Cambodia Investment Review

IBC ‘Industry Views and Outlook for 2024’: An Overview of 10 Major Sectors in Cambodia (Part 2) 

IBC ‘Industry Views and Outlook for 2024’: An Overview of 10 Major Sectors in Cambodia (Part 2) 

Cambodia Investment Review 

The International Business Chamber (IBC) hosted its flagship bi-annual economic outlook, “Industry Views and Outlook 2024,” gathering ten industry leaders to forecast Cambodia’s economic trajectory over the next 12 months and beyond. 

Read more: IBC ‘Industry Views and Outlook for 2024’: An Overview of 10 Major Sectors in Cambodia (Part 1)

The outlook following the World Bank’s revised growth projection for 2023 to 5.4%, offered a platform for a sector-wide analysis amidst optimistic forecasts for 2024 and 2025, with anticipated growth rates of 5.8% and 6.1%, respectively.  

The meeting also aimed to distill the collective expertise into actionable insights, charting a course for IBC members amid current global headwinds, large scale infrastructure developments and the ripple effects of increasing regional trade accords. 

My Word Forecasts Cambodian Job Market Poised for Transformation & Vacancies 

The current job market status shows a discrepancy with a higher number of vacancies than suitable candidates available, particularly in revenue-impacting roles. Simon Bruce, the Country Director of MyWorld Careers, highlighted the substantial demand for candidates who can directly contribute to revenue, noting that “The right talent is not just about filling a position but about making a positive impact on the company’s bottom line.” 

Technical roles, especially, are facing a tough time, with the availability of candidates with the necessary language skills and capabilities not meeting demand. Bruce mentioned that it often takes two to three months from opening a position to the candidate actually joining, which suggests a tightening market for skilled professionals. 

Read more: Harnessing Talent in Cambodia’s Modern Business Landscape 

Looking at the next 12 months, experts anticipate an increasing demand for such revenue-impacting candidates, reflecting a broader sluggishness in Southeast Asia’s job market. The IT sector, in particular, is expected to face challenges due to a shortage of talent and stiff competition from the banking sector for skilled candidates. 

Simon Bruce, the Country Director of MyWorld Careers.

On a more positive note, Cambodia is increasingly being seen as a regional hub, attracting more mid-career and senior regional roles, often filled by expats from the region as well as western countries. “Cambodia is becoming the CLM (Cambodia, Laos, Myanmar) hub, drawing in diverse talent and offering opportunities for regional leadership positions,” said Simon. 

The outlook also shed light on the challenges and opportunities on the horizon. One of the key suggestions was to broaden the search for candidates beyond Cambodia’s borders, considering professionals from neighboring countries for mid-career roles, not just senior positions. “Expanding our talent search to the wider region could help alleviate some of the shortages we’re seeing,” Simon asserted. 

Additionally, there’s a consensus on the need to offer more opportunities to junior candidates who show potential to grow. This approach could foster a talent pipeline that’s more resilient to market fluctuations and skill shortages. 

Cambodia’s Retail Landscape: Adapting to Economic Shifts and Consumer Trends Says Lucky Supermarkets 

The current state of Cambodia’s retail sector, particularly in FMCG, indicates a noticeable shift in sales from Modern Trade (MT) to Traditional Trade (TT). Charlie Bettencourt of DFI Lucky Private Limited described the trend, “There’s been a pivot towards traditional retail channels which seems to resonate with the market’s need for convenience and value.” 

Modern Trade retailers have experienced the impact of lower Like-For-Like (LFL) sales and basket spend, alongside rising costs due to inflation affecting the cost of goods sold (COGS) and operational costs. Bettencourt noted, “We are navigating through a tough period where both sales metrics and operational expenses are putting pressure on operating profit margins.” 

Read more: Phnom Penh Malls Adapt to Changing Retail Landscape Amid Overbuilding and Diminishing Footfall 

The competitive landscape is becoming increasingly challenging with the rapid spread of new competitors leading to an oversaturated market which will eventually drive further consolidation. Despite this, the FMCG sector sees less impact from skill shortages and lower attrition rates compared to other industries.

