Lawrence Lennon: Challenges in first half of 2023 likely to persist

PHNOM PENH: The Council for the Development of Cambodia (CDC) approved 113 investment projects and investment expansion projects in the first half of 2023, with a total investment capital of US$1,105 million. This represents a decrease of 15 projects and US$800 million from the same period last year.

The approved investment projects, however, created some 122,000 jobs for local people. The majority of the investment projects were in the industrial sector, followed by agriculture and agro-industry, tourism, and infrastructure.

Cambodia's international trade also decreased in the same period. According to the General Department of Customs and Excise, the total value of trade was US$23.69 billion, a decrease of 13 percent from the same period last year.

Exports fell by 0.8 percent to US$11.46 billion, while imports decreased by 22.9 percent to US$12.22 billion.

The decline in investment and trade is likely due to the global economic slowdown, which has affected Cambodia's economy. However, the CDC remains optimistic about the country's investment potential, citing its young and growing workforce, low labor costs, and strategic location.

“The challenges observed over the first six months of 2023 are expected to persist as we observe a slow-down in the global macro context.” Said Lawrence Lennon, Managing Director of CBRE Cambodia, speaking at the “Mid-year review 2023 market insights for ” reports launching on 12th of July 2023.

He added that Cambodia being more globalized than ever faces a range of headwinds. As the cost of Capital Continues to rise in response to racing inflation, western markets have reduced consumption having a direct impact on the kingdoms' exports by 30% in Q1 2023. Equally, FDI has dropped as China experiences problems in its export and real estate industries.

With that said, China and the world continue to reopen following the COVID-19 freeze. Tourism and business travel, however slowly, are ticking in the right direction, added Lawrence.

In 2022, the Cambodian Investment Board (CIB) and Special Economic Zones Board (SEZB) approved 186 investment projects totaling USD 4.03 billion. Major investors included China, Thailand, and , with investments spanning sectors like agriculture, manufacturing, tourism, and infrastructure.

Last year, local investment accounted for 53.54% of total investment, while Foreign Direct Investment made up the remaining 46.46%. China stood out as a significant foreign investor, contributing 42% of the total.

In terms of exports, the United States ranked as Cambodia's top destination at 43.6%, followed by the European Union at 19.7%. From January to November 2022, Cambodia's exports to the US increased by 42% compared to the previous year, reaching $11,391 million.

The majority of these exports consisted of garments, footwear, bicycles, and furniture, benefiting from trade preferences such as Most-Favoured Nation status and General Specialised Preference (GSP) for travel goods.

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