Cambodia is expected to lead in foreign direct investments (FDI) in 2024, according to the FDI Standouts Watchlist 2024.
The list, put together by fDi Intelligence, looks at the macroeconomic and FDI prospects of the world’s top 50 direct investment destinations.
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By GlobalDataSix Asian countries feature among the top ten countries with the strongest FDI momentum for 2024, with Cambodia leading the way. Despite strong competition from its Southeast Asian neighbours, the country’s GDP is expected to grow by 6.1% next year, bolstered by a strong manufacturing base and recovery in services following the Covid-19 pandemic.
This year, Cambodia scored 5.10 in the Inward FDI Performance Index – carried out by Investment Monitor – showing it received more than five times its share of inward greenfield FDI compared to what could be expected when looking at its GDP. As a result, the Southeast Asian country came up first in rankings, well above regional competitors like Malaysia (3.39), Singapore (4.28), Thailand (2.36) and Vietnam (3.85).
In addition, in 2021, the government in Phnom Penh adopted an investment law to incentivise the FDI climate. The law offers a wide range of incentives, including income tax exemption for three to nine years, depending on the nature of investments, as well as exemptions for certain customs duties.
However, challenges remain for Cambodia’s economy, including global economic uncertainties triggered by Russia’s war in Ukraine. The US Department of State reports that despite recent changes in laws to attract FDI, the country has failed to bring in significant investment from the US.
The reasons behind this include widespread corruption, a limited supply of skilled labour, inadequate infrastructure, opaque government approval processes and preferential treatment given to local or other foreign companies involved in tax evasion or benefiting from the weak domestic regulatory environment.
