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INTERNATIONAL BUSINESS

Group Assignment
(MGT 3215)

Name: Leong Huey Tyng I10006351
Wong Yan Kee I11008548
Leong Shuh Jiun I11009185
Xu Qing Qing I11008892
Yong Hui Hwa I11009119
Kong Lai Yee I10006524

Section: 5I2
Lecturers name: Miss Wong Choon Fah




Table of Content

Content Page
1.0 Executive Summary
2.0 Introduction
3.0 Introduce the country & reason
4.0 Factors that influences business opportunities
4.1 Political
4.2 Legal
4.3 Social Culture
4.4 Economy


5.0 Potential Competitors in the industry
6.0 Strategies of company
7.0 Potential risk that company may face
8.0 Conclusion
9.0 Reference
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1.0 Executive Summary

Transportation affects a countrys economy sector enormously. With a good transport system,
people get access to various destinations and bring economics as well as social benefits. Hence, we
choose to enter into transportation sector. Proton Holding Bhd is selected as it is one of the largest
automobile manufacturers in Malaysia. Since we want to enter into South East Asia countries,
Cambodia is chosen after considering various factors such as product suitability, political, legal,
social-cultural and economic factors, potential competitors and potential risks. We have also taken
into consideration that Proton has entered Indonesia, Thailand, Brunei and Laos so we would want to
enter into a new country to gain more market share.

The Proton Holding Bhd is founded in 1983 as Malaysia automobile industry. At first, they
cooperated with Mitsubishi Motors to learn their technology and gain experience. Research and
development (R&D) is stressed by Proton and that is the reason Proton in gaining more and more
popularity nowadays. Proton Exora is chose for Proton to enter into Cambodia due to its relaxing
comfort, outstanding performance as well as safety features. As for country to enter, Cambodia is
chosen due to its fast track investment approval, competitive investment approval, simple
procedure to buy Protons products, social-cultural factors and large population, language used as
well as right-side drive.

In sum, we find that this assignment has helped us to develop critical thinking skills and has helped
us to apply what we have learnt. We manage to develop skills to analyze business environment,
understand the importance of analyzing foreign market and able to find out the business implications
of different environmental factors. We also learn to work in a team and make the assignment a
success together.

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2.0 Introduction
When we start a business in foreign country, not only the type of company should we consider, but
also choose the most suitable product to its targeted market. After so many discussions, we have
chosen Proton Holding Bhd as our main company and the product of Protons Exora as our primary
product to spread in foreign country. Here is the introduction about the company Proton and its
product-Proton Exora as our product to start business in foreign country.
Introduction of company, Proton
The Proton Holding Bhd which has a long history found in 1983 is a Malaysian automobile
manufacturer. At the early product development, Proton Company did not have any basics on the
production of cars, thus they firstly cooperated with Mitsubishi Motors. Nearly most of technologies
and parts were from Mitsubishi Motors at the beginning of development. With the help of Mitsubishi
Motors, the first model of Proton Saga began in September 1985. (Proton, 2012) After then, Proton
made a sustained effort to invest much more capital in the area of developing research and design
capabilities so that they could truly become independent in the automotive industry. In a way, Proton
Holding Bhd has already got the mature skills to produce high quality cars such as Persona launched
in 2007. (Proton, 2012) Nowadays, the Malaysian government is constantly paying attention to the
local early dominant carmaker-Proton and also grants some subsidies and low-interest loan to
support Proton. On one side, the Proton can gain competitive advantage to get subsidy from
government to strengthen their business for developing their own innovative product; on the other
side, they also borrow low interest loans from their government to expand their business further such
as foreign country investment. As a result, Proton Holding Bhd is an ideal company to invest
business in foreign country.
The introduction of product
Proton Exora which is a compact multi-purpose vehicle (MPV) model was launched on 15
April 2009. This type of automobile is mainly to meet Malaysias first homegrown MPV being an
ideal family vehicle. (Tan, 2011) Proton Exora which has multiple functions, good performance and
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high quality design includes advanced styling such as a touch screen portable GPS device, spacious
interior by adding maximum number of 7 adults as a new type of family vehicle. There are mainly 3
characteristics of Exora being mentioned as follow.
(i) Relaxing comfort
Proton Exora has a spacious interior with flexible seating arrangement and plush leather seats. When
we sit in the car, interior height and width will make us get comfortable feeling without limitation of
space. What more, the spacious space can bring a chance for people to get entertained to make sure
that people get all-around comfort. Besides, the spacious interior can carry 7 adults comfortably plus
luggage. Refer to the underpinning of Proton Exora, it has a monologue chassis with a 2,730mm
wheelbase.(Tan, 2011) When people drive the car, monologue chassis which can bring people a
superior ride make people drive as much comfortable as possible. Therefore, Proton Exora can truly
bring the relaxing comfort for driver or passengers.
(ii) Outstanding performance
Proton Exoras new 1.6L engine that was developed by Proton and Lotus engineers gets up to a
powerful 138bhp to a maximum of 151bhp. (Tan, 2011) The new engine is more efficient which
comes up to a 2.0L engine with less high fuel consumption. Therefore, customer will experience
powerful performance with Proton Exoras new engine; at the same time, they can save a fraction of
fuel consumption. It is the best choice for consumer to choose Proton Excra.
(iii) Safety features
Proton Exora includes an Antilock Brake System (ABS) to avoid skidding during an emergency
brake and an Electronic Brake Force Distribution System (EBD) (Tan, 2009). Those high-technical
systems can guarantee the correct amount of braking power which is able to send the correct wheels
depending on the current weight distribution of the car. Two front airbags and pre-tensioner seat
belts are set up for the front passengers so that it can truly help people get rid of the danger under the
emergent situation. Therefore, most of people would like to choose Proton Exora with high-technical
safety feature.
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3.0 Introduce the country & reason
Cambodia, a country in Southeast Asia, has a potential opportunity to develop although it is
a poor developing country. In 2011 per capital income in Cambodia is rapidly increasing between
$2470 and $1040 even though this data is lower compared to other developing country. In Cambodia,
most rural households depend on agriculture and its related sub-sectors. So far, Cambodia major
exports are rice, fish, rubber and timber. Because Cambodia has the ability to maintain the domestic
food self-efficient, so they can gain more profits from export market. As a result, we select the
country with a good prospect to expand our business. There are several reasons which encourage us
to expand our business in Cambodia.
1. "Fast-track" investment approval
The purpose of the Council for the Development of Cambodia (CDC) permits investors to process
one stage with one government body which is called "One Stop Service" investment centre that
offers the speediest approval response for foreign investors.(Cambodias.net 2007) During the
investment approval, the CDC provides information and application documents, evaluates and
processes investment applications in less than 45 days so that investors can quickly carry on their
business in foreign country. (Cambodias.net 2007) Whats more, the CDC also grants customs duties
and tax exemption, issues visas and work permits, and facilitates other downstream administrative
procedures. (Cambodias.net 2007) As a result, Protons business built in Cambodia not only can get
a application approval in a short time period, but also get money support from Cambodia government.
It is good policy that attracts foreign investment.
2. Very competitive investment incentives
So far, Cambodia has offered the best business incentive package in Southeast Asia in term of the
investment law. The following are the highlights of the new law:
The government sets full import duty exemption for foreigners opening their business in Cambodia.
(Cambodias.net 2007) It can reduce the overall costs for Proton importing some components
manufactured in Malaysia such as engine to Cambodia so that Proton can lower their total cost as a
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competitive advantage over local rival such as Toyota. Whats more, there is no withholding tax on
dividends. (Cambodias.net 2007) As shareholders in Proton, they can get more dividends through
investing more capitals to support Proton investing in Cambodia without deducing tax on dividends.
Certainly, there are no nationalization and price controls. (Cambodias.net 2007) Proton can get the
free opportunity to control its business without local government intervention. Moreover, there are a
great number of supplies in labour. So far Cambodia has a population of nearly 9 million people
which have 51% in the 'working age" group. (Cambodias.net 2007) Besides, the local labour costs
are lower compared to other South-east Asia countries and Proton can make full use of local labours
to improve Proton Exoras productivity. As a consequence, those are good business incentives that
Proton can build their own business strategy according to the demand from target market to seize
their market share.
3. Simple procedure
In Cambodia, most people use second car such as Toyota RAV4 car in their families due to its
reasonable price which is suitable for family and for traveling or work for long distance from time to
time. However, if people buy second car, it has complicated process where they need proper cars
document and copy of all related document, ID card and information. Buyer must validate the car
and sign on the agreement with the owner before they make a full payment with witness on the spot
(The Phnom penh Cambodia, 2012) So it should spend a lot of times to finish the transaction about
buying the second car. However, if we choose to buy a new car such as Proton Exora which also has
a simple transaction and Proton Exora have similar price and quality to Toyota RAV4. There is no
doubt that people may choose to buy a new car with simple transaction process. Therefore, Proton
can obtain more competitive advantage over its rivals.


