Logo of Phnom Penh Post newspaper Phnom Penh Post - Inflow of FDI up in first half

Inflow of FDI up in first half

Content image - Phnom Penh Post
Garment workers sew sweatshirts and check for defects at a factory in Phnom Penh in 2013. Though foreign direct investment in the Kingdom is on the rise, the National Bank of Cambodia has said inflows into the garment sector is falling. Pha Lina

Inflow of FDI up in first half

The inflow of foreign direct investment (FDI) into Cambodia witnessed solid growth in the first half of this year due to strong funds flowing into the financial and real estate sectors, said a central bank report.

It said this was despite the agriculture and garment sectors suffering a decline.

The semi-annual report by the National Bank of Cambodia (NBC) revealed that total FDI inflow into Cambodia amounted to $1.32 billion during the first half of 2018 – a 14 percent jump from $1.16 billion in the same period last year.

“Banking and real estate sectors saw a strong inflow of foreign capital, while industrial and agriculture [sectors] saw a decline,” the NBC’s report said, adding that FDI inflow into the garment sector continues to fall.

However, it said there is a surge of capital inflow into non-garment sectors like assembly and electronic manufacturing.

While the NBC revealed the total foreign funds entering the domestic market, it did not provide the actual breakdown of FDI in the respective sectors.

Cambodia’s real estate is still attractive to foreign investors – mostly from Asian countries such as mainland China, Hong Kong, Singapore, Taiwan, Korea and Malaysia, said the report.

Supreme National Economic Council senior adviser Mey Kalyan said it is a healthy trend that FDI had increased while the country is gearing for the July 29 national elections.

He acknowledged that the decline in FDI in the garment sector was not good news but this was expected as the sector had almost reached its saturation point and is burdened with high production costs.

However, he said growing investments in the assembly and electronic manufacturing areas appeared to be a good sign as it reflected the diversification of Cambodia’s industrial sector.

“We understand the benefits of the garment sector for our economy and we want to see it grow further, but it is the nature (of the sector) that it will slow down when it reaches a saturation point,” he said.

He said other countries that depended on garment and footwear manufacturing during the initial period of developing their economies also faced a similar predicament but gradually shifted to more advanced industries to sustain economic growth.

The strategy is to diversify the domestic manufacturing sector and focus on producing more high-value products, added Kalyan.

Hing Thoraxy, an economics lecturer at the Royal Academy of Cambodia, said that FDI could help boost the Cambodian economy.

“More capital inflow means more investments to provide jobs to the Cambodian people and provide many benefits to the economy,” he said.

The government in 2015 released a 10-year industrial development policy (IDP) that outlines strategies to expand the country’s narrow industrial base beyond garments and rice. The aim of the policy is to attract more FDI.

MOST VIEWED

  • Body of woman killed in Bangkok returns

    The Cambodian embassy in Thailand is working to repatriate the body of a casino dealer who was shot dead in Bangkok on Monday night. Ministry of Foreign Affairs and International Cooperation spokesman Kuy Kuong told The Post on Wednesday that officials are preparing paperwork to

  • Chikungunya hits 15 provinces, says gov’t

    Ministry of Health spokeswoman Or Vandine said on Thursday that the chikungunya outbreak in the Kingdom has spread to 15 provinces. Some 1,700 people are now suspected to have the disease. Vandine urged people to prevent its further spread by eliminating shelters for the Aedes aegypti mosquitoes

  • Gov’t exempts visa A and B holders from Covid fees

    Airline passengers who are diplomats and officials of international organisations holding Type A and B visas for travel to Cambodia are exempted from paying Covid-19 testing fees, said the Ministry of Health in its latest adjustment of rules on Wednesday. Health Minister Mam Bun Heng

  • Bill covering dress code draws ire

    Ministry of Interior secretary of state Ouk Kim Lek responded on Tuesday to criticism concerning a draft law that would ban women from wearing overly revealing clothing, saying that input from all parties will be considered as the law moves through the promulgation process. Several

  • Passing the test: Is Cambodia’s education system failing its people?

    The Kingdom’s education system needs to grow its people but some flaws might stifle​ this growth Coming from the Khmer Rouge occupation, with the loss of many scholars and academicians and a collapsed government, the education system had to be reconstructed from scratch – one

  • What’s the deal with Cambodia and China’s FTA?

    Cambodia’s Free Trade Agreement (FTA) with China kicks off a series of FTAs in future but for now, critics wonder what else the parties could bring to the table apart from what it already has to date By the end of this year, Cambodia