In this article we discuss the latest developments in the relationship between Cambodia & Singapore, including trade agreements, investments, challenges and opportunities. For more information on business and investment in Cambodia, view our useful market information or contact our expert team.
What is the current economic relationship between Cambodia and Singapore?
Cambodia and Singapore have enjoyed strong economic relations for many years. In 2021, bilateral trade between the two countries reached $5.2 billion, up from $4.7 billion in 2020 (source). This growth was driven by increased exports of Cambodian garments and footwear to Singapore, as well as increased imports of machinery and electronics from Singapore.
Foreign direct investment (FDI) from Singapore to Cambodia has also been on the rise. In 2021, Singapore was the largest source of FDI into Cambodia, with investments totalling $2.7 billion. That year, Singapore overtook China as the leading investing country in Cambodia in 2021, contributing some 40 percent of Cambodia’s inward FDI according to the Investment Monitor’s ‘2022 Inward FDI Performance Index’. (source) This investment was mainly in the garment and footwear sectors, as well as in the banking and finance sectors.
The strong economic ties between Cambodia and Singapore are expected to continue its upward trend in the years to come. The two countries are signatories to a number of free trade agreements, including the ASEAN Free Trade Area (AFTA) and the Regional Comprehensive Economic Partnership (RCEP). These agreements will reduce tariffs and other barriers to trade between the two countries, making it easier for businesses to operate in both markets.
What are the latest projects and investments from Singapore in Cambodia?
Singapore interests have seen a number of investments in Cambodia in recent years. These investments include:
- Logistics complex in Phnom Penh (source)
The $200 million project, called the Multi-Modal Phnom Penh Logistics Complex (PPLC), was announced during the 40th and 41st ASEAN Summit and is expected to transform Cambodia into a high-potential logistics hub and a connectivity point for serving regional trade. The PPLC was unveiled in a ceremony attended by senior government officials from Cambodia and Singapore, as well as representatives from the private sector.
The PPLC is a joint venture between YCH Group, Singapore’s largest home-grown supply chain solutions company, and WorldBridge Group, a leading Cambodian conglomerate. The project is expected to create over 1,000 jobs during the construction phase and over 500 jobs.
Expected to be completed in 2026, it will be a major boost to Cambodia’s economy and will help to position the country as a leading logistics hub in the region.
- Investment in Electric Vehicle (EV) factory in Cambodia (source)
Singaporean venture capital firm Trive has invested in MVLLABS, the company behind South-east Asian ride-hailing service TADA. The investment is part of a US$15 million Series B funding round that will be used to build an electric vehicle (EV) model for launch in Cambodia.
Trive is a venture capital firm that invests in early-stage technology companies in Southeast Asia. The firm has a strong track record of investing in successful companies, such as Nium, a global payments platform, and Carro, an online car marketplace.
- The entry of SIA Engineering (source)
In a recent development, Singapore Airlines Engineering (SIA Engineering) has announced that it will set up a maintenance, repair, and overhaul (MRO) facility in Cambodia. The facility is expected to be completed in 2025 and will create up to 1,000 jobs.
The entry of SIA Engineering is a significant development for Cambodia’s aviation industry. It is the first MRO facility to be established in the country and is expected to attract more airlines to Cambodia. The facility is also expected to boost economic growth in the country as well as facilitate knowledge transfer and skills.
- Export of electricity to Singapore (source)
Cambodia’s Royal Group of Companies plans to export renewable energy to Singapore after the group signed an agreement with Keppel Energy Pte Ltd in 2023 for the latter to purchase electricity from the Kingdom.
During a signing ceremony attended by Suy Sem, Minister of Mines and Energy and representing Singapore, Tan See Leng, Second Minister for Trade and Industry, Tan said this agreement is a milestone in the expedition of developing the renewable energy resources and importing electricity into Singapore.
He further said the partnership between Keppel and RGP demonstrates the “strong commercial interest and viability” of renewable energy co-development projects for cross-border electricity trade.
- RCEP and the future of trade and investment (source)
The Regional Comprehensive Economic Partnership Agreement (RCEP) is a free trade agreement between 15 countries in the Asia-Pacific region, including Cambodia and Singapore. The agreement came into effect in January 2022, and it is expected to boost trade and investment between the participating countries.
In particular, the RCEP is expected to provide a significant boost to foreign investors looking to establish production bases in Cambodia, leveraging the country’s low-cost environment and favorable investment incentives to export to a broader global market.
It will help reduce tariffs on goods traded between the participating countries, making it easier for businesses and production facilities in Cambodia to export their products to other RCEP markets.
- Singaporean forums, associations and delegations (source)
Organizations like the Singapore Club Cambodia (SCC) and the Singapore Business & Investment Forum (SBIF) play an important role in fostering business ties between Singapore and Cambodia.
They are useful conduits for networking, knowledge sharing, and collaboration, and help investors better understand in-market developments and opportunities in Cambodia.
As the voice of the Singaporean business community, they also deliver advocacy and representation, to help raise awareness of the challenges and opportunities in doing business in Cambodia. This allows local and foreign businesses in the Kingdom to foster meaningful interactions with their Singaporean and international counterparts, which can lead to new business collaboration possibilities.
What are the new growth areas in Cambodia that Singapore interests can take advantage of?
Singapore can look forward to leveraging Cambodia’s abundant agriculture resources to address its food security, and explore collaboration in the digital economy space given its youthful demography (70% of population are under 35YO) and the rapid rate of adoption of digitalisation in Cambodia (can refer to KT article on e-payments being USD300b in 2022, which is 10 times its GDP).
The economic ties between Cambodia and Singapore are robust and are expected to continue to grow in the years to come. In particular, the recent entry of SIA Engineering could open the doors for more Singapore solutions and service providers to seriously consider investing or establishing a presence in Cambodia.
For more information, reach out to our expert team here.