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4.0 Factors that influences business opportunities
4.1 Political
Over the years, Cambodias politics experienced dramatic changes. In the year of 1953,
Cambodia got independent from France, under the King of France, Prince Norodom Sihanouk.
After that, Cambodia got involved in the conflict between United States and Vietnam and the
destructive civil war when under Khmer Rouges rule. All these have brought high damages to the
country. The impacts are still can be seen now after so many years. (Economy and Politics of
Cambodia)
Finally, peace has come to Cambodia in 1993. A political system that is based on
multiparty democracy has established. It has known as parliamentary representative democratic
monarchy. It has provided the framework for assurance of good governance. Prime minister is the
head of the government, he is elected by the King while the King is the head of state. (Economy
and Politics of Cambodia)
The country, Cambodia now has political stability which attracts our attention to invest in
their country. It has transformed into a peaceful country with the improvement of social order,
stability, cooperation and development. Several key ministers are very experienced and wise in
facing all kinds of problems because of long-serving the in ministry. The Prime Minister Samdech
Techo Hun Sen, from time to time putting his effort on strengthening the judicial system, and
developing the countrys legal framework and institutions. His main reason is to attract foreign
investors by providing favourable business environment. (Invest in Cambodia)
Other than that, to attract foreign investors, the government has put in efforts to win the
hearts of foreign investors. They have solved all kinds of problems that related to business
investments that are local and foreign. For example, reimbursement of value-added tax for exported
goods, extension of tax holidays for garment factories, requirements for bank licensing, and the
extension of accommodation tax exemption for the tourism industry. (Investing in Cambodia)

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(Investment Risk In Cambodia)
Statistics are shown after a research is carried out to analyse the risks of doing business in
Cambodia. The research measured the risks according to certain variables but in this picture, we
will only focus on political risks as we need to equip our company with the knowledge of the
country we want to invest in, especially political as it will affect the business environment just a
blink of an eye.
We can see that there is reduction of risk from the year 2011 to the year 2012 especially on
external political risk. The grading system tells us that the lower the grade the risk has, the more
favourable the environment to do business. The external political risk has reduced. This has
indicated that Cambodia is now enjoying a more stable relationship between China, United States
and other major trading partners. These relationships have helped Cambodia to promoting in
attracting other countries to invest in. Most importantly, the relationship between Thailand and
Cambodia has been restored as the problems that have lasted for years since long time have settled.
Therefore, Cambodia is definitely a safe environment for us to start our business there. (Investment
Risk In Cambodia)
On the other hand, domestic political risk has also slightly reduced. This indicates that the
political situation in Cambodia remains stable. Even though election is going to be held in the year
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end of 2012 and beginning of 2013. It seems that majority vote will still go to current government.
Thus, theres not going to have changes in business environment and this will definitely bring
assurance to the investors of our company. Besides that, government policies are consistent. The
policies are made to promote open economy to international world. The government is working
hard to open up its country for foreign investment. The main purpose is to improve the economic
growth and recover from the damage that has been done in last time. (Investment Risk In
Cambodia)
There is no zero-risk investment in the world. The corruption in Cambodia hurts the
business investment either from local or foreign countries. This has added on into business costs.
Usually bribes are functioning as a tool to connect the businessman with the local government
officers. It does not speed up administrative procedures like what happens in other countries.
Therefore, our company must prepare the business cost that will occur. (Cambodia 2012
Investment Climate Statement)
Other than that, the institution is weak due to large and inefficiency bureaucracy. There
are too many government departments and officers but administrative work is still slow. The
officers are not efficient enough to get all the administrative work done. This has caused slowing
down of all the procedures that are related to doing business in the country. Rules and regulation
that are made by government are unclear and meaningless. Our company must have good planning
while we are investing in the country. This plan will definitely include time and cost that are going
to spend in the process of setting up the business in Cambodia. This planning work will help the
companys work smoothly and be more efficient while investment is being carried out. Time and
cost will be reduced on the company side as all the problems are predicted and solutions are
already prepared. (Investment Risk In Cambodia)

