FDI in Figures
FDI inflows to Cambodia have grown exponentially in the last few years due to sound macroeconomic policies, political stability, regional economic growth and an open investment market; reaching USD 3.1 billion in 2018, up from USD 2.7 billion in 2017. The total stock of FDI stood at USD 23.7 billion in 2018, representing around 96.8% of the country’s GDP (2019 World Investment Report by UNCTAD). The main investing countries are China (Chinese FDI alone surpassed all other FDI sources combined), Hong Kong, the US and the Netherlands. The construction industry attracts the largest share of foreign investors, followed by infrastructure, industry (primarily textiles), agriculture and tourism. New railways are under construction, ranging from Phnom Penh to Siem Reap all the way to the Vietnamese border in the other direction; this project also uses Chinese funding. Additional agreements with China include an economic and technical cooperation pledge and a USD 65 million grant to expand the capacity of Preah Ket Mealea military hospital in Phnom Penh. The China National Heavy Machinery Corporation has also invested USD 1.4 billion in the 246-megawatt Stung Tata hydropower plant in the Koh Kong province; which is expected to supply 30% of Cambodia's national power grid.
Cambodia has a generally open and liberal foreign investment regime. Incentives to investors include: 100% foreign ownership of companies, corporate tax holidays of up to eight years, a 20% corporate tax rate after the incentive period ends, duty-free import of capital goods, and no restrictions on capital repatriation. To facilitate foreign investment, Cambodia has created special economic zones (SEZs), which provide companies with ready access to land, infrastructure and other services to facilitate the set-up and operation of businesses. According to the US Department of State, in recent years the Phnom Penh Special Economic Zone alone has attracted more than USD 100 million from American companies such as Coca-Cola, American Licorice and Tiffany & Co. Nevertheless, the country’s legal system lacks of transparency and energy supply and transportation problems remain significant obstacles to international investment. Corruption, a scarcity of skilled labour, inadequate infrastructure and high energy costs also contribute to hinder investments. The World Bank continues to draw attention to Cambodia's poor business climate in its 2019 Doing Business report, ranking the country 138th out of 190 countries (down by three spots compared to the previous year).