Cambodia Investment Review

Swedfund Pledges $10M to ASEAN Frontier Markets Fund to Promote Sustainable Business in Cambodia and Laos

Swedfund Pledges $10M to ASEAN Frontier Markets Fund to Promote Sustainable Business in Cambodia and Laos

Cambodia Investment Review

Swedish Development Finance Institution, Swedfund, has invested $10 million in the ASEAN Frontier Markets Fund (AFMF) to support small and medium-sized companies and contribute to job creation and development in Cambodia and Laos. The investment aims to promote gender equality, climate resilience, strong ESG standards and financial inclusion in the countries.

In a press release the fund stated that Cambodia and Laos are two of the poorest countries in Southeast Asia, according to the OECD/DAC list of least developed countries. AFMF will provide capital to strengthen and scale up regional growth-oriented SMEs that are key players in the private sector, contributing to economic development. This investment is in line with Swedfund’s goal of investing in the most vulnerable and poorest countries, it added.

Creating jobs with decent working conditions

Sofia Gedeon, Head of Sustainable Enterprises at Swedfund, said that the investment in AFMF is a way to reach more small companies that can invest and create jobs, which are crucial for developing countries. She added that both Cambodia and Laos face high poverty levels and need significant investment to create jobs with decent working conditions.

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The press release further added that before the pandemic, Cambodia was one of the fastest-growing economies in the world, but it was hit hard by the pandemic and economic growth stalled, potentially reversing recent improvements in poverty. While the human rights situation remains challenging, the country has emerged well from the COVID period, and forecast resumed growth provides new opportunities for the fund and its companies to address poverty and contribute to equitable development.

Sofia Gedeon, Head of Sustainable Enterprises at Swedfund.

Over the past twenty years, Laos has made great strides in development, halving poverty, reducing malnutrition, and improving education. However, economic growth has slowed down over the past two years, and there is a risk that the country will fall back in development without renewed and responsible investments, it added.

This is Swedfund’s first investment in a fund focusing on Cambodia and Laos. The AFMF will be managed by Emerging Markets Investment Advisers (EMIA), a Singapore-regulated fund manager focused on frontier ASEAN.

Financing sustainable businesses in Cambodia and Laos

Swedfund, established in 1979 and joined EDFI in 1995, is a Limited Liability Company (A.B.), wholly owned by the Swedish government. The fund operations are financed by capital injections, for which the Swedish Ministry for Foreign Affairs is responsible, and through reflows from the portfolio. Swedfund’s mission is to finance and develop sustainable businesses as a developed private sector with decent jobs contributes to stable communities and reduced poverty in developing countries.

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Impact investing in Cambodia has gained significant attention in recent years. The country has made great strides in economic development, with a strong focus on promoting inclusive growth and reducing poverty. Impact investing is becoming a critical tool for investors looking to achieve both financial and social returns.

According to the Global Impact Investing Network’s (GIIN) Annual Impact Investor Survey, the total value of impact investing assets in Southeast Asia increased by 10% from 2019 to 2020, reaching $4.7 billion. Cambodia, with its young and growing population and abundant natural resources, is an attractive market for impact investors.

However, the impact investing landscape in Cambodia is still relatively nascent, and challenges remain. Access to finance, inadequate infrastructure, and a lack of skilled labor are among the most significant obstacles facing investors. Despite these challenges, investors are drawn to the country’s potential for growth and impact, and Swedfund’s investment in AFMF is an example of this.

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