Investment-friendly tax and investment laws and incentives, as well as the industrial development policy, are geared towards making Cambodia an investment hub and centre for automotive and electronics manufacturing in Southeast Asia.

Chea Vuthy, deputy secretary-general of the Council for the Development of Cambodia (CDC), said foreign direct investment (FDI) in Cambodia was $3.6 billion in 2022, which was comparable with the investment growth at $224.2 billion in ASEAN.

“Despite the ongoing impact of Covid-19 and geopolitical tension, FDI in Cambodia remains stable,” he said at the Cambodia Business Forum 2023 event, organised by the Cambodian Oknha Association.

In the last two years, investment and public-private partnership (PPP) laws, as well as tax incentive policies, have been introduced for eight prioritised investment areas as the country moves closer to exiting Least Developed Country (LDC) status.

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They are industry and manufacturing, physical infrastructure, agriculture and agro-processing, small and medium enterprises (SMEs), green energy, services, special economic zones (SEZ), and education and vocational training.

Tax incentives under the Law on Investment are offered under three tiers - basic, additional and special, he said, while pointing out that incentives expand into PPPs.

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Eight qualified sectors for PPP were identified, including transport and logistics, post, telecommunications, information and digital technology, mine and energy, healthcare, tourism, culture, social housing, and science and innovation.

Alongside that, the industrial development policy, which aims to shift the economy towards high value-added sectors, is looking to modernise and transform Cambodia’s industrial structure by 2025.

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Similarly, the automotive and electronics development roadmaps have identified key segments that seek investment.

Within the automotive sector, opportunities are available in wire harness, seats, simpler part components and two-wheeler backward linkages segments, while the electronics sector is seeking investors in cable and connectors and PCB assembly.

According to Vuthy, CDC registered a 60 percent drop in qualified investment capital in the first seven months of this year to $1.3 billion from $3.1 billion a year ago, although the project numbers rose to 128 versus 111 in the same period last year.

Between 2017 and 2022, tourism received the highest investment at 40.1 percent, followed by infrastructure (30.6 percent), industry (25.7 percent) and agriculture (3.8 percent).

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