“Thanks to peace, political stability, adult population and human capital combined with strong economic growth, Cambodia has been able to attract many investors from Europe, the United States and Asia,” he said in his speech at the ASEAN-China (Shanxi) Trade and Investment Promotion Seminar, held in Changzhi, China’s Shanxi province this afternoon under the theme “New Opportunities, New Momentum, New Cooperation, and New Development,” as part of the ASEAN-China Week 2024.

As of 2023, foreign direct investment (FDI) in Cambodia amounted to a total of US$48.4 billion, an increase by 7.9 percent compared to a year earlier, he pointed out, attributing this growth to the favourable investment environment, incentives policies for new investments, and large-scale free trade agreements (FTAs) between Cambodia and her strategic trading partners, including the Cambodia-China FTA, Regional Comprehensive Economic Partnership (RCEP) Agreement, Cambodia-Korea FTA, and Cambodia-UAE Comprehensive Economic Partnership Agreement.

According to the minister, last year, China remained the largest investor in Cambodia, with a total investment of up to US$3.7 billion. “Cambodia will provide many opportunities for Chinese companies and investors, especially from Shanxi and ASEAN countries, to invest in the Kingdom,” he stressed.

Cambodia-made products are exported and supplied to a total of 250 million people in the Mekong sub-region, about 630 million consumers in the ASEAN market, and 2.2 billion people in the RCEP countries.

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This ambitious project aligns with the “Pentagon Strategy Phase 1” and positions Sihanoukville as a key economic driver under the leadership of Prime Minister Hun Manet.

The plan, solidified during a meeting of the Inter-Ministerial Coordinating Committee on July 9, 2024, outlines a long-term vision with three key goals:

Cambodia’s Gateway: Sihanoukville will become a multimodal transport and logistics hub, a flourishing business center, and an international financial center.

National Development Powerhouse: The city will be transformed into a world-class destination for coastal tourism, a national center for industrial development, and a hub for technological innovation.

Sustainable Metropolis: Sihanoukville aims to become a leading ASEAN city known for its multiculturalism, commitment to environmental protection, and utilization of smart green technologies.

This vision will be achieved through a two-phase implementation:

Phase 1 (2025-2028): Focus on integrating Sihanoukville into regional trade, expanding logistics and tourism infrastructure, revitalizing the existing city, and developing new areas to attract high-value investments.

Phase 2 (2029-2038): Solidify Sihanoukville’s position as a national and regional leader in finance, trade, industry, transportation, and technology.

The city will also transform into a model green and smart city, attracting high-income residents and achieving significant economic prosperity.
The Sihanoukville Multi-Purpose SEZ Master Plan signifies the Cambodian government’s commitment to propelling the city into a prominent economic zone, a global destination, and a sustainable leader within ASEAN.

Sihanoukville’s Strong Economic Foundation

Sihanoukville boasts a strong foundation for this ambitious transformation. The province is a major player in several key sectors prioritized by the Royal Government for national economic development, including industry, trade, tourism, and agriculture. These strengths are bolstered by existing infrastructure like the Deep Sea Port, 11 Special Economic Zones (3 operational and 8 planned), Sihanoukville International Airport, and its beautiful beaches, nicknamed “Southwest Star.”

Investment and Recent Challenges

Between 2018 and 2022, Sihanoukville attracted significant investment, with 1,588 applications in the construction sector alone. These projects encompassed a total construction area of over 14.6 million square meters and represented a combined investment capital of $7.9 billion.

However, the city faced challenges during the COVID-19 pandemic and its aftermath. Stalled investment projects emerged as a major concern. The Cambodian government has responded with full support to revitalize the city’s investment scene.

New Incentive Packages Drive Investment

Sihanoukville recently unveiled a new Special Incentive Package, unlocking a significant $2 billion investment boost. This initiative builds on the success of the “Sihanoukville Special Investment Promotion Program 2024” launched in January. That program has already approved special benefits for 63 projects. This latest package focuses on 22 new projects valued at over $2 billion USD, further revitalizing Sihanoukville’s investment scene.

