|Source: PwC. Aerial view of Phnom Penh.|
A new outlook study titled Cambodia’s Infrastructure Market Update and Outlook, jointly produced by PwC Singapore and PwC Cambodia, highlights that Cambodia is poised for growth and remains attractive for foreign investment despite global economic headwinds.
The report aims to provide investors and financiers with insights into the potential for infrastructure investments in Cambodia, focusing on the latest market developments in key infrastructure subsectors. The report also highlights issues around connectivity between its economic nodes, integration with ASEAN and global transportation and economic networks – in ports, logistics, transportation and construction sectors – and outlines the potential pipeline for the players in these subsectors.
The Council for Development of Cambodia has identified six priority development sectors as drivers for future growth:
- Textile and apparel
- Bike and parts
- Furniture and plywood
For Cambodia to fulfil its investment potential, PwC said that significant investment in infrastructure is required - US$28 B is estimated to be required between 2016 and 2040. Although the economy contracted due to COVID-19, the country is expected to grow at a CAGR of around 6% in the medium term - making Cambodia one of the fastest growing economies in the ASEAN region. Plus points for existing and future players include:
Public-Private Partnership (PPP) Law of 2021
The new Law on Public-Private Partnership is a step in the right direction as the country seeks greater private capital and efficiencies in infrastructure creation. With the enactment of the PPP Law, many bottlenecks in the infrastructure project pipelines could be eased by using incentive mechanisms.
Joint ventures with local players
The ability to find the right local partner is key to help foreign investors navigate various local factors including bureaucracy, business culture, and more. Cambodia has seen good growth in the asset portfolio of local players who have joined hands and diversified into new sectors.
Affordable long-term financing
The ability to raise affordable long-term capital to finance infrastructure projects remains a challenge. The combination of an increasingly competitive financial sector, larger play by multilateral financing institutions, willingness of local players to access capital markets, availability of guarantee products will enable supply to meet the expected growing demand.
Jennifer Tay, Infrastructure Leader, PwC Singapore said: “With significant development plans underway in the neighbourhood and geopolitical shifts potentially altering the capital flows within the ASEAN region, Cambodia is in a good position to capitalise on potential opportunities for sustained growth, further backed by the Royal Government of Cambodia’s commitment to reforms and growth.”