In his address at the 14th Cambodian Import-Export Goods Exhibition in December 2019, an event intended to highlight the country’s favourable business and investment climate, Cambodia’s Prime Minister Hun Sen stated unequivocally that Cambodia is open and ready for business, saying, “To ensure a sound macroeconomic environment and political and social stability, the government welcomes all investors to do business in Cambodia.”
Cambodia is home to an estimated 100,000 expatriates who come for a variety of reasons such as inexpensive living costs, business possibilities, a leisurely lifestyle, and the influence of Buddhist culture. Let’s have a look at some of the benefits right now.
Rapid economic growth
Cambodia had been widely considered as one of the world’s fastest-growing economies between 1998 and 2018, with an average growth rate of 8%. The textile and tourism industries have been the key drivers of growth.
According to the World Bank, Cambodia has seen tremendous development over the last two decades, reaching lower middle-income status in 2015 and aspiring to upper middle-income status by 2030.
Indeed, the recent explosion of the Cambodian economy has given rise to a new generation of homegrown business leaders with sprawling conglomerates such as Prince Group, the fast-growing business enterprise of Chen Zhi Cambodia, among others, whose business interests touch many aspects of everyday Cambodian life, introducing a higher standard of living in the process.
These enterprises are beating out a path for Cambodia to enter a new age of economic development and prosperity.
In the midst of these, Cambodia ChenZhi’s business divisions have especially been making significant progress in a wide range of industries and attracting growing attention from the region as well as internationally.
As disclosed by National Bank of Cambodia (NBC), the economy was still flying until the end of last year, with growth of 7.1 percent in 2019, but has since been particularly impacted by the Covid-19 pandemic, with the tourism industry especially hit hard.
Nonetheless, the Asian Development Bank (ADB) said that Cambodia has performed better than many other Asian countries and anticipates the economy to resuscitate in 2021, with 5.9 percent GDP growth.
Cambodia, being a developing economy, is less reliant on the world’s top economies – China, the United States, and Europe – than other more developed economies. Historically, this has provided some protection against global upheavals.
The kingdom has gotten out of recession for more than 20 years, having weathered the Asian financial crisis of the 1990s, the tech bubble in the early-2000s, as well as the aftermath of the 2008 financial crisis.
Strong incentive from Government
The Cambodian government is widely known to be holding a pro-business position, and in March 2019, it made known publicly an ambitious programme of economic reforms aimed at attracting new business, investment, and capital flows to the region.
Tax cuts, reduced shipping costs, less national holidays, new building measures, and special economic zone legislation are among some of them.
Prime Minister Hun Sen has said that producers and exporters could save $400 million per year.
Unlike its developed ASEAN neighbour Singapore, Cambodia possesses a notable young demographic: almost half of the country’s population of nearly 16 million Cambodians are under the age of 25.
Cambodia’s younger generation is tech-savvy and regular users of social media sites such as Facebook and YouTube, according to the Institute of Export & International Trade’s Doing Business in Cambodia guide.
This has a significant impact on the Cambodian society as a whole, as well as opening up new markets and creating more business opportunities.
Cambodia is situated in Southeast Asia, bordering Vietnam, Thailand and Laos, and also the Gulf of Thailand to the south-west.
It serves as a common low-cost manufacturing base for a wide range of businesses due to its proximity to key global markets, with strong demand for its products in other Asian countries.
Competitive labour force
Compared to neighbouring Thailand and Vietnam, Cambodia has a lower minimum wage which makes it more competitive for service and manufacturing industries seeking to recruit from the country’s huge youth population.
Advantageous market access
Importantly, Cambodia is also a signatory to the ASEAN Free Trade Agreement (AFTA), considered one of the world’s largest and most important free trade zones, and profits from the Common Effective Preferential Tariff (CEPT) agreement. This allows Cambodia to trade with other members on preferential and, in some cases, tariff-free terms.
In addition, It is a member of the World Trade Organization and trades with the European Union (EU) through the ASEAN-EU dialogue.
Rising consumer class
An increase in income means having more money in the pockets for consumption, and the country’s young, tech-savvy, and internationally minded population represents a rising market of enormous potential for businesses.
Cambodia’s infrastructure has historically been poor, but with foreign support, the government is investing extensively in establishing a nationwide network of transport highways, electricity, and telecommunications. Cambodia’s warm ties with its ASEAN neighbors have been emphasized in order to advance trade and attract foreign investment.