Cambodia Set to Lead Global FDI in 2024

The FDI Standouts Watchlist 2024 predicts Cambodia’s emergence as a frontrunner in foreign direct investments (FDI) for the coming year, according to insights compiled by fDi Intelligence. The watchlist assesses the macroeconomic and FDI prospects of the world’s top 50 direct investment destinations.

In an impressive display, six Asian nations secure positions within the top ten countries exhibiting the strongest FDI momentum for 2024, with Cambodia securing the top spot. Despite stiff competition from neighbouring Southeast Asian countries, Cambodia anticipates a robust GDP growth of 6.1% in the upcoming year. This growth is attributed to a resilient manufacturing base and a post-Covid-19 recovery in services.

In the recent Inward FDI Performance Index by Investment Monitor, Cambodia scored 5.10, indicating it attracted more than five times its expected share of inward greenfield FDI based on its GDP. This places Cambodia ahead of regional contenders such as Malaysia (3.39), Singapore (4.28), Thailand (2.36), and Vietnam (3.85).

Further enhancing its attractiveness to investors, the Cambodian government implemented an investment law in 2021, offering a range of incentives. These include income tax exemptions ranging from three to nine years, depending on the nature of investments, and waivers for specific customs duties.

However, Cambodia faces economic challenges, notably the global uncertainties triggered by Russia’s war in Ukraine. Despite recent legislative changes aimed at attracting FDI, the country struggles to draw substantial investment from the United States. Factors contributing to this include widespread corruption, a shortage of skilled labor, inadequate infrastructure, opaque government approval processes, and preferential treatment given to local or other foreign companies engaged in tax evasion or benefiting from a weak domestic regulatory environment, as reported by the US Department of State.