Looking ahead, the sector anticipates limited LFL growth in sales for 2024. “Basket size is expected to continue to affect Modern Trade, and we predict general trade will likely outperform modern trade,” Bettencourt predicted. This shift is attributed to price challenges and rising operating costs, which are reshaping profit opportunities. 

The retail infrastructure is also expected to undergo significant changes, with community malls forecasted to see reduced rentals and an increase in vacancies. Reflecting on the real estate implications, Bettencourt said, “We foresee a downturn in property investments for retail spaces as businesses become more cautious about expansion due to market volatility.” 

Regarding investments, there’s a consensus that lower investments in expansion are expected, as the return on investment for new network development is likely to yield poor returns in the current economic climate. 

The industry does see silver linings in the form of customer-centric opportunities. Consumers are increasingly looking for convenience and value for money. There’s a rise in preference for smaller format stores closer to home and an increase in the use of online delivery applications. “To stay relevant, we must adapt by providing value through competitive pricing, smaller pack sizes, white label imports, or local supply capability building,” Bettencourt emphasized. 

TotalEnergies Projects Cambodia’s Energy Sector at a Crossroads: Renewable Initiatives and Policy Shifts Ahead 

Dinah Kumar, the Country Chair of TotalEnergies Cambodia, outlined the current status of the sector, noting that the country has approximately 4.5k MW of installed capacity, with an impressive ~88% transmission reach across 25 provinces and capitals, connecting about 85% of households. The capacity mix as of 2023 stands at 57% renewable (of which 45% is hydro), 33% coal, and 10% fuel oil. Kumar emphasized that while Cambodia boasts one of the highest percentages of renewables in the region, the energy costs remain higher than many Southeast Asian neighbors. 

Kumar also mentioned the significant step of canceling plans to build a 700MW coal-fired power plant along the southwest coast, underscoring a commitment to cleaner energy sources. “This move illustrates our dedication to a sustainable future and the importance of renewable energy in our portfolio,” said Kumar. 

Read more: Cambodia Shifts Energy Strategy, Abandons Coal for Gas in Addition With a Major Renewable Push 

The upcoming year is crucial for policy updates and frameworks concerning energy transition. Kumar highlighted that “We are at a key moment where new policies, particularly regarding rooftop solar power and compensation tariffs, will greatly impact the sector.” These policies are especially relevant to those connected to the grid and are expected to drive the transition towards more sustainable energy production. 

Dinah Kumar, the Country Chair of TotalEnergies Cambodia.

Challenges and opportunities go hand in hand as the sector looks to LNG-fired plants to facilitate the transition to a net-zero future. Kumar sees potential in the renewables sector, with a goal to increase the solar capacity mix from 11% to over 17%, aiming for a 35% solar mix by 2040. Wind energy exploration is also on the agenda. 

The drive to increase energy efficiency and modernize service is another area of focus. Kumar stated, “By improving energy efficiency and modernizing our services, we can make a significant impact on our sustainability goals.” Additionally, the sector is looking at decarbonizing areas such as transport, agriculture, and industrial processes to create a more holistic approach to environmental stewardship. 

Reshaping Cambodia’s Real Estate Landscape for the Modern Consumer with Urban Village Project 

Urban Village Phnom Penh, a development by the largest Hong Kong developer in Cambodia, has reached a significant construction milestone, achieving ‘topping out’ status. Dr. Ben L. announced that over 90% of the units have already been sold, a testament to the project’s resonance with the market’s pulse. “Our development stands as the tallest on Hunsen Boulevard, featuring the highest penthouse in the area and encompassing a 760,000 square meter living community that’s set to redefine urban living in Cambodia,” he stated. 

