The EU is a key development partner for Cambodia and has provided substantial financial and technical assistance to support economic development nationwide. The European bloc is also a significant buyer of Cambodian garments, footwear and other textile-related items.
The European Investment Bank (EIB), the EU’s lending arm owned by its 27 member states, is planning to expand its presence in Cambodia, especially in green projects, with the world’s largest multilateral borrower and lender by volume currently investing in projects nationwide valued at well over $200 million.
During his trip to Cambodia this week, EIB vice-president Kris Peeters sat down with The Post’s May Kunmakara to discuss the bank’s activities in the Kingdom and plans for the near term.
Could you briefly tell us about your mission to Cambodia?
The EIB, the bank of the European Union, opened its regional representation office for Southeast Asia and the Pacific based in Jakarta, Indonesia with another office in Suva, Fiji covering the Pacific. Our new office will support EIB and EU investments in Cambodia, as well as other ASEAN countries and I am here to help unlock new investment opportunities for the Kingdom.
We typically do this together with the European Union as the bank is a part of “Team Europe”. At the same time we also typically work together with other financial players – both public and private.
I want to see how Cambodia can benefit from EIB and EU support, identify potential projects Europe and Cambodia can cooperate on, especially now when the European Union offers investment opportunities under the Global Gateway initiative.
My mission is also to present the EIB and our new development branch EIB Global and introduce the new head of regional representation office for Southeast Asia, Sunita Lukkhoo. She is now permanently based in Jakarta to help identify and bring forward investment opportunities in Cambodia too.
This takes place against the backdrop of the unique capabilities we have to offer to support green and sustainable social and economic development. I will meet our partners from Team Europe like Agence Francaise de Developpement (AFD), and our international partners like Asian Development Bank (ADB), to see what we can do together in partnership with Cambodia.
In short, the EIB is bringing alternative financing in support of Cambodia’s investment plans – a choice that allows for long-term financing for sustainable development. We also bring valuable advisory support for project preparation and our experience stemming from more than six decades of financing some of the largest projects in the world.
Cambodia will choose what is best for the country and its people and I will be conveying this important message to our partners in the government.
What projects is the EIB currently involved in here?
The EIB currently has three projects in Cambodia worth “some €260 million”. We are investing €100 million on the modern drinking water supply for Phnom Penh. This project will bring clean, safe drinking water to the capital city and some of its poorest neighbourhoods, improving the health and lives of hundreds of thousands of Cambodians living there, while saving them money.
It will also create thousands of jobs, contributing to Cambodia’s economic growth and development. We are very proud of our contribution to this project together with other partners from Team Europe – AFD and the European Commission (the EU’s main executive body).
We are providing €65 million in financing for sustainable rural development of the country, together with the International Fund for Agriculture Development (IFAD). This project will improve connectivity and benefit 200,000 rural households with approximately one million people by bringing better roads, enhanced access to markets and improved food supply.
The EIB will invest in the rehabilitation of approximately 650km of rural roads across the country, making them both safer and more resilient to disasters.
Finally, we have invested €80 million for improving irrigation of agricultural land in Cambodia, contributing to making this important sector more efficient and resilient, addressing food security and fostering growth.
We have partnered with the ADB on this project, and together we will modernise and upgrade five existing irrigation networks in Battambang, Kampong Cham, Kampong Thom, Takeo and Kampot provinces, which provide water to an area of about 51,000ha of existing agricultural land.
Have there been any major issues regarding the allocation of funds for these projects?
We see no issues with the way our loans are used in Cambodia and at this moment we don’t see any red flags in any of the three projects we have in the country. The EIB has very strict rules to ensure that our financing ends exclusively where it was intended for.
We make no compromise about any kind of misuse or inappropriate allocation of funds which is one of the reasons why global investors gladly co-invest in projects that we support in Cambodia or elsewhere.
Our involvement in a project means that the highest environmental, economic, social and procurement standards have been observed and met. This makes our involvement a stamp-of-quality for a project, and financing projects through the EIB can help Cambodia in attracting investments faster for its priority projects.
When the EIB invests in a project, other investors tend to be more easily convinced to join.
What new initiatives does the EIB plan to work with the Cambodian government on?
The European Union wants to strengthen its partnership with Cambodia and ASEAN, with whom it established a strategic partnership in 2020. Together we can do a lot not just for the people of Cambodia but also for the planet as a whole.
Having this ambition as our guiding principle, the EIB will work closely with the Royal Government of Cambodia (RGC) and our partners in the EU Delegation to identify and prioritise financing for projects supporting climate action and clean energy, as well as sustainable and climate change resilient infrastructure.
Europe and Cambodia share a lot of priorities and common interests in a green, sustainable future for our planet and this allows us exciting, new cooperation opportunities. As the bank of the European Union, we are more than happy to follow and reinforce EU priorities in Cambodia.
The world is facing unprecedented times when complex issues such as climate action, energy and food security issues, as well as wars threaten the wellbeing and habitats of people. These issues are quite complex and demand all hands on deck.
If we don’t act now – especially on climate action – floods in Pakistan, droughts in Europe or forest fires of North America could very soon become our daily reality.
I am very happy to see Europe and Cambodia see eye-to-eye on the importance of fast and decisive climate action, and I would be glad to identify the projects where we can help. I will remind you that, as the climate bank of the European Union, we also plan to invest up to €1 trillion in climate action by 2030 and it is my task to discuss with the RGC to see how the country can benefit from this.
Are there any plans to work with the Cambodian or ASEAN central banks on green policies?
We are more than happy to engage with the National Bank of Cambodia and ASEAN counterparts, as well as any other key players in the region on tackling the important issue of green finances, as we are also the climate bank of the European Union. Climate action is a part of our DNA and we are the first international financial institution with its activities fully aligned with the Paris Agreement.
The EIB is a valuable partner on the issue of green financing, we are actually a pioneer in the field. The bank is the first international financial institution in the world to issue green bonds – this year we celebrated 15 years since our first green bond.
Total issuance of green, social and sustainability bonds today stands at around €2.2 trillion, and we have been right in assessing the potential of green finances for climate action.
The RGC is also spot-on with its ambitions to promote green finances. When complemented by social and sustainability bonds and helped by legislation on sustainable finance, green bonds can become increasingly important in directing capital towards sustainable economic activities in the country.
Into which Cambodian sectors is the EIB looking to expand?
We have three exciting projects in a phase that we could describe as “close to finalisation” with our partners in the RGC. We are looking into projects designed to improve integrated water management, agricultural services, and disaster risk management and flood resilience. We also want to look into projects related to food and energy security, as well as innovative green finance.
Considering the ongoing projects and our pipeline, we’re looking at an investment presence in Cambodia of about €500 million. With our new office for Southeast Asia and the Pacific in Jakarta, we hope that in the future we can do even more for the Kingdom’s socio-economic development.
This interview has been edited for length and clarity.