ASEAN-Cambodia Business Summit

OVERVIEW OF CAMBODIA

Cambodia is country of close to 17 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 5.2% in 2022, reaching $29.6 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).

Recent efforts have sought to increase agricultural production and efficiency with the main goal of increasing exports to regional and international markets, thus improving the livelihoods of farmers. Increasing the company's exports and regional connectivity remains an overarching goal, and recent infrastructure upgrades including new roads, highways, airports, and a planned rail line, should offer much more convenient options for traders.

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 almost 40% in 2022. The main investors in construction and real estate in the Kingdom include Chinese, Vietnamese, Korean and Japanese entities. 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. A current oversupply of office/residential buildings and a green movement is shifting the industry, as it looks to repurpose old buildings and future-proof Phnom Penh.

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. The pandemic interrupted this growth, but the sector appears to be bouncing back. While tourism was down, the government used the time to revitalise Siem Reap by building new roads, sidewalks, and city infrastructure.

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. 2022 saw the completion of Cambodia's first true expressway between Phnom Penh and Sihanoukville and more projects -- including roads, bridges, airports, and seaports -- are ongoing to truly connect Cambodia to the region.

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 one million 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 (57% in 2022), and creates the most stable jobs for young Cambodians. In 2022, the Kingdom exported more than $10 billion worth of apparel products. The EU and the US remain the largest markets, ahead of China. Several major international brands (Nike, H&M, Adidas, Decathlon...) produce in Cambodia. The industry is currently suffering a downturn due to a decrease in global orders and stricter enforcement of sustainability standards. It is now shifting towards sustainability, with renewable energy solutions and potential recycling solutions in the pipeline.

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 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, constituted 22% of the country's GDP in 2022. The 2019 CIAS (Cambodia Inter-Censal Agriculture Survey) counted a total of 1726,000 family farms, 23.5% of which are run by women. The sector has become a focal point for the government, the private sector, and partners as efforts are made to increase productivity and export potential. Some of these efforts include the Ministry of Commerce's new National Policy on Cashew Nuts for 2022–2027, investments in processing facilities, and development programs to improve sustainability.