Despite a modest improvement in the Covid-19 situation in Cambodia, the number of new projects outside of special economic zones (SEZ) approved by the Council for the Development of Cambodia (CDC) saw a sharp decline in January-November 2021 compared to the same period a year earlier.
The CDC agreed to issue final registration certificates for 107 new non-SEZ private investment projects in the first 11 months of 2021, a drop of 34 projects or 24.11 per cent year-on-year, the Ministry of Economy and Finance reported.
These projects involve a capital investment of $1.716 billion, falling by 72.8 per cent year-on-year from $6.3 billion, and could create about 89,000 new jobs, sliding by 20.3 per cent from the same period in 2020, ministry figures indicated.
Although not yet to pre-Covid-19 levels, the economic situation in Cambodia is gradually showing more positive signs, it said, adding that improvements in economic growth are reflected in the visible increases in indicators such as the exports of textile-related goods, electrical components and agricultural products.
Hong Vanak, director of International Economics at the Royal Academy of Cambodia, pointed out that although applications for investment projects and CDC approvals may have declined, the newly-greenlit ventures covered a very diverse range of fields.
These include electricity, electronic components, solar, auto-assembly and furniture, he noted.
New medium and heavy industry projects will not only help upskill Cambodian workers, but strengthen the Kingdom’s economic growth, he surmised.
“It’s common for the number of approved projects to be small, but what should be recognised is the creation of an abundant and diverse manufacturing and processing industry in Cambodia,” Vanak told The Post on January 10.
Cambodia Chamber of Commerce vice-president Lim Heng said Covid-induced issues have amplified the global drop in new development projects, invested by both local and foreign entities.
Chief among them are the tightened travel rules, which impede experts from inspecting prospective site locations and studying the particulars of projects, he said.
“Declines such as those during this period are not uncommon, as Covid-19 disinclines investors from entering the market, and the market for locally manufactured and grown products also remains uncertain,” Heng said.
He predicted that the number of new private investment projects would progressively improve from the beginning of 2022, buoyed by successful Covid-19 vaccination campaigns, new investment laws and other pertinent regulations, a handful of bilateral and multilateral free trade agreements, and infrastructure development.
“Having opened its doors to investors and holidaymakers from mid-November 2021 will help Cambodia reel in more investment,” he opined.
The National Bank of Cambodia (NBC) last week put the Kingdom’s economic growth at five per cent for 2022, due to the anticipated global recovery, despite the potential emergence of new variants of the Covid-19 coronavirus.
The gradual global economic recovery will support Cambodian exports, especially of garments and non-garment manufacturing products that align with diversification strategies, such as electrical spare parts and bicycles, the NBC suggested.