"Within one month our revenues had jumped over 50%."

Doing Business in Cambodia

angkor wat

With a population of over 14.8 million, according to 2011 government census, Cambodia is the 69th most populous country in the world. The kingdom is a constitutional monarchy with Norodom Sihamoni, an elected monarch chosen by the Royal Throne Council, as head of state. The head of government is Hun Sen, who is currently the longest serving leader in South East Asia and has ruled Cambodia for over 25 years. The capital and largest city is Phnom Penh; the political, economical, and cultural center of Cambodia. Rebuilding from decades of civil war, Cambodia has seen rapid progress in the economic and human resource areas. The country has had one of the best economic records in Asia, with economic growth growing an average 6.0% for the last 10 years. Strong textiles, agriculture, construction, garments, and tourism sectors led to foreign investments and international trade, according to the Phnom Penh Post.

In 2010 Cambodia’s per capita income in PPP is $2,470 and $1,040 in nominal per capita. Cambodia’s per capita income is rapidly increasing but is low compared to other countries in the region. Most rural households depend on agriculture and its related sub-sectors. Rice, fish, timber, garments and rubber are Cambodia’s major exports. Cambodia’s nominal GDP was estimated at $13.001 billion for 2010, according to the IMF. Based on the Economist, IMF: Annual average GDP growth for the period 2001–2010 was 7.7% making it one of the world’s top ten countries with the highest annual average GDP growth. Tourism was Cambodia’s fastest growing industry, with arrivals increasing from 219,000 in 1997 to 2 million in 2007. The tourism industry is the country’s second-greatest source of hard currency after the textile industry for Cambodia, according to the US State Department. Chinese-language newspaper Jianhua Daily quoted industry official as saying that Cambodia will have three million foreign tourist arrival in 2010 and five million in 2015.

China is Cambodia’s biggest source of foreign direct investment