The Council for the Development of Cambodia (CDC) approved 238 investment projects worth a total of $8.2 billion last year, down 12 per cent from 2019, according to a CDC press statement.
At the same time, the CDC noted that it gave the green light to 20 investment projects with a total capital investment of $621 million last month, up from 17 projects worth $93 million in January last year.
“These results are the fruit borne from the implementation of drastic measures to control the Covid-19 epidemic and the government’s sweeping package of reform measures launched at the 18th Government-Private Sector Forum on March 29, 2019 in a bid to improve and streamline the investment climate in Cambodia,” the statement said.
CDC secretary-general Sok Chenda Sophea said in the statement that the government is in the process of drafting new investment laws and other regulations related to investment that are aimed at increasing foreign direct investment (FDI).
“The new investment law will increase the attractiveness of investment as a basis for investors, business people to decide to invest and do business in Cambodia,” he said.
The National Bank of Cambodia (NBC) said in “Macroeconomic and Banking Progress Report 2019 and Outlook 2020” that FDI inflows to Cambodia totalled $3.588 billion in 2019, an increase of 11.7 per cent compared to 2018’s $3.212 billion.
A breakdown of the data by country showed that China led the FDI inflows into Cambodia in 2019, accounting for 43 per cent, followed by South Korea (11 per cent), Vietnam (seven per cent), Japan, Singapore (six per cent) and other countries (27 per cent).
Hong Vanak, director of International Economics at the Royal Academy of Cambodia, told The Post that the Covid-19 outbreak was a serious deterrent to FDI inflows last year.
“Foreign investors who wish to invest in Cambodia have had their projects delayed due to the disease,” he said.
He pointed out that China has been the leading source of FDI for the past decade, for the most part investing in garments, construction, real estate, hospitality, agriculture and mineral resources.
“The main factor that leads the Chinese to invest in Cambodia is strong diplomatic relations between Cambodia and China. In the future, I believe Chinese investors will remain the most dominant in Cambodia,” Vanak said.
Cambodia Chamber of Commerce vice-president Lim Heng said the drop in the investment capital in the approved projects last year would not have a significant impact on the economy.
“This is just to show the number of new investment projects being registered, it is not worrying. On the other hand, if the investment is registered and then the project is withdrawn, that’d be a matter of concern,” he said.
CDC data show that China was Cambodia’s leading foreign direct investor for five consecutive years from 2013-2017, pumping in FDI worth $5.3 billion during the period, or about $1 billion annually.