Investment Odyssey: Cambodia’s Unwavering Attractiveness

Cambodia, situated in Southeast Asia, stands as an enticing prospect for foreign investors. The recent release of ‘Cambodia’s Infrastructure Market Update and Outlook,’ in partnership with PwC’s Singapore and Cambodian branches, reinforces the nation’s position as a promising frontier economy. This report delves into the potential infrastructure investment opportunities within Cambodia and sheds light on the vital infrastructure sub-sectors in need of development.

Over the years, Cambodia has showcased impressive economic growth, with an average annual GDP growth rate of 7.1% between 1994 and 2021. This growth has been primarily driven by key sectors such as manufacturing (garment and leather), agriculture, tourism, and construction. Notably, Cambodia’s steadfast long-term growth makes it one of the most consistent performers across the region. Despite enduring the economic setbacks triggered by the COVID-19 pandemic, with a 3.1% contraction in 2020 and a 2% decline in 2021, Cambodia is swiftly recovering.

Jennifer Tay, Infrastructure Leader at PwC Singapore, highlights Cambodia’s advantageous position, asserting that the nation is well-poised to capitalize on opportunities for sustained growth. This prospect is further bolstered by the Royal Government of Cambodia’s dedication to implementing reforms and nurturing growth.

Nevertheless, the report acknowledges the challenges brought by recent geopolitical factors. Rising energy and food prices are a concern for Cambodia, which heavily relies on imports of these commodities. To maintain its growth trajectory and align with the Prime Minister’s vision of elevating Cambodia to middle-income country status by 2050, PwC underscores the necessity for significant investment in infrastructure. The report recommends a substantial investment of $28 billion in infrastructure between 2016 and 2040 to support economic growth.

The report also underscores that Cambodia’s population growth surpasses international averages, further reinforcing its potential to achieve middle-income status by 2050. This, coupled with ongoing reforms and capital asset formation, is expected to fuel sustainable long-term growth.

To guide potential investors, the report outlines key roadmaps, including the Royal Government of Cambodia’s infrastructure development plan, the Transport and logistics master plan, and the Public-Private Partnership (PPP) Law. The Council for Development of Cambodia has identified specific sectors like agri-food, automotive, electronics, textile and apparel, bike and parts, and furniture and plywood, which are projected to drive future growth and enable Cambodian firms to become global leaders.

The implementation of the Public-Private Partnership (PPP) Law of 2021 has notably advanced infrastructure investment. This law has fostered increased participation of private capital and improved efficiencies in infrastructure development. As the report highlights, “With the enactment of the PPP Law, many bottlenecks in the infrastructure project pipelines could be eased by using an incentive mechanism.”

The report also recognizes the potential for joint ventures with local players in Cambodia, albeit emphasizing the importance of finding the right local partners. Navigating local factors, including bureaucracy and business culture, necessitates a reliable local partner. Cambodia has witnessed significant growth in the asset portfolios of such local players, indicating their ability to diversify into new sectors.

Nonetheless, the report concedes that raising affordable long-term capital for financing infrastructure projects remains a challenge. This underscores the need for innovative financing solutions to sustain Cambodia’s growth trajectory and attract investors to its burgeoning economy.