Cambodia has recorded a cumulative total of $41 billion of Foreign Direct Investment (FDI) over the last 27 years with China accounting for over $18 billion (43%) in that period, according to data released by the National Bank of Cambodia.
The figure has more than doubled since 2014 when it was recorded at $19.2 billion in the first ever FDI survey conducted jointly by the National Bank of Cambodia and National Institute of Statistics.
The data outlines that Cambodia’s financial sector accounted for the majority of FDI since 1994 with $22.9 billion (22%) followed by manufacturing $8.5 billion (20%) and real estate at $4.9 billion (12%).
After China the countries with the most investment are South Korea $4.9 billion (11%), Singapore $2.9 billion (6%) and then Vietnam $2.5 billion (6%).
To read more about Cambodia’s economic outlook click here.
The ASEAN+3 Macroeconomic Research Office (AMRO) recently released its annual Regional Economic Outlook 2022 and predicted ASEAN GDPs to grow by 5.1 percent this year and 5.2 percent in 2023.
Cambodia’s economic growth is ahead of the curve, with GDP expected to grow by 6.1 percent in 2023, just behind regional neighbors Philippines and Vietnam, at 6.5 percent and 7 percent respectively.
Cambodia’s FDI predicted to increase over coming years
Speaking to Cambodia Investment Review the regional economists at AMRO said they are tipping FDI into Cambodia will increase this year.
“Cambodia has continued to expand its network of free trade agreements (FTAs), including recently signed FTAs with China and Korea, as well as the Regional Comprehensive Economic Partnership Agreement (RCEP),” AMRO said.
To read more about Cambodia’s RCEP opportunities click here.
“These agreements are expected to help Cambodia diversify its exports (beyond lower value-added garments and light manufacturing) and export markets, and to encourage further FDI inflows in the years to come,” they added.
In addition, AMRO outlined that China has been a major source of FDI for Cambodia, partly due to Chinese manufacturers relocating their production base to Cambodia to facilitate their access to the US market.
“If this trend continues, we expect to see higher FDI inflows into Cambodia which could help diversify the economy and enhance its growth potential,” they said.
“Government efforts to expand vocational and skills training and improve infrastructure and institutions are expected to improve the business environment, which should attract more FDI in the future,” they added.
In a recent interview with Cambodian Investment Review, Oknha Lim Heng, Vice President of the Cambodian Chamber of Commerce said the chamber expects the flow of foreign investors to return to Cambodia in large numbers in 2022.
“We still have high hopes as in 2021, because in the first two months of 2022, the Council for the Development of Cambodia received investment from foreign investors totaling more than $2.4 billion. There are already more than 10,000 online registrations with the Ministry of Economy,” he said.
“I think this year is a good year for Cambodia to attract foreign investors, while in 2021, the presence of investors and traders will continue to invest in Cambodia without any signs of decline,” he added.
According to data from the Council for the Development of Cambodia, in 2021, the CDC approved a total of 161 investment projects worth nearly $ 4 billion and created nearly 100,000 jobs.
More quality FDI in priority sectors
Development organization have previously expressed the need for more foreign direct investment into Cambodia’s heath, education and infrastructure sectors over the near to mid-term.
To read more about the recommendations click here.
Quality FDI is characterized by contributing to the creation of decent and value-adding jobs; enhancing the skill base of host economies; facilitating the transfer of technology, knowledge, and know-how; boosting the competitiveness of domestic firms and enabling their access to markets; and operating in a socially and environmentally responsible manner.
In 2020, AMRO released a consultation report where it recommended Cambodia address its structural challenges, especially the relatively poor infrastructure, limited supply of skilled labor, and rapidly rising minimum wages.