Heightening geopolitical competition among major powers is bearing far-reaching negative implications for foreign direct investment (FDI) flows across the world, and although the Covid-19 crisis drags on, it offers unprecedented impetus to the digital revolution.
There has never been a greater need for deeper investment ties, to reinforce the world’s economies and make them more resilient and responsive to these changes, and to build a stronger global community.
This is what Council for the Development of Cambodia (CDC) secretary-general Sok Chenda Sophea told the five-day 7th World Investment Forum – hosted in the Swiss diplomatic hub Geneva – on its October 18 opening day via video link.
“The rationale is that the world has been undergoing a series of profound changes, brought on by industrial transformation, technological shifts, societal evolution, geopolitical competition and the Covid-19 pandemic.
“International investment can tie together and strengthen economies throughout these changes, making the global community stronger rather than weaker. However, international investment flows have changed form, and in many cases declined – with FDI falling globally 35 per cent in 2020 – putting their contribution to sustainable development at risk.
“At the same time, there are trillion of dollars in sustainable finance waiting to capitalise a rebound in greenfield FDI, if enabling policies and measures are put in place. This potential is seen with the burst of recent mergers and acquisitions around the world, which in only the first half of 2021, surpassed all of 2020,” he said.
A Ministry of Economy and Finance report has said that just 75 private investment projects outside of special economic zones (SEZ) were approved by the CDC in the first eight months of 2021, down by nearly 30 per cent year-on-year.
The report presented an overall glum picture for new investments in non-SEZ projects, with new ventures approved by the CDC in January-August involving a total capital investment valued at $1.106 billion, tumbling by 52.5 per cent year-on-year, and expected to create 57,000 jobs, shrinking by 32.3 per cent on a yearly basis.
Cambodia Chamber of Commerce vice-president Lim Heng accredits the decline in new such projects to Covid-prompted restrictions related to trans-border human movement.
These include considerably long quarantine periods that stymie the process of studying markets and selecting sites for potential ventures, resulting in bottlenecks in investment procedures, he said.
He previously told The Post that Cambodia is expected to reopen its economy soon, noting that the Kingdom boasts the highest Covid-19 vaccination rate in the region and that quarantine rules for fully-inoculated travellers have been eased.
Heng said these plans “will open up more opportunities for investors to come to Cambodia and enable an increase in investment applications, as well as underpin a recovery in approvals by the competent authorities”.
This expected upswing in investment will be all the more pronounced starting early next year, when a number of regional and bilateral free trade agreements are set to come into force, he surmised.
However, Heng cautioned that taking too long to manage a successful economic reopening would only pose more challenges.
The CDC’s Chenda Sophea went on to say: “Cambodia has indicated its strong commitments in promoting sustainability dimension in its new investment law where a smart incentive scheme has been introduced in this new investment law to lure more sustainable investments to the Kingdom.
“Cambodia launched this year a supplier database with sustainability dimensions to facilitate investment that achieves sustainable objectives.
“Investors are able to contract with domestic firms that operate in manners that project the environment, achieve gender goals, and impart training for skills development,” he said, adding that the database “is a result of cooperation” between the CDC and World Economic Forum.