Despite facing global economic recession and external uncertainties, foreign direct investment (FDI) in construction and real estate that flowed into Cambodia last year increased significantly, surpassing pre-COVID-19 levels.
According to data released by the National Bank of Cambodia, the total value of FDI that flowed into Cambodia last year (2022) reached $3.6 billion, a slight increase of 2.7% compared to the previous year (2021). Non-financial sectors saw a year-on-year increase of 14.2% in foreign investment, with the construction and real estate sector attracting a growth of 27.7%, manufacturing increasing by 15.5%, and hydropower and energy sectors growing by 51%. However, FDI flowing into the financial sector decreased by 15.7% year-on-year, mainly due to a slowdown in bank capital investment and reinvestment of profits.
Driven by the influx of foreign investment, the total value of FDI that flowed into construction and real estate last year reached $767 million, surpassing pre-COVID-19 levels in 2019 ($688 million). This has also increased the cumulative proportion of foreign investment in the construction and real estate sector to 12.2% of total FDI, indicating that foreign investors' confidence is improving. This has reversed the decline in the construction and real estate sector over the past two years. In 2020, FDI flowing into this sector decreased by 10.6% year-on-year, while in 2021 it only increased by 1%.
Construction and real estate are the "locomotives" driving Cambodia's economic growth and are mainly dependent on foreign investment to drive growth. Before 2021, it was the non-financial sector that attracted the most FDI in Cambodia, accounting for nearly 20% of total FDI. In 2021, with the sharp decrease in FDI inflows, the manufacturing sector replaced the construction and real estate sector as the sector attracting the most FDI.
The Cambodian government passed the "Foreign Property Ownership Law"