An independent review of investment risks in Cambodia commissioned by NagaCorp, operator of the NagaWorld integrated resort in Phnom Penh, has found the nation’s biggest risks in 2024 are economic rather than political.
The findings of the review by Political & Economic Risk Consultancy, Ltd are set out in NagaCorp’s Interim Report, released Thursday, and paint a picture of a Cambodian economy that has “moved beyond” the COVID-19 pandemic but has not returned to its pre-pandemic levels.
“Most of the reasons for this delayed economic recovery are external,” it states, “Unfortunately, that means they are largely beyond the ability of the government to control and are likely to disappoint those hoping for a speedy rebound.
“Overall growth will remain below pre-pandemic levels for another few years. The most significant adverse influences include a downturn in demand in the US and Europe for some of Cambodia’s biggest exports like garments, the continuing reluctance of Mainland Chinese to travel outside their country, and the inflationary impact and other economic disruption caused by the Ukraine and Gaza wars.”
The review adds that Cambodia will also have to contend with the slowness with which the US Federal Reserve lowers interest rates, possible fallout from further strains in US-China relations, and continuing economic weakness in China, the US and Europe.”
More positive for companies like NagaCorp is the government’s smooth leadership transition and continuation of policies practiced by the previous government.
“The general population is supportive of the new leadership, which is centered on Prime Minister Hun Manet, the son of the former prime minister, Mr Hun Sen. The position of the ruling Cambodian People’s Party has never been stronger,” the review states.
“Although long-standing factions within the CPP remain a feature of the political scene, all factions have supported the new government. In part, that is because Hun Sen is still present to support his son’s transition and to ensure that other factions do not challenge him. It is also partly due to an expansion in the number of special advisors to the prime minister, so key factions have been able to orchestrate generational leadership changes of their own in ways that have protected their influence.”
While the sheer number of special advisors has reached “unwieldy” levels, the review notes that the prime minister is taking guidance from “a much smaller number of experienced advisors who also had the trust of and worked closely with his father.
“The prime minister is also listening closely to private sector business leaders, including foreign investors, to ensure their biggest concerns are being addressed in ways that protect and enhance the business environment at a time when economic conditions remain challenging,” it observes.
NagaCorp said the findings of another review it has commissioned to look at the internal controls of the group with a focus on anti-money laundering will be enclosed in its 2024 Annual Report.
The company, meanwhile, confirmed that it has now fully repaid the outstanding US$472.2 million in Senior Notes due in July 2024 and no longer has any debt obligations other than an outstanding shareholder’s loan provided by founder Chen Lip Keong before his recent passing.
The notes maturity had been highlighted by analysts as a key risk heading into 2024 given the slow recovery of NagaCorp’s gaming operations post-COVID.
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