Cambodia means business. With an economy growing at a brisk ~5 per cent, a government committed to development, investments pouring into infrastructure projects and trade touching new heights, Cambodia is on course to emerge as the ASEAN region’s nodal nation. Buoyed by its booming exports – non-garment manufacturing exports have increased nearly 30% YoY – Cambodia is strengthening its agro industries and widening its manufacturing sector to emerge as a regional hub.

While the recent policy measures for tax redemption and diversification of exports, coupled with the newly introduced Law on Investment, are driving the surge in exports, the government has also expedited the implementation of strategic policies for the development of major industries such as garments, automobiles, electronics, agriculture, tourism and energy efficiency. Capitalizing on its cost-efficient labour vis-à-vis rising labour costs in China, Cambodia is rapidly ramping up its infrastructure and industrial output for solid, sustainable growth in the years to come.

AXIS OF GROWTH

Strategically located between Bangkok and Saigon, Phnom Penh is at the centre of the East-West corridor between the two major regional trading hubs of Thailand and Vietnam. Cambodia has significantly benefited with the rising manufacturing cost in China, and it has emerged as a competitive alternate manufacturing base for relocation of light manufacturing within Southeast Asia vis-a-vis other countries in the region like Vietnam and Thailand. The abundance of low-cost labour and rapid urbanisation is boosting the economy – and attracting overseas companies to set up operations in Cambodia.

The integration with ASEAN Economic Community (AEC) and the resultant free flow of trade and skilled labour is attracting a larger volume of FDI, which is driving the country’s post-pandemic smart recovery. Despite the on-going political friction between the ruling Cambodian People’s Party and the Cambodian National Rescue Party – the National Assembly elections are slated in July this year – an agreement between the two parties to cooperate has resulted in a more stable political environment which, in turn, has led to renewed investor confidence in the market. Foreign-owned companies from China, Hong Kong, Japan, Malaysia, Korea and Singapore are leading the charge in Cambodia.

DIGITAL PUSH

Building on the pandemic-prompted surge in e-commerce, contactless payments and online learning, Cambodia is investing significant resources to enable a total digital transformation. This opens a world of opportunities for fintech, edtech and the start-up ecosystem. The Cambodian payment system Bakong and KHQR that facilitates cross-bank and financial institutional payments, is also easing cross-border payments. Cambodia has around 18-mn internet users and 19.5-mn mobile subscribers, exceeding the country’s total population of 16 million. The country’s digital initiatives are aligned with ASEAN’s Digital Economic Framework Agreement that aims to enable the region’s leapfrog into the digital economy.