FDI inflows hit $8.1B in one year
FDI inflows hit $8.1B in one year
In one year between September 2023 and September 2024, Cambodia’s Foreign Direct Investment (FDI) inflows surged to $8.1 billion, according to a report by the Ministry of Economy and Finance (MEF).
The growth reflects strong international confidence in Cambodia’s growth-oriented policies and stable economic condition.
The main sources of FDI were from China, followed by South Korea, Singapore, Japan, Vietnam, Malaysia, Thailand, Canada, and the UK.
Speaking at the ‘Global Chinese Economic and Technology Summit–GCET 2024’ last week, Aun Pornmoniroth, Deputy Prime Minister and Minister of Economy and Finance, said that Cambodia has solidified its position as one of the fastest-growing investment destinations in the region.
With peace, social order, safety, security and political stability as strong foundations, Cambodia has consistently maintained high growth, leading to remarkable economic development, poverty reduction, and lower middle-income status in 2015.
In 2024 and 2025, the economy is projected to grow around six percent and 6.3 percent, respectively, mainly supported by a continued momentum in export-oriented sectors, especially the garment sectors, he added.
“Cambodia is open to foreign business ownership and free capital repatriation. We allow 100 percent foreign ownership in most sectors, except land ownership, and allows investors to freely purchase foreign currencies and repatriate those foreign currencies.
Our Law on Investment offers generous tax breaks up to nine years, investment guarantees, and streamlined business registration processes,” Pornmoniroth said.
In the first nine months of 2024, the Council for the Development of Cambodia (CDC) registered 315 projects, bringing in $5.3 billion in investment and generating over 252 000 jobs.
Lim Heng, Vice President of the Cambodia Chamber of Commerce told Khmer Times yesterday that, lately, there has been a significant increase in investment registered with CDC, and in particular, most of the listed companies are non-garment manufacturers.
Companies investing in the medium and heavy industry, focusing on infrastructure investment, car assembly plants, agricultural processing and tyre production are good investments for the country’s economy, by not solely depending on the garment sector’s investment, he added.
“We attract investors due to two factors—first, we have a free trade agreement between Cambodia, China, Korea and the United Arab Emirates, besides the RCEP regional agreement. China-US trade dispute is another inducement for investors to invest in Cambodia and export to the US and China at low tariffs.
Second, the government takes care of investors through public-private dialogue forums that protect and address the challenges of the private sector, and now we see that the government has reformed its internal economy to make the market more favorable for investment,” Heng said.
Anthony Galliano, CEO of Cambodian Investment Management Group and Vice President of the American Chamber of Commerce in Cambodia, said China remains the largest and major investor by far in the Kingdom with the lion’s share of the pie.
He observed that China’s investments are mainly driven by large-scale infrastructure projects, such as the Phnom Penh-Bavet Expressway, real estate and construction, and manufacturing, particularly in electronics and assembly.
It is also noticeable that Cambodia is not attracting foreign investment in high-tech manufacturing which is strategically important in shifting global supply chains, he added.
“The main sectors of foreign investment are financial activities, manufacturing, real estate, agriculture, and energy.
The banking, microfinance, and insurance sectors have also seen rapid expansion,” Anthony said.
The strategic shift of global supply chains away from over-reliance on China, often referred to as ‘de-risking’ or the ‘China Plus One’ strategy, is benefitting Cambodia’s manufacturing sector to some degree, he said, adding that, nations such as Vietnam, Malaysia, Thailand, Indonesia, and the Philippines have emerged as attractive alternatives for manufacturing and investment.
“Foreign investors are seeking diversification of their production bases with countries that have a strategic location, competitive labour force, well-established industrial base, favorable trade agreements, robust infrastructure, and a stable political environment,” he said,
Cambodia’s FDI reached 197.8 trillion riels ($48.4 billion) between 2018-2023, said a data from the National Bank of Cambodia (NBC) in June.
The main source of FDI inflows was China with 45.6 percent of total FDI, South Korea (11.8 percent), Singapore (6.5 percent), Japan (6.2 percent), Vietnam (5.3 percent), Malaysia (4.4 percent), Thailand (4 percent), Canada (3.5 percent), and the UK (3.2 percent). FDI inflows from other countries were at 9.5 percent.
