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FDI grows 42% in H1 in spite of downturn

A view of high rise buildings in Phnom Penh.
A view of high rise buildings in Phnom Penh. Heng Chivoan

FDI grows 42% in H1 in spite of downturn

Although the current global financial situation is weak, foreign direct investment (FDI) inflows in the first half of 2023 increased 41.6 per cent compared to the same period in 2022.

Based on the outcome of the Council of Ministers’ plenary session on September 20, the first half FDI inflow showed remarkable growth compared to a mere 0.4 per cent hike in 2022, despite the tightening of the global financial situation.

A statement by the Council of Ministers noted that the positive FDI is expected to see the agricultural sector grow by 0.9 per cent while the hotel and restaurant sub-sectors are projected to recover at a rate of 41.5 per cent.

Similarly, the non-garment manufacturing sub-sector is estimated to grow strongly at 11.7 per cent, mainly underpinned by solar panel exports, especially to the US market, as the flow of investment in the non-garment manufacturing sub-sector increased sharply by 172 per cent.

To promote economic growth and encourage farmers, Prime Minister Hun Manet instructed ministries, institutions and stakeholders to find markets for agricultural products for farmers, especially in the upcoming harvest season, as well as providing advice on potential crops for the next season.

Meanwhile, Hong Vannak, an economist at the Institute of International Relations at the Royal Academy of Cambodia, said geographical location, human resources, export markets and investment law reform have made Cambodia a potential location for investment in all sectors.

In addition to large investments from foreign companies, more and more local investors are investing, he said, adding that free trade agreements and preferential tariffs with major countries are contributing significantly in the efforts of attracting foreign investors to Cambodia.

“Looking at Cambodia’s potential, I think FDI would increase, especially when the crisis is over,” he said, noting that investments in Cambodia is more diverse now.

At a business forum on August 11, Chea Vuthy, deputy secretary-general of the Council for the Development of Cambodia, said despite the protracted Covid-19 outbreak and the Sino-US tensions, foreign investment inflow in Cambodia remains remarkably stable compared to other countries in the region.

The private sector is an important driving force for the development of the national economy, Vuthy stressed, adding that the flow of foreign investment in Cambodia was, in fact, better than some ASEAN members.

“The figures show that we received nearly $4 billion foreign investment a year. In 2020, ASEAN saw a sharp decline of 40 per cent in investment, but we were stable at around $3.6 billion investments,” he said.

Vuthy shared that Cambodia’s foreign investments are from China, Thailand, Japan, the Cayman Islands, South Korea, the UK, Singapore and Malaysia.


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