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4.2 Legal
1. Structure of the Judiciary System
For judiciary system in Cambodia, it consists of two main components which are power,
institution and actors. (khmerrough.com) For power, it is influenced by three components which are
judiciary, legislation and executive. The definition for judiciary is the part of a country's
government which is responsible for its legal system and which consists of all the judges in the
country's courts of law. On the other hand, legislation is defined as a law or set of laws suggested
by a government and made official by a parliament (Cambridge Dictionaries Online, 2011) which
executive is defined as the part of a government that is responsible for making certain that laws and
decisions are put into action (Cambridge Dictionaries Online, 2011). The performance of the 3
powers is monitored by media.
As for institutions, it consists of constitutional council, supreme council of magistracy,
courts and departments of prosecution and ministry of justice. (khmerrough.com) For the last
component which is actors, it is made up of judges, lawyers, prosecutors and notary. These people
play a vital role in maintaining justice in Cambodia. (khmerrough.com) Hence, we can observe that
Cambodia has a proper judiciary system. This gives confidence to Proton to invest in Cambodia.
2. Transparency of the Legal System
The laws of Cambodia are clearly stated and it can be downloaded in either English or
Khmer language in Internet. (GoCambodia.com) As for language used in court, the parties are free
to agree on the language or languages to be used in the arbitral proceedings. If the parties fail to
agree on this, the arbitral tribunal shall decide the language or languages to be used in the
proceedings. Any documentary evidence might be ordered by the arbitral tribunal with a translation
into language or languages agreed upon by the parties or decided by the arbitral tribunal. Hence, if
there is any disputes that need to settle in court, we can choose English language to be used in the
arbitral proceedings. English is an international language and we believe that the court would allow
us to English in the proceedings. As for documentary evidence, since it can be ordered by the
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arbitral tribunal to translate into language or languages agreed, we would have no difficulties in
understanding the documents.
Thinking on behalf of Proton, the availability of laws in Internet and language used in
courts is undoubtedly an additional point for us to invest in Cambodia. This is because everyone
can access to Cambodias laws easily and it is transparent. Other than that, it is a good news that we
can choose the language used in courts. Since English is an international language and we
understand language, we can always request to use English in court.
3. Legal Aid Service by International Bridges Justice (IBJ)
International Bridges Justice (IBJ) is committed to protect the basic legal rights of citizens
in developing countries so that all citizens are able to have competent legal representative, are
protected from unfair punishment and are treated fairly. (Ibj.org, 1990) In Cambodia, IBJ helps in
training Cambodias lawyer and concentrating on the development of legal aid service. The
rebuilding of the legal infrastructure is carrying by IBJ in Cambodia. (Ibj.org, 1990)
Since we are doing business in Cambodia, we focus on the land law issue such as illegal
land distribution which is also handled by IBJ. Other than that, seeing that we will be sending
employees to Cambodia, a good criminal law is vital to ensure that our employees safety is
guaranteed. With the help of IBJ, the criminal law of Cambodia is improved so we have confidence
in investing in Cambodia. (Ibj.org, 1990)
4. Corruption
In 2011, Cambodia was ranked by Transparency International as 164th in the world by
perception of corruption. Its better rank than Mynmar in Southeast Asia. (Transparency
International, 2012) However, the president of the Federation of Association for Small & Medium
Enterprises of Cambodia, Te Taingpor commented that Cambodia will raise the awareness of the
public regarding the importance of minimizing corruption.
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Officials who accept bribes might be jailed for up to 15 years if found guilty under the
Anti-Corruption Law. (Business Anti-Corruption Portal, 2012) This law also enables
anti-corruption council as well as anti-corruption unit to investigate bribes cases. A five-year plan
including mandatory asset declarations are adopted starting from year 2010 to combat corruption.
(Business Anti-Corruption Portal, 2012)
One of the very good examples is Top Chan Sereivuth, the former prosecutor of Pursar
province was sentenced into 19- year jail and was charged US $100 after being found guilty of
extortion money, illegally detaining businessman and corruption together with his two bodyguards
according to The Straits Time. The two bodyguards, Chhit Vuthy and Ro Samnang were sentenced
into 16 and 15 years jail respectively. (2012 AFP,2012)
For any businesses, a corruption free business environment is important. It is the
corruption free business environment that allows companies to compete in a fair way. For Proton,
business ethnics are stressed and we focus on producing the best quality of products and services to
meet the demand of customers. Hence, to compete with other automobile manufacturers in a fair
manner, the corruption rate must be low. This proves that Cambodia government is putting effort in
combating corruption so we will give Cambodia a chance in this matter.
5. Type of Business Organization in Cambodia
The types of business organizations available in Cambodia are branch office, commercial
representative office, branch office, joint stock company, limited liability company, partnership
(both general and limited), limited liability company and sole proprietorship limited company.
Below are the characteristics of the business organizations in Cambodia. (GoCambodia.com)
(i) Branch Office
An office which is set up by foreign company in Cambodia to carry out commercial activity is
called as branch office. The parent company have the authority in selecting the management people.
It can carry out all the commercial activities such as buying and selling goods and services. The
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method of production is fully controlled by its parent company. As for liabilities, the debts of a
branch office are under the responsibility of both branch and parent company. (GoCambodia.com)
(ii) Commercial Representative Office (CRO)
Eligible foreign investors are allowed to establish CRO to help in the sourcing of local products
and services in order to gather information for its parent company. It is treated as the same legal
entity from its parent company. CRO is treated as a cost centre which means it does not gain direct
profit (TechTarget 2012) and derive no income from its activities. The examples of CRO are
research and development (R&D) departments, Marketing departments and customer contact center.
(TechTarget, 2012)
(iii) Joint Stock Company
It is a company in which all stockholders are unknown to the public. It must be formed with at least
7 shareholders. As for the minimum issued capital, it must have at least 100 million riets which is
equivalent to RM7792.97 at a principle value per share of at least 10,000 riels or RM7.79. As for
Board of Directors, three of them must be the shareholders of the company. (GoCambodia.com)
(iv) Limited Liability Company
It is a company in which the shareholders of a limited liability company have limited liability.
Minimum 2 and maximum 30 shareholders are allowed in Limited Liability Company. Businesses
such as financial institutions and insurance companies are not allowed to be incorporating as a
limited liability company. It has a minimum paid up capital of 20 million riels which is equivalent
to RM15532.78 at a principle value per share of at least 20,000 riels or RM15.53.
(GoCambodia.com)
(v) Partnership
In Cambodia, two forms of partnership which are general partnership and limited partnership can
be formed. For general partnership, it is formed between two or more persons who have shared
unlimited liabilities which mean all general partners have the risk their personal assets in case the
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company goes into bankruptcy and cannot pay back the debts. As for limited partnership, it is
formed by one or more general partners who have unlimited liability and a few limited partners
who have limited liability. Only the name of general partners will appear in the name of business.
(vi) Sole Proprietorship Limited Company
Only one shareholder is found in sole proprietorship limited company. This type of company can be
either managed by the shareholder himself or an individual appointed by the shareholder himself. If
it is registered in registered office in Cambodia and has at least 51 percent of its shares owned by
Cambodian nationality will be able to own land in Cambodia. Only Cambodian citizen can become
the Chairperson of the Board of Directors while other directors can be foreigners.
(GoCambodia.com)
In conclusion, after considering all types of business organization, we made up our mind
to set up Protons branch office in Cambodia. The reason behind is we want to have fully control of
the directors as for branch office, the Head Office has the authority to manage and control the
branch office by selecting its own directors. Another reason for us to choose branch office is branch
office in Cambodia is permitted to can control the buying and selling of goods, the signing of
contract, the services rendered and so on. As a car manufacturer, we want to take control on where
to get the raw materials as well as resources. The products and services provided must be as good
as what Protons headquarter offered. Hence, we would enter Cambodia through branch office.
6. Rights to Private Ownership
There are no restrictions for foreign companies to establish and own business in Cambodia.
The law on land, 2001 of Cambodia provides a guideline for individuals and corporation to own
land in Cambodia. Under the law only Cambodia citizens and companies which have 51 percent of
its shares are owned by Cambodias citizen or Cambodia Company. (AAA Advisors Ltd -
Accounting, Auditing & Advisory Services, 2012)
Under the law, foreign investors are allowed to use long term land lease to own buildings.
Previously, no foreigners are allowed to own land but from what we see today, Cambodia has
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progressed as it provides an alternative which is to use long term lease for foreign investors to own
land but. Proton do not choose to use long term lease as using long term lease would require us to
have 51 percent of shares owned by Cambodias citizen or Cambodia Company. (AAA Advisors
Ltd - Accounting, Auditing & Advisory Services, 2012)
Under the law as well, the Council for the Development of Cambodia can approve
qualifies investors to own buildings on leased property. Since Proton is focusing on improving the
transportation in Cambodia, we can approach the council and apply to become a qualified investor
to own buildings on leased property.
It is good news for Proton because we can apply to become a qualified investor. Since we
plan to manufacture at Cambodia, Cambodia has given us the green light to own land at Cambodia.
7. Protection of Property Rights
Being a member of the World intellectual Property Organization (WIPO) and the Paris
Convention for the Protection of Industrial Property (State.gov 2010), Cambodia follows rules and
regulations to protect property rights. Land laws and the Law on Copyrights and Patent and
Industrial Design are designed to protect property rights. The law on land, 2001 of Cambodia
provides a guideline for individuals and corporation to own land in Cambodia. Under the law,
foreign investors are allowed to use long term land lease to own buildings. Previously, no
foreigners are allowed to own land but from what we see today, Cambodia has progressed as it
provides an alternative which is to use long term lease for foreign investors to own land. Cambodia
(2012 Investment Climate Statement, January 2012)
Under the law as well, the Council for the Development of Cambodia can approve
qualifies investors to own buildings on leased property. Since Proton is focusing on improving the
transportation in Cambodia, we can approach the council and apply to become a qualified investor
to own buildings on leased property.
It is good news for Proton because as long as we have long term land lease, we can have
our own building there and we can apply to become a qualified investor. Since we plan to
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manufacture at Cambodia, Cambodia has given us the green light to own building using long term
land lease.
As for intellectual property rights (IPR), Cambodia adheres to World Trade Organization
(WTO) commitments as Cambodia is a member of it. To meet the requirement of WTO, the law
concerning marks, trade names and acts of unfair competition was approved by the Cambodian
National Assembly. For your information, WTO had extended the deadline to 2012 for Cambodia
on November 9, 2005 to fully comply with WTO rules and regulations. (state.gov 2012)
It is year 2012 and next year is already year 2013. In a very near future, the deadline for
Cambodia to comply all the rules and regulations such as to enforce copyright laws and patents set
by WTO on intellectual property rights will reach. Hence, Proton will not need to worry that when
we set up a branch office at there, our intellectual properties are violated by irresponsible third
parties. (state.gov 2012)


