The Council for the Development of Cambodia (CDC) in 2022 approved 132 private investment projects outside of the Kingdom’s special economic zones (SEZ) worth a total of $3.23 billion that were expected to create about 0.122 million jobs, according to the finance ministry.
These figures respectively mark on-year increases of 22.22 per cent from 108 projects, 87.9 per cent from $1.719 billion, and 35.9 per cent from 0.09 million jobs, as indicated by the Ministry of Economy and Finance’s Socio-Economic Trends reports for 2021 and 2022.
The 2022 edition remarked that Cambodia’s economic growth was anticipated to have ridden the year on an uptrend, despite fallout from the Russo-Ukrainian conflict.
Although no concrete figures were given, a pixel count of the provided graph found that services accounted for the lion’s share of the $3.23 billion in cumulative investment capital, at roughly 43-47 per cent, followed by industry (23-27%), tourism (14-17%), energy (10-13%), and agriculture (1-3%).
“With the current momentum of the recent recovery of economic activities, the perspectives on the Cambodian economy [are] showing positive signs, especially [in production,] which [reflect] the continuous growth in industrial production, garments, and non-garment exports.
“In addition, the implementation [of the] ‘Strategic Framework and Programs for Economic Recovery in the Context of Living with Covid-19 in a New Normal 2021-2023’ is expected to accelerate key growth drivers including garment [and] non-garment [manufacturing], tourism and agriculture,” the report said.
Generally seen as a type of commercial oasis, an SEZ is a specially-defined region within a jurisdiction’s borders that is subject to different – typically more liberal – legal, administrative and economic regulations than elsewhere in the same jurisdiction, and can include unique tax, logistical or one-stop service arrangements designed to attract business and investment.
Cambodia Chamber of Commerce (CCC) vice-president Lim Heng told The Post that the post-Covid resumption of economic activities across the world has gradually spurred investment inflows into the Kingdom, even amid downward pressure on global economic recovery tied to the fighting in Ukraine and conflicts between major powers.
The uptick in number of these CDC-greenlit projects last year is indicative of Cambodia’s increasingly favourable conditions for investment, in terms of legal and regulatory frameworks, labour, and the availability of raw materials, he said, adding that the Kingdom’s trade agreements with several countries offer significant benefits in the import-export domain.
“As the global political and economic situation improves, Cambodia will receive more investment, and that investment will be more diversified to meet the needs of the international market,” Heng said.
He explained that non-SEZ investment projects “mostly” require large areas, particularly those in agriculture or industry, or locations near raw materials to keep production running.
In January, Hong Vanak, director of International Economics at the Royal Academy of Cambodia, argued that a steady increase in investment suggests that a country is politically stable and can give investors more bang for their buck.
But for a venture to be profitable, products must be marketable and competitively priced, he cautioned. “Increased investment will help boost Cambodia’s exports as well as even out its international trade balance,” Vanak said.
Provisional Customs (GDCE) figures show that Cambodia’s international goods trade amounted to $52.425 billion last year, up 9.19 per cent on 2021. The Kingdom imported and exported $29.942 billion and $22.483 billion, respectively, up 4.32 per cent and 16.44 per cent on a yearly basis, narrowing the trade deficit by 20.60 per cent to $7.459 billion.