Cambodia

OVERVIEW OF CAMBODIA

Cambodia is country of more than 16 million inhabitants which has experienced sustained catch-up growth for more than twenty years (more than 7% on average since 2000). Although more than 75% of the population remains rural, rapid urbanization is underway and agriculture now accounts for less than a quarter of GDP. Driven by services (tourism and finance), textiles and construction while agriculture's share is declining, GDP grew by 7.1% in 2019 according to the World Bank, reaching USD 26.9 billion. A member of ASEAN since 1999, of the WTO since 2004 and of the ASEAN Economic Community (AEC) since January 1, 2016, Cambodia has benefited from the region's dynamism, which has resulted in an influx of international investments, mainly from Asia (China, Japan, Korea, etc.). Its foreign trade remains, however, asymmetrical, with most of Cambodia's imports coming from Asia while nearly two-thirds of its exports are destined for the developed markets of Europe and North America. Cambodia benefits from significant support from multilateral and bilateral donors (more than $1 billion in grants and concessional loans each year), as well as trade advantages (preferential access to European and American markets) linked to its status as an LDC (Least Developed Country, UNCTAD classification).

With +19.6% in 2019, trade growth between France and Cambodia has accelerated significantly (+4.2% in 2018, +8.5% in 2017). This trend is primarily due to the very good performance of our exports, which more than doubled this year (+117%, after an 8.6% decrease in 2018), with all of our main export items experiencing strong increases. On a much larger basis, our imports continued to grow (+10.1% in 2019, after 5.8% in 2018) and remain concentrated on textiles and agri-food products. In terms of FDI, France is present in most sectors of the Cambodian economy, due to a limited but growing number of subsidiaries of major groups but, above all, to the existence of a dynamic fabric of local companies created by French entrepreneurs (more than 400 companies).

Source : Economic Department of the French Embassy in Cambodia (note adapted by the CCIFC)

SUSTAINABLE CITY

While the energy, water, and renewable energy sectors are benefiting from many investments, Cambodia still faces many challenges such as waste collection and treatment, municipal wastewater and industrial effluent treatment, rainwater drainage, rural water supply, air quality monitoring, clean energy production, resilience and adaptation to climate change.

REAL ESTATE AND CONSTRUCTION

A real driver of Cambodia's economic growth, the construction sector contributed to about one-third of GDP growth in 2019. This field is increasingly attracting foreign investment with USD 9.35 billion in total investment in 2019 compared to USD 5.22 billion in 2018. The main investors in construction and real estate in the kingdom include Chinese, Vietnamese, Korean and Japanese. Prior to 2020, construction was mainly driven by the dynamism of tourism, hotels and residential developments in Phnom Penh, Siem Reap and Sihanoukville. While residential still remains the driving force, malls and entertainment venues are now contributing more strongly.

TOURISM

Cambodia, a politically stable country that has been pacified for the past twenty years, has a remarkable and world-famous historical heritage (Angkor temples), beaches along the Gulf of Thailand, tropical islands (notably Koh Rong), atypical jungles, mountainous massifs and a great biodiversity. Cambodia combines all the elements of a dream destination for foreign tourists. As a pillar of the Cambodian economy, the tourism sector has grown considerably in recent years, attracting more and more travelers. However, Cambodia has not escaped the disastrous consequences of the pandemic, which we will discuss in this forum.

DIGITAL AND START-UP

The Cambodian market is an ideal market for digital enterprise. With a smaller population than neighboring countries (16 million vs. 97 million in Vietnam and 70 million in Thailand), startups have significantly lower investment needs before launching their operations and validating their solutions. However, Cambodia is large enough to be representative of the challenges in the ASEAN region and is an ideal base for launching a pilot and for future expansion on a larger scale.

INFRASTRUCTURE AND LOGISTICS

Cambodia owes a significant part of its economic growth to the development of international trade. The government is thus committing significant resources to developing its logistics and transport infrastructure to support the increase in the number of its trading partners with 34 additional countries between 2015 and 2018. Between 2019 and 2020, the budget of the Ministry of Public Works and Transport increased from USD 738 million to USD 794 million (+7.5%), which is the largest budget item among the economic ministries.

TEXTILE

The textile and footwear industry is one of the pillars of the Cambodian economy, ahead of agriculture. It is the largest formal employer in the country with approximately 800,000 workers, mainly women, working in more than 1,100 factories throughout the country. It is the sector that contributes the most to Cambodia's exports (70% in 2019), and creates the most stable jobs for young Cambodians. In 2020, the Kingdom exported apparel products worth a total of USD 7.4 billion to foreign markets (USD 9.3 billion in 2019). The EU and the US remain the largest markets, ahead of China. Several major international brands (Nike, H&M, Adidas, Decathlon...) produce in Cambodia.

HEALTH

In three decades, Cambodia has made significant progress in terms of public health, as evidenced by the increase in life expectancy of Cambodians from 54 years in 1990 to 70 years in 2020, the highest increase in the region. The budget of the Cambodian Ministry of Health has increased by 15.5% to US$ 519 million in 2020, less than 7% of Cambodia's national budget for this year. The public health system is subject to significant deficiencies, as evidenced by the significant number of Cambodians who prefer to seek treatment abroad: the difficulty in finding trained personnel, the lack of hygiene in health centers and the high costs charged are among the problems regularly raised by patients.

AGRICULTURE

Agriculture, Cambodia's largest employer with nearly 76% of Cambodia's population living in rural areas, contributed 16% of GDP growth in 2019. The 2019 CIAS (Cambodia Inter-censal agriculture survey) counted a total of 1726,000 family farms, 23.5% of which are run by women. From 2019 and 2020, the budget of the Ministry of Agriculture, Forestry and Fisheries (MAFF) received a very large increase from USD 115 million to USD 154 million (+33.6%), a sign of the vital interest that this sector represents for the Cambodian government.