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4.3 Social culture
When we enter into a foreign country to start direct foreign investment, we need to focus on the
social-culture which can show us a countrys culture to help us know if the country has potential
development. Our companys product is very suitable for Cambodia as it matches the social culture.
1. Population
According to the Cambodias statistic in 2011, it has an estimated population of 14,805,358 people,
of which 51% are in working age group higher than those of Thailand, South Korea, and India. It
can prove that Cambodia has a plenty of labour supplied for us to utilize. There is no wonder that
choosing Cambodia as Protons direct foreign investment is the best choice to further expand
protons business.
2. Language
In recent years, many younger Cambodians and those in the business field have gradually studied
English. The tourism industry is the countrys one of greatest popular industry, English is widely
spoken and taught at a large number of schools because of a great number of tourists from
English-speaking countries. As a consequence, we can hire some local technicians to produce
Protons Exora by communicating with English and Protons car industry will manage more
efficiently.
3. Right side drive
Cambodia follows a keep-to-the-right rule drive derived from France. In another words, Cambodia
has the same right side drive as Malaysia. Therefore, Proton does not need modify its module of
Proton Exora according to the same rule of right-side drive with Cambodia. It can help Proton save
certain of design capability fees to reduce cars cost. As a result, Proton will set a lower price to get
a competitive advantage over local rivals.


