Cambodia's Financial Environment

The Highlights of the Week 2023/10/23 – 10/27 

1.    Tax revenue falls in the first 8 months of '23: ministry
In the first 8 months of 2023, Cambodia's central government budget (BCG) recorded total revenue of 17.308 trillion riel (approximately 4.19 billion USD). Of this, tax revenue amounted to 14.738 trillion riel (approximately 3.57 billion USD), accounting for 85.15% of the total income. Compared to the same period in 2022, tax revenue decreased by 2.75%. The Cambodian government's tax report also noted, "Slow income performance combined with rapid expenditure has resulted in a budget deficit of approximately 124 billion riel (30.05 million USD), approximately 22.19% of the annual projected budget deficit. The deficit for 2023 has led to an increase in debt of about 3.332 trillion riel (807.43 million USD), and net acquisition of non-financial assets increased by approximately 1.859 trillion riel (450.46 million USD)." These figures indicate that Cambodia's post-pandemic income recovery is relatively slow, still relying on increasing government spending to stimulate economic growth. However, the deficit of about 30 million USD due to lower tax revenue compared to expenditure doesn't seem to be a major concern at the moment, and the Cambodian authorities appear to be able to manage it.

2.    Cambodia remains attractive for investors, says PWC
A recent report titled "Cambodia Infrastructure Market Insights and Outlook" by PwC suggests that Cambodia is poised for greater growth and remains attractive to foreign investors as a front-runner in Southeast Asia's economy. The report also highlights the need for substantial infrastructure investments in Cambodia, recommending an investment of 28 billion USD in infrastructure from 2016 to 2040 to support economic growth.

3.    Cambodia targets tech and agriculture investments
The Secretary-General of the Cambodia Investment Board (CIB) at the Cambodian Development Council (CDC), Chea Vuthy, emphasized two major priority areas for Chinese investors in Cambodia's new investment law: the high-tech industry and agriculture, targeting both domestic and international markets. While agriculture contributes only 17.7% to Cambodia's GDP, it employs nearly 70% of the population, making the continuous development and upgrading of agriculture a significant focus to increase the income of farmers and national income. On the other hand, industry and manufacturing account for a significant portion of GDP, and the government aims to gradually shift towards high-tech products to increase added value.

4.    Vietnamese delegation seeks to increase investments in Cambodia
In the first nine months of 2023, the CDC approved investment projects worth nearly 4 billion USD, with Chinese investors contributing 76% of the total, approximately 3.04 billion USD. This highlights a significant dependence on a single country for foreign investment, making Cambodia vulnerable to economic fluctuations in that country. The CDC acknowledges this situation and highly appreciates Vietnam's investments in Cambodia. During the visit of the Vietnamese delegation, the CDC requested strengthening the partnership and expanding investment cooperation to enhance the efficiency of Vietnam's investments in Cambodia and to increase the contribution of other countries to Cambodia's overall foreign investment.

5.    Cambodia’s exports to RCEP countries rise 23% to $5.8B
Regarding exports, the Ministry of Commerce report shows that in the first nine months of this year, Cambodia exported goods worth 5.8 billion USD to RCEP countries, representing a 23% growth compared to the same period last year. However, bilateral trade between Cambodia and RCEP countries declined by 9.3%, indicating a decrease in Cambodia's import demand. RCEP trade accounts for 33% of Cambodia's total trade in the first three quarters, making it an important trading region. While Cambodia's import and consumption levels have not fully recovered after the pandemic, its export performance remains strong. Additionally, international organizations still anticipate Cambodia to be among the leading countries in economic growth in the ASEAN region. Therefore, the overall outlook for Cambodia remains relatively optimistic.