FDI Inflows into Manufacturing Sector of Cambodia Remain Robust

Foreign direct investment (FDI) into the manufacturing sector of Cambodia remained robust throughout 2023, maintaining high levels following significant investments in construction and real estate, as detailed in the Annual Financial Stability Review Report 2023 by the National Bank of Cambodia (NBC).

The report highlights that FDI inflows, while rebounding, showed an uneven distribution across various sectors. Manufacturing saw a notable increase in funding over the last five years, followed closely by construction and real estate. Conversely, financial activities, agriculture, accommodation, and telecom sectors experienced reduced FDI inflows.

China led the FDI inflows into Cambodia in 2023, contributing 56 percent, followed by Korea (10.2 percent) and Canada (9.5 percent). Other significant contributors included Japan (7.6 percent), Singapore (6.6 percent), Malaysia (2.5 percent), the UK (1.6 percent), the US (1.3 percent), and Vietnam (0.9 percent).

NBC data indicated that Cambodia’s economic growth, estimated at five percent in 2023, was primarily driven by the manufacturing and services sectors. Trade, accommodation, and food services also played substantial roles in this growth. The report noted a rebound in the transportation, communication, construction, and real estate sectors as well.

Despite a noticeable recovery in international tourist arrivals in 2023, NBC cautioned that the quality of this recovery appeared less promising. The share of tourists arriving by air decreased from 66 percent in 2018 to 34 percent in 2023, suggesting fewer high-spending visitors. However, arrivals by waterways increased to 66 percent, up from 34 percent in 2018. Despite these concerns, the overall rise in tourist numbers is commendable, with 82.5 percent being international tourists and 62.7 percent of them visiting Angkor Wat.