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4.4 Economy
Cambodia has emerged as a high growth economy in recent years. This has made many
investors as well as corporations from all around the globe are being attracted to have investment
project with this country. Cambodia had slowly transformed from a centrally planned economy
country to a free-market economy in 1993. Instead of controlling and planning for the country what
to produce, how to produce, the Cambodia government has taking effort in promoting private
investment and encouraging with several institutional and economic reforms.
1. Under-penetrated economy
When compared to other countries like Vietnam and Thailand, Cambodia is still
considered as an under-penetrated economy with growing domestic consumer market. The word
under-penetrated means that the market is still new and has less businesses operating in it .Thus
if we could set up our business there then we might be able to gain some first-mover advantages
such as higher profit or greater market share. According to an research that reported 61% of
Cambodian are under 25 years old, so this exceptionally youthful demographic there will also
ensure a rising domestic demand. (The Phnom Post, 2012)
Some analysts and economists even made their assumption that with workforce
participation, household formation and urbanization will all contribute to the robust growth of
Cambodia for the next decade. Besides, the GDP per capita had increased twice as well which
signified a rising purchasing power of the people in the Kingdom. (Leopard Capital.2008-2012)
2. Strategic Location
The location of a country will affect its attractiveness to become an investment country.
Cambodia gains advantage in this aspect as it is located at the heart of South East Asia, which is a
region that is experiencing enormous economic growth for several decades.
Cambodia is sandwiched between Thailand and Vietnam which these two countries have a
better and more developed economies that will indirectly facilitate the economics of Cambodia. At
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the same time, it is also the midway between China and India thus this is very beneficial as these
two countries are the most important growth area of 21
st
century. (Leopard Capital.2008-2012)
3. Improvement of Transportation Connectivity
On the other hand, the transportation system of a country is also very important as it will
influence the cost of doing business there .Cambodia is basically connected by road system with
Thailand, Laos and Vietnam but waterway are still an vital supplement to the roads as the country
is not very well-established yet. Since the transport system is not advanced and complete hence this
will indirectly increase our cost of doing business there. In order to improve on this aspect, the
country had decided that all key road and bridge that connecting with neighboring countries like
Vietnam and Thailand will soon be upgrade.
Unlike technology-advanced countries such as Japan and South Korea, Cambodia only has
two rail lines, one is extending from Phnom Penh to the Thai border while the other one is from
Phnom Penh to Sihanoukville. In the hope to attract more foreign direct investment, Cambodian
country is currently put in a lot of effort as the railroad system is being rehabilitated while their
container sea port in Sihanoukville has been modernized and expanded. Meanwhile, Cambodia
government had also opened three new international airports to ease the travel of businessmen and
the transfer of cargos and containers. (Leopard Capital.2008-2012)
4. Low Labor Cost
It is relatively low cost to invest in Cambodia when compared to Thailand and Vietnam as
the younger generation in these two countries are increasingly prefer to get a white-collar jobs for
themselves which will gradually increase the cost of labor. Then we should look for other
alternatives like this new emerging country, Cambodia.
The workers here are more diligent and easily motivated as a single working opportunity is
consider very precious for them. Hence they are willing to work even though the task is tough.
Thus it is very beneficial for us to employ them and train then then work for us with low cost but
high productivity.
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The lack of skilled workforce is not a big obstacle for us as the country is currently
initiating a lot of intensive on-the-job training for its people to make them more
well-equipped .Besides ,we can also bring our own management team and senior workers to
Cambodia and give training to them. This might seem to be costly but actually it is better in a way
that the Cambodias workers are lack of experience hence it is easier for them to absorb what we
teach them just like a white paper that can be easily be occupied by writing or drawing .(Royal
Consulate General of Cambodia ,2011)
5. Attractive Incentives
The Cambodian government proactively support and welcome foreign direct investment
by offering a variety of attractive incentives for investors that will manufacture and sell products in
their country. The first incentive is the import tax exemption for construction materials and
production equipment. For instance, since we are going to set up our own business there so we are
under domestic manufacturing industry for the type of industry and will get exempted from the
import tax for construction materials and production equipments. (Phnom Penh Special Economic
Zone, 2012)
The second incentive is about the ease of opening a capital account in Cambodia and the
advantage of repatriation of profit. Repatriation of profit means that the profit that we had gained in
Cambodia can be converted and transfer back to Malaysia. Although the national currency in
Cambodia is Riel, the US dollar is widely used in business and daily life in Cambodia. With several
regional banks have opened in recent years, making it even easier for investors to move funds in
and out of the country as well as open a capital account in Cambodia. (Leopard Capital,
2008-2012)
The third incentive is the Government-Private Sector Forum will help to reduce obstacles
and inefficiencies in our operation in Cambodia. This body will always be there and ready to bring
government and private sectors together to talk about all issues and find appropriate solutions
which benefit all. (Leopard Capital, 2008-2012)
20


6. Unleveraged Financial Position
The sovereign credit rating of Cambodia has remained unchanged and unleveraged since
they are first received by the Kingdom in 2007. Moodys presently rated Cambodias long-term
debt at B2 while Standard and Poors rating is B+. Both rating indicate that this country has an
ideal speculative investment prospect. Cambodia also has relatively low levels of sovereign,
corporate, and consumer debt due to well-capitalized and conservative banking system. (Leopard
Capital, 2008-2012)
7. Largely dollarized economy
Other than having an unleveraged financial position, Cambodia also has a very largely
dollarized economy, which minimizes foreign exchange risk for a lot of foreign investors. This type
of economy can help to stable monetary and fiscal responsibilities as well. Moreover, Cambodia is
focusing and working very hard in increasing trade integration. For example, Cambodia has been a
member of WTO and ASEAN, and above all Cambodia has duty free or preferential export access
to most developed economies. (Leopard Capital, 2008-2012)
8. Taxation
Cambodia has a more lenient tax regime compared to most neighbouring countries.
Corporate tax rates are low, and filing requirements are simple and streamlined. In addition,
Qualified Investment Projects can benefit from attractive tax breaks, as determined by the CDC.
QIP is an investment project which has received a so-called Final Registration Certificate (FRC) by
the Cambodian investment board or other relevant government authorities. (Global Legal Resource,
1995-2012)
9. Special Economic Zones
Special Economic Zones have recently been introduced to Cambodia. This zone is just like
what we are now having in Malaysia so called as Free Industrial Zone; one good example is Bayan
21

Lepas which located in Pinang. All industrial activities are brought together into one special
development under the auspices of the SEZ. Each zone contains a production and service area and
may also include a residential area to accommodate workers.
SEZs offer a one-stop service for imports and exports, with government officials stationed
on-site to provide administrative services. Applications to establish factories within the SEZs are
dealt with on-site as well as all administrative clearances, permits, and authorisations. Businesses
within the SEZs also benefit from a number of fiscal advantages, including income tax, customs,
and VAT breaks.
Since the adoption of the sub-decree establishing economic zones, the government has
approved 21 SEZs, located along the border with Thailand and Vietnam, Sihanoukville and Phnom
Penh. Of the 21, six have commenced operations. (Global Legal Resource, 1995-2012)

22

5.0 Potential competitors
PROTON and PERODUA are the two Malaysian National automobile companies.
Cambodia represents the huge potential market to enter. The expansion into Cambodia will lower
Proton and Peroduas business risk through market diversification.

