Cambodian Prime Minister Hun Sen stated unequivocally that Cambodia is open for business at the 14th Cambodian Import-Export Goods Exhibition in December 2019, an event designed to highlight the country’s favorable business and investment climate, saying, “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 are drawn to the country for a variety of reasons, including inexpensive living costs, business opportunities, a relaxed lifestyle, and the Buddhist influence. Let’s have a look at some of the benefits now.
Rapid economic expansion
Cambodia’s economy increased at an annual pace of 8% between 1998 and 2018, making it one of the world’s fastest-growing economies, with the textile and tourism industries serving as the main engines of growth.
Cambodia has seen a substantial shift during the previous two decades, according to the World Bank, reaching lower middle-income status in 2015 and aiming for upper middle-income status by 2030.
Indeed, the Cambodian economy’s recent explosion has resulted in the emergence of a class of indigenous business leaders with sprawling conglomerates like Chen Zhi Prince Group Cambodia, led by businessman Chen Zhi Cambodia, and others, whose business interests span numerous facets of everyday Cambodian life, thereby improving the country’s standard of living. Cambodia’s transition to a new era of economic development and prosperity is being accelerated by these commercial firms.
The economy was still surging until the end of last year, growing at a 7.1 percent annual rate in 2019, according to the National Bank of Cambodia (NBC), but was eventually ravaged by the Covid-19 outbreak, particularly the tourism industry.
Nonetheless, the Asian Development Bank (ADB) claims that Cambodia has outperformed several other Asian countries and predicts a 5.9% GDP growth in 2021.
Economy that is resilient
Cambodia is a developing economy, meaning it is less reliant on the world’s three largest economies – China, the United States, and Europe – than established economies. This has served as a historical buffer against global upheavals.
The kingdom has remained out of recession for more than two decades, having weathered the Asian financial crisis of the 1990s, the tech boom of the early 2000s, and even the aftermath of the 2008 financial crisis.
The government provides a strong incentive.
Cambodia’s government is well-known for its pro-business posture, and it unveiled an ambitious program of economic reforms in March 2019 aimed at encouraging new enterprise, investment, and capital flows to the region.
Tax reductions, lower shipping costs, fewer national holidays, new construction initiatives, and legislation establishing special economic zones were among them.
According to Prime Minister Hun Sen, producers and exporters will save $400 million per year.
Additionally, unlike some Asian countries, Cambodia produces a majority of foreign-owned businesses.
Population in its youth
Additionally, the population is notable: about half of the country’s nearly 16 million residents are under the age of 25.
The Institute of Export and International Trade’s Handbook to Doing Business in Cambodia notes that the growing generation is digitally savvy and frequent users of social media platforms such as Facebook and YouTube.
This has a significant impact on Cambodian society in general, as well as on the establishment of new markets and trade routes.
Cambodia is located in Southeast Asia, bordering Thailand, Laos, and Vietnam to the north, and the Gulf of Thailand to the south.
Due to its proximity to key worldwide markets, it is a well-known low-cost manufacturing base for a diverse variety of industries, with a substantial market for its products in other Asian countries.
Labor force that is competitive
Cambodia’s minimum wage is lower than in neighboring Thailand and Vietnam, making it more competitive for service and manufacturing companies recruiting from the country’s large youth population.
Market access that is advantageous
Cambodia is a member of the ASEAN Free Trade Pact (AFTA), one of the largest and most influential free trade zones in the world, and benefits from the CEPT agreement. This ensures that it will trade with other members preferentially and, in some situations, duty-free.
Additionally, it is a WTO member and engages in trade with the European Union via the ASEAN-EU dialogue.
Consumer class expands
Higher earnings translate into increased disposable income, and the country’s young, tech-savvy, and globally minded populace represents a huge opportunity for businesses.
Cambodia’s infrastructure has historically been weak, but with international support, the government is substantially investing in the building of a national network of transportation highways, energy, and telecommunications.
Cambodia has emphasized its ties with neighboring nations in order to facilitate trade and attract foreign investment.