October 10, 2023
PHNOM PENH – Despite global and regional economic downturns due to ongoing geopolitical conflict, Cambodia continues to be a beacon for investments. In the first nine months of 2023, the Kingdom drew in fixed-asset investments worth $3.76 billion, marking an 8.6 per cent rise from the $3.46 billion recorded in the same period last year.
According to data released by the Council for the Development of Cambodia (CDC) on October 7, between January and September they approved 191 investment projects, a 27 per cent increase from 150 projects over the corresponding period the prior year. Leading the charge in foreign investments were nations including China, Malaysia, Singapore, Vietnam and the British Virgin Islands.
Ngoun Meng Tech, director-general of the Cambodia Chamber of Commerce (CCC), said the Kingdom stands out in southeast Asia for its exceptionally liberal investment framework. The system allows foreign investors to retain 100 per cent ownership of their investments, bypassing the need for a local partner that many other countries mandate.
Meng Tech further highlighted that the government had adopted a new investment law (sub-decree 139) in October 2021, paving the way for a more inclusive and incentive-rich investment environment.
“We don’t deny that current geopolitical tensions impact our economy; they certainly do. However, despite these external challenges from major global players, Cambodia remains committed to drawing more investments, particularly from regional countries,” he stated.
CDC deputy secretary-general Chea Vuthy lauded the country’s economic promise at the Cambodian Business forum on August 11. He underscored the nation’s stability – politically, economically and in terms of security.
Vuthy also emphasised the private sector’s critical contribution to the national economy.
“Despite obstacles like the Covid-19 pandemic and Sino-US trade tensions, Cambodia consistently attracts nearly $4 billion in foreign investment annually. In 2020, while foreign investments in ASEAN plunged by approximately 40 per cent, we remained steady at about $3.6 billion,” he noted.
The European Chamber of Commerce’s (EuroCham) Business Confidence Survey 2023 indicates that Cambodia’s ease of doing business (EoDB) index remains buoyant, even when faced with challenges such as global inflation and the Russia-Ukraine conflict.
While most firms achieved their profitability benchmarks and maintain a hopeful outlook, obstacles like limited access to finance and a scarcity of skilled workers persist. The survey reveals a growth expectation of 62%for businesses in the coming year, up from 56%in 2021, though still below the pre-pandemic level of 72%.
“With sufficient governmental backing, they’re positioned well to overcome these hurdles and maintain their upward growth,” stated the report.
Nevertheless, a shadow of uncertainty looms over future EoDB. The survey displayed a slight uptick in respondents forecasting a tougher business climate (31%, a rise from 29% in 2021), while optimism decreased, dropping from 31% in 2021 to 27%.
The ASEAN+3 Regional Economic Outlook (AREO) press conference on October 4 projected Cambodia’s economic growth for 2023 at 5.9%. This figure is surpassed only by Vietnam’s 6.8% and the Philippines’ 6.2%. Forecasts for 2024 predict even faster growth with Cambodia at 6.7%, Vietnam at 7.1% and the Philippines at 6.5%. In terms of inflation, Cambodia’s rate is anticipated to be 3.3% in 2023, dropping slightly to 3.1% in 2024.