Perusahaan Otomobile Nasional Berhad (PROTON) was incorporated on 1983. The company
has come a long way from mere car assembler to integrated car company. While, Perusahaan Otomobil
Kedua Sdn Bhd (PERODUA), established in 1993, is a joint venture company between Malaysian and
Japanese partners and the two other joint venture partners of Perodua are Daihatsu Motor Co. Ltd. and
Mitsui & Co. Ltd both of Japan. Proton is considered the first or early mover compared to Perodua
where it was publicly listed on the Kuala Lumpur Stock Exchange (KLSE) currently known as
BURSA on 1992.

Both corporation of PERODUA and PROTON are competitors which producing variety of
automobiles such as MPV model, SUV model, SEDAN models and etcetera. PERODUA has
introduced a new variant of its MPV called Alza SR. SR stands for Smart Ride and this is an entry
level variant positioned below the Standard and Advanced spec while for the competitor, PROTON
has also produced Proton EXORA which is also categorized as MPV.
The strength of Perodua is when it comes to customer services and welfare. Natural disaster
such as flood is commonly happens in Cambodia. Perodua provides Flood Damage service while in
the event of breakdown due to flood, the member or Perodua customer shall be entitled to
reimbursement for the towing services up to a certain limit of payment in Cambodia. Vehicle is
repaired at Perodua Workshop in Cambodia. Maximize the wealth and welfare of the customer brings
advantages for Perodua compare to Proton.

However, lately, Perodua has issued a new loan for the product. Since much of sales are
done through bank loans, the new rules which are based on disposable income rather than gross
income have seen the approval rate of people wanting to buy a Perodua car dip but the problem is
compounded by the fact that most of the customer there, a lot of them farmers and small traders, are
23

not salaried people and it's difficult for them to come up with the necessary documents or financial
statement demanded by banks these days. The situation at the Perodua plant belies a bigger problem
that has been caused by a lower loan approval rate after the responsible lending guidelines came into
force this year. The delays and dragging the process of borrowing loan from bank had affected the
demand of Perodua vehicles. Perodua now have to keep stock and its here where inventory has built
up. Perodua has to re-strategize if it intends to keep its market share.

Proton has a different business model than Perodua but there are definitely areas that the
carmakers can collaborate. The different business model will not make a merger between the two
national carmakers possible.


24

6.0 Strategies

1. Understand their rules and transportation
Firstly, according to the rules of Cambodia, they drive car on the right-hand side of the road,
which means the driver sits on the left hand-side of the car. For Malaysia, driver sits on the
right-hand side of the car and drive on the left-hand side of the road. In order to sell our
productProton Exora which is the product of Malaysia; we need to change the drivers seat into
left-hand side to follow their rules. (Brian Lucas, 2011)

2. Entry mode: Strategic alliance
2.1 Benefit of strategic alliance

To enter the Cambodia market, we tend to use strategic alliance and manufacture our
product at Cambodia which means work together with local companies by sign a legal agreement to
share access to their technology, trademarks or other assets. We will cooperate with local spare-part
companies to save our material cost and also it helps us to understand better their law and the way
they doing business in Cambodia. It is the most efficient and effective way to reach Cambodian
buyers by having a local partner as they have the market knowledge and established network in their
own country. In Cambodia, personal relationships can be the key to successful business transactions.
In addition, by using strategic alliance, we can share the benefits among firms to share the costs,
risks, and profits of business operations. And also we can narrow our internal focus and specialize in
selected areas, relying on our partners to specialize in others areas of functional or technical
competence. In the process, we share the risks of specialized investments, reduce internal complexity
and administrative costs, and achieve greater adaptability and responsiveness to the environment. It
allows us to share the resources or capital, and the customer relationship which has been build, more
ability to raise fund and more talent to manage the business. Lastly, cooperate with spare part
business might increase the sales volume of our product since it is convenient for our customer to
having maintenance or repair in their own country. (Evangeline Marzec) (Daboub, Anthony J,
2002)
25

Besides that, corporation tax in Cambodia is 20% which is lower than Malaysias 28%. By
considering the import tax of vehicle into Cambodia which is 70%, it is a high cost for us to import
our product into Cambodia. But if we manufacture our product in Cambodia, import raw materials
only charge 7% and for the equipment and machinery, it charge 15%. Compare to all those cost,
produce in Cambodia is better than export our product into Cambodia. Also, their labor cost is quite
low due to the illiteracy problem and high population. Besides that, the GDP of Cambodia is keeping
increasing and has a great potential to develop in the future. Based on research, it grows to 6.7% in
2011 compare to 2010 which is 6% and it will continue growing in the future. (2009) (Camlinks,
2009)

Cambodia is an agricultural based country which is not advanced in industrial area, so there
is a great potential for us to gain a high market share in Cambodia since there is not so much
competitors in automobile area. Based on research, there is lack of public transportation in Cambodia,
so it is not convenient for the people there to transport themselves in daily life. So Cambodia will
import motor vehicle from other countries to support their transportation.

2.2 Entry risk
Besides the advantages of strategic alliance, there are also some risks for us to use this entry
mode. Firstly, we cannot earn the whole profit. The profits need to be split and shared by both
companies. Sometimes, it has the problem and conflict between both company that how to share the
profits. Thus, it is essential for us to discuss and state clear the ratio of profits to be shared by both
companies when doing contract with the partner. Furthermore, the knowledge of the company need
to be shared and the technology will be learned by the partners. The learning opportunities may not
be symmetrical which means one firm may learn more than the other. It might be risky that after the
partner learn our technology, they might start their own business instead of continue cooperate with
us. So which means when we go into strategic alliance, we must trust each other in order to make
sure that the relationship can be continued. Thirdly, due to specialization in our own areas, we might
lose the chance to learn new things and become more dependent to our partner. Besides that, the
culture of our company might not be same with our partner, which mean the way and the behavior of
26

doing business might not be same. For example, the rules and practices of our company might not
same with our partner, this might create conflict within us due to the different opinion during the
management of the business. We are not able to control our partner behavior and this might influence
the relationship of each other and the efficiency of the work. (Daboub, Anthony J, 2002) For
example, the alliance of Renault and Volvo fail due to six points, there are misalignment of operating
and senior managers, path dependence, alliance recontracting, leadership style, cultural differences
and time. (Nina Rakowski / Martin Patz, 2007)

2.3 Our partner
Our company decided to have a strategic alliance with 212 Kim Heng Car Spare Part Shop
which located at No 212 Oknha Tep Pan (St.182), Phnom Penh, Cambodia. Based on the survey, our
partner is a biggest spare part shop and has a good reputation in their country, and they already set
their business in Cambodia for 10 years. Our partner have variety brand of spare part and also our
product brand spare part. Besides that, our partner has many skilled-employees, and they are full of
experience in this field. They do sale the spare part of the car and provide maintenance and repair
services for their customers. According to the feedback of their customers, they are satisfied with the
services that provided by our partner and the quality of their product. Furthermore, our partner also
has a strong fundamental in their business and their financial condition is stable. Therefore, our
company make the decisions that cooperate with 212 Kim Heng Car Spare Part Shop in Cambodia.

