Cambodia: FTAs, investment law help attract more FDI

The new investment law, free trade pacts with China and South Korea and the Regional Comprehensive Economic Partnership (RCEP) along with peace prevailing in the country helped Cambodia to attract more foreign direct investment (FDI) in 2023, particularly to its industrial sector, according to experts.

The Council for the Development of Cambodia (CDC) approved 268 investment projects in 2023, a year-on-year increase of 44 percent. Approved investment projects brought a total investment of $4.9 billion, a 22 percent increase over 2022, read the CDC’s report.
 
Breaking it down by sectors, 92 percent of the projects covered the industrial sector, while the rest were in agriculture and agro-industry, tourism and infrastructure.

Vice-President of the Cambodia Chamber of Commerce Lim Heng attributed the remarkable growth in the number of investment projects to the new investment law and free trade pacts.

“New investment law and free trade pacts with China and Korea and the mega trade pact RCEP have been the catalysts in attracting more investors to Cambodia. These FTAs have created a huge market for made-in-Cambodia products,” Heng told Khmer Times.

Also, the peace prevailing in the country boosted the confidence of investors, he said.

Investments from China ranked first, accounting for two-thirds of the total investment capital, while domestic investment ranked second with 24 percent, read the report.

The approved investment projects created some 307,000 jobs for local people.

Meanwhile, the export of garments, footwear, and travel goods is likely to grow in 2024 as a number of new factories in the sector were opened last year, said Cambodian Footwear Association President Ly Khun Thai.

“In 2023, Cambodia received a significant increase in new factories, especially investment in the footwear industry. With the increase in purchase orders, the association expects that in 2024, Cambodia’s exports of goods, especially footwear, will be better than in 2023,” Kun Thai said.

The manufacturing sector was estimated to have contributed about 40 percent of the country’s Gross Domestic Product (GDP) in 2022, according to the Ministry of Industry, Science, Technology, and Innovation.

The garment, footwear and travel goods industry is the largest foreign exchange earner for Cambodia and non-garment manufacturing products include electronic components, bicycles, auto parts, furniture, leather, plastic and other industrial

Source:Khmer Times