From left: General Manager of Phnom Penh Branch Takeshi Fukui, Deputy General Manager Yasuharu Funabashi and Manager Norifumi Matsuo

Japan’s Top Bank Enters Cambodia

Mizuho Bank Ltd. has set foot in Cambodia. The move was initiated after the Japanese bank signed a Memorandum of Understanding with the Secretary General of the Council for the Development of Cambodia, H.E. Sok Chenda Sophea on the 27th of February 2017. The Memorandum aims to increase investment activities of Japanese Companies in Cambodia while promoting partnership and entrepreneurship between the two nations. The agreement illustrates the drastic increase in Cambodian exportation towards the Japanese market. A reach of 334M USD in this year’s first quarter represents a 37% increase over a one-year period. That rise is partly due to important investments made by Japanese investors in the Cambodian textile industry.

The links between Cambodia and Japan are set to increase as the Minister of Public Works and Transport, H.E. Sun Chanthol, met with the Japanese ambassador, H.E. Horinouchi Hidehisa on the 15th of June 2017. The main objective of the meeting is to expand the cooperation between both countries in order to match politics with the increased economic relations. Future progress is set to be made as H.E. Sun Chanthol will lead a Cambodian delegation to Japan for a fact-finding mission next November.

The agreement made between the CDC and Mizuho Bank Ltd. marks another successful foreign investment in the prosperity of Cambodia. By April 19th 2017, Mizuho bank is fully operational in Cambodia. Management Insider interviewed the General Manager of the Phnom Penh Branch, Takeshi Fukui, on his up to date opinion about the financial climate of Cambodia.

 

Mizuho Bank is one of Japan’s largest financial institutions. It is also the first Japanese based commercial bank to operate in the Kingdom. Why has Mizuho Bank decided to establish a branch in Cambodia? Why now and not before?

We came here in 2013 to establish a work place to research Cambodia’s market place. After four years in this region, our observation came to be that Cambodia doesn’t have an interbank market which provides a sophisticated system. If investors send money to Cambodia, it takes several days to reach or if someone in Cambodia wants to send money overseas, it takes several days as well and the cost is quite expensive. Not only is the settlement system a problem but the loan system is equally difficult. To accept a real commercial system between Japan and Cambodia, the establishment to bridge this gap is very important.

 

Cambodia’s banking sector is crowded, how can Mizuho Financial Group bring a different approach to the market?

Mizuho is currently ranked 18th in the world. The bank has a market capitalization of $50 billion. Since we open our first branch in Cambodia as of April 19th 2017, our client target is mostly corporate not individuals. There are many Japanese companies, including multinational companies from Vietnam and Thailand that have institutionalised branches here. About 97% of loans are to Cambodian individuals or SMEs, but SMEs here mostly consist of personal companies. There is an extreme limitation to loans catered to corporate companies in Cambodia. Some of our target clients are big corporations like AEON, Coca Cola, Toyota which need a lot of funds. Unfortunately, there are not enough local banks that provide loans and sufficient credit, statistics and instructions to corporate companies. We are professionals in this area so we establish accessibility to enable them to be can be active here.

 

Cambodia’s investment climate is rapidly growing. There is an astonishing visibility of progression in every sector. In the banking industry, elasticity and loan quotations showed the most improvements. On another note, there’s a lot of interconnecting systems between industries which allow easy access to manufacturing.

 

What do you think about Cambodia’s investment climate?

Cambodia’s investment climate is rapidly growing. There is an astonishing visibility of progression in every sector. In the banking industry, elasticity and loan quotations showed the most improvements. On another note, there’s a lot of interconnecting systems between industries which allow easy access to manufacturing. For example, at the Thai border Polpet, Toyota has encouraged parts maker to come from Thailand to settle an establishment here. Furthermore, the expansion of the supplies and manufacturing company SCG, which is different from Phnom Penh’s SCG would lead to a big industry cluster from China or Germany. Overall, the growth symptoms are very good which lead us to the decision of finally coming here.

 

Bancassurance is booming in Cambodia. Do you plan to operate in this sector?

It is not within our short-term plan but perhaps in the long-term as our current investment’s main focus is on strengthening the operation we recently established here. The smooth transition into Cambodia has enabled us to form a trustworthy alliance with the existing life insurance companies. We can collaborate with them while booming the economy in several industries. In a research point of view, we are responsible for the delegation management of the Japanese Corporation to promote business expansion.