3. Strategy when doing business in Cambodia

3.1 Sales promotion
Firstly, most of the Cambodian is poor and low educated, so they prefer economical cars and
is more affordable for them which mean they are sensitive towards the price. In order to attract their
attention towards our product when we first produce our product at there, we will have some sales
promotion campaign such as giving discount coupon and lucky draw. For sales promotion campaign,
the participant who wins the 1
st
price in our lucky draw contest can get a free new Proton Exora and
for another 10 winners will get discount coupon to buy our cars. This is also a way by using
27

word-of-mouth if the winner feel satisfy with our product, they will recommend our product to their
relative and friends. With this sales promotion, it will easily build our image in our potential
customers mind and may get higher market share. It is quite attractive towards our market since it is
economical, affordable and our cars have seven seats as we know they are high population in
Cambodia usually in a big family. In additional, our product maybe is still new for Cambodian, by
lowering down our price, it may encourage the customers try and know more our product.

3.2 Advertising
Advertising is also an effective way for us to promote our product in Cambodia such as
newspaper, radio and television. According to a public survey on radio programming conducted by
the International Republican Institute (IRI), FM105 and FM103 are the most popular radio stations in
Cambodia whereas the most popular television channel is CTN. It is easy for us to approach our
potential customers and get the attention of them. (2010)

3.3 Set a branch office in Cambodia
In order to manage and able to control the business in Cambodia, we will set a branch office
in Cambodia and send our manager to Cambodia who has the experience and skillful enough to help
our business there and dealing with those work and transactions. It is also a good opportunity for us
to learn their culture and the way of doing business. By setting a branch office in Cambodia, parent
company able to know the problem and condition of the business in Cambodia and solve it faster and
properly. In addition, branch office may provide training to the labor to become a skillful worker to
maintain the quality of our product.

3.4 Provide after-sales-service
There are only certain brands of spare part shop in Cambodia especially Toyota have the
most spare part and this make the Toyota car be the most popular car in Cambodia. In order to solve
this problem, we will provide after-sales-services and warranty to our customers if our product have
occur some problem, this might bring a lot of convenient to our customers and lower down their
worry about difficult to have an maintenance on their car.

28

7.0 Potential Risk
Perceptions of Cambodias Business Environment RisksGradeGrades



1.0 Political risk in Cambodia
Cambodia is a country that enjoys political stability and has a government that welcomes
dialogue with the private sector. It is a very open economy with a business-friendly government. This
is a country that has enjoyed stable macroeconomic development and has a firm vision for medium
and long term economic growth.

Investors have been impressed with the commitment of the RGC (Royal Government of
Cambodia) in getting modern commercial laws in place, as evidenced by the progress that has been
made both before and after Cambodia's accession to the World Trade Organisation (WTO). The
Royal Government has been implementing serious reforms in all sectors, including Public Financial
Management Reform, Financial Sector Development, Private Sector Development and Governance
Reform including land management, administration and legal and judicial reforms. All aimed at
improving the business and investment climate through trade facilitation and increased private sector
29

participation in physical infrastructure and the development of small and medium enterprises (SMEs).
Having achieved steady growth and successes over the past several years, Cambodia is now
confident that we are on the verge of a bright future, full of optimism and hope.

1.1.1 Corruption
However, in general, Cambodias inefficiency to reduce poverty and to provide better
infrastructures and health care is primarily due to corruption. It is a very serious political problem in
Cambodia. Corruption is the simply means the private benefit of a few power officials at the
expenses of the people. Even more basically corruption is simply the theft of the peoples money.
Military conflicts and political strife isolated Cambodia from global trends that have profoundly
reshaped some of its neighbors, and then UNTAC and subsequent events thrust the country abruptly
into the modern world. Survival corruption is a way of life for the poor, and a succession of
medium and large-scale corrupt acts are the ticket to wealth for the politically powerful. (Narak Sem,
2009)

A significant portion of revenues received by the RGC (Royal Government of Cambodia)
are legal under Cambodian law or in accordance with international agreements. Businesses pay taxes,
customs duties and fees, buy licenses and share revenues from natural resource concessions.
International donors provide concessionary loans and grants, and offer technical assistance, training,
infrastructure and commodities. According to available reports, donor resources provide about half of
Cambodias national budget, and as much as one tenth of gross national product. However, it is
important to understand that even legal payments to Government can be tainted, diverted and
manipulated in numerous ways. Businesses are routinely assisted in reducing their formal tax
burdens or customs duties after paying bribes. Thus, legal import of the number of vehicles has
increased fivefold. Just for this one product, a large smuggling industry must necessarily be in place,
providing significant payments into the illicit system. International firms are forced to take local
partners, who provide little more than occasional fixer services in return for a significant share of
profits. No one outside the system knows what proportion of earnings go to pay taxes, what
proportion go to international businesses as excessive profits, and what proportion are transferred to
30

foreign bank accounts.

Some observers have argued that such payments are taxes in another form. While there
is some truth in this observation, this form of corruption places businesses in a legally and morally
ambiguous position, tainted by their own actions, and readily subject to additional, irregular
exactions from officials. The costs to citizens-at-large are even greater. Low formal tax payments
lead to poor health and education services and second rate infrastructure. And because of potential
foreign and indigenous investors refuse to do business in Cambodia, few jobs are created, and
additional legal revenues are foregone. Due to the high corruption in business market, PROTON
CORPORATION have to pay with unnecessary payment to enter PROTON EXORA, this will cause
the original price of the car rises.

1.1.2 Election
Furthermore, domestic political risks are higher this year than one year ago mainly because
commune elections will be held shortly and National Assembly elections are scheduled to be held
soon. This means there will be some changes in leadership at both the local and national level. The
opposition parties in a very weak position to win seats away from effectively a one-party,
authoritarian state. This is incorrect, but the government faces an on-going challenge in political
system to observers inside and outside the country. (Political Risk, Jan 2012)

2.0 Economic risk in Cambodia
The global financial and economic crisis is the latest in a series of external shocks to hit
Cambodia in the space of about two decades, following on from the food crisis that struck in 2006
and the Asian financial crisis of 1997. Wrestling with the effects of these three crises has represented
a major feat for Cambodias post-conflict economy. The global financial crisis hit Cambodia through
its second-round effects on trade, private capital flows and, ultimately, the countrys growth sectors.
Its overall impact has been all too clear. From being one of the fastest-growing economies in the
world, Cambodia is now poised to suffer one of the steepest contractions in output in developing
East Asia. In the decade before the crisis, the country experienced significant reductions in poverty,
31

whereas the number of poor Cambodians is now expected to increase.

