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Are The Kingdom’s Infrastructure Projects On Track To Boost Economic Growth - Mid-Year Review 2023
Updated on: September 6, 2023, 1:32 a.m.
Published on: July 9, 2023, 4:34 a.m.

Are The Kingdom’s Infrastructure Projects On Track To Boost Economic Growth - Mid-Year Review 2023

At the start of the year, we tried to share some insights into the key economic and infrastructure development projects in Cambodia which had and have a real chance of igniting the long-term economic growth as the nation puts the pandemic in its rearview mirror. 

We are now beyond the halfway point of 2023 so we have revisited these projects and their progress as well as identified newly announced projects in the first half of 2023.

Cambodian Trade and Economic Growth

The Asian Development Bank and National Bank of Cambodia (NBC) both now forecasts that Cambodia’s gross domestic product (GDP) will grow by 5.5 per cent in 2023, which could place the country among the top three performers in terms of GDP growth in Southeast Asia. Even the cynics are optimistic about stronger performances from 2023-2024 with 6.6 per cent GDP growth predicted by the Ministry of Economy and Finance.

Coming into 2023 the hopes for economic trade growth were probably largely pinned on Regional Comprehensive Economic Partnership (RCEP). In the first four months of 2023, Cambodian exports to RCEP countries did rise by 16 per cent. 

The Cambodia-Korea Free Trade Agreement (CKFTA) also came into effect in December 2022 and the addition of new FTAs (Free Trade Agreements) and with the important signing of the comprehensive economic partnership agreement (CEPA) with UAE, Cambodia is planting the right seeds for the future.

This has been buoyed by clearer government-led strategic plans on logistics and modernising all logistics routes (land, sea, and air) with investments both local and foreign to try and transform the Kingdom to be a competitive trade and logistics hub.

Cambodia’s economy is still reliant on the export of garments, tourism, agriculture and real estate and construction.

The Cambodia Securities Exchange (CSX) is growing albeit slowly but H.E. Hong Sok Hour (CEO of the Cambodia Securities Exchange) is confident and with their aims this year to list more firms, double daily trading volumes to $1 million and triple the number of registered trading accounts to 15,000, Hour said that the average trading account is expected to increase by the end of 2023.

The global fears of recession and inflation (throw in the ongoing Ukraine conflict, the energy crisis in Europe, and what has to date been an underwhelming Chinese economic recovery) have all dampened growth but Cambodia remains well-placed to see one of the fastest GDP recoveries.

Cambodian Airport Developments

Cambodian Airport Developments & Rebounding Tourism & Flights

Thong Khon, Cambodian Minister of Tourism (MoT) expects the Kingdom to attract 4.5 million international tourists in 2023 and is hopeful that this figure will reach over seven million tourists by 2025-2026. 

The official figure for visiting international tourists for the first half of 2023 was 2.57 million, the MoT confirmed. This period does include the SEA Games & ASEAN Para Games which helped spike inbound tourism numbers, nevertheless, the Kingdom is still on track to reach the MoT expectations. 

These goals are also only possible by the renewal of affordable and frequent flights, and to date, more flights have been announced with several international airlines scheduling the return of routes in the second half of the year too. So far in 2023, approximately 910,000 foreign tourists visited Cambodia by air, 1.63 million by land, and 30,000 by waterways.

Announced in 2022, the launch of Air Asia Cambodia operations is apparently still on track for the backend of 2023 while multiple new flight routes are under constant discussion with key destinations such as India, Japan, the Gulf and elsewhere.

In terms of the progress of the multiple new Cambodia airports under development, this is the latest by July 2023:

  • Techo Takhmao International Airport - Construction is underway and the first phase is targeted to be operational by March 2025.
  • (New) Rail Link to new Phnom Penh Airport - The Minister of Public Works and Transport (MPWT) announced in July 2023 that they are exploring an underground light rail transit to connect the airport to the southern part of the capital.
  • Angkor Siem Reap International Airport - Due to be operational before the end of the year, a provisional official inauguration date was set for October 2023. The airport was 98 per cent complete by the end of June 2023.
  • Koh Rong International Ecotourism Airport - Announced at the start of 2023 there has been hardly any news since.
  • Dara Sakor International Airport - Delayed in 2022 and delayed again in 2023, the latest news in June suggested the developers had not completed construction to meet standards of aviation safety, according to the State Secretariat of Civil Aviation.

Foreign Investment Cambodia

A Resurgent Sihanoukville?

Coming into the year, there still seemed to be some scepticism about how the coastal Cambodian city could be rejuvenated and the plans were still in development for transforming the Preah Sihanouk province into a model multi-purpose special economic zone. This is intended to form a key cog of the roadmap to develop the area into as part of the National Industrial Development Policy 2015-2025.

Although the exact roadmap is not crystal clear, projects such as the Bay of Lights by Canopy Sands Development (which was also showcased in the Middle East this year), and the announcement of plans to tackle the unfinished buildings were laid out in 2023 - but if successful, the project will take several years to complete.

2023 Cambodian Infrastructure Projects Snapshot

The ongoing infrastructure investments from the Cambian government in addition to private-public investments are one of the main reasons there is an optimistic mood for the future.

  • Koh Pich-Koh Norea bridge - Construction has reached 85 per cent and the bridge is expected to be completed in November 2023 (Updated in July 2023).
  • Korea-Cambodia Friendship Bridge - Final assessments were completed in 2022 and the expectation was for the construction to start in the second half of 2023 but there has been no official update for many months.
  • Phnom Penh-Bavet Expressway - Construction officially got underway on June 7th 2023 and the second groundbreaking freeway won't be completed until 2027.
  • Phnom Penh-Siem Reap Expressway - A feasibility study is underway, due to be completed in 2023.
  • Phnom Penh-Poipet Express Railway - Study completed to increase the speed to approximately 160 km per hour.
  • Phnom Penh to Preah Sihanouk Railway - Study is underway to upgrade this line.
  • Kampot International Tourism Port - Although reported as completed in 2022, by July 2023 there is still a need to deepen the port’s waterway before it can be operational.
  • Kampot International Port & Logistics Centre - Construction got underway in 2022 and the port’s first phase operations are due in 2025.
  • Funan Techo Canal - Rumoured at the start of 2023 and finally confirmed with its name, this is a game changer for interconnectivity or the transportation of goods and to decrease costs. Launched in 2023 and not due to be completed by 2027.
  • Sihanoukville Autonomous Port (PAS) - Long delayed but the Japanese-financed Sihanoukville container terminal expansion got underway in May 2023.
  • Koh Kong Province’s International Seaport - due to be launched in the second half of 2023.

Koh Pich-Koh Norea bridge MPWT

Real Estate in Cambodia Outlook

The year has been challenging but there are green shoots for the property and construction sector. There is a sentiment that buyers and interested investors are being spread across more countries, and we think diversification is great.

In June 2023, the Ministry of Land Management, Urban Planning and Construction reported that Cambodia's construction sector attracted investment worth USD $2.27 billion in the first five months of 2023, a year-on-year increase of 138 per cent. 

The retail and commercial property sectors are under some pressure, as are condos due to the impressions of oversupply. 

However, the key investment traits of anticipated growth due to the country's young population and increasing urbanisation, and the positive view of Cambodia as an investment destination continue to provide optimism for the long-term.