Assessing the Impacts of Foreign Direct Investment (FDI) on Local Skills Development: the Hotel Industry in Siem Reap, Cambodia

Foreign Direct Investment (FDI) capital in tourism has become crucial for Cambodia’s economy. Numerous researchers cite the positive impacts of FDI on tourism in host countries, including it as an essential tool for increasing employment opportunities and improving skills and knowledge. However, a number of other researchers discuss the negative impacts of FDI firms on host country. In the Siem Reap context, although it has been the second most attractive area in Cambodia for FDI for more than a decade, developing competence in employability skills among local employees in the province remains challenging. This study assesses the impacts of FDI on local skills development in Siem Reap hotels. Semi-structured interviews were used to obtain primary data from 18 participants from 10 different hotels in the province. The findings of this study are the first to detail the significant benefits of FDI hotels on the development of Cambodian human capital in the sector. This thesis shows that compared with non-chain and local firms, chain hotels offer better developed training programs as well as staff development programs that benefit employees in their future career development. Moreover, spillover effects, especially those drawn from chain hotels, positively affect workforce skills development through labour mobility, labour competition and motivation. Additionally, value-added benefits of each type of hotel investment were found to significantly contribute to public vocational training systems. The research concludes that there is a need to improve the link between private and public sectors in order to improve the human capital in tourism professionalism. Collaboration is required, from reviewing policies to establishing or running public training programs together. Additionally, the study recommends strong consideration of strategic plans for local employee development in foreign enterprises when the government decides whether or not to approve an investment