2023 Foreign Investment Opportunities in Cambodia

By Chris Devonshire-Ellis 

Following where China has been spending and investing its Belt & Road Initiative capital can provide FDI clues and reveal new opportunities in recipient countries. As infrastructure builds start to yield productive user cashflows and the need for subsequent support services arises, case studies for investment potential become apparent. In this new series, we will be examining where China has spent its money and where returns on investment exist for foreign investors in piggybacking onto opportunities created by the BRI build. 

Cambodia has long been a Chinese partner, with this accelerating over the past few years as BRI projects began to take hold as China reached out into Southeast Asia to develop both infrastructure, trade relations and upgrade local wealth. The development of Cambodia has been an interesting example of how, in conjunction with the China-ASEAN Free Trade Agreement and the recent RCEP agreement – Cambodia is a member of both – China has been combining development with free trade.  

Some of these developments have taken ingenious paths – the development of casinos to generate capital from mainland Chinese gamblers (often involved in money-laundering or other illicit money) which was subsequently re-invested in infrastructure is a quirky case in point – but it worked.  

In this new series, in which we examine China’s BRI investments into all of the ASEAN nations, we look at how its finance and development is impacting Cambodia and where the future developments lie.     

China-Cambodia BRI Background 

During 2012-2017, China invested over US$15 billion (£12.36 billion), including US$11 billion alone in the energy sector, in building the infrastructure of Cambodia. The infrastructure also included roads/expressways, ports, and airports. The US$1.9 billion (£1.57 billion) expressway which links Phnom Penh with Sihanoukville, a port town and vacation destination, is located 12 km from the Sihanoukville Autonomous Port (PAS) the sole international and commercial deep seaport of Cambodia (where some 90% of Cambodia’s imports and exports transported by sea pass through).  

2021 China-Cambodia bilateral trade reached US$11.2 billion. 

Casinos & Real Estate  

Throughout the period of 2015-2018, manufacturing (many relocating from China), and tourism – led by casinos – real estate boomed around the expressway/corridor into the Sihanoukville SEZ (SSEZ). This is partially a recreation of the China Macao model.  

The SSEZ has become recognized as a high-profile example of cooperation between China and Cambodia under the BRI. Launched in 2008 as a future home of manufacturing, led by garments and textiles, SSEZ is now home to 170 enterprises as well as university buildings, legal service centers, libraries, and shopping. By the end of 2021, SSEZ provided nearly 30,000 job opportunities to locals. It is of note that it was the original casino developments that prompted this development, with careful government planning then overseeing the financial benefits of that then being reinvested into manufacturing, production, retail and educational facilities.  

Infrastructure Investment  

Cambodia Airports  

In November 2020, Cambodia Airport Investment (a domestic Cambodian JV/OCIC) chose the Metallurgical Corporation of China (MCC) to design and build the airfield for its US$1.5 billion (£1.24 billion) international airport in Kandal province to the south of Phnom Penh. The US$400 million (£330 million) deal, MCC’s largest foreign contract 2021, will be executed by its Shanghai Baoye Group subsidiary. The airport is due to be completed by the end of 2022, allowing flights to begin in 2023. 

• Chinese investment is also planned in the US$3.8 billion (£3.13 billion) Dara Sakor airport and resort. About US$1.1 billion (£910 million) of the total cost of the Takhmao airport will come from China Development Bank and US$280 million (£231 million) from the OCIC.  

Other Chinese Investments  

• In June 2021, Celllcard (Cambodia) chose ZTE for its 5G partner  
• In 2018, Xiaomi partnered with SEATEL, a fast-growing domestic telecommunications network  
• In March 2019, Alibaba announced plans to make Cambodia its logistics hub for the Grater Mekong region, which has a population of circa 300 million.   
• In 2019, Alibaba announced a partnership with DaraPay to allow Chinese customers to use their Alipay wallets in Cambodia  
• In 2022, Cellcard and Tencent announced plans to expand an e-sports platform, both domestically and regionally.  
• After the COVID related downturn of 2020, the two countries have a goal of reaching 5 million tourists by 2025, and 8 million by 2030.  

Inbound FDI from China (2021)  

Chinese investment in Cambodia increased significantly in 2021 despite the negative effect of the COVID-19 pandemic. Cambodia attracted fixed-asset investment of US$2.32 billion from China in 2021, up 67% from US$1.39 billion from 2020, according to a report from the Council for the Development of Cambodia. China remained as the top foreign investor in Cambodia, accounting for 53.4% of the total investment of US$4.35 billion the kingdom approved in 2020. 

Looking Ahead 

Cambodia’s growth rebounded to an estimated 3.0% in 2021 after a contraction of -3.1% in 2020. The government has implemented policies to mitigate the negative impact of COVID-19 on businesses and people’s incomes and to support economic recovery. Growth is expected to be 5% over 2022, although there are inflationary concerns. According to the World Bank, over the past two decades, Cambodia has undergone a significant transition, reaching lower middle-income status in 2015 and aspires to attain upper middle-income status by 2030. 

Cambodia Investment Intelligence 

Readers may use the ASEAN Briefing search function at the top of the homepage to find more Cambodia intelligence. Just type ‘Cambodia’ into the subject box. We also provide investment assistance and research into Cambodia, please contact us at asean@dezshira.com for assistance.    

Also Read

• Cambodia’s Law on Investment: What Foreign Investors Need to Know
• An Introduction to Doing Business in ASEAN 2022

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