There have been indications that the Cambodian economy has already bottomed out and is
now on the rebound, but there is significant downside risks involved in this upturn. The fate of the
garment sector, the economys sole major export driver, remains uncertain, having lost
competitiveness in the global post-quota environment. The government has not had the fiscal
capacity to deliver a bigger and sustained stimulus, and the effectiveness of some of its responses has
been of concern.

2.1 Poor Infrastructure
The biggest economic risk that Cambodia faces is poor infrastructure where going into 2012
and 2013 will be the high cost of electric power. The country is increasing its power generation
capacity rapidly and the supply of electricity is much more reliable than it used to be. But the
continuing high cost of electricity is hurting the countrys competitiveness by undermining other
advantages like the low cost of labor. If Proton sets up the manufacturing factory in Cambodia, it will
burden the corporation term of high set up cost, for example, Proton might have to build its own
electric power to monopolies and supply electric power to manufacture the production. Another
words, Proton will also have double taxation to get power supply, all this will force the cost of
production rise. (Political Risk, Jan 2012)

3.0 Legal risk in Cambodia
As Cambodia transforms into a free-market and democratic society, its legal system has also
seen significant change. For an investor seeking to do business in Cambodia, it is important for
Proton Corporation to understand not only the current difficulties of the legal system but also its
future opportunities. The government has committed itself to reforming the legal system. Its
priorities are upgrading the legislative process, making the judiciary more transparent and bolstering
structures for alternative dispute resolution.
The Royal Government will make further strides on the path of trade liberalisation aimed at
the free movement of goods and services within the country and between Cambodia and her trading
32

partners; creating access for Cambodian products, without barriers and obstacles, to extensive
regional and world markets. This will create opportunity to avail of economies of scales and bring
other benefits to the Cambodian economy in terms of an increase in investment, jobs, income and
economic growth as a whole. All these are critical to reduce poverty among our people.

The Royal Government will pay particular attention to the further integration of Cambodia
into the region and the international community by pursuing membership of Asia-Pacific Economic
Cooperation (APEC) forum and participating in the building of the Asean Community. All
ministries/agencies are expected to fulfil the duties of Cambodias membership of the WTO by
adopting laws and regulations and ensure their effective enforcement to meet the requirements of the
WTO. The Royal Government will promote the implementation of new measures including:
establishing a National Productivity Centre in order to improve productivity and reduce production
costs; establishing a National Standards Institute to ensure that product quality conforms with
regional and international standards; establishing national testing laboratories for physics, chemistry,
micro-biology and mechanics in order to evaluate quality and set prerequisite criteria for products;
strengthening an industrial property rights protection mechanism in order to promote innovation,
adoption of new techniques and new technology; imparting training to improve skills; and,
strengthening the relevant legal framework.

3.1 Weak Judiciary
A bad situation is exacerbated by an extremely weak judiciary and the absence of the rule
of law. The legal system in Cambodia remains ineffective, despite 16 years of promises, the
government has still not passed any new criminal law, anti-corruption law, or other protection of
human rights. Commercial and criminal codes and associated procedural codes are being developed
with international assistance, but the process is extremely slow. Numerous NGO efforts are under
way to develop basic legal services for the weak and poor, and defend the public interest against
predatory elites. But this work is barely under way. Some progress is being made in training judges
and prosecutors, but the number of competent legal professionals continues to be woefully
inadequate. Court proceedings are simultaneously over-complex and dilatory, with most judges
33

responding to political pressure. Low ranking court personnel profit from cumbersome
administrative procedures. Despite scheduled salary increases for judges, their legal income will
continue to be well below what they can extract from placing court rulings up for sale. Ordinary
Cambodians distrust the legal system, including the formal courts. The police and other enforcement
bodies are also seen as corrupt.

3.2 Land Law
According to the new constitution of 1993 and the Land Law of 2001 five main categories
of property on land can be distinguished as private land, state public land (all areas need for public
services such as roads, river banks, etc.), state private land (all other areas owned by the state),
communal land and indigenous land.

Land ownership for the investments shall be vested in natural persons holding Cambodian
citizenship or in Cambodian Entities. Foreigners are not allowed to own land in Cambodia (Land
Law 2001), but only the property and buildings on the land. A Proton corporation shall be deemed to
be of Khmer nationality if the company has a place of business and a registered office in Cambodia
and more than 51% of the voting shares of the company are held by a natural or legal person of
Khmer nationality. The use of land for investment can be permitted in the form of a concession, with
unlimited long-term leases or limited short-term leases.

In late December 2005, the ELC sub-decree was established, defining a mechanism to grant
state private land through a specific ELC contract to a concessionaire to use the land for agricultural
and agro-industrial production. For an ELC, which can be granted to private or investment
companies, it must have been classified and registered in the Land Register as state private land,
complying with the necessary legal procedures.

In addition, the granted land concession must be exploited within 12 months after issuance
of the concession and it will be cancelled or withdrawn if the conditions are not complied with or do
not fulfill the conditions stated in the concession charge book. Until September 2008 the Ministry of
34

Agriculture, Forestry and Fisheries (MAFF) was authorised to grant economic land concessions that
exceeded 1.000 ha with a total investment value of USD 2.500.000. (Eschborn, December 2009)



35

8.0 Conclusion

After we have completed the market research on the economy of Cambodia, we had come to
a stage where everyone is agreed to invest in this country after comparing on the cost and benefit of
doing business there. Although the transportation system and the pace of developing is a bit slower
when compared to other developing countries such as Thailand and Vietnam, we still believed
Cambodia has it is own advantages and has bright prospect in future. So if we take this move to
invest in Cambodia before other automobile companies come in, we might gain some first-mover
advantage such as higher profit and greater market share.

Initially we planned to invest in Indonesia but after knowing that Proton already established
its brand loyalty there, we decided to explore with other country that have not been ventured by
Proton yet to give each and every of us a new experience. Fortunately, we had chosen Cambodia to
be our ideal choice and gave us a chance to know this country better rather than just a poor
developing country. Cambodia provide financial information aids, established legal system and
improving economic which all these will guarantee a good investment chance for investor .

In short, all the data that we have accumulated and analyzed showed that the benefit is
outweigh the cost of doing business there. So we will invest in Cambodia with our product, Proton
Exora which meet with the local requirement such as the right-side drive and set up our business
there.

36

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