Attractivity of Cambodia for Investors remains solid

  • Alain Gascuel
  • December 2, 2019 9:05 AM

Most projects of investments in Cambodia come, this year, from China and from Cambodia, also from Japan, Hong Kong, Taïwan …

PHNOM PENH--Cambodia attracts investors, both foreign and local. This is a long-term phenomenon observed for many years. And that tends to increase In the nine months to September 2019, the Council for the Development of Cambodia (CDC) approved 147 projects worth $5.76 billions. That compares with 149 projects worth $5.8 billions for the whole of last year.  The improvement could reach, for the whole year, more than 30 %. 

The approved projects during the first nine months of this year are expected to create around 183 500 employments.

The surge in CDC investment approvals this year reflects exceptional circumstances, mostly the trade war between the United States and China. Countries like Cambodia benefit as Chinese companies move production abroad to avoid the “Made in China” label in the US market. 

During the last 18-month period, Cambodia ranked first among investors in accounting for 53 percent of investment approvals. China was second with about 30 percent and Japan ranked third with about 8 percent.

But, very important evolution, during the last 9 months of 2019, the CDC, Council for Development of Cambodia, approved 85 Chinese projects, an exceptionally high number; 29 cambodian projects; 12 projects coming from Hong Kong; 11 from Taïwan; 3 from South Korea;  3 from Singapore; 2 from the USA; 3 from Great Britain;  1 from France; 1 from Vietnam; 1 from Malaysia;  …

These CDC statistics, however, are limited to investments reaching more than $2 millions. That means they don’t take into account the innumerable small investments like buying shops, restaurants, create agencies for many different kinds of services like transport, repairing computers, or engines, design, hair dressing, planting vegetables, …  all activities of major importance for creating jobs, for the daily life of the great majority of Cambodians, for the general health of the country.

Which are the most attractive sectors?

If you consider the number of projects approved during the 9 first months of 2019, the most attractive sector is garments, bags, shoes and travel goods :  - 42 projects for the “bags” ($ 220 millions);  - 39 for the “garments” ($ 147,6 millions); - 7 for the shoes ($50 millions).

But if you consider the amount of these approved projects,  Hotels and Tourism come by far in the first place.

For 7 luxurious hotels, the total of projected investments reaches $ 969,4 millions;  for the Tourism  (tourism Centers, complex Kampot, water park, …) :  $ 3,8 billions.  

It is worth noting that these projects of hotels and tourism centers take much more time than garments factories to implement and that they generate much fewer jobs. 

In other sectors: CDC approved, during the 18 last months, $2.08 billion in infrastructure investment including a new $1.87 billion highway between Phnom Penh and Sihanoukville and a $120 million solar farm near Kampong  Chhnang …  Services attracted $ 782 million, waste recycling $300 million, the rubber sector $ 137 million, agro-industrial projects $186 million, …

Too much of China?

The strong Chinese presence generates two kinds of reactions among Cambodians. Some are critical — the profits go to Chinese investors with no benefits for Cambodians, workers are brought in from China and Cambodian workers are paid too little. Chinese buying of apartments meanwhile pushes rental prices higher and casinos in Sihanoukville create a negative environment.

Others see Chinese investment as a wonderful opportunity for Cambodian exports to the world’s largest market. Indeed, Cambodia and China agreed in October to increase trade between the two countries to $10 billion a year.

As investment in Cambodia expands, so must diversification. The country needs to diversify the number of partners, countries and markets with which it trades and also the number of countries investing in Cambodia. At the same time, Cambodia needs obviously to diversify its economic activities and exports.

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