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Jan 01, 2024

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Headlines:

Investment Opportunity in Cambodia-Japan SEZs

Cambodia Remains Promising FDI Destination

Steady Economic Recovery Seen Through 2023

Mobile Markets Bring the Store to Your Door

Industrial Power Fees Challenge Competitiveness

Judicial Reform with New Steering Committee

Bakong Digital Currency Hits 10 Million Accounts

FTAs Impacting Customs and Excise Revenue

Koh Kong Green SEZ

RCEP Nations Mark Economic Resilience

Techo Funan Canal Waterway Project

Eyeing Growth in 2024

RIP: A Journalistic Titan Remembered

Investment Opportunity in Cambodia-Japan SEZs

Cambodia is actively engaging with Japan to establish Special Economic Zones (SEZs) aimed at attracting Japanese investment. Prime Minister Hun Manet's recent visit to Japan included discussions on the zones, focusing on logistics, transport infrastructure, and ports. The SEZs are expected to draw more Japanese investors, similar to the influx of Chinese investment in Chinese-owned SEZs. Potential locations are being studied near appropriate transport routes.

Cambodia Remains Promising FDI Destination

Cambodia is gaining recognition as an attractive investment destination, with a recent government report highlighting positive growth trends, development, and reform. The International Monetary Fund projects Cambodia's growth to reach 5.6% in 2023 and 6.6% in 2024. The country scored 96.11 out of 100 on the Foreign Direct Investment Standouts Watchlist 2024. Strengths include a young workforce, strategic location for exports, reasonable labor costs in manufacturing, and free trade agreements with ASEAN and other economies. Cambodia's modernizing infrastructure and government initiatives to improve technical and digital skills of those entering the workforce further support its investment appeal.

Steady Economic Recovery Seen Through 2023

Cambodia's economy is on a steady path to recovery in 2023, as reported by the ASEAN+3 Macroeconomic Research Office (AMRO). While the garment sector may see a slowdown due to reduced demand from the US and EU, the non-garment manufacturing sector is expected to continue growing. The GDP growth rate is projected to rise from 5.3% in 2023 to 6.2% in 2024. Consumer price inflation is anticipated to ease, with headline CPI inflation predicted to drop to 2.6% in 2023 from 5.3% in 2022. The current account deficit is also expected to narrow significantly in 2023, reflecting improvements in trade balances. However, the fiscal deficit may widen to 6.2% of GDP due to increased spending. Despite these positive trends, Cambodia's economy faces external risks and domestic vulnerabilities, including a potential slowdown in China's economic recovery and a weaker global economy.

Mobile Markets Bring the Store to Your Door

Mobile markets have emerged as a popular solution for delivering goods of all kinds, from food to home appliances, directly to consumers' doorsteps. These mobile vendors, often using motorbikes or trailers, offer a variety of products including meat, vegetables, fruits, and clothing. Vendors have adapted to this model, buying products at lower prices from central markets and selling them at a slight markup. This service is particularly beneficial for busy residents who find it challenging to visit distant markets. The rise of mobile markets reflects a significant shift in Cambodia's business landscape, where street traders constitute about 10% of the country's businesses.

Industrial Power Fees Challenge Competitiveness

Cambodia faces a significant challenge in its industrial sector due to the highest electricity costs in the region, as reported by a World Bank study. In 2022, the cost stood at $0.137 per kW hour, 18% lower than in 2017, but still higher than neighboring countries Thailand, Vietnam, Malaysia, and Laos. Despite efforts to reduce these costs, more work is still needed. The country also struggles with a large infrastructure financing gap, hindering adequate service provision to meet growing demands. Investments are crucial in the energy sector to address increasing electricity demand and climate change commitments. The Ministry of Mines and Energy has initiated price reductions for industrial and agricultural enterprises, with further reductions expected in 2024. The Asian Development Bank suggests that energy efficiency measures could significantly reduce electricity demand, leading to lower tariffs.

Judicial Reform with New Steering Committee

Cambodia has established a Judicial Reform Steering Committee, co-chaired by Justice Minister Keut Rith and Supreme Court President Chiv Keng, following a Royal Decree by King Norodom Sihamoni. The committee, made up of 19 members, aims to enhance the rule of law and the justice system's quality and effectiveness. It will review, evaluate, and advise on laws and regulations related to judicial reforms. The committee can include representatives from various sectors for consultations. Despite the formation of this committee, human rights groups continue to emphasize the need for genuine political will and an independent judiciary for effective reform.

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