Infrastructure market in Cambodia

To sustain its growth, Cambodia requires significant investment in infrastructure to the tune of USD $28 billion between 2016 and 2040, based on The Global Infrastructure Hub's estimates. The poor quality of its current infrastructure is reflected in its 2019 global ranking, ranked at 106 out of 140 countries. Recognizing this gap, and to attract private sector investment, the Cambodian government aims to attract private sector investment through the Industrial Development Policy (IDP), the updated law on Investment in the Kingdom of Cambodia of 2023 (Law on Investment) and the new Law on Public and Private Partnership (the "PPP Law") which was enacted in 2021. The PPP Law aims to promote the management and implementation of public and private partnership (P3) projects in an effective, efficient, sustainable, transparent, and accountable manner.

Key opportunities for Canadian infrastructure companies in Cambodia:

• Public infrastructure and services for transportation and logistics sectors, such as roads, bridges, railways, high-speed rail, sky trains, subways, airports, ports, public parking and canals
• Information and communication technology (ICT) sectors
• Distribution of electricity, gas distribution and public services in mining and energy sectors
• Clean water supply infrastructure, sewage systems, water drainage, wastewater treatment, waste management, healthcare, education, labor and vocational training sector, tourism, and culture and fine arts
• Food processing and food preservation
• Agriculture and irrigation system

In the first quarter of 2022, 47 investment projects were approved by the Government of Cambodia for P3.

• Phnom Penh-Siem Reap-Poi Pet Expressway
• Provision of Aviation Security Services
• Phnom Penh Logistics Complex
• Phnom Penh-Bavet Expressway
• Phnom Penh-Sihanoukville Expressway
• Sihanoukville Smart Parking
• Kampot International Tourism Pier
• Electric Buses in Siem Reap City
• Prey Kabas Irrigation Systems
• Development of New Mondulkiri Airport

Notable challenges for Canadian infrastructure companies in Cambodia:

• Insufficient regulatory frameworks, resulting in continued use of "ad hoc mechanism" in carrying out P3 projects
• Limited human and institutional capacity of relevant stakeholders in the management of P3 projects in initiating, developing, negotiating and managing the P3 projects
• Limited resources to provide for P3 projects that may depend on grants and concessional loans from development partners
• A lack of transparency in some government approval processes, and preferential treatment given to companies from certain countries, namely China

Cambodian business landscape:

Cambodia has been shifting from an agriculture-based economy towards an industrial and service-based economy. Cambodia is facing a serious infrastructure gap and would benefit from greater connectivity and investments in rural and urban infrastructure. To encourage the private sector to join government efforts to diversify its economic base and sustainable growth, a Law on Public-Private Partnerships has been adopted with details of qualified projects dealing with the development of public infrastructures and public services in strategic sectors namely transportation, digital and telecommunication, energy, environment, social affairs, science, and agriculture. Even though the infrastructure market is dominated by China, many pipeline P3 projects such as Sky trains, monorail, subway, railways, waste management, healthcare, etc., could be of interest for Canadian companies.

Summary

With the GDP of USD $28.54 billion in 2022, Cambodia has experienced significant economic growth in the last decade, as one of the fastest-growing economies in the region, with averaged an annual 7.1% GDP growth rate between 1994 and 2021 and is forecasted to reach 5.8% in 2023, largely driven by the manufacturing, agriculture, tourism and construction sectors. The country achieved lower middle-income status in 2015 and the government's goal is to make Cambodia an upper middle-income country by 2030 and a high-income one by 2050. The government has made it a priority to attract investment from abroad. Foreign direct investment (FDI) incentives available to investors include 100 percent foreign ownership of companies, corporate tax holidays of up to eight years, a 20 percent corporate tax rate after the incentive period ends, duty-free import of capital goods, and no restrictions on capital repatriation.

For more information on Infrastructure in the Cambodia market please contact BUNLENG MEN, (Bunleng.Men@International.gc.ca), Trade Commissioner for all sectors, in Cambodia.