Cambodia Investment Review
Cambodia is emerging as a standout performer in Asia, positioned to lead regional economic growth due to favorable demographic changes. A recent report by Mekong Strategic Capital highlights Cambodia’s potential to outpace its neighbors, particularly Thailand, which face significant challenges due to aging populations. As these countries grapple with declining working-age populations, Cambodia is set to reap the benefits of a demographic dividend, driving sustained economic expansion over the coming decades.
Demographic Dividend: The Engine of Growth
The key to Cambodia’s advantageous position lies in its demographic profile. The country is expected to see one of the largest increases in the population aged 30 to 49 years by 2050, a crucial age group for economic activity. This cohort is not only the peak consumption age but also represents the primary borrowing age, which will bolster credit growth for Cambodian banks. Ian Gisbourne, Chief Investment Officer at Mekong Strategic Capital, emphasized, “Cambodia is set to enjoy another 20-plus years of rapid economic growth, underpinned by its demographic dividend. The growth in the working-age population will be critical in maintaining the country’s economic momentum.”
Comparative Regional Analysis: Cambodia vs. Thailand and Vietnam
While Cambodia benefits from its growing working-age population, neighboring countries like Thailand and Vietnam are facing demographic headwinds. The report underscores that these countries will experience a decline in the population aged 30 to 49, creating challenges for their economies, particularly in sustaining credit growth and consumer spending. “The demographic shifts in Cambodia are in stark contrast to those in Thailand and Vietnam, where aging populations will pose significant economic challenges,” noted Gisbourne.
In Thailand, the situation is particularly acute, which he describes as having “got old before it got rich.” This demographic shift has significant implications for Thailand’s economy, which may struggle to maintain growth as the population ages. The report warns that Thailand’s pension system is under pressure, with reserves projected to run out within the next 30 years, a scenario Cambodia has time to avoid if it takes proactive steps.
Sectoral Opportunities: Tourism, Aged Care, and Capital Markets
Cambodia’s demographic advantage is expected to create significant opportunities across various sectors. The global rise in retirees—forecasted to exceed a billion by 2050, with two-thirds in China and India—presents a substantial market for tourism, aged care, and retirement services. “Cambodia stands to be one of the largest beneficiaries of this trend, provided it can develop the necessary infrastructure and healthcare services,” Gisbourne added.
Additionally, the imperative to develop local institutional investment is expected to lead to significant capital deepening in Cambodia. The report forecasts exponential growth in the value of local capital markets over the next two decades. Gisbourne stressed the importance of strengthening Cambodia’s pension system to prepare for these demographic shifts. “Investing in a robust pension system will be crucial for Cambodia to fully capitalize on its demographic dividend,” Gisbourne commented.
Long-Term Implications: Planning for the Future
While Cambodia’s demographic profile offers substantial opportunities, the report cautions that these benefits are not guaranteed. The country must begin planning and investing now to fully leverage its demographic advantage. “These demographic changes are locked in, and they carry profound economic and social implications. Cambodia stands out as a clear beneficiary in the region, but the country needs to start planning for these changes today,” Gisbourne advised.
Cambodia’s ability to harness its demographic dividend will be key to shaping its future economic trajectory. As neighboring countries face the challenges of aging populations, Cambodia’s youthful demographic profile positions it as a regional leader in economic growth, provided the right strategies are implemented now to ensure long-term success.