The Sihanoukville Multi-Purpose SEZ Master Plan, coupled with the government’s strong commitment to investment, signifies a new era for the city. With its solid economic foundation and focus on sustainability, Sihanoukville is poised to become a prominent economic zone, a global destination, and a sustainable leader within ASEAN.

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According to the latest reports from the World Bank, the share of the ASEAN market rose to 20.1 percent of the total in 2023, up from 14.6 percent in 2022, while the share of the EU market declined to 15.6 percent of the total, down from 18.0 percent during the same period.

Goods exports to the ASEAN market increased further, accounting for 28.0 percent of total goods exports, reaching US$1.8 billion, or a 33.1 percent y/y increase during the first quarter of 2024.

Exports of cashew nut, cassava, rubber, and mango products contributed 6.6 percentage points, 5.4 percentage points, 3.6 percentage points, and 2.6 percentage points of the increase in goods export to the ASEAN market, respectively, while the rest of the products contributed 15.0 percentage points.

Unlike the U.S. (and EU) markets, which import mostly Cambodia’s GTF products and bicycles, the ASEAN market largely imports Cambodia’s agricultural commodities, which include cassava, cashew nut, rubber, and mango, which accounted for 25.0 percent, 14.1 percent, 5.7 percent, and 2.4 percent of total goods exports to the market, respectively, during the first quarter of 2024.

Goods exports to the EU, Cambodia’s third largest export market, accounting for 14.3 percent of total exports, reached US$903 million, or an 11.9 percent y/y increase during the first quarter of 2024, driven mainly by exports of garment and rice products.

Of the increase in goods exports to the EU market, garment and rice products contributed 17.8 percentage points and 2.4 percentage points, respectively, while the contribution of bicycle exports contracted by 7.8 percentage points.

Japan, China, the United Kingdom, and rest of the world markets accounted for 5.8 percent, 5.8 percent, 3.3 percent, and 11.3 percent, respectively during the first quarter of 2024.

The U.S., ASEAN, and EU markets accounted for 31.4 percent, 28.0 percent, and 14.3 percent of Cambodia’s total goods exports during the first quarter of 2024, respectively, compared to 33.8 percent, 24.7 percent, and 15.0 percent, respectively in 2023 (and 40.0 percent, 14.7 percent, and 18 percent, respectively in 2022).

So, a rapid expansion of the share of the ASEAN market, driven mainly by non-GTF exports, which rose to 28.0 percent of total during the first quarter of 2024, up from 24.7 percent in 2023 (and 14.7 percent in 2022), will lessen the country’s reliance on the U.S. and EU markets, driven largely by GTF exports.

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Samdech Techo Hun Sen, also President of the Supreme Privy Council to His Majesty the King, made the call while receiving a courtesy visit from Mr. Tan Sri Michael Yeoh, President of KSI Strategic Institute for Asia Pacific, at the Senate Palace yesterday.

The Cambodian former Prime Minister advised KSI and AVI (Asian Vision Institute) of Cambodia to work together to promote local market, especially between ASEAN and China through existing agreements, including Regional Comprehensive Economic Partnership, China-ASEAN Free Trade Agreement, and so on.

For his part, Mr. Tan Sri Michael Yeoh briefed Samdech Techo Hun Sen on the outcome of his meeting with Prime Minister Samdech Thipadei Hun Manet, during with the Premier agreed to preside over and deliver his keynote address at two important forums in November this year – the Global Chinese Economic and Technology Summit and the Asia Economic and Entrepreneurship Summit – which will bring investors from around the world to explore investment opportunities in Cambodia.

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The remarks were underscored by Samdech Moha Borvor Thipadei Hun Manet, Prime Minister of the Kingdom of Cambodia, while presiding over the official opening ceremony of Cambodia-ASEAN Business Summit, held here this morning.

With her strategic location, Cambodia provides a seamless connectivity and creates an ecosystem of collaboration that focuses on mutual benefits and common well-being throughout the region, the Premier said.

