Cambodia: CDC approves $4 billion in investment projects

• May 17, 2019

The government approved $4 billion worth of investment projects during the first four months of the year, the Council for the Development of Cambodia recently revealed.

From January to April this year, the value of investments approved more than tripled compared to the same period in 2018, CDC said. 115 projects were given a greenlight by CDC, compared to just 81 last year. They include hotels and garment and footwear factories, as well as factories of electrical appliances, furniture, and plywood.

There were also investments in the F&B and agriculture sectors.

Ngeth Chou, senior consultant at Emerging Markets Consulting, said the sharp increase reflects the confidence both local and foreign investors have on the country’s stability and economic performance.

“This booming growth shows strong confidence among local and foreign investors in the political situation and the economy, which is now growing healthily,” he said.

CDC’s data did not reveal investors’ nationalities but Mr Chou believes the majority of approved investment projects come from China, particularly those in construction and real estate.

“I do believe China is the biggest source of foreign direct investment in Cambodia. The construction and the property sector continues to attract many Chinese companies,” he said, adding that “foreigners can own condominiums in Cambodia, and about 70 percent of buyers are Chinese.”

Kaing Monika, deputy secretary general of the Garment Manufacturers Association in Cambodia, told Khmer Times that the increase in investment was partially enabled by the trade spat between the United States and China.

“The trade war is a concern, but also represents an opportunity for Cambodia in terms of attracting more FDI. Many companies are moving out of China and relocating to Cambodia.

“Asean, a peaceful region with a competitive investment environment, stands to benefit from this trade war,” he said.

“The question is whether we will be able to take advantage of the situation. I am personally concerned that the current speed at which the minimum wage is increasing could make us less competitive, particularly for low-value industries like garment and shoes,” he said.

Mr Monika pointed out that reforms recently announced by the government are a step in the right direction, but that they might not be enough to achieve competitiveness in a fast-changing global market which requires adaptability and flexibility.

“Moving forward, buyers will not just look at cost, but at the entire package, including additional services and shorter lead time. Achieving this requires a skilled workforce, local supporting industries, and efficient logistics – factors Cambodia is still lacking,” he added.

In March, Prime Minister Hun Sen announced a series of initiatives to build the country’s economic independence and mitigate risks arising from EU’s potential withdrawal of the Everything-but-arms (EBA) scheme. They include tax incentives, eliminating port inspection fees, reducing electricity fees, and revamping the railway system.

Source: https://www.khmertimeskh.com/50605108/cdc-approves-4-billion-in-investment-projects/