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Cambodia’s FDI surges 11.2% to $41B in 2021

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High-rise buildings in Preah Sihanouk province. Chinese players have propped up the economy of Preah Sihanouk province and ensured that it runs smoothly, through investment in real estate and other areas. YOUSOS APDOULRASHIM

Cambodia’s FDI surges 11.2% to $41B in 2021

Foreign direct investment (FDI) inflows in Cambodia between mid-1994 and end-2021 amounted to 168.8 trillion riel ($41.0 billion), rising by 11.2 per cent from the end of 2020, with the Greater China area remaining the Kingdom’s top source market, according to a new report.

For the period between August 5, 1994 and December 31, 2021, the Greater China region – comprising mainland China, Hong Kong, Macau and Taiwan – accounted for the lion’s share of FDI, standing at $18.0 billion or 43.9 per cent, followed by South Korea ($4.9 billion; 11.9 per cent), Vietnam ($2.5 billion; 6.1 per cent), Singapore ($2.7 billion; 6.5 per cent), Japan ($2.4 billion; 5.9 per cent) and Malaysia ($1.9 billion; 4.6 per cent).

August 5, 1994 was the day when Royal Decree No 03/NS/94 promulgated the old Law on Investment and established the Council for the Development of Cambodia (CDC).

Broken down by sector, finance topped the FDI list, with $9.4 billion invested in the area, followed by manufacturing ($8.5 billion), real estate ($4.9 billion), hotels and restaurants ($4.4 billion), agriculture ($4.2 billion), electricity ($2.6 billion) and construction ($1.6 billion), with $5.3 billion going into other sectors.

Concerning the Greater China region, manufacturing captured the largest share of inward FDI stock, at 30.7 per cent, followed by electricity (13.0 per cent), finance (10.9 per cent), real estate (10.7 per cent), hotels and restaurants (9.6 per cent), agriculture (6.4 per cent) and construction (5.2 per cent), with the remaining 13.3 per cent going to other sectors.

The report was jointly published by the CDC and the National Bank of Cambodia (NBC), the central bank.

Cambodia Chamber of Commerce (CCC) vice-president Lim Heng chalked up the spurt in FDI inflows into the Kingdom to the “routine toils” of institutions that engage the private sector, which are aimed at drawing in foreign investors. He listed the CCC, CDC, Ministry of Commerce and the upper echelons of government as primary examples.

He told The Post that Cambodia’s economic growth has largely been buoyed by direct investment from Chinese companies, even since before Covid-19.

In addition to the capital, Chinese players have propped up the economy of Preah Sihanouk province and ensured that it runs smoothly, through investment in real estate and other areas, according to Heng.

“Cambodia does not discriminate when it comes to investment, we welcome all investors who want to invest legally in Cambodia, not just those from China. After China and South Korea, we’ve seen that Japan has tonnes of potential when it comes to direct investment in Cambodia.

“Moreover, India also has a large and growing economy with investment opportunities that we could tap into, and our country’s leaders are pushing for a free trade agreement with the country,” Heng said.

To further expand FDI, Heng shared that a CCC delegation would travel to New York City in the US next month and discuss business and investment with the New York Chamber of Commerce, which he says is mulling a visit to the Kingdom to scout for promising investment opportunities.

And in June, the CCC is due to open a representative office in Canada, Heng said, adding that he and his team would take the occasion to meet investors in the country.

Royal Academy of Cambodia economics researcher Ky Sereyvath pointed out that there was a general feeling of optimism around the economic situation, with the Kingdom expected to become the “first country” to reach a proper endemic state for Covid-19 – a feat he attributed to coronavirus vaccines.

This has captivated the attention of foreign investors, convincing many to apply for permits to directly invest in the Kingdom, which in turn has encouraged swathes of Cambodians to prepare to pursue jobs that suit their skills and specialties, he said.

“This growth could spur the domestic economy and boost exports. We’ve observed that China is still investing heavily despite the Covid-19 crisis, and besides China, one could say that Japan and [South] Korea will be helping to make the investment environment more stable, and simpler,” Sereyvath said.

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