Cambodia stands at the forefront of foreign direct investment (FDI) in Southeast Asia, anticipating a robust influx of capital in 2024, buoyed by a solid economic recovery.

The International Monetary Fund (IMF) projects the country’s growth to reach 6.1% next year, as highlighted in the annual FDI Standouts Watchlist from fDi Intelligence, the industry analysis division of Financial Times (FT) Group Ltd.

The report underscores that the study, evaluating the macroeconomic and FDI trends of the world’s top 50 FDI destinations using data from the IMF and fDi Markets, identifies countries poised to enter the new year with strong momentum, as the world continues to navigate an uneven post-pandemic recovery.

“Asia has performed admirably in this year’s Watchlist, with six countries in the top 10: Cambodia, leading the list, followed by the Philippines, Iraq, Kazakhstan, Azerbaijan and India. Only three African countries feature in the top 10: Kenya, Namibia and Morocco. Serbia is the sole country outside Asia and Africa to secure a spot in the top 10, ranking ninth,” stated the report.

Chea Vuthy, deputy secretary-general of the Cambodian Investment Board (CIB) and the Cambodian Special Economic Zone Board (CSEZB) at the Council for the Development of Cambodia (CDC), noted at a recent business forum that the country boasts economic potential, peace, security, and political and economic stability. 

He emphasised the crucial role of the private sector in driving national economic development.

“We see that FDI annually approaches $4 billion. In 2020, ASEAN experienced a steep 40% decline, but our FDI remained stable at around $3.6 billion,” said Vuthy.

He added that Cambodian investors took the lead in the first half of the year, buoyed by confidence in the country’s investment climate and “trust in its leadership”. 

According to the CDC, China was the largest contributor of FDI for the first two quarters of 2023, accounting for 42.1%, followed by Thailand, Japan, the Cayman Islands, Samoa, South Korea, the British Virgin Islands, Singapore and Malaysia.

For capital investment, the first six months of 2023 saw 128 projects valued at $1.3 billion, compared to 111 projects worth $3.1 billion in the same period of 2022, as per the CDC.

The IMF adjusted its economic growth forecasts for ASEAN countries in October, including Cambodia, in response to sluggish global and regional economies, significantly influenced by China’s slowdown. The IMF’s latest report predicts the bloc’s economic growth to be 4.2% this year and 4.6% in 2024, slightly lower than the April projections.

The IMF revised its growth estimates for Cambodia from the April prediction of 5.8% to 5.6% for this year, with the 2024 forecast reduced from 6.2% to 6.1%.

Shanaka Peiris, division chief of regional studies at IMF’s Asia and Pacific Department (APD), acknowledged in a virtual press conference in October that the revised figures for 2023-24 are marginally lower than April’s forecast. 

“We have observed an increase in Cambodia’s trade integration with its partners, diminishing some of the dependency on the US and EU, which is currently significant,” he stated.

Peiris explained that the diversification of the Kingdom’s economy, along with commitments under the Regional Comprehensive Economic Partnership (RCEP), is expected to have medium to long-term effects. The agreements are anticipated to gradually yield benefits, thereby creating an appealing environment for investment and FDI across various sectors.