The government’s top investment decision-making body gave the nod to 36 new projects in the fourth quarter (Q4) of 2022 – just one more than during the same period in 2021 – but total capital commitments behind the developments plunged by nearly half year-on-year (y-o-y), according to new Ministry of Economy and Finance data.

The Council for the Development of Cambodia (CDC) approved 52 new investment projects in Q3 – encompassing all developments inside and outside of the Kingdom’s special economic zones (SEZ) – which means that the October-December period registered a 30.77 per cent quarter-on-quarter (q-o-q) drop.

The 36 investment projects greenlit in Q4 had total capital commitments of $573.28 million, down 42.5 per cent y-o-y but up 24.42 per cent q-o-q, and were expected to create 29,896 jobs (down 1.5% y-o-y; down 25.77% q-o-q).

In its latest Economic and Financial Bulletin, the ministry put the sharp on-year decrease in total capital commitments seen in 2022Q4 down to a decline in investment in solar-panel manufacturing as well as the garment and agro-industrial sectors.

Nine of the projects are set to be inside SEZs – compared to five in 2021Q4 and 19 in 2022Q3 – with total capital commitments of $33.23 million (down 62.1% y-o-y; down 82.9% q-o-q) and plans to generate 1,782 new jobs (down 31.46% y-o-y; down 78.08% q-o-q). All SEZ developments were in the industrial sector, as has been the case since 2021Q2.

The remaining 27 non-SEZ projects – compared to 30 in 2021Q4 and 33 in 2022Q3 – have total capital commitments of $540.05 million (down 40.57% y-o-y; up 102.8% q-o-q) and are anticipated to deliver 28,114 new jobs (up 1.34% y-o-y; down 12.53% q-o-q).

Projects are categorised in the agricultural, energy, industrial, services, and tourism sectors. The energy sector has not seen a contribution since 2022Q1, the finance ministry’s economic and financial bulletins show.

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.

Hong Vanak, director of International Economics at the Royal Academy of Cambodia, commented to The Post on March 22 that investors have been particularly risk-averse as of late, amid enduring Covid-19-induced impacts, the Russo-Ukrainian conflict, and geopolitical conflicts between major powers.

Cambodia’s investment situation and international trade volumes, especially goods exports – have been feeling the pain since 2022Q3, he said.

With bilateral free trade agreements (FTA) with China and South Korean as well as the Regional Comprehensive Economic Partnership Agreement (RCEP) – all of which took effect in 2022 – improving market access for Cambodian goods, a return to a situation more or less identical to the pre-2020 world would undergird investment growth in the Kingdom, he remarked.

“As a developing country, Cambodia must strive to improve its legal system, infrastructure and other issues to convince more local and foreign investors to put up more capital and open businesses, factories or manufacturing enterprises,” he argued, noting that a meaningful resolution to the Ukraine conflict should improve things.

A CDC report in January indicated that Cambodia approved major investment projects cumulatively valued at $4.68 billion in 2022, up 7.5 per cent from $4.355 billion in 2021.

The leading source markets were the Greater China region – comprising mainland China, Hong Kong, Macau and Taiwan – Japan, the Cayman Islands, Thailand and Singapore, the report noted, listing major sectors represented by the ventures as agriculture and agro-industry, tourism, textiles, and infrastructure.

On January 25, finance ministry permanent secretary of state Vongsey Vissoth revealed that the government had revised down its 2023 growth forecast for the Cambodian economy to 5.6 per cent versus the 6.6 per cent it put forth in October, citing uncertainty about global economic growth tied to the Ukraine conflict, climate change and the Covid-19 crisis.