Trend of Foreign Direct Investment, Net Inflows

This series shows Net Inflows (new investment inflows less disinvestment) in an economy from foreign investors. Data are in U.S. dollars. The latest value for Net Inflows in Cambodia was USD 1,557,134,885 as of 2012. Over the past 9 years, the value for this indicator has fluctuated between USD 131,416,229 in 2004 and USD 1,557,134,885 in 2012. On the other hand, the latest value for Net Inflows in Bangladesh was USD 1,178,439,622 as of 2012. Over the past 9 years, the value for this indicator has fluctuated between USD 448,905,401 in 2004 and USD 1,178,439,622 in 2012. Source: Year 2004 2005 2006 2007 2008 2009 2010 2011 2012 Cambodia 131,416,229 379,180,191 483,209,383 867,288,539 815,180,218 539,113,440 782,596,735 901,668,591 1,557,134,885 Bangladesh 448,905,401 813,321,972 697,206,284 652,818,719 1,009,623,164 732,809,636 918,172,638 1,137,916,361 1,178,439,622

A graphical comparison of Foreign Direct Investment, Net Inflows of these two countries is shown below –

000 400. billion in 2012. There are investment opportunities in the following sectors in Cambodia –         Agriculture and Agro – Industry Transportation and Telecommunication Sector Energy Sector Labor Intensive Industries and Export Oriented Industries Processing Industry Tourism Sector Human Resource Development Oil & Gas.600.200.800.000 800.000.400.000.000 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 Cambodia Bangladesh Factors that Attract Cambodia as Best FDI Destination Amidst global economic frailty.000. compared to USD 902 million in 2011.000 1.000 1. Mining The influx in investment is credited to the following factors –  Safe Banking Sector .000.000.000 200.000. The FDI reached USD1. Foreign Direct Investment in Cambodia grew by an impressive 67% in 2012.1.000.000 600.000 1.000 1.

The NBC recently signed a Memorandum of Understanding (MOU) with the China Banking Regulatory Commission. we are in fact talking about micro-small and medium-sized enterprises (MSMEs). from 09 percent and 15 percent. credits and deposits surged to 43 percent and 46 percent of GDP. Over the past decade. As a result. Among the notable achievements are the total banking sector assets reaching 80 percent of GDP in 2012 versus just 22 percent in 2005. Over the same nine year period.3 billion. Generally. and the second highest number of projects. create more jobs. the Chinese authorities will be able to inspect and supervise branch activities while at the same time to help to improve the knowledge and skills of local workers.000 economic establishments or enterprises counted in the 2011 Cambodia Economic Census. and enlarge the tax collection base. The State-owned authority recently opened a $28 million container terminal financed by a loan from the Chinese government. Cambodia enjoys excellent bilateral political and fiscal ties to the People's Republic of China that continue to strengthen after being formed 55 years ago. respectively. Cambodia’s banking sector attracted the most capital.One of the authorities playing a key role in Cambodia's macro-economic success is the National Bank of Cambodia (NBC) which has overseen trade policies.  Strong Bilateral Relations Economic diversification is attracting substantial sums of FDI from China and beyond. As the country's central bank and highest financial regulatory body.000 economic establishments .  Small Businesses Serve as Backbone of Sustainable Economy Historically. at 56. The 2011 census shows that more than 500. US$2. Cambodia’s strength in Greenfield projects in retail banking. market liberalization and low inflation that has defined the country's economic development. NBC determines the monetary and exchange policies within the framework of the economy and supervises the fast-growing banking sector and financial services industry. Home to the fastest-growing economy in Southeast Asia.and medium-sized enterprises (SMEs) as the backbone of a sustainable economy. facilitate Foreign Direct Investment. in Cambodia when we talk about SME economic activities.000 of them employ only one to 10 employees. some 493. Growth in the number of MSMEs could help expand the economy. Chea Chanto. The MOU will create an exchange of information and cooperation in banking supervision both inside and outside of the country. of any least developed country. Cambodia has relied on the role of small. as out of the more than 500.

