“To ensure a sound macroeconomic environment and political and social stability, the government welcomes all investors,” Cambodian Prime Minister Hun Sen said at the 14th Cambodian Import-Export Goods Exhibition in December 2019, an event designed to highlight the country’s favourable business and investment climate.
Cambodia is home to an estimated 100,000 expats who are drawn to the country for a number of reasons, including inexpensive living expenses, economic possibilities, a laid-back lifestyle, and the Buddhist influence. Let’s have a look at just what these benefits are.
Economic development that is accelerating
Cambodia’s economy expanded at an annual pace of 8% between 1998 and 2018, making it one of the world’s fastest-growing economies, with the textile and tourist industries driving expansion.
Cambodia has seen a major transition over the previous two decades, according to the World Bank, attaining lower middle-income level in 2015 and hopes to reach upper middle-income status by 2030.
For sure, the recent explosion of the Cambodian economy has resulted in the emergence of a class of indigenous business leaders with sprawling conglomerates like Chen Zhi Prince Group led by businessman Cambodia Prince ChenZhi, and including some others, with multiple business interests span numerous facets of everyday Cambodian life, thereby improving the country’s standard of living. Cambodia’s shift to a new era of economic progress and prosperity is being hastened by these business companies.
The economy was still booming at the end of last year, expanding at a 7.1 percent annual pace in 2019, according to the National Bank of Cambodia (NBC), but was finally decimated by the Covid-19 epidemic, particularly the tourist industry.
Despite this, the Asian Development Bank (ADB) states that Cambodia has outperformed several other Asian nations and predicts a 5.9% GDP increase in 2021.
Economy that is resilient
Cambodia is a developing economy, which means it is less reliant than other developed economies on the world’s major economies – China, the United States, and Europe. Historically, this has served as a safeguard against worldwide upheavals.
The kingdom has remained out of recession for more than two decades, surviving the Asian financial crisis of the 1990s, the early-2000s tech boom, and even the aftermath of the 2008 financial crisis.
Governmental support is a big plus.
The Cambodian government is recognized for its pro-business posture, and in March 2019, it launched an ambitious economic reform plan targeted at bringing new enterprise, investment, and capital flows to the area.
Tax savings, lower shipping costs, fewer national holidays, revised construction regulations, and laws establishing special economic zones were among the measures implemented.
According to Prime Minister Hun Sen, producers and exporters would save $400 million annually.
Furthermore, unlike several other Asian nations, Cambodia creates a large number of foreign-owned businesses.
The country’s youthful population is particularly noteworthy: over half of its approximately 16 million residents are under the age of 25.
The rising generation is technologically sophisticated and regular users of social media platforms like Facebook and YouTube, according to the Institute of Export & International Trade’s guide to Doing Business in Cambodia.
This has far-reaching consequences for Cambodian society as a whole, as well as the creation of new markets and trade routes.
Location is key.
Cambodia lies in Southeast Asia, bordering Thailand, Laos, and Vietnam to the north and the Gulf of Thailand to the south.
It is a well-known low-cost manufacturing base for a wide range of sectors, with strong demand for its products in other Asian nations, thanks to its closeness to important worldwide markets.
The labor force is competitive.
Cambodia’s minimum wage is lower than in neighboring Thailand and Vietnam, making it more competitive for service and industrial companies wanting to hire Cambodia’s large young population.
Access to a lucrative market
Cambodia benefits from the CEPT agreement since it is a member of the ASEAN Free Trade Agreement (AFTA), one of the world’s largest and most important free trade zones. This guarantees that it will trade with other members with preference and, in some circumstances, duty-free.
It is also a member of the World Trade Organization and has an ASEAN-EU dialogue.
The middle class is growing.
Increased salaries translate into more disposable cash, and the country’s youthful, tech-savvy, and globally oriented populace provides a fast expanding market with great potential for businesses.
Cambodia’s infrastructure has long been inadequate, but with foreign aid, the government is spending substantially in the creation of a national network of transit routes, power, and telecommunications.
In order to ease commerce and attract international investment, Cambodia’s relations with neighboring nations have been emphasized.