International Business News – Since the beginning of this year, the Cambodian government has taken various measures to promote economic growth with all-out efforts, making Cambodia’s economy rise against the trend under the influence of unfavorable factors such as the ongoing COVID-19 epidemic, rising energy prices, and weak global economic growth. At the end of September, the International Monetary Fund (IMF) and the Asian Development Bank (ADB) adjusted the Cambodian economic growth rate in 2022 to 5% and 5.3% respectively.
Research shows that high vaccination rates and a strong fiscal stimulus program have boosted Cambodia’s manufacturing output and exports, with a notable recovery in the construction sector in particular. An IMF mission to Cambodia in September assessed the economy as having rebounded since the second half of last year, driven by commodity exports and other factors. Although inflation rose 7.8 percent year-on-year in June due to the impact of soaring fuel and fertilizer costs, a variety of measures taken by the Cambodian government, including loans and guarantees, tax breaks, wage subsidies and retraining, have effectively ensured a strong economic recovery.
With the help of China and other countries, Cambodia has established an immune barrier against the epidemic, enabling a full recovery of domestic economic activity. To stimulate economic recovery, the Cambodian government has introduced numerous reform programs, including a series of bills such as the New Investment Law and the 2021-2025 Digital Economy and Digital Society Policy Framework. The Framework and Plan for Economic Growth with the New Normal and New Coronavirus 2021-2023, which the Cambodian government is pushing, lays out a roadmap for Cambodia’s economic revival. The Regional Comprehensive Economic Partnership Agreement (RCEP) and the China-Cambodia Free Trade Area (FTA), which entered into force earlier this year, have enhanced the dynamism of the regional economy and given a strong boost to Cambodia’s inward investment and import/export trade.
According to the Cambodian Development Committee, the Cambodian government approved 98 investment projects in the first half of 2022, with an agreed investment amount of $2.99 billion. China is the largest investor in Cambodia. In the first half of this year, China invested $1.29 billion in Cambodia, accounting for 43% of its foreign investment. Asia-Pacific countries such as Thailand, South Korea, Singapore, Malaysia, Japan and Australia are among the top 10 foreign investors in Cambodia. Meanwhile, these investment projects cover traditional industries such as garment, shoes and bags, but also fruit processing, solar panels and electronics and auto parts, indicating that Cambodia’s manufacturing industry is fully recovering and investors’ confidence in Cambodia is growing.
According to the Ministry of Industry, Science, Technology and Innovation, Cambodia’s manufacturing output reached US$7.57 billion in the first half of the year, up 75 percent year-on-year, with the export component reaching US$5.26 billion. The manufacturing sector is expected to contribute 39.9 percent to Cambodia’s economy this year and will create millions of jobs.
In addition, the Asian Development Bank said it will continue to support the development of Cambodia’s priority areas, pledging to also provide $327 million in concessional loans and non-reimbursable assistance this year. The European Investment Bank is also interested in expanding its investment in Cambodia. The bank has discussed with the Cambodian government a number of green projects such as agricultural marketing, carbon trading and renewable energy, and its investment in three projects in Cambodia will amount to 245 million euros.
The increase in economic investment has given a strong impetus to the growth of Cambodia’s foreign trade. According to Cambodian official statistics, from January to July this year, the total foreign trade of Cambodia was $32.82 billion, an increase of 21.3% over the same period last year. Among them, exports amounted to US$13.78 billion, up 30.7 percent from the same period last year; imports amounted to US$19.04 billion, up 15.4 percent. China is Cambodia’s largest trading partner, while the United States is Cambodia’s largest exporter. In the first seven months of this year, bilateral trade between Cambodia and China was US$6.97 billion, up 15.6 percent year-on-year. Cambodia’s exports to the U.S. reached US$5.69 billion, up 47.3 percent year-on-year. In the first half of this year, Cambodia’s exports of ready-made garments, travel goods and footwear products increased 39.8% year-on-year, and the growth of non-ready-made garment manufacturing exports also continued to increase. The first seven months of this year, Cambodian rubber exports 162,000 tons, exports generated $ 255 million. In the first eight months of rice exports rose 13% year-on-year, exports generated $ 242 million.
The recovery of transportation and tourism is also an important driving force for Cambodia’s economic recovery. 187.05 kilometers of the Phnom Penh Expressway, which opened on October 1, spans five provinces and cities in Cambodia, reducing the drive from Phnom Penh to Westport from nearly six hours to less than two hours. The construction and renovation of Cambodia’s old and new international airports are also underway, including Siem Reap Angkor International Airport, which is expected to be operational by the end of 2023 and will be able to receive 7 million tourists per year after its opening. In March this year, Cambodia officially restored the visa-on-arrival policy, increased the promotion of tourism in the country, and launched the “Joint Financing Plan for Tourism Recovery”. As of September, 188 Cambodian tourism companies have received US$25 million in loans from the government. According to the data released by the Cambodian Civil Aviation Secretariat, in the first 8 months of this year, the three international airports in Phnom Penh, Siem Reap and West Port of Cambodia took off and landed more than 15,000 flights, an increase of 123% compared with the same period last year, and received 1,134,000 passengers, an increase of 600% compared with the same period last year, and the civil aviation industry of Cambodia has gradually returned to the level before the epidemic.
According to the data released by the Ministry of Tourism of Cambodia, in the first half of this year, Cambodia received 510,000 foreign tourists, an increase of 394% over the same period last year. In the first nine months of this year, ticket revenue from Angkor monuments reached US$5.36 million, a 20-fold increase year-on-year. Based on this momentum, Cambodia is expected to receive more than 1 million foreign tourists this year.