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

  • Omicron patients can stay home: PM

    Prime Minister Hun Sen has given the green light for anyone who contracts the SARS-CoV-2 Omicron mutation or any other variant to convalesce or receive treatment at home or in any other reasonable non-healthcare setting. The new decision supersedes a restriction on home care for

  • The effects of the USD interest rate hike on Cambodian economy

    Experts weigh in on the effect of a potential interest rate expansion by the US Federal Reserve on a highly dollarised Cambodia Anticipation of the US Federal Reserve’s interest rate hike in March is putting developing economies on edge, a recent blog post by

  • Cambodia’s first ever anime festival kicks off Jan 22 at capital’s F3 centre

    Phnom Penh's first ever Anime Festival will bring together fans, artists, shops and other local businesses with ties to the Japanese animation style for cosplay competitions, online games, pop-up shops and more on January 22, with Friends Futures Factory (F3) hosting. F3 is a project that

  • PM eyes Myanmar peace troika

    Prime Minister Hun Sen has suggested that ASEAN member states establish a tripartite committee or diplomatic troika consisting of representatives from Cambodia, Brunei and Indonesia that would be tasked with mediating a ceasefire in Myanmar. The premier also requested that Nippon Foundation chairman Yohei Sasakawa

  • Demining rat ‘hero’ Magawa dead at 8

    A landmine-hunting rat that was awarded a gold medal for heroism for clearing ordnance from the Cambodian countryside has died, his charity said on January 11. Magawa, a giant African pouched rat originally from Tanzania, helped clear mines from about 225,000sqm of land – the equivalent of 42

  • Hun Sen gets 4th Covid shot, urges compatriots to follow

    Prime Minister Hun Sen and his wife Bun Rany on January 14 received their fourth dose of Covid-19 vaccine and called on compatriots to follow suit as the Omicron coronavirus variant continues to spread in the community. This marks the launch of Cambodia's fourth-dose vaccination campaign,