Cambodia Investment Review

Opinion: Cambodia the Emerging Market You Can’t Afford To Ignore

Opinion: Cambodia the Emerging Market You Can’t Afford To Ignore

Investing in Cambodia is a great choice if you’re looking at emerging markets. Cambodia is home to more than 16 million people. In recent years, the country’s economy has expanded and undergone significant changes. As a result of this, the market has become more appealing to entrepreneurs and investors.

The Cambodian economy has been growing at a staggering pace for over twenty years. Based on statistics, Cambodia’s economy was the sixth fastest growing in the world between 1995 and 2017. Some economists predict that Cambodia’s economy will keep expanding in the years ahead. Below are some of the insights that support the prediction:

Strong Economic Foundation

Cambodia’s GDP has increased by 7.6% annually on average during the last decade. This has resulted in a far higher quality of life than in many other nations in the area. In a recent report, the Asian Development Bank (ADB) reaffirmed its optimistic growth prediction for Cambodia’s economy in 2023 at 6.2%.

The Cambodian government has prioritized making the country’s business climate conducive to the country’s fast economic expansion. Some of the changes they’ve made include making it easier to start a company and modernizing the judicial system.

Read more: Cambodia’s economy top performing in ASEAN+3 says AMRO

Real estate and construction has been a major driver of Cambodia’s economy over the last 10 years.

This has led to Cambodia moving up the ranks to the 15th spot in the region as the easiest country to conduct business in. As well, the growth goals of the Cambodian government are in line with the ADB’s assistance to the country. Investment projects totaling $2.43 billion are now being carried out in Cambodia by the bank.

In 2021, the Asian Development Bank loaned and granted Cambodia a total of $327.1 million, with an additional $5 million leveraged via cofinancing. The Asian Development Bank (ADB) has $1.17 billion in concessional loans and $43.9 million in grants in the works to aid the country’s economic development and recovery from the COVID-19 epidemic between 2022 and 2025.

Great Natural Resources

The abundance of natural resources in Cambodia, such as oil, gas, wood, and arable land, is expected to be a major factor in the country’s significant GDP growth anticipated over the next several decades. All economic expansion and progress rests on these resources. Because of its favorable geology, Cambodia is rich in a wide range of minerals that might make substantial contributions to the economy.

Read more: Cambodia’s solar sector has ‘huge potential’ for expansion as total energy demand forecast to quintuple by 2040

There are several international companies mining gold in Cambodia.

Iron ore, copper, and gold are some of Cambodia’s most important minerals. Oil, one of Cambodia’s most valuable commodities, is found in large quantities here. Cambodia has a lot of oil within its borders, but the country has yet to start commercializing it.

According to official government data, Cambodia has both six offshore and nineteen onshore oil exploration zones. Experts predict that Block A, the largest of Cambodia’s offshore blocks, will begin oil production before any of the country’s onshore blocks. Experts estimate that there are over 30 million barrels of oil in one of the blocks.

Proven Agricultural and Tourism Industries

Cambodia is gifted with fertile terrain in addition to its abundant natural resources. According to World Bank data, around 22 percent of Cambodia’s land was suitable for farming.

Since the early 1990s, when the government first began to actively promote agriculture, Cambodia’s quantity of arable land has grown gradually. Approximately 35% of Cambodia’s GDP in 2012 came from agriculture, making it one of the country’s primary economic sectors.

Read more: Time is ripe for investment in Cambodian agriculture

Angkor Wat in Siem Reap is a tourist mecca and the largest religious monument in the world.

Tourism is another important sector of the Cambodian economy. More than 10 million tourists visit Cambodia every year, making the industry a significant driver of the country’s GDP. This is predicted to increase in the years to come as more and more people learn about the country’s fascinating culture and travel there to see its breathtaking temples, picturesque beaches, and storied landmarks.

Rising Manufacturing Sector

Although tourism and agriculture are important to Cambodia’s economy, a new industry is emerging as a potential game changer, namely the manufacturing and technology sector.

Cambodia’s economy benefits greatly from its manufacturing sector, which produces a diverse array of goods, from apparel and footwear to electronics.

“An increase in Cambodia’s manufactured product exports and a gradual recovery in the construction and service sectors have supported economic growth in 2022 despite the drop in agricultural growth caused by surging fuel and fertilizer prices and heavy rains,” said ADB Country Director for Cambodia Jyotsana Varma.

In addition, companies looking to reduce their manufacturing expenses should consider setting up shop in Cambodia since it has some of the lowest labor prices in the region. The minimum salary for workers in Cambodia’s textile industry rose from $100 to $177 per month in 2014.

Read more: First $30M fully automated medical-grade glove factory showcases Bavet as an emerging manufacturing hub in Cambodia

More firms are opening agro processing facilities in Cambodia, reducing the nations reliance on imports .

The minimum wage has been continuously raised by the government since that time. Even with the increase in the minimum wage, labor costs are extremely low. As well, businesses in Cambodia may benefit from the country’s free trade agreements with other nations worldwide in addition to the country’s cheap cost of labor.

Several nations, notably China, India, and the European Union, have signed free trade agreements with Cambodia. The ability to sell goods internationally and enter new markets is facilitated by this.

Also, Cambodia has a youthful, educated workforce, with more than half of the population under the age of 30; this is in contrast to other industrialized nations like Japan, where the growth of the young population is a concern. This paves the way for robust economic expansion in the years to come.

Growing Middle Class

The country’s progress has resulted in a sizable and growing middle class in Cambodia. It is claimed that as many as half of Cambodians currently belong to the country’s middle class. This is a fantastic opportunity for companies to offer their products to a rapidly expanding clientele. A massive increase in the number of mobile phones — 19 million in total — has also been noted by industry experts.

Read more: Encouraging foreign talent will play a key role in the post-pandemic growth of Cambodia

International brands and malls are targeting the growing middle class in Cambodia.

Not to be overlooked is the rapid rate at which Cambodia is urbanizing, with Phnom Penh’s annual growth rate sitting at about 6%. This gives businesses a lot of options to take advantage of the rising market in cities.

Ultimately, Cambodia is a promising and dynamic investment destination due to its quick economic growth. With sustained economic development and technological advancement, it stands to further compete to cement its position as a leading Southeast Asian economic powerhouse. As an emerging market, Cambodia is ripe for investment.

Richard Yim is the CEO of Quantum Engineering and Manufacturing. He was recently selected as ASEAN Top 40 Under 40.

You can follow his Instagram and Twitter accounts @richardyim

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