Cambodia enjoys a strategic position.  Investment Protection The Investment Law and Sub-decree of Cambodia contain a number of important guarantees for the investors:      Equal treatment of all investors No requirement of local equity participation No price controls on products or services No restriction on ForEx convertibility Free remittance of foreign currencies abroad There are several investment incentives such as –       20% Corporate Tax Tax holidays of 3 years Full Import Duty Exemption Repatriation of profit (withholding tax) Reinvestment of earning (special depreciation) Labor Intensive Economy Many major international companies have invested hundreds of millions of dollars in laborintensive garment and manufacturing industries to take advantage of the country's young population and duty free access to a number of lucrative markets such as the EU. . friendly and welcoming business climate.were engaged in economic activities. the Kingdom of Cambodia offers investors a modern.  Business Climate Rich in history and culture and blessed with wonderful natural and human resources that are driving its impressive economic growth and attracting record sums of foreign direct investment (FDI).6 million laborers or approximately 20 percent of the total Cambodian labor force. Phnom Penh Autonomous Port is the country's second largest international port and boasts a strategic position at the intersection of four major rivers in the heart of the country.  Strategic Position Home to the fastest-growing economy in Southeast Asia. Established in 1986. employing more than 1.

Businesses are looking to cut costs in labor intensive industries. the profit outlook was overwhelmingly positive. GPSF conducted in every six months. For companies already operating in Cambodia. has played a key role in Cambodia’s emergence as leading FDI destination and in the creation of more than 20 strategically-located Special Economic Zones (SEZs) around the country which ensure better infrastructure and One Stop Services/SEZ Zone Administration. particularly the garment sector. where overall FDI increased by only 2%. Cambodia is touted as a “bright spot” in Southeast Asia.  Pro-business Government: The government has committed to a Pro-business/Investor Model which resulted in the formation of Government-Private Sector Forum (GPSF) which includes the followings – o o o o Steering Committee for the Private Sector Development: Sub-steering committee on Investment Climate Sub-steering committee on Trade Facilitation Sub-steering committee on SME Development There are 9 Working Groups chaired by Government and Private Sector’s representative who meet on a monthly basis to address the issues relating to doing business and investment in Cambodia. . 22 SEZs have been authorized and are being developed by private investors/operators. its appeal as an investment destination lags behind most of its neighbors due to the perception of endemic corruption. presided over by Prime Minister to ensure – o Easy access to Government Officials o Prompt response to all inquiries Challenges  Corruption Although the businesses in Cambodia are optimistic of the country’s economy. the remainders are in various stages of development.  Special Economic Zones (SEZs) Cham Prasidh. Five SEZs are currently in operation. senior minister and minister of Commerce. including SEZs near the borders with Thailand and Vietnam. There are several benefits of doing business in Cambodia as mentioned above.

. the Ministry of Economy and Finance has released growth projections for the first half of the year. 7 specialized banks and 32 microfinance institutions. The ministry’s preliminary data claims that from January through June. economic growth stood at 7. and starting in 2011 agriculture financing.6 percent. which has been driven largely by wholesale and retail financing.  Limited Access to Capital Commercial banks are a primary source of funding.  Ownership and Use of Land The Law on Investment of Cambodia restricts foreigners from owning land in Cambodia since land ownership is reserved to natural and legal Cambodians. which placed 8th out of the 10 ASEAN countries. The annualized rate of lending growth was 34 percent in December and as high as 34. the key players in Cambodia’s financial sector are 31 Commercial banks. an announcement that critics are questioning not only for accuracy but also for timing.  Employment of Foreigners A business is entitled to obtain visas and work permits for the employment in Cambodia of foreign citizens as managers.Yet foreign companies not based in the country were less excited about making the move to Cambodia. 28 micro-finance NGOs and 11 insurance companies. behind Laos and Brunei. if the qualification and expertise are not available in Cambodia. unfavorable laws and regulations and underdeveloped infrastructure . technicians and skilled workers. despite a recent slow-down in credit disbursals. Reasons cited by companies were a shortage of skilled workers. Credit growth. and the numbers are good. has eased to 29.2 percent (year on year) in January 2013. 2 Representative Offices. Limited access to capital is one of the constraints of doing business in Cambodia.6 percent in January 2012. The ‘top-4’ hold over 70% of total deposits and loans in the banking system.  Accuracy of the Statistics For the first time in recent memory. In 2011.  Risk of Credit Growth The World Bank has warned that the rapid growth of lending by Cambodia’s Banks is still a concern.But the major worry for most of the investors is corruption.