Cambodia 20241125: Impactful, Diffident, Heretical
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Headlines:
Funding Uncertainty Clouds Canal Project
FDI Drives Growth and Employment
$36B Infrastructure Push Draws Global Interest
EV Revolution Gets Manufacturing Boost
International Relations: AZ,KZ,ES,AE,KR
Regional Players Pivot East
Trade Surge Drives Regional Growth
Clean Energy Drive Powers Up
New License Freeze for Domestic Beer Production
Real Estate and Land Management Efforts
Manila, Phnom Penh in Tax Pact
Education Sector to Incorporate VR and AR
Air Traffic, Tourism Growth Point to Recovery
AmCham: Mixed Signals on Investment Climate
Press Crackdown Claims Investigative Reporter
Funding Uncertainty Clouds Canal Project
Cambodia's $1.7 billion Funan Techo Canal project is facing questions over funding, particularly regarding China's role. Initially announced with China contributing 49% of the expense, reports now suggest that Beijing remains noncommittal, with serious misgivings over the viability of the whole thing. Cambodian authorities are denying any financial hurdles, claiming that the project is progressing just fine with domestic backing. Observers are saying that China's hesitance comes along with general cutbacks in overseas investment and domestic economic challenges.
Read more: Reuters (Funding Concerns), Khmer Times (Government Denial)
FDI Drives Growth and Employment
Cambodia continues to reap benefits from foreign investments, with China leading as the top contributor for 12 years in a row. Bilateral trade between China and Cambodia is booming, with China investing nearly $3 billion this year. The Cambodian government has approved 30 new foreign investment projects in 2024, expected to generate 16,000 jobs. With more than 53,000 positions available across agriculture, industry, and services, the focus remains on using investments to improve local job opportunities and diversify the economy.
Read more: Khmer Times (China Investment), Khmer Times (Job Creation)
$36B Infrastructure Push Draws Global Interest
Cambodia is positioning itself as a major logistics hub through a $36 billion infrastructure masterplan, attracting attention from global players like DP World. The 10-year blueprint includes 174 priority projects across transportation sectors, with port developments already showing results as Sihanoukville's container traffic grew 36% in Q32024. The expansion includes partnerships with Japan for 5G network development and Thailand for new cross-border connections. An expansion of Sihanoukville Port is expected to handle 1.25 million TEUs annually by 2027.
Read more: Khmer Times (Infrastructure Plan), Khmer Times (DP World Interest), Fibre2Fashion (Port Growth), Cambodia Investment Review (5G Development), Khmer Times (Thailand Bridge)
EV Revolution Gets Manufacturing Boost
Registered EVs reached a total of 2,327 units by late 2024 and market leader BYD is finalizing plans to set up a manufacturing facility in the country. The government's 50% import duty reduction for EVs has helped drive adoption, with BYD, Toyota, and Tesla leading sales. The expected BYD manufacturing hub would position Cambodia within regional auto manufacturing networks alongside Thailand and Vietnam, while supporting the country's target of 40% electric car and bus adoption by 2050 along with higher-paying jobs and advanced manufacturing capabilities for the industrial sector.
Read more: Khmer Times (Market Growth), Khmer Times (BYD Plans)
International Relations: AZ,KZ,ES,AE,KR
A trilateral celebration with Azerbaijan and Kazakhstan has brought along with it new direct flight routes and agricultural trade frameworks. Spain's proposed business forum is expected to help both nations build on an existing $884 million trade relationship. A partnership with the UAE is showing early success with a 7% trade increase topping $75 million in its first months, opening new routes to African markets. A collaboration with Korea's Plant Industries Association is setting sights on modernizing the silk industry through technology adoption.
Read more: Khmer Times (Diplomatic Partnership), Phnom Penh Post (Spanish Investment), Khmer Times (Silk Industry), Khmer Times (UAE Trade)
Regional Players Pivot East
Cambodia and Laos have both appointed new foreign ministers with strong Beijing connections, a shift in Southeast Asian diplomacy. The appointments of Prak Sokhonn and Thongsavanh Phomvihane seem to be indicative of both nations' preparation for upcoming geopolitical challenges, including Cambodia's concerns about future U.S. relations and Laos's mounting Chinese debt obligations. The diplomatic reshuffling suggests a calculated move to strengthen ties with China while stepping back from wider international engagement, a development that could impact foreign investment patterns and business planning in Southeast Asia.
Read more: Radio Free Asia
Trade Surge Drives Regional Growth
China is leading as Cambodia’s dominant trade partner with $12.38 billion in the first 10 months of 2024, nearly 30% of total trade. Vietnam-Cambodia trade reached $8.3 billion, while Cambodia-Malaysia trade hit $715 million, increases of 17.5% and 35% respectively. The World Bank is saying that transport infrastructure improvements are going to be critical to for sustain this growth, calling for investments in road, rail, and waterway networks to improve cargo movement efficiency and cross-border capability.
