PHNOM PENH: The Economist Intelligence Unit (EIU) has ranked Cambodia as the world’s sixth most attractive investment destination for market expansion by Chinese companies.
In a report on China’s Belt and Road Initiative released Thursday, the EIU also ranked Cambodia as the tenth best destination for Chinese investment in supply-chain development.
“We anticipate strong momentum behind Chinese enterprises going global,” the London-based business intelligence firm said.
Expansion is expected to focus on consumer electronics, information technology services, telecommunications, renewable energy, and automotive products “where China has already been establishing its competitive edge.”
URGENCY OF FINDING ALTERNATIVE MARKETS
“Deteriorating relations with conventional export markets and slow domestic growth have highlighted the urgency of finding alternative markets,” the EIU said,
For market expansion, Indonesia ranked top followed by Bangladesh, Vietnam, Malaysia, and Pakistan.
Trailing Cambodia in the Top 20 most attractive destinations for Chinese market expansion was Egypt in seventh place followed by India, Tanzania, Colombia, Russia, Ethiopia, the US, Angola, the Philippines, Nigeria, Israel, Brazil, the Democratic Republic of Congo, and Kenya.
Although not in the Top 20, the report said Thailand was “attracting Chinese automakers to position the country as their EV manufacturing hub” in ASEAN.
Ahead of Cambodia in the rankings for supply-chain investment, Singapore topped the list followed by Malaysia, Thailand, Indonesia, Vietnam, Mexico, Egypt, Bangladesh, and Morocco.
After Cambodia were South Africa, Chile, the Philippines, India, Hungary, Brazil, Poland, Bulgaria, Romania, and Turkey.
“We suggest that investors consider the key operational risks associated with the investment destination, such as labor market restrictions and disputes with major trading partners,” the report said.
“Financial risks, such as exchange-rate volatility and capital account convertibility, are also instrumental.”
BALANCING OPPORTUNITIES AND RISKS
The EIU ranked Cambodia among 21 destinations with “more opportunities and less risk” — alongside fellow Regional Comprehensive Economic Partnership (RCEP) members Indonesia, Malaysia, Singapore, Thailand, and Vietnam.
China’s “mixed record” of direct investment abroad over the last decade “underscores the importance of anticipating the risks associated with entering a foreign country,” it said.
The report noted that the Chinese government had increasingly emphasized the “rationalization” of overseas investment.
Part of this drive is putting priority on “small and beautiful” projects in the Belt and Road Initiative.
New Zealand was the only RCEP member with “less risk but few opportunities” while Australia, Japan, the Philippines, and South Korea had “more opportunities but high risk.” The only RCEP member with “few opportunities and high risk” was Myanmar.
CAMBODIA’S OVERALL RANKING: 21 OUT OF 80 DESTINATIONS
Overall, Cambodia ranked 21 out of 80 destinations based on its appeal to Chinese investors.
The Top 20 were Singapore followed by Indonesia, Malaysia, Hong Kong, Thailand, Vietnam, Switzerland, UAE, Saudi Arabia, Chile, India, Bangladesh, South Africa, New Zealand, Russia, Qatar, Egypt, Colombia, Kazakhstan and South Korea.
Trailing Cambodia in the Top 30 were Mexico, Israel, Ecuador, Peru, Germany, Brazil, the US, Austria, and France. AKP
