A new tyre factory opens in Preah Sihanouk province in June 2023. SPM
Investment projects in Cambodia's industrial sector have been on the rise, comprising over 90% of all ventures approved by the Council for the Development of Cambodia (CDC) in 2023.
A total of 268 investments were approved in 2023, comprising 247 new undertakings and 21 production expansion projects, according to a CDC press release.
The financing, valued at $4.9 billion, is expected to create more than 300,000 jobs.
The CDC noted that the sector accounted for approximately 92.54% (248 projects) of the total number, contributing about 46% of total capital investment.
The projects include the establishment of a cement factory in Battambang province, a motorcycle assembly expansion project and a solar panel manufacture and assembly factory.
Hong Vanak, director of International Economics at the Royal Academy of Cambodia, told The Post on February 12 that the country’s favourable geographical location, political stability, economic growth, investment laws, transport infrastructure, labour, markets and preferential tariffs from major countries are key factors in attracting national and international investors to establish factories and enterprises.
He stated that free trade agreements (FTAs), such as those with China (CCFTA), South Korea (CKFTA), the Regional Comprehensive Economic Partnership (RCEP) and the Cambodia-United Arab Emirates Comprehensive Economic Partnership (CAM-UAE CEPA), also play an important role in drawing financers.
"Cambodia is increasing its potential to lure investors, particularly in recent years, with the emergence of numerous large-scale factory initiatives. These include the automobile assembly-manufacturing industry, tyre production and the manufacture of components, machinery and electrical equipment, with more factories using advanced technology," Vanak said.
He noted that to participate effectively and seize opportunities presented by the arrival of large factories and industries, the government is currently implementing a strategy to train its human resources.
Te Taingpor, president of the Federation of Associations for Small and Medium Enterprises of Cambodia (FASMEC), said the potential to attract financers would be considerably enhanced if the cost of electricity could be reduced or aligned with that of neighbouring countries.
He added that large industries are now investing directly in Cambodia.
"Fuel and electricity prices are crucial factors in attracting investors, as they are key components of the production sector, alongside the costs of raw materials and labour. When fuel and electricity prices are stable and low, investors perceive greater opportunities," he explained.
According to the Ministry of Economy and Finance's Budget in Brief for the fiscal year 2024, the country’s economy is expected to recover and grow by approximately 6.6% this year, primarily driven by the industrial sector.
“The [industry] is projected to continue its growth at around 8.5% in 2024, a significant increase from about 5% 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 said.
