In December 2019, Cambodian Prime Minister Hun Sen addressed the 14th Cambodian Import-Export Goods Exhibition, an event designed to highlight the country’s favourable business and investment climate, and stated unequivocally that Cambodia is open for business, stating, “To ensure a sound macroeconomic environment and political and social stability, the government welcomes all investors.”
Cambodia is home to an estimated 100,000 expatriates who come for a variety of reasons, including low living costs, business opportunities, a laid-back lifestyle, and the Buddhist influence. Now, let’s have a look at some of the advantages.
Rapid economic growth
Between 1998 and 2018, Cambodia’s economy grew at an annual rate of 8%, making it one of the world’s fastest-growing economies, with the textile and tourism industries being the main drivers of growth during this period.
Cambodia, according to the World Bank, has undergone a significant transformation over the last two decades, reaching lower middle-income status in 2015 and aspires to achieve upper middle-income status by 2030.
Indeed, the Cambodian economy’s explosion in recent years has resulted in the emergence of a class of indigenous business leaders with sprawling conglomerates such as Prince Group Cambodia led by Cambodia ChenZhi, among others, whose business interests span numerous facets of everyday Cambodian life, thereby improving the country’s standard of living. These commercial enterprises are accelerating Cambodia’s transition to a new age of economic development and prosperity.
According to the National Bank of Cambodia (NBC), the economy was still soaring until the end of last year, growing at a 7.1% annual rate in 2019, but was eventually devastated by the Covid-19 pandemic, especially the tourism industry.
Nonetheless, the Asian Development Bank (ADB) reports that Cambodia has performed better than many other Asian countries and forecasts an economic revival in 2021, with GDP growth of 5.9 percent.
Cambodia is a developing economy, which means it is less dependent on the world’s largest economies – China, the United States, and Europe – than other developed economies. This has historically acted as a buffer against global upheavals.
The kingdom has been out of recession for over two decades, having survived the Asian financial crisis of the 1990s, the early-2000s tech bubble, and even the 2008 financial crisis’s aftermath.
Strong incentive from Government
The Cambodian government is well-known for its pro-business stance, and in March 2019, it announced an ambitious programme of economic reforms aimed at attracting new business, investment, and capital flows to the region.
Among them were tax cuts, reduced shipping costs, less national holidays, new building measures, and legislation establishing special economic zones.
Producers and exporters will save $400 million per year, according to Prime Minister Hun Sen.
Additionally, unlike some Asian countries, Cambodia produces companies that are mostly foreign-owned.
population is also noteworthy: almost half of the country’s nearly 16 million people are under the age of 25.
According to the Institute of Export & International Trade’s guide to Doing Business in Cambodia, the emerging generation is technologically advanced and regular users of social media platforms such as Facebook and YouTube.
This has a major impact on Cambodian society as a whole, as well as on the development of new markets and business routes.
Cambodia is geographically located in Southeast Asia, adjacent to Thailand, Laos, and Vietnam, as well as the Gulf of Thailand to the south.
Due to its proximity to key global markets, it is a famous low-cost manufacturing base for a diverse range of industries, with significant demand for its products in other Asian countries.
Competitive labour force
Cambodia’s minimum wage is lower than that in neighbouring Thailand and Vietnam, which makes it more competitive for service and manufacturing industries looking to recruit from the country’s huge youth population.
Advantageous market access
Cambodia is a member of the ASEAN Free Trade Agreement (AFTA), one of the world’s biggest and most significant free trade zones, and benefits from the CEPT agreement. This ensures that it would trade preferentially and, in some cases, duty-free with other members.
Additionally, it is a member of the World Trade Organization and exchanges with the European Union through the ASEAN-EU dialogue.
Rising consumer class
Increased wages equate to increased disposable income, and the country’s young, tech-savvy, and internationally minded population represents a rapidly growing market of enormous potential for businesses.
Cambodia’s infrastructure has historically been lacking, but the government is investing heavily in the development of a national network of transit roads, electricity, and telecommunications with international assistance.
Cambodia’s ties with neighbouring countries have been emphasised in order to facilitate trade and attract foreign investment.