The future of infrastructure developments and the construction industry in Cambodia

• 23 July 2019
• Local News
• 4580 Views

In the past decade, Cambodia has launched ambitious infrastructure developments toward building much needed airports, bridges, dams, roads and seaports. However, Cambodia still ranks 112 out of 137 nations in terms of infrastructure ranking, lagging behind most of its Southeast Asian neighbours according to the World Economic Forum’s latest Global Competitiveness Report. It revealed that inadequate supply of infrastructure is considered to be one of the most problematic factors for doing business in the Cambodia.

In recent years, China has channelled funding to a wide range of infrastructure projects in Cambodia, from highway networks, to railways and ports. These investments represent an opportunity for Cambodia to invest in domestic infrastructure projects that not only improve domestic efficiency, but also boost connectivity with neighbours such as Thailand and Vietnam. So far, land transportation accounts for more than 80% of Cambodia’s total freight volume. For the development of railways, an efficient rail system would not only help in the movement of passengers, but also boost freight transportation.

Building infrastructure also open numerous avenues for business and investment opportunities for local as well as foreign enterprises. Business and investment opportunities in Cambodia are attracting foreign investor interest, with the country enjoying record high foreign direct investments in 2018. In addition, for Cambodia to maintain its status as a manufacturing hub, the government should emphasise transportation and electricity developments in industrial zones. Direct investment will only increase if it is channelled towards electricity, construction, manufacturing and real estate activities.

As Cambodia’s construction industry is forecast to expand, this has also created heavy demand for construction equipment such as cranes, excavators and other heavy machineries. In order to stay competitive, Cambodia also needs to upgrade its infrastructure investments which have been hindered by a lack of infrastructure spending, persistent fiscal deficits and rising public debt. Unless the country improves its logistics, Cambodia won’t be able to integrate with the economies of other Southeast Asian countries.

So far, Cambodia is already closely connected to Asia’s two largest economies – China and Japan. The country can succeed if it synergises those linkages, and to upgrade its manufacturing and infrastructure. Furthermore, an even more powerful outcome can be achieved if Cambodia is able to make close economic relations with both China and Japan. If Cambodia becomes more competitive in the Southeast Asian region and more productive domestically, this will bring better jobs and higher incomes for locals. It could open a new chapter of investment opportunities and wealth creation for both domestic and foreign businesses and entrepreneurs. As a result of this, traditional sectors like construction and properties will all stand to benefit.

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