For the last several years, Cambodia has been gaining quietly in the race to emerge as an emerging business destination in Southeast Asia. Formerly famous for its historic temples and deep-seated culture, the country is now catching the attention of entrepreneurs, investors, and even the biggest corporations worldwide. Boasting a rising economy, a geographically advantageous spot on the map, a young, employed labour force and favourable government policies, Cambodia is ramping up to be the next big thing in business. Here, in no particular order, are five of the reasons why Cambodia is increasingly a compelling option for companies looking for a home to expand their operations within Southeast Asia.
A Rapidly Growing Economy
Over the past 20 years, Cambodia has been one of the world’s fastest-growing economies, averaging approximately 7% in GDP growth each year. The steady growth has been fueled by a surging garment industry, growing tourism and higher inflows of foreign direct investment (FDI). Cambodia has experienced superior economic performance in comparison to many small Southeast Asian nations. She has achieved double-digit manufacturing growth in most years, and has seen over 45% growth in exports in 1995.
The strategic position of Cambodia in the Greater Mekong Subregion has led to it becoming an important part of regional trade, linking with significant markets such as Vietnam, Thailand, and Laos. At the same time, new highways, ports, and airports are being constructed on a fast track through different infrastructure development projects, and Cambodia’s economy is going to fast-track itself even more, creating opportunities for businesses seeking to base themselves in Cambodia and the rest of the region. The government is also progressing with plans to develop the financial sector and relax trade barriers, features which make it all the more attractive for businesses to enter the country.
CAMBODIAN VISA FOR AFGHANISTAN CITIZENS
A Young and Dynamic Workforce
And a young and motivated workforce—one of Cambodia’s prime drawcards for business. With 70% of Cambodians under 30 years old, the country has a young, energetic workforce ready to work, grow, and help improve its economy. This group is not only large in numbers but is also increasingly educated and trained due to government efforts to improve education and training.
Labour costs in Cambodia are still low in comparison with countries like neighbouring Thailand and Vietnam, so it is attractive for businesses interested in keeping costs down by taking advantage of a motivated and expanding workforce. The Cambodian government also took steps forward in labour law reform and workers’ rights, fostering a more predictable operating environment for companies. Inexpensive labour and such eagerness to work - no wonder many businesses find Cambodia an appealing destination to expand operations.
Advantageous Business Climate and Support From Government
Cambodia has a very proactive government when it comes to creating a business-friendly environment. In the past decade, it has introduced a slew of reforms to make it more attractive to foreign investors, such as tax breaks, easier business registries and a clearer regulatory environment for investment approval. An application for investment is admissible under the Cambodian Investment Board ( CIB ) regulations, which provide for significant tax incentives, including duty-free privileges for importing raw materials and machinery and substantial tax reductions to companies engaged in manufacturing and export activities.
What’s more, the government is investing in addressing bottlenecks in infrastructure, logistics and distribution efficiencies. Its role in the ASEAN Free Trade Area (AFTA) and the Regional Comprehensive Economic Partnership (RCEP) adds to its attractiveness as a hub for international businesses. For investors, costs of entry are likely to be much lower than in more embryonic economies. Yet, the country is still well located to access other burgeoning growth opportunities across Southeast Asia.
Growth in Infrastructure and Connectivity
Capacity building has been a priority for the Cambodian government in recent years. Road network, power generation, and telecommunications are the focus of considerable capital investment. New highways, bridges, and ports are being built to improve Cambodia’s connectivity, not only within Southeast Asia but also with China, the country’s greatest trading partner.
The Sihanoukville Special Economic Zone (SSEZ), located along the highway and Phnom Penh’s industrial zones, is a tangible reflection of Cambodia’s development projects, hosting first-class architectural buildings for investment to establish their businesses. Moreover, Cambodia’s online infrastructure is blossoming at a rapid pace, its internet penetration is increasing, and mobile networks are developing. E-commerce, tech and other digital industries are thus finding Cambodia increasingly appealing.
The government is also giving priority to improving air connectivity. The metropolises of Phnom Penh and Siem Reap have international airports that are growing, and businesses are increasingly able to ship products with greater ease to markets across Asia and the world. Such better connectivity will be crucial if it is to turn Cambodia into a regional trading hub, benefiting trade and tourism alike.
A Thriving Tourism Industry
While investment opportunities in Cambodia are growing at a breakneck pace, it is worth noting that the tourism business there is already well-established and doing well. Cambodia, famous for its Angkor Wat temples and scenic views, draws millions of tourists every year. This tourist influx presents a range of opportunities for enterprises in hospitality, real estate, food and beverage, and the retail industry.
The government’s initiatives to advance tourism, which include creating new tourist attractions and facilities, have also contributed to this growth. Further evidence of the potential for Cambodia’s tourism is the increase in recent years of high-end hotel openings and international airlines opening up direct flights, as well as the growth of luxury travel experiences. There is an increasing market of businesses serving the expanding middle class in Southeast Asia and foreign tourists, which will be a driver of growth and remain long into the future in Cambodia.
Furthermore, revenues in business-to-business (B2B) products and services will grow as Cambodia’s tourism industry grows. Businesses in construction, technology, agribusiness, and logistics that support the tourism supply chain will do well in Cambodia. With solid economic growth and the government’s support behind it, the country is one of those destinations where tourism and commerce can develop in parallel.
Conclusion: Cambodia’s Prospects as a Business Hub
Cambodia is rapidly becoming an appealing destination for doing business in Southeast Asia. It boasts a robust economy, pro-business government policies, inexpensive labour costs, and a tech-savvy, young population. Its location in the region, as well as its growth in infrastructure and connectivity, make it a global player. While a prime target of international investors, businesses hoping to set foot in the exciting Southeast Asian region can still find unexplored riches across Cambodia.
With the modernisation of the country and its growing economy, Cambodia is sure to emerge as an even more important business centre for the world community in the ensuing years. For entrepreneurs and investors, increasingly visible Vietnam is becoming one of the most exciting places to do business in the region. The dawn of business in Cambodia is here, and it’s time to participate.
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