At the same time, he continued, Cambodia’s strategic membership in major regional and global trade agreements such as the Regional Comprehensive Economic Partnership (RCEP) and World Trade Organisation (WTO) makes the Kingdom a highly integrated player in the global market. “Made in Cambodia” products such as clothing and bicycles are now internationally recognised for their quality and competitive prices, which demonstrates Cambodia’s growing presence in the global market.

According to Samdech Thipadei, Cambodia firmly believes that a strong, resilient and integrated ASEAN Economic Community can bring common prosperity to all member states. In this spirit, the Royal Government of Cambodia has been promoting the implementation of the “Plus-One Strategy” by attracting investment in the production of spare parts or semi-finished products to supply large factories in neighbouring ASEAN countries, and has approved the new Investment Law to provide investors with potential and strategic excellence with many incentives for investment projects in key priority areas.

Moreover, he underlined, Cambodia is investing in developing connectivity infrastructure, including highways, deep seaports and international airports, and modern logistic centre, which will promote smooth and efficient regional connectivity to key economic corridors in Cambodia and the ASEAN region as a whole, and these strategic investments will help reduce the logistics costs and increase the efficiency of businesses operating in Cambodia so that they can draw huge potential from the regional market.

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Over two days, key players from ASEAN member states – business leaders, policymakers, and thought leaders – will discuss critical areas for regional growth.

Prime Minister Hun Manet emphasized the importance of ASEAN’s connectivity and technological innovation for inclusive growth. He believes this summit, themed “Unleashing ASEAN’s Potential: Technology, Sustainability, and Inclusive Growth,” will be a catalyst for unlocking the region’s vast potential.

Neak Oknha Kit Meng, President of the Cambodian Chamber of Commerce, underscored the need for collaboration between the private sector and governments. He urged participants to “join hands to further invest in digitalization” and other key areas to propel ASEAN’s development.

Digital transformation, according to Neak Oknha Kit Meng, is crucial for unlocking economic growth through efficiency, productivity, and innovation. He estimates that further digitalization could boost ASEAN’s economy by US$1 trillion by 2030.

Cambodia, positioned at the heart of ASEAN, aspires to be a strategic link for trade and collaboration within the bloc, Meng emphasized.

Following the opening ceremony, several panel discussions will be held featuring keynote addresses by prominent Cambodian officials and experts. These include Deputy Prime Minister Sun Chanthol, Minister of Mines and Energy Keo Rottanak, and Minister of Industry, Science, Technology and Innovation Hem Vanndy.

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The update was shared in a report circulated on Oct. 6 by the Cambodia Rice Federation.

The January-November export accounted for about 65 percent of the planned export of 700,000 tonnes this year, and it was shipped to 57 countries and regions around the world, it added.

European Union countries remained the top buyers of Cambodia’s milled rice, purchasing 190,788 tonnes, followed by China and its autonomous regions, and ASEAN members with 155,366 tonnes and 45,306 tonnes, respectively.

Exported milled rice varieties included premium aromatic rice, fragrant rice, long-grain white rice, parboiled rice, and organic rice.

In 2022, Cambodia exported over 630,000 tonnes of milled rice to 59 countries, earning $414 million, while the revenue from paddy rice exports was around $841 million.

The Cambodia Rice Federation has set an ambitious goal to export at least a million tonnes of milled rice by 2025.

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On October 5, Minister Tina met with Ichiro Miyashita, the Japanese Minister of Agriculture, Hunting and Fisheries. They discussed Japan’s long-standing support for Cambodian agriculture, and Minister Tina encouraged Japanese investors to invest in processing agricultural products for export to Japan and other international markets.

Later that day, Minister Tina met with representatives of the US-ASEAN Business Council (US-ABC) to discuss US investment opportunities in Cambodia’s agricultural sector. He encouraged US companies to co-invest with existing private sector, research institutions, and educational institutions to help increase farmers’ profits through market assurance.

On the morning of October 6, Minister Tina attended the ASEAN Plus Three Ministerial Meeting on Agriculture and Forestry. He also met with Datuk Seri Haji Mohamad bin Sabu, the Malaysian Minister of Agriculture and Food Security, to discuss cooperation between the two countries.