Read more: Acclime Officially Opens Cambodian Office in Urban Village: Growing & Nurturing Local Talent 

The project is poised to impact Cambodia’s private sector significantly over the next 12 months. “Urban Village is at the forefront of setting market trends and consumer preferences, tailoring modern living spaces for youths who prefer living independently or with family in a modern space,” Dr. Ben L. explained. 

With the Cambodian real estate sector’s current position, Urban Village is ideally positioned to catalyze further economic improvements and increase job opportunities as more businesses are built in and around this new community. Dr. Ben L. emphasized the suitability of the development for Cambodia’s growing younger population, which is seeking creative and flexible living solutions that can keep pace with the country’s growing everyday lifestyle demands. 

Dr. Ben Li the Founder & Chairman of Urban Village.

Urban Village’s approach to real estate development is not without its challenges. Dr. Ben L. acknowledged the need for the sector to create inclusive opportunities and address affordability. “We’re aiming to make a significant mark by offering elevated lifestyle choices while ensuring that our developments are affordable and inclusive,” he remarked, highlighting the project’s commitment to bridging societal divides with good payment terms that cater to a diverse clientele. 

As Cambodia’s real estate sector continues to expand, the project under Dr. Ben L.’s guidance underscores the potential for real estate developments to not only offer modern amenities but also to contribute meaningfully to the country’s economic and social fabric. As Urban Village nears completion, it encapsulates the aspirations of a modern Cambodia, driving forward with confidence into the future of urban development. 

Cellcard Forecasts A Tech-Driven Surge In Cambodia’s Private Sector & Safeguarding The Digital Ecosystem 

Simon Perkins, CEO of Cellcard shared that Cambodia currently boasts more than 22.5 million mobile connections, a 131.5% penetration rate relative to the population. With over 67% of the population having internet access predominantly through mobile devices, and 90% of the company’s user base operating smartphones, the foundation for a digital revolution in the private sector is well laid out. However, he pointed out that home broadband penetration is still low, hovering around 10% of households. 

The tech-savvy nature of Cambodians is evident with a significant digital native user base that has rapidly adopted modern connectivity solutions offered by the company. Perkins noted a 24% increase in electronic top-ups, a 43% adoption rate of their proprietary app, and a 13% surge in data consumption, painting a picture of a country rapidly embracing the digital age. 

Read more: Royal Group Exchange: Embarks on a Path to Transform Cambodia’s Crypto Landscape with Localized, Regulated Approach 

Looking ahead, Perkins predicted an e-commerce boom in the next 12 months, spurred by the widespread use of mobile internet, increasing adoption of digital payment methods, and rising disposable incomes. “We’re on the brink of an e-commerce revolution, powered by a tech-enabled population ready to embrace digital transactions,” said Perkins. 

Simon Perkins, CEO of Cellcard.

The fintech sector is also expected to experience significant growth, with financial institutions offering innovative products like microloans and ‘Buy Now Pay Later’ options. “This is an exciting time for fintech growth in Cambodia. The introduction of flexible financial solutions will empower consumers and bolster economic activity,” he added. 

Yet, with the rise in online activity, Perkins raised concerns about the growing risk of cybercrime and online scams. “Cybersecurity is at the top of our agenda. As the digital footprint expands, protecting users and businesses from cyber threats is paramount,” he emphasized. 

The company is responding to these opportunities and challenges by encouraging businesses to go online and take advantage of the growing e-commerce landscape. They are also exploring bundled home broadband packages that include video, games, and security for comprehensive digital lifestyle solutions. 

Perkins concluded his presentation with a call to action for the sector, stressing the importance of embracing innovation and safeguarding the digital ecosystem. “Our commitment to enhancing connectivity and fostering a secure digital environment will pave the way for a thriving, tech-driven private sector in Cambodia,” Perkins affirmed. 

Read more: IBC Mid-Year Market Review 2023: Trends, Transitions and Triumphs Across Key Industries in Cambodia (Part 1) and IBC Mid-Year Market Review 2023: Trends, Transitions and Triumphs Across Key Industries in Cambodia (Part 2).

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