Despites the ongoing Covid-19 crisis and geopolitical tensions, foreign direct investment (FDI) inflows to Cambodia remain stable, attracting $3.6 billion last year, a senior official said on Friday.
Speaking at the Cambodia Business Forum, Chea Vuthy, Deputy Secretary General of the Cambodian Investment Board, said FDI in 2020 and 2021 reached $3.6 and $3.5 respectively.
Cambodia topped the list of investors in the country last year with 53.54 percent, followed by China at 42.01 percent, Thailand at 1.09 percent, and Japan at 0.98 percent.
Vuthy said from 2017 to 2022, 40.1 percent of investment was in tourism, 30.6 percent in infrastructure, 25.7 percent in industry and 3.8 percent in agriculture. The investment was mostly in Phnom Penh, followed by Kampong Speu, Preah Sihanouk, Kandal, Svay Rieng and Takeo provinces.
Special Economic Zones have been a significant attraction for FDI, Vuthy said. SEZs have attracted significant levels of foreign investment into Cambodia that would not have been present otherwise.
These investments have created jobs, with equal or better pay and better prospects than the alternatives that would otherwise have existed. This has raised the economic welfare of the workers concerned, he said in his presentation to more than 400 business leaders from across Cambodia, organized by Cambodian Oknha Association.
He added that the SEZs have attracted higher value-added industries that resulted in the diversification of investment activities, leading to an overall increase in investment quality.
Vuthy said 24 operational SEZs have 655 investment projects worth $8.1 billion, exporting $25.7 billion and creating approximately 174,000 jobs.
Bicycles and spare parts topped SEZ exports in 2022, totalling $979 million, followed by electronic components worth $507 million.
Electric cables and harness wiring ($379 million) and decorative light bulbs ($252 million) were among the top SEZ exports in 2022, according to Vuthy’s presentation.
Vuthy said that negotiations are ongoing with two tyre companies to invest in SEZs, in addition to three already operational in the country. If these go ahead, combined they will have the capacity to produce an estimated 200,000 tonnes of latex annually. Cambodia currently exports about 500,000 tonnes of latex, Vuthy said.
To produce a vehicle tyre requires 100 different kinds of materials, with Cambodia unable to produce semi-final products. The country can only produce latex, Vuthy said.
Friday’s Cambodia Business Forum 2023 was the first forum following the official inauguration of Cambodian Oknha Association in June.
The forum partly aims to promote trade and investment activities in Cambodia and to strengthen solidarity between the Association and the Council for the Development of Cambodia (CDC).
The gathering of oknhas comes amid recent arrests of tycoons for the alleged fraud of hundreds of families.
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The Association said that the aim is also to “promote the values of Oknha, to ensure honor and moral dignity”. As of August 10, the Association had 290 members.
Sear Rithy, vice president of the Association, said while there are challenges with the economy, it is clear that it is moving in the right direction.
“I believe that we made some real progress in identifying the challenges and opportunities that lie ahead for the Cambodian economy, Rithy said, wrapping up the forum. “These challenges are opportunities for increased investment, both domestic and international.”
Rithy said that the Association is committed to building a strong community of business leaders, and the forum was a great way to get to know peers, adding that, among other things, “upholding the highest standards of honesty and integrity”.
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