PHNOM PENH—U.S. President Barack Obama's move to clear the way for the U.S. Export-Import Bank to help finance U.S. exports to Cambodia marks a small but significant step in improving relations, analysts say.
Obama this month issued two memoranda determining that Cambodia and Laos were no longer Marxist-Leninist countries, based on their market-opening moves.
That will allow U.S. firms to seek financing through the U.S. Export-Import bank, which provides working capital guarantees, export credit insurance, and loan guarantees.
...You could say some investors from America have waited."
Chan Sophal, Cambodian Economic Association
Murray Hiebert, senior director for Southeast Asia at the U.S. Chamber of Commerce East Asia department, called the move "a great opportunity to explore new options for expanding trade and investment between our two countries."
"Cambodia has been in all kinds of discussions with the U.S. government in the last year or two on expanding trade and economic cooperation…Cambodians have been very anxious to look for ways to broaden their economic relationships with the U.S.," Hiebert said.
An Ex-Im Bank spokesman called the move "a first step" in financing to foreign buyers of U.S. goods and services in Cambodia.
"Now begins a process of updating the required studies that the U.S. government uses to determine the programs for which buyers in those two countries could be eligible to use, the products they could have access to, and the rates that would be used to determine the costs of that financing,” spokesman Phil Cogan said.
Ex-Im Bank is bound by U.S. government rules and minimum costs established by the Organization for Economic Cooperation and Development (OECD), of which the U.S. is a member, he said.
The OECD bars exporting countries from undercutting each other based on the fees they charge for their financing and forces exporters to compete based on the quality of their products.
"Someone in Phnom Penh or in Laos who wants to start buying U.S. goods and they don’t have access to reasonable financing, or any financing, to buy from the U.S. will...be able to use their local bank, or bank in the U.S., to help them finance what they buy, with the Ex-Im Bank either providing the guarantee of that loan or providing a direct loan," Cogan said.
"The action the president took enables us to begin the process of opening up for business, but it’s going to be a period of months before we’ll actually be able to start accepting applications," he said.
In the Cambodian capital, Phnom Penh, officials welcomed the move.
"The door has already been unlocked and it just needs to be opened. We welcome the removal [of Cambodia from the blacklist] because it will facilitate small investors to come to Cambodia," Cambodian government spokesman Khieu Kanharith said.
Cheam Yeab, chairman of the National Assembly finance, banking, and audit committee, called it "a gift to Cambodia and the Cambodian people to open their trade and agro-industrial markets to the U.S."
"In addition, more U.S. investments in other fields will come, besides Chevron which has exploited oil along the Khmer coast," Cheam Yeab said.
Son Chhay, an opposition member of parliament, said it would boost political and economic motivation but added that Cambodia "should have been removed long ago" from the trade blacklist.
Chan Sophal, president of the Cambodian Economic Association, hoped for increased U.S. investment in Cambodia.
"The blacklist did not bring Cambodia obstacles to [all trade]—a number of countries and investors still came for business in Cambodia—but you could say some investors from America have waited. We hope this good news will help them decide to…come directly to Cambodia for investments," Chan Sophal said.
Cambodia and Laos, with a combined population of more than 20 million, are small markets for the United States.
Last year, the United States exported just U.S. $154 million worth of goods to Cambodia and just U.S. $18 million to Laos.
U.S. imports of mostly clothing and other textiles from Cambodia totaled more than U.S. $2.4 billion last year. The United States bought U.S. $42 million worth of goods from Laos in 2008.
Original reporting by Ath Bonny for RFA’s Khmer service. Khmer service director: Sos Kem. Translated by Uon Chhin. Written for the Web in English by Joshua Lipes. Edited by Sarah Jackson-Han.