Cambodia-Japan Relations: Beyond the East China Sea

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Cambodia-Japan Relations: Beyond the East China Sea

Regional maritime disputes put Cambodia in an awkward spot. It must not take sides.

Cambodia-Japan Relations: Beyond the East China Sea
Credit: REUTERS/Toshifumi Kitamura/Pool

Cambodia and Japan first established diplomatic relations in 1953. Subsequently, during the more than two decades in which Cambodia was engulfed in political turbulence and then civil war, bilateral ties were suspended. Then, in the lead-up to the signing of the Paris Peace Agreements on October 23, 1991, Japan played an active role in bringing all the warring factions together and helping them to reconcile. Tokyo was also one of the major contributors to Cambodia’s post-war reconstruction.

Since 1992, Japan has been Cambodia’s biggest donor, giving more than $2 billion in official development assistance. Japanese aid placed heavy emphasis on rebuilding Cambodia’s infrastructure, which had been destroyed by years of war and negligence. Roads, bridges, and irrigation systems have been constructed or rehabilitated, connecting rural areas to major cities across the country and improving the lives of many Cambodians.

In addition, Japan has been working closely with the Cambodian government to strengthen its education system, which remains weak and underfunded. More schools have been built. Each year, hundreds of Cambodian students receive scholarships either from private funding or from the Japanese government to pursue their studies in Japan and other countries. Some aid money is also allocated to address the problem of skills shortages, especially in the area of science, technology and engineering.

In early 2014, Japan provided $11.5 million in Grant Aid to expand the National Maternal and Child Health Center. Meanwhile, Sunrise Healthcare Service Co is building the first Japanese hospital in Cambodia, spending $35 million on the facility that is scheduled to open in 2016. The new hospital will be equipped with state-of-the-art healthcare equipment and highly trained medical staff. These are just some highlights of Japan’s role in strengthening the healthcare system in Cambodia.

However, Japanese assistance to Cambodia goes beyond economic development and poverty reduction to include governance issues. Since 1993, the Japan International Cooperation Agency (JICA), which is tasked with coordinating Japan’s official development assistance to developing countries, has provided Cambodia with technical assistance and financial resources to improve public finance management, reform the legal and judicial system, and promote gender equality. In addition, Japan has recently been asked by its Cambodian counterpart to provide technical assistance and resources in order to lay the groundwork for electoral reforms.

Japan also plays a crucial role in Cambodia’s political stability. For instance, in the aftermath of the deadly 1998 fighting in Phnom Penh, Japan helped broker a deal between the ruling Cambodian People’s Party and the FUNCINPEC party, paving the way for Prince Norodom Rannariddh and other opposition members to return to Cambodia to compete in the July 1998 election. Japan has always been a vocal supporter of political stability and peace in Cambodia, urging both parties to resolve their differences peacefully after the 2013 election.

There is little doubt that the rise of China is shaping relations between Cambodia and Japan in many important ways. Growing tensions between Japan and China over the Senkaku/Diaoyu Islands and other security issues in the East China Sea put Cambodia in an extremely difficult position. There is also a heated debate among Cambodian scholars and policymakers over what position the country should take. Regardless of the outcome of this debate, the consensus seems to be that Cambodia cannot afford to pick sides on these issues.

Thus, it is not surprising that during an official visit by Japanese Prime Minister Shinzo Abe to Cambodia in November 2013, Prime Minister Hun Sen urged Japan to resolve territorial disputes with China peacefully. Moreover, when he met with his Japanese counterpart on the sidelines of the 40th ASEAN-Japan Commemorative Summit in Japan in December 2013, Hun Sen reiterated Cambodia’s strong support for a peaceful resolution to the maritime disputes in the East China Sea.

Trying to pressure Cambodia into choosing Japan and abandon China is rather counterproductive and unrealistic. As a small, poor nation, Cambodia has to engage with other countries and cannot afford to isolate itself from a major economic power, whether that be China or Japan. Moreover, even if Cambodia did indeed support Japan over its maritime claims in the East China Sea, that would not produce any meaningful solution. The consequences for Cambodia, however, would be serious and far-reaching.

What Cambodia and Japan should do now is move beyond the current debate over Cambodia’s position regarding the Senkaku/Diaoyu Islands issue. In December 2013, Prime Minister Hun Sen and Prime Minister Shinzo Abe signed an agreement during a meeting in Tokyo to upgrade relations between the two countries to the “strategic level.” The two countries also signed a memorandum to strengthen their defense cooperation. These agreements underline the extent to which both countries depend on one another to advance their mutual interests.

In fact, Cambodia needs Japan more than ever. During the official launch of the Cambodian Trade Integration Strategy in 2014, Prime Minister Hun Sen suggested that Cambodia is on track to become an upper middle income country by 2030 and a high income country by 2050. This is a bold prediction, and one that will not be easy to fulfill. Cambodia needs to embrace economic restructuring and political reforms to move from a labor-intensive economy to one centered on manufacturing. Japan can play a key role in this economic modernization process.

From 2010 to 2012, Japanese investment in Cambodia increased almost tenfold, from $35 million to $328 million. The number of Japanese business registrations in Cambodia also surged, from just 19 in 2010 to 195 in 2013, according to Kiyotaka Doho, chief representative of the Japan External Trade Organization (JETRO) in Cambodia. The latest report by JETRO indicates that Cambodia ranks among the top countries as an investment destination for Japanese firms in 2015.

A number of Japanese companies, such as Minebea, Sumitomo and Ajinomoto, have already set up plants in Cambodia’s special economic zones. Moreover, they have also been involved in the mineral and energy sectors. In September 2014, Japan operated its first direct commercial flight to Cambodia, encouraging more Japanese tourists and investors to come to the country. This development significantly raises the prospect that economic relations between the two countries will strengthen far into the future.

As Cambodia prepares for the ASEAN Economic Integration in 2015, there is still much that needs to be done. In fact, there are some concerns among scholars and the public that Cambodia may not be able to compete with other ASEAN members given the challenges the country is facing, most notably skills shortages, inadequate infrastructure, and electricity issues. Tellingly, these are also major factors discouraging Japanese companies from investing in Cambodia.

Given the budget constraints, the Cambodian government cannot address every problem, so it must prioritize. Japan could potentially have a role to play here. Resolving these issues will not only leave Cambodia better placed to take full advantage of regional economic integration, it will also allow Japanese firms to operate at lower cost. In fact, JICA is already working with the Cambodian government to solve some of these issues, and it has also pledged to help Cambodia with ASEAN integration in 2015.

It is clear that Cambodia and Japan stand to benefit from strong diplomatic ties. Despite the challenges, both countries seem committed to building on the progress already made. Of course, the East China Sea issue will not go away anytime soon, and Cambodia should work closely with its ASEAN counterparts to assist Japan and China in achieving a peaceful resolution to the  disputes. For Cambodia, Japan remains one of its most important donors and investors, and with the rising cost of labor and political instability in countries traditionally targeted by Japanese for investment, Cambodia is an excellent alternative for Japanese firms.

Phoak Kung is Vice President for Academic Affairs at Mengly J. Quach Education. He is also Co-founder and Co-president of the Cambodian Institute for Strategic Studies. He was formerly a Visiting Fellow at the University of Oxford and Cornell University.