Steady FDI helps keep economy on course

Total foreign direct investment receipts have remained consistent over the past five years, according to a new government report that incorporates central bank data.

FDI inflows have ranged from $1.5 billion to $2 billion a year between 2012 and 2015, according to the biannual Macroeconomic Outlook issued by the Ministry of Economy and Finance. Meanwhile, the National Bank of Cambodia (NBC) reported separately that the Kingdom received $1.9 billion in FDI in 2016.

Hing Thoraxy, senior researcher at the Cambodian Institute for Cooperation and Peace (CICP), said that the relatively stable level of FDI over the past five years was a result of Cambodia’s strong economic performance. He said consistent inflows have helped stabilise the Kingdom’s macroeconomic indicators, while reducing the poverty rate and diversifying the country’s manufacturing sector.

He predicted that FDI would remain steady in the coming years, supported by the government’s 2015-2025 Industrial Development Policy (IDP) and the Kingdom’s improving investment climate.

“With strong FDI inflows Cambodia will maintain its 7 percent annual GDP growth, create more job opportunities and generate higher income for its people,” he said. “This will help Cambodia to achieve its goal to becoming a higher-middle income country in 2026 or 2027.”

While the MEF report did not break down FDI receipts by source or distribution, NBC figures released earlier this year showed that over $539 million, or about a quarter, of all FDI logged last year was directed to the financial sector. The manufacturing and property sectors received the next largest shares of FDI, with $390 million and $370 million, respectively.

According to the NBC, China was the largest investor last year, providing $511 million, followed by Hong Kong, Vietnam and Japan.

In Channy, president and group managing director of Acleda Bank, said Cambodia could expect further substantial investment from these countries, contributing to industrial growth and higher incomes.

“FDI inflow into assembly factories and electronics manufacturing will increase and this kind of industry and will provide higher wages for Cambodian workers,” he said.