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Cambodia: Economy to grow 4.8 percent next year, bank says
Cambodia’s economy will grow 2.4 percent this year, with gross domestic product improving to 4.8 percent in 2022, according to Phillip Bank, the only Singapore-owned commercial bank in the Kingdom.
Phillip Bank Director Ong Teong Hoon said next year’s pick up will be driven by a revival in the three main sectors of the economy: first garments, footwear and textiles, second non-garments such as electronic components, toys and bicycles and third agriculture.
Ong said the economy probably won’t return to pre-Covid-19 growth levels until 2024 because he does not expect a revival in tourism until at least 2023.
From a banking perspective he said the National Bank of Cambodia responded to the Coronavirus pandemic in a timely and correct manner and the government also responded well.
“They have reduced the liquidity requirement from 12.5 to 7 percent. The banking adequacy for the country is very sound. The [capital adequacy ratio] for banks is 23.7 [percent] and for microfinance institutions it is 38.9 [percent]. For the liquidity coverage ratio it is 162 percent. It’s very sound. So in terms of the banking sector it’s got no worries at all,” he said.
Ong said Cambodia is in a strong trading position because of its membership of ASEAN, its ratification of the Regional Comprehensive Economic Partnership, a free trade agreement (FTA) with China and a soon-to-be-inked deal with South Korea. He said FTAs with Russia, Japan and the US were also likely to be signed.
“All these trading networks can only be good for the country because you cannot be isolated: You have to be connected to the world,” he said.
Ong said foreign investors find Cambodia very attractive because they can own 100 percent of anything except land, giving it an advantage over many of its Asian neighbours. The government also offers tax holidays of three to nine years after an entity makes a profit, free imports of construction materials and freedom from import and export duty for companies operating in one of the Kingdom’s 54 special economic zones. Ong said Phillip Bank has so many investments in Cambodia because the government does not have a nationalisation policy.
On the overall outlook for the economy Ong said he was very optimistic.
“The government has introduced the right things,” he said. “They have done the right thing relaxing travel restrictions. It is not a blanket open to all but they are doing it in a regulated manner, which is a good thing and is not sudden. A lot of it will also depend on what other countries are doing. As I see it a lot of countries are gradually opening up… and if more countries open up I’m sure Cambodia will revert back to pre-Covid. Give it maybe three years, maybe two years. It will not be a sudden explosion of growth but I think it will be a graduated and calibrated reopening and returning to pre-Covid,” he said.
Ong’s comments came at a seminar organised by Singapore Club Cambodia, with the support of the embassy of Cambodia in Singapore.
Source: https://www.khmertimeskh.com/50956602/economy-to-grow-4-8-percent-next-year-bank-says/