INVESTMENT
Five good reasons to invest in Cambodia
a. Location
A small country of about 15 million people, Cambodia is located at the heart of what has been the most dynamic region of the world economy for the past several decades: South–East Asia. In 1999, Cambodia became a member of the Association of South-East Asian Nations (ASEAN). The ASEAN Free Trade Area (AFTA) will reduce most tariffs on Cambodia’s exports to its neighbors to between 0 and 5% by 2010 (or earlier) and will abolish them altogether by 2018. The China–ASEAN Free Trade Area (CAFTA), to come into effect in 2010, will create a trading block of 1.7 billion people. Talks under way between India and ASEAN could create another one not much smaller. In addition, as an LDC (Less Developed Country), Cambodia has preferential access to some of the world’s richest markets for a number of products.
b. An open economy
Cambodia has one of the most open economies in what is a fairly open economic region. Cambodia is not without the problems of many a poor developing country (e.g. poor infrastructure) but at least where government policy is concerned, it can claim to offer a liberal welcome to investors.
Foreign Direct Investment (FDI) has increased significantly since 2004. FDI was very low throughout the 1990s and into the 2000s. Since 2004, it has increased significantly, growing 10 times between its low level of 2003 and its highest in 2007. Asian investors – from ASEAN, China, Hong Kong, Taiwan, South Korea – continue to dominate inflows. Some recent interest from Middle Eastern investors, especially in agribusiness, was noted in 2007.
c. A strong track record of growth and stable macroeconomic conditions
Growth accelerated in 1999 as the domestic political situation became clearer and the external economic situation improved following the 1997 Asian crisis. Growth averaged 9.8 per annum, with inflation largely remaining below 5 percent throughout the period.
d. A strong growth in consumption
Consumption has been one of the main drivers of growth, contributing 5.7 points of growth per annum. Exports have increased fast, but the contribution of net exports to growth has been very small (0.1 percentage point on average). On the investment side, it is a major achievement that the investment-to-GDP ratio has increased from 15 percent in 1997 to 21 percent in 2007, contributing 2.4 points of growth per annum on average.
e. Specific asset
Tourism is the area in which Cambodia most wants to attract foreign investment. In this, it is hardly unique. Unlike most other countries, however, Cambodia has an astonishing cultural asset in the temples of the Angkor complex. The country has already reached the 2-million-tourists mark in 2007 and the potential here may be huge. An entirely different kind of asset is Cambodian labor. While it is recognized by both current investors and the Government that Cambodian workers are poorly trained, this is a remediable shortcoming, and nearly everyone agrees that they are willing and able to learn, and certainly hardworking. When you add that Cambodian wages are half of what they are in the lowest-cost parts of Thailand, it is clear that there is a winning combination here, as is evidenced by the extraordinary growth of the garments-for-export industry over the past decade.
Key factors for foreign investment
a. Opportunities
Participation in the reconstruction of the country by providing basic services and infrastructure
Development of the oil industry
Upcoming of a real consumption-oriented middle-class
Enormous tourism potential (beaches and primary forests)
Land available for agriculture
b. Threats
Lack of local industry development and diversification which could result in overseas investors taking over the market
Improper management of oil revenues
c. Strengths
Access to the dynamic ASEAN market, as well as preferential access to the European Union and other developed regions as an LDC
WTO membership
Strong and stable government commitment to create a business-friendly environment
Considerable natural and cultural assets for agriculture and tourism
A labour market efficiency
Cambodia is largely a dollarized, cash-based economy
A strong potential of growth:
d. Weaknesses
Shortage of technically and managerially skilled personnel
High costs of electricity, water, telecommunications and transport
Weak administration and persistent corruption
PM: Cambodian economy in good shape despite global financial crisis
PHNOM PENH, Feb. 5 (Xinhua) -- The Cambodian economy is in good shape, though it has been affected by the global financial crisis, Prime Minister Hun Sen told the Third Cambodia Economic Forum hereon Thursday.
Kep developments take off
New investments from both the private and public sector are rebuilding the sleepy coastal town of Kep as one of Cambodia's premier tourism getaways
Cambodia's Coastal Revival
In Cambodia, where a decade-long tourism boom has been driven almost entirely by safe and easy access to the ancient Angkor Wat temples, the rebirth of a seaside resort town is helping to lure visitors to the country's long-neglected coastline.
