Could you introduce the Asian Development Bank (ADB) and its role in Cambodia?

ADB is one of the largest sources of external development finance in Cambodia, who are a founding member of ADB since 1966. To date, we have brought over $5.5 billion in development finance, and we have a large portfolio of 32 active sovereign projects currently across different sectors. Our key goal is to support Cambodia’s long-term development agenda for inclusive and sustainable growth, in alignment with the country’s vision to achieve upper middle-income status by 2030. We provide concessional loans for projects and policy support, technical assistance, some grants, and private sector financing, particularly in areas such as agriculture, education and skills development, water and urban infrastructure, energy, and public financial management.

What are ADB’s key priorities in Cambodia for the next five years?

We have developed a strong partnership strategy with the government, aligned with the national Pentagonal Strategy, and focused on three pillars: Prosperity, People, and the Planet. Under the Prosperity pillar, we are committed to promote economic diversification, with a heavy emphasis on private sector development. ADB is working closely with the Cambodian government to provide urban and rural infrastructure and government services to foster and support business development and economic diversification. 

Moreover, to create an environment conducive to business growth, ADB is working with the government and the private sector strengthening policy reforms, public-private partnerships, access to finance for SMEs, and capacity building. We also offer early-stage technical support to small businesses through initiatives like “ADB Frontiers,” which helps them gain access to finance. Additionally, the ADB is exploring innovative financial tools, such as trade finance and green bonds, to encourage further investment in Cambodia’s economy.

The People pillar is all about improving human capital. We’re enhancing secondary education and vocational training, particularly focusing on STEM subjects, to equip students with the skills needed in Cambodia’s evolving job market. We have a large skills development program where we collaborate closely with industry associations to align skills with the needs of the private sector. By doing this, we ensure that trainees are prepared for jobs in high-growth areas, including technology, engineering, and finance.

The Planet pillar addresses climate resilience and environmental sustainability. Cambodia is vulnerable to climate risks, and ADB’s support focuses on both mitigation and adaptation. We are investing in renewable energy projects, including Cambodia’s first 100-megawatt solar power plant, in improving energy efficiency, and grid strengthening. 

Additionally, we are working on preparing a pipeline of projects to help vulnerable areas around the Tonle Sap adapt to climate impacts, such as floods and droughts. Across the Asia Pacific region, ADB aims to mobilize $100 billion in climate finance by 2030, with Cambodia being a key beneficiary.

What is ADB’s role in regional cooperation?

Through the Greater Mekong Subregion (GMS) program, ADB has been instrumental in advancing regional cooperation, which has a direct positive impact on Cambodia. We focus on areas such as cross-border infrastructure, regional trade facilitation, and joint health public goods. For instance, our work in developing economic corridors that connect Cambodia with neighboring countries, boosting trade and tourism. 

We’re also partners in the ASEAN Power Grid initiative, which seeks to create a regional electricity infrastructure that connects the power grids of Southeast Asian nations to enable reliable, efficient and sustainable energy sharing across borders. ADB’s health programs support the unique needs of nearly 2 million migrant workers from Cambodia to Thailand in ensuring their access to healthcare.

How is Cambodia positioned to reach the goal of becoming an upper-middle-income country by 2030 and a high-income by 2050?

 Cambodia is positioned for continued growth, primarily due to its open trade economy and proactive government policies. Prime Minister Hun Manet’s commitment to promoting investment signals a favorable environment for foreign direct investment and international partnerships. The government’s willingness to regularly engage with industry stakeholders to address challenges demonstrates a genuine desire to cultivate an ecosystem that supports private sector participation.

To achieve the ambitious targets, Cambodia must significantly increase its investments to move up the value chains in several sectors. Key sectors such as agriculture, tourism, exports, and construction need to be prioritized. Agriculture, a cornerstone of Cambodia’s economy, can add value through better processing and branding. For example, enhancing export quality rice and promoting cash crops like cashew nuts are vital steps forward.

Diversification of Cambodia’s export basket is another critical component. Currently, around 40% of exports go to the United States. Expanding into other markets, especially within regional trade agreements like the Regional Comprehensive Economic Partnership (RCEP), will be essential for sustainable growth. This diversification will help mitigate risks associated with market fluctuations and strengthen the economy.

Moreover, higher-value manufacturing is crucial. Cambodia has made strides in sectors like automobile assembly and electronics, which can provide better returns than traditional exports. The government recognizes the importance of creating a business-friendly environment by simplifying regulations, improving infrastructure, and enhancing access to finance.

Human capital development is also a pivotal factor. The young, tech-savvy population is a significant asset for the nation. Focusing on education, especially in STEM fields, will ensure that the workforce is equipped with the necessary skills to meet the demands of a rapidly evolving economy.

What final message would you like to share with our readers considering investing in Cambodia?

Cambodia is a country on the rise, rich in potential and resilience. The government’s commitment to creating a stable and attractive investment climate is evident. For those looking to invest, now is an opportune time to engage with a youthful population eager to learn and grow. With ongoing reforms and strategic partnerships, Cambodia is poised to be a promising investment destination in Southeast Asia.