Analysis: How Will the EBA Issue and the Political Situation Affect the Real Estate Industry in Cambodia?

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By Yin Leang Kong, Founder and CEO of Propertyarea.asia

Phnom Penh: The political heat in Cambodia is as hot as 4:00 pm, and the situation of investment in real estate transaction and some trading activity seems to be slowing down due to some challenges.

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Uncertainty in the face of Chinese investors’ return and the preferential tax system on Every But Arms (EBA) are in doubt as investors await results on February 12 for European’s decision on whether the Kingdom retains its tariff-free designation.

China-US Trade War Issue

The open hostilities of the US-China trade war may be over, but there’s a wave of worries that have not faded. While the war is not yet over, economists and analysts have already indicated that the world economy will recover in 2020.

The United Nations Conference on Trade and Development (UNCTAD) claimed Cambodia was one of the winners in the Southeast Asian nation during the US-China trade pact.

According to the World Bank data, FDI in 2018 accounted for 23% of Hong Kong GDP and over 22% of Singapore – both higher than anywhere else in Southeast Asia. The next highest recipient, Cambodia, was the largest recipient of 12.6%.

Based on the above data, Cambodia in 2019 could be a winner during the turmoil of the China-US trade war.

Internal Problems in Cambodia

Cambodia has been a country that the world recognizes for its rapid growth through its strong economic growth. The country has become one of the 10 fastest growing economies in the world and in 2015, ADB named Cambodia the “new Asian Tiger” because of its growing economy with about 7 percent for more than two decades in a row.

In 2015, the World Bank classified Cambodia as a low-middle income country, a new category that means it has escaped the low-poverty status of the country.

As Cambodia moves toward its prosperity, the political tsunami erupted in an attempt to destroy peace and bring about a change of ambiguity that would allow the future of the nation to suffer a new tragedy as piles of bones, the pool of blood is still fresh because of the mistakes of politicians who do not recognize their limitations and prefer to blame others.

Starting from the geopolitics of international relations, the government has taken legal measures to curb the so-called “color revolution.” As a result of this action, Cambodia has been left in the shadows of the international eye, often taking human rights and democracy as a pretext for eradicating or suppressing its immorality.

Cambodians who have suffered from decades of war and mental illness have not yet been able to cope with the same fears and old ghosts once again in their hearts.

The outcome of the political war, the trade war, and the influence of domestic politics have been leaving local and very rich and wealthy investors waiting for something rather than ditching their capital to invest in a project or project and land or housing.

It’s not a mistake, but it can be scary, and it’s not extremism, but the past has taught them too much.

EBA Issues

It is a sensitive issue that international investors are worried about, especially for the Cambodian people who are anxiously awaiting the decision of the European Union to continue or withhold Cambodia’s tax system (EBA).
The EBA issue is not about human rights and democracy issue, but a double standard on Cambodia, and if the EU removes the EBA from Cambodia, it is not about human rights and democracy, but rather an expression of that “Do not respect human rights and democracy” because if they respect human rights and democracy, they will not take away the tax preferential system.

The withdrawal of preferential tax system will affect the livelihood of about 80 thousand workers directly and indirectly an estimated 2 million people.

The question here is, “Does the EU really respect human rights, or just talk about human rights and act as a masked killer?”

Does the government really ignore this? The Royal Government, under the leadership of

Prime Minister Hun Sen, has been active on economic development and poverty reduction, in particular providing better public services to the people from year to year, and has dispatched several experts to explain the political issues in Cambodia and its position with the international community and the European Union in relation to human rights and promotion Democracy has been growing in Cambodia.

Cambodia will not die, and the Cambodian economy will not be adversely affected as the government has been expanding its alliance with other partner countries through free trade talks with China, Korea, Japan and expanding exports to the economic community. ASEAN is the key to furthering the Cambodian economy.

A Precise Message

Cambodian Prime Minister Hun Sen has repeatedly made clear that #Cambodia will not bow to exchange its sovereignty.”

The clear message is that the head of the government, which has led the country from scratch, is already thinking and preparing to deal with the challenges faced when Cambodia loses its preferential system and the government will not leave behind or let Cambodia be trampled on again, and the shade of peace will not be destroyed by an elegant group of politicians.

The government has already reformed a number of bureaucratic systems, such as the abolition of the Kamsab, Camcontrol and many other unnecessary tasks to encourage international investors.

Therefore, if the EBA issue is to be withdrawn from Cambodia, Cambodia will not die because friendly countries still support Cambodia, and no doubt the head of government will cancel or encourage more international investors to promote a better investment climate or leave Cambodia, and instead, they’ll receive a new gift from the country’s head of government.

Will the Construction and Real Estate Sector Continue to Grow?

A clear message, more certain than that, is that the construction and real estate sector in Cambodia will continue to grow, with construction investment in the Kingdom rising to $11 billion in 2019, an increase of about 78 per cent, compared to 2018.

This huge amount of money has been injected into almost every sector of the economy, which keeps the economy afloat and keeps the sector afloat as each investment and investment project does not end in a single year or two years.

Although internal political and EBA issues are becoming new challenges for 2020, Cambodia remains a favorable geography in the ASEAN region, especially as Cambodia has a favorable environment that encourages international investors because the economy will continue to grow (albeit at a slowing pace), and investment laws remain open and attractive to law firms System is less complex and more favorable conditions.

Therefore, the flow of FDI from domestic and foreign countries is relatively small, but this is a common trend in many parts of the world.

The last question is: Under such circumstances, should investors continue to invest or wait? The answer that smart investors always say is, “Smart investors see the opportunity in times of trouble and always take the opportunity when others are afraid to take it.”

Should investors look forward to the opportunities or embrace opportunities that others are reluctant to start? The answer is there is every chance for a wise and successful investor.

Do you stand by and watch as they move forward or capture the moment that some people are overlooking?

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