FDI inflows propel forex reserves to $21B at end of last year
THE narrower current account deficit and continued capital inflows from foreign direct investment (FDI) and other sources supported a continued increase in gross foreign-exchange (forex) reserves, which rose to $21.3 billion at the end of last year from $18.8 billion at end-2019, the Asian Development Outlook (ADO) report issued last week said.
The report noted that the economy is forecast to expand by 4.0 per cent in 2021 and 5.5 per cent in 2022. The economic recovery in major trading partners will support strong demand for Cambodia’s merchandise exports and continued FDI inflows.
Industrial production is expected to grow strongly, expanding by 7.1 per cent in 2021 and 7.0 per cent in 2022 on the back of a rebound in the garments, footwear and travel goods sector and growth in light manufacturing, it said.
Agriculture is also expected to pick up, growing by 1.3 per cent in 2021 and 1.2 per cent in 2022, underpinned by higher crop production after last year’s flood damage, continued aquaculture growth, and rising agricultural exports to China from a new bilateral free trade agreement.
The Council for the Development of Cambodia (CDC) reported that it had approved $85.88 billion in investment projects as of end-2019 since it was established in 1994.
In 2019 alone, the CDC approved $9.40 billion worth of investment projects, of which mainland Chinese investors accounted for $2.75 billion. Hong Kong ranked second at $912.55 million, while Japan took third with $298.84 million.
Of the cumulative FDI approved in 1994-2019, the largest share was from mainland China (21.81 per cent), which in the early years had been the source of extensive investment in the fields of infrastructure, resource development (such as natural rubber) and tourism.
South Korea took the second largest share at 6.16 per cent and the UK placed third at 5.01 per cent.
Other major sources were Malaysia (3.59 per cent), Japan (3.13 per cent), Hong Kong (3.05 per cent), Taiwan (1.77 per cent), Vietnam (2.31 per cent), Singapore (1.64 per cent) and Thailand (1.54 per cent) – whose investment comes mainly from the garment sector.