of the work has already been done. If Australia has developed and applied a strategy, it can give Cambodia confidence that this is tried and tested and that they don’t have to come up with something completely new. We can piggyback on this existing technology, these existing standards, or these existing ways of doing business. This can make for some real opportunities.
While Australia’s business footprint in Cambodia isn’t as large as some other nations, your country has operated within the development space here for decades. How do you think this history can support expanding trade relationships and how could these two elements of foreign policy play off each other?
We’ve been here a long time and there has been a lot of development assistance that has gone into the region. We have our flagship programme, the Cambodia Australian Partnership for Resilient Economic Development, CAPRED, which is an impressive programme for economic development. There is also a human development side, so there’s work on health and governance and gender equity programmes.
There are certainly linkages between trying to get investors here and those types of development. For example, if you look at the agricultural sector, the capacity of CAPRED to support that sector is materially important. If investors are looking here at agriculture, they can see that there has been development investment in the sector so Australians could see it in a stronger light.
Besides agriculture, are there other sectors that could benefit from this interplay between development and commercial investment?
Another example, education. Australia is the top English language destination for Cambodian higher-ed. So Australian educational providers should be looking into how they can provide their services here. This means we have opportunities to bring in, not just higher education, but also technical skills.
I see tourism as another industry where Australia could provide technical training and some technology as well. There is an incredibly valuable tourism offering here and I think there’s room there for Australian providers to help.
The other area I see is health services. This is something that Australian experience and technology can help with. Again, this would build on the development side of work that has been going on here for decades. There’s been a lot of interaction between our countries in that sector, but putting it into a more commercial perspective and bringing some of that expertise, I see a lot of opportunities there as well.
The Cambodian government has rolled out a number of initiatives aimed at improving the quality and safety standards around agriculture products to support expansion into regional and international markets. Recently, the medium-sized enterprise Home Taste Food in Siem Reap, was celebrated for achieving the first shipment of dried fish from the Kingdom to Australia. Why are these types of programmes important and how can they improve Cambodia’s appeal as a destination for Australian investment?
We actually went to visit [this business] when they had just shipped the first container! It was the first formal shipment of processed fish to Australia from Cambodia and that shipment could not have taken place without the support of that development programme. When we visited, it was immaculate. It was a really slick, beautiful, clean operation. We saw some photos of what it looked like before and it was chalk and cheese.
It makes you realise that you can take a facility like this, and you can absolutely achieve this certification and these quality standards. Without that foundational work, it’s really hard to see how someone could take something like that and get it in line with the type of quality standards that we have in Australia. Our requirements for importing agricultural products are very strict, so if you can get your agricultural product, your processed fish, into Australia, you can go anywhere in the world.
So these types of events can be awareness raising exercises. There is very little awareness of Cambodia and the opportunities here, so part of my role is to raise awareness and highlight success stories and explain what the opportunities are and what the benefits would be for Australian investors.
What do you feel are the most attractive aspects of entering the market from an Australian perspective? What are some of the most significant barriers to potential operators?
It’s a smaller market, but there’s a growth story here. There’s growth in economic terms, but there’s also growth in terms of population, growth in opportunities. There’s the opportunity to get onto the ground floor because Cambodia is still working its way onto the global stage in a lot of sectors. If you look at agriculture for example and the amount of raw agricultural material that leaves the country that could be processed here, it is kind of staggering. These are opportunities. As opposed to walking into a sector that is already overserviced, which is the case in a lot of other countries.
It’s also a country where there are linkages that exist. Compared to some other countries in the region, Australia is a bit of a known factor here. In other markets, we might have to be elbowing our way in. But here, we don’t have to tell our story. People know who we are here. Cambodia is welcoming to Australians. There isn’t a sort of invisible barrier that we have to fight through. The door is open and the doormat says welcome.
