Cambodia seeks to boost foreign investment

A view of Phnom Penh City. - PPP

PHNOM PENH (The Phnom Penh Post/Asia News Network): Domestic stakeholders and economic experts are advocating for an enhanced investment climate to elevate Cambodia’s status and attract foreign direct investment (FDI) within Asean.

Tan Monivann, vice-president of the Cambodia Chamber of Commerce (CCC), is currently attending the 43rd Asean Summit in Indonesia. He conveyed to The Post on Sept 4 that the new government has introduced its Pentagonal Strategy and other reforms to attract FDI, utilising digital technology and investment laws.

“We’ve undertaken substantial efforts in infrastructure, laws, digital technology integration and reforms to entice FDI. However, a lack of skilled human resources remains. This shortfall influences foreigners considering investment in our country,” he said.

Monivann noted that Indonesian President Joko “Jokowi” Widodo emphasised Asean as a highly appealing FDI destination.

Monivann said the bloc has pursued FDI promotion through initiatives like digital exchanges and skill development. He suggested that the intergovernmental organisation continue to share effective practices, particularly high-growth FDI countries aiding member nations to bolster the region’s strength.

According to the National Bank of Cambodia (NBC), the Kingdoms’ FDI for the first quarter of this year reached US$45.8 billion, a nine per cent rise compared to last year. Capital allocations originated from China, South Korea, Singapore, Japan, Vietnam, Malaysia, Thailand and the UK.

FDI spanned finance, manufacturing, real estate, hospitality, agriculture, hydroelectricity and construction. Notably, the financial sector garnered substantial FDI, primarily from companies in the region.

In Channy, the president of public-listed ACLEDA Bank, highlighted factors that continued to entice foreign financial investment. These encompassed NBC’s regulatory focus, adherence to laws and international regulations and low bank capital requirements, among others.

“Sharing information about banking and finance regulations, work environment, market insights and associated risks holds significant importance. The ease of conducting business operations in US dollars eliminates concerns over currency conversion, making it simpler for investors,” he said.

Speaking at the recent Cambodian Business Forum, Chea Vuthy, deputy secretary-general of the Cambodian Investment Board (CIB) at the Council of the Development of Cambodia (CDC), noted that despite the Covid-19 pandemic and geopolitical tensions, the country has maintained a steady flow of FDI, attracting $3.6 billion last year.

“In 2022, Cambodia topped the FDI list at 53.54 per cent, followed by China at 42.01 per cent, Thailand at 1.09 per cent, and Japan at 0.98 per cent,” he said.

Vuthy emphasised the significance of special economic zones as key FDI attractions.

Hong Vannak, an economics researcher from the Institute of International Relations at the Royal Academy of Cambodia, stressed that both the government and private sector should engage in comprehensive discussions to create an investor-trusted, high-profit investment climate for FDI growth.

“Effective formulation of policies, laws and preparatory infrastructure holds paramount importance. Electricity pricing, pivotal for all sectors, alongside raw materials, labour and digital technology spending can influence overseas investors,” he added.