Foreign Investment In Cambodia

What is foreign investment?

Foreign Investment refers to the investment by a foreign investor, allowing extensive ownership to the investor in domestic companies or assets of another country. It also allows the investor to have an active role in managing and influencing business strategy. Foreign direct investment (FDI), a type of foreign investment, is the long-term physical investment and purchase in a foreign country by a company. The activities generally include opening plants and buying buildings, factories, machines, or other equipment in another country.

Why do investors invest in Cambodia?

Cambodia is one of the fastest-growing economies, sustaining an average growth of 7.7% between 1998 and 2019. Despite the growth slowdown in 2020 due to the pandemic, Cambodia created more than 150,000 jobs through 195 new investment projects and 43 production expansion requests. Investing in Cambodia helps the investment thrive because of four main reasons:

Conducive investor climate: open economy, generous incentives, and efficient processes
Competitive workforce: young and energetic talent and proficient and competitive wages
Connected trade infrastructure: favorable trade agreement, logistical infrastructure, and key markets
Consistent and sustainable growth: strong economic growth, consistent business environment, and care for sustainability\

What are the investment trends by country and sector in Cambodia?

In 2018, China was the top foreign investor in Cambodia, accounting for 3 179 million USD, followed by Japan's investment (882 million USD). While Chinese investment continued to decrease in 2019 and 2020 to 2 746 million USD and 1 393 million USD respectively, new foreign investors from the American region emerged. The British Virgin Islands showed a significant surge in 2019 with 546 million USD in capital investment. The Cayman Islands became the top foreign investor in Cambodia in 2020 with 1 722 million USD in capital investment.

The line graph below shows a fluctuation of investment by sector in Cambodia from 2016 to 2020. However, it illustrated a downward trend during the 2019-2020 period, except for the energy sector, which increased from 158 million USD in 2019 to 1 763 million USD in the following year. Tourism showed the biggest change as it rose significantly from 1 508 million USD in 2018 to 6 051 million USD in 2019 before falling to 3840 million USD in 2020. Noticeably, Investment in the services sector dropped dramatically from 3 172 million USD in 2018 to 1 021 million USD in 2019 to 321 million USD in 2020.

Source : Ministry of foreign affair and international corporation

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