Facilitating investment flows to least developed and developing countries and creating favourable investment environments is necessary to support and accelerate economic recovery in the post-Covid-19 era, according to Council for the Development of Cambodia (CDC) secretary-general Sok Chenda Sophea on October 22.
Chenda Sophea made the comment during a virtual discussion, organised by the World Investment Forum, on how to streamline the management operations of least developed country (LDC) governments to boost and facilitate investment.
He stressed the need to create environments that are conducive to the flow of investment to LDCs and developing countries, saying that establishing an investment climate and mobilising investment flows are vital elements needed to prop up and accelerate economic recovery after Covid.
“The joint efforts of LDCs and developing countries will be key to achieving a more efficient business and investment environment and creating sure-fire conditions to attract sustainable investment flows,” he said.
Minister of Commerce Pan Sorasak early this month noted that the rapid growth recorded by trade and the digital economy has also widened the digital gap between developed and developing countries, especially LDCs.
The minister was speaking via video link at the 15th session of the UN Conference on Trade and Development (UNCTAD) Ministerial Roundtable IV on “Harnessing frontier technologies for shared prosperity”, co-organised by the Barbadian government and the UN trade body.
In this regard, bilateral and multilateral cooperation with trading partners, development partners and relevant international organisations plays an important role in supporting the development of digital commerce and maximising benefits, the minister said.
These partnerships help build infrastructure, foster technology transfers, strengthen the legal and policy environment, and support capacity development to promote the creativity and innovation of developing and least developed countries, he explained.
At the same time, Sorasak also called on UNCTAD to continue to support least developed countries, including Cambodia, in strengthening production capacity, institutional and human resource capacity development, and technical skills.
According to Chenda Sophea, the path to promoting sustainable development lies in enhancing cross-border trade and investment facilitation, thereby promoting private investment and achieving greater export diversification.
In addition, he said, LDCs also need to tap into the full potential of deeper regional integration and diversify their economies to reinforce economic growth and resilience, as well as establishing legal frameworks and regulatory regimes that encourage domestic and foreign investment.
He also shared some of the newly promulgated Cambodian Law on Investment’s core elements that are designed to build an open, transparent and reliable legal framework that is complementary in nature and ensures that local conditions are favourable for investment.
Of note, the law provides tactical incentives to investment projects that use technology, conduct research and development, support innovation, provide skills training, or create a substantial number of jobs, he said.
FDI is an important source of development finance for LDCs and can complement official development assistance (ODA), he added.
According to UNCTAD, global FDI inflows reached about $852 billion in the first half of 2021, showing a “stronger-than-expected” recovery. The increase restored more than 70 per cent of the decline recorded in 2020.
FDI flows into developing economies also increased significantly, totalling $427 billion in the first half of 2021, with faster growth in East and Southeast Asia (25 per cent). Of the total recovery of about $373 billion in global FDI inflows in the first half of 2021, 75 per cent was logged in developed countries.