Read more: Phnom Penh Post (China), Khmer Times (Malaysia), VietnamPlus (Vietnam), Fibre2fashion (Infrastructure)
Clean Energy Drive Powers Up
Clean energy growth is gaining momentum, with electricity consumption jumping 15.56% in 2024 as the nation pushes toward 70% renewable energy by 2030. Thirteen new power projects totaling 1,275 megawatts are under construction, with 23 more planned to add 5,950 megawatts by 2029. The national grid now reaches 99.15% of villages, connecting 3.86 million users - a 4% increase from 2023. Domestic production supplies 86.67% of power needs, mainly through hydropower, solar, and biomass sources, with China leading hydroelectric investments. The expansion has brought electricity access to 95.25% of households.
Read more: Khmer Times (Energy Targets), Khmer Times (Consumption Growth)
New License Freeze for Domestic Beer Production
Prime Minister Hun Manet announced a suspension of new licenses for beer production targeting the domestic market, permitting only breweries focused on exports. Apparently, the decision was made to align investments with actual market needs and strengthen existing businesses rather than granting licenses for ventures with limited demand. At the moment, seven breweries operate for local distribution.
Read more: Khmer Times
Real Estate and Land Management Efforts
Progress has been made in land registration, resolving most disputes and issuing 7 million land titles in order to improve urban planning and infrastructure while addressing historical challenges. Complementing these efforts, new property tax incentives have been announced, and include deferred capital gains taxes and exemptions for low-value property transfers, supporting investment and easing developer burdens.
Read more: Khmer Times (Registration), Khmer Times (Tax Incentives)
Manila, Phnom Penh in Tax Pact
Cambodian and Philippine officials recently met to expand cooperation in trade, security, and tourism, emphasizing ASEAN-driven objectives like regional integration. They agreed to eliminate double taxation in a pact set to be signed in February 2025, which is expected to ease the tax burden on businesses operating between the countries borders, boosting trade competitiveness.
Read more: Khmer Times (future cooperation), Inquirer (taxation pact)
Education Sector to Incorporate VR and AR
Cambodia’s Ministry of Education plans to integrate virtual reality (VR), augmented reality (AR), and digital classrooms into technical education to align curricula with job market demands and improve learning. Short-term training, partnerships with higher education institutions, and public-private collaborations are also on the agenda. The initiative was discussed during the 2024 World Vocational and Technical Education Development Conference hosted by China.
Read more: Khmer Times
Air Traffic, Tourism Growth Point to Recovery
International airports handled 4.7 million passengers in the first ten months of 2023, up 21% year-on-year. Now, more than 30 airlines connect Cambodia to ASEAN, China, South Korea, India, and the Middle East. While overall tourism nearly hit 5 million foreign visitors, Cambodia is chasing high-value markets, particularly Singapore, where tourists spend nearly $1,000 per trip on shopping and dining. The $1.5 billion Techo International Airport is 90% complete and on track to open next year, and marketing efforts are underway to pull Singaporean arrivals beyond the current 31,176 visitors.
Read more: Khmer Times (Aviation Growth), Khmer Times (Tourism Strategy)
AmCham: Mixed Signals on Investment Climate
The American Chamber of Commerce's latest business survey is showing strong optimism tempered by challenges in the local business environment. While 70% of companies expect profit growth and 65% plan increased investments in 2024, problems remain. The country's appealing features include 100% foreign ownership rights, a USD-based economy, and good location, but electricity costs running double those of Vietnam, along with regulatory uncertainty and infrastructure limitations, are seen as substantial risks. Digital transformation is creating new opportunities in the e-commerce and fintech sectors, though skilled worker shortages continue to affect many. The overall picture suggests cautious optimism.
Read more: Khmer Times (Business Outlook), Cambodia Investment Review (Survey Details)
And now for something completely different.
While the focus of The Memo is on news for business, we often wrap with a less business-focused article.
Three new gecko species have been discovered in the Cardamom mountains, a python was found in an unexpected Sihanoukville hideaway, a Canadian pontificates about the cost of living in Cambodia, the “Photo Phnom Penh Festival” is back, and, speaking of beautiful photos, we loved this beautiful waterfall pic and related stories. We leave you with the next chapter of Mech Dara’s story:
Press Crackdown Claims Investigative Reporter
Mech Dara, a leading Cambodian investigative journalist who exposed illegal scam operations has abandoned his profession following arrest and detention, as deteriorating press conditions continue to threaten business transparency in the region. Mech Dara's departure after facing incitement charges over social media posts is typical of recently seen pressure on independent media, with authorities shuttering more than 30 news outlets since 2017. The Committee to Protect Journalists has documented 28 harassment cases in 2023 alone, particularly targeting reporters covering sensitive business topics like land use, human trafficking, and environmental issues. This ongoing suppression of investigative journalism remains a concern about access to reliable information for businesses operating in or considering expansion into Cambodia.
Read more: VOA News
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