Industry minister Hem Vandy addresses the media at a CCJ-organised conference on January 26. CCJ
Cambodia is actively seeking more direct investment to enhance its small and medium-sized enterprise (SME) sector, a key driver of the nation’s economic growth, according to the Ministry of Industry, Science, Technology and Innovation.
Industry minister Hem Vandy made the remarks at a forum on the ministry’s priorities, held in collaboration with the Club of Cambodian Journalists (CCJ) on January 26.
Vandy emphasised the government’s ongoing role in promoting domestic production.
He said the initiative aims to augment the processing production chain, thereby reducing reliance on imports and boosting exports to global markets.
He highlighted the growth in the number of factories registered with the ministry, which reached 2,125 in 2023, including 241 new registrations that year.
Vandy attributed the increase to the country’s political and macroeconomic stability and economic growth.
He said that following Prime Minister Hun Manet’s recent visit to Japan, there has been a surge in interest from Japanese investors in establishing industrial zones in Cambodia, signalling optimism for the industry and SMEs.
“I believe that through the support and efforts, investors will have more trust, more interest in Cambodia, especially during the seventh government mandate led by [Manet],” he stated.
The minister emphasised that forming a community or federation is crucial for accelerating SME production.
He said the collaboration will enable SMEs to compete with imported products, increase export capacity, enhance productivity and establish common quality standards, financial resources and skilled labour.
Growing SME production chain importance
Hong Vanak, director of International Economics at the Royal Academy of Cambodia, highlighted the sector’s importance to the economies of developing countries in a discussion with The Post on January 28.
SMEs, he noted, encompass the production of daily essentials such as food, consumer goods, tourism products and some processed goods.
He said a thriving SME sector not only propels economic growth through job creation and family income but also facilitates the transition from small-scale production to industrial production, incorporating modern technology.
“I am confident that the government’s commitment to the SME sector will help accelerate Cambodia’s economic growth, especially in improving the ability to export semi-finished and finished products from the Kingdom to more international markets in the future,” he stated.
However, Vanak also pointed out that the advancement of the sector hinges on the active involvement of all factory owners and businesses.
He said the collaboration is crucial for achieving better quality, reducing costs and accessing broader markets.
Foreign investors show increasing interest
Manet, speaking on the sidelines of the commemorative summit for the 50th anniversary of ASEAN-Japan Friendship and Cooperation in December, highlighted several priorities to attract Japanese investors, including the establishment of special economic zones (SEZs).
Sam Soknoeun, president of the Global Real Estate Association, who is exploring the possibility of collaborating with the Japanese on the Cambodia-Japan SEZ project, told The Post that Japanese financing in these zones would inevitably draw more Japanese investors to Cambodia.
He noted that SEZs in Cambodia are predominantly owned by Chinese investors, leading to an increase in Chinese-funded factories in the country.
“If well-known Japanese companies open factories directly in Cambodia, it will not only help improve the quality of consumer products in the Kingdom, but also enhance the capacity to export Cambodian goods to international markets,” he added.
Projected economic growth for 2024
The Ministry of Economy and Finance’s Budget in Brief for the Fiscal Year 2024 stated that the country’s economy is anticipated to recover and is projected to grow at approximately 6.6%. The growth is expected to increase the gross domestic product (GDP) to around 142.66 trillion riel (equivalent to about $34.97 billion).
The forecast attributes the economic upturn primarily to the industrial sector, with an expected growth of 8.5%, followed by service at 6.9% and agriculture at 1.1%.
“The industrial sector is projected to continue its growth at around 8.5% in 2024, a significant increase from about 5.0% in 2023. This is due to the anticipated recovery of the garment sub-sector, while the non-garment manufacturing sub-sector is expected to maintain strong growth. Additionally, the construction sub-sector is projected to continue its gradual growth,” it stated.
“Meanwhile, the introduction of the Law on Investment is expected to contribute significantly towards making the investment environment more attractive and favourable,” the report added.