In the afternoon, Minister Tina attended the 8th ASEAN-China Ministerial Meeting on Sanitation. The meeting agreed to issue a joint statement in which China committed to expanding the volume of agricultural exports from ASEAN to domestic markets. China aims to import $150 billion worth of agricultural products from ASEAN in the coming years.

Minister Tina’s meetings in Malaysia were productive and resulted in a number of potential investment projects in the Cambodian agricultural sector.

These investments will help to modernize and commercialize the agricultural value chain, boost farmers’ incomes, and increase agricultural exports.

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Aaditya Mattoo, chief economist of the World Bank’s East Asia and Pacific Region, said the RCEP agreement and Cambodia’s new law on investment have created greater market access and helped generate new trade and investment flows for the kingdom.

It will help Cambodia diversify its economy and exports which have been heavily reliant on garments so far, he said during a video press conference on the launch of the World Bank’s East Asia and Pacific economic update report.

Mattoo suggested Cambodia improve its skilled labor and connectivity in order to sustain its economy and exports in the long run.

In the update report, the World Bank said the RCEP and other newly ratified free trade agreements (FTAs) have helped Cambodia strengthen its exports and attract more foreign direct investment (FDI).

The RCEP free trade deal comprises 15 Asia-Pacific countries, including 10 ASEAN (Association of Southeast Asian Nations) member states – Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, Vietnam – together with their five trading partners, namely China, Japan, South Korea, Australia and New Zealand.

Cambodia’s total exports to the RCEP member countries amounted to 4.59 billion U.S. dollars from January to July 2023, a year-on-year increase of 21 percent, according to the country’s Ministry of Commerce’s report.

Cambodian Ministry of Commerce’s Secretary of State Penn Sovicheat said the RCEP has been a key driving force for the kingdom’s export growth and has become a magnet to attract more FDI inflows to the country.

“This world’s largest FTA, along with other bilateral FTAs, will help Cambodia graduate from its least developed country status by 2027 and achieve its goals of becoming an upper-middle income country by 2030 and a high-income nation by 2050,” he told Xinhua.

According to World Bank data, the RCEP covers 2.3 billion people, 25.8 trillion U.S. dollars of global GDP, 12.7 trillion dollars of global trade in goods and services, and 31 percent of global FDI inflows.

Kin Phea, director-general of the International Relations Institute of Cambodia, a think-tank under the Royal Academy of Cambodia, said the RCEP has helped stabilize its members’ economies, especially during the period of global economic slowdown and uncertainty.

“The RCEP has great potential to create tangible benefits for all of its members, and ASEAN will reap long-term benefits from this trade pact by integrating further into global supply chains,” he told Xinhua. “I believe that the RCEP will help transform the ASEAN region into a new engine of growth in Asia.” Xinhua

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In her opening remarks under the session “Connectivity & Growth in the Mekong Region within ASEAN” this afternoon, H.E. Mrs. Cham Nimul, minister of commerce highlighted the importance of the Mekong region, especially in the field of trade, investment, and the efforts of countries in the region to promote physical and people-to-people connectivity in order to accelerate and support sustainable and environmental economic growth.

She also underscored Cambodia’s effort to promote connectivity through establishing infrastructure, digitalization development, and effort with ASEAN member states to implement the Master Plan on ASEAN Connectivity 2025.

In addition, H.E. Mrs. Cham Nimul has mentioned that the Royal Government of Cambodia paid high attention to promoting the participation of the private sector in economic activities in order to take advantage of free trade agreements and also highlighted the mechanism of establishing Public-Private Partnerships, especially in the arrangement of Government-Private Sector Forums during the end of 2023.

Last but not least, she encouraged businessmen, investors, and members of the EU-ASEAN Business Council to consider investing in Cambodia’s potential sectors, including agro-processing industries, tourism services, and increasing the import of Cambodia’s potential goods such as textile, footwear, traveling goods, and manufacturing products, etc.

Organized by EuroCham and its partners, the ASEAN-Cambodian Business Summit 2023 brings a good mix of practitioners and experts to provide great knowledge and practical insight and provide an excellent opportunity to exchange and explore on trade and investment potential of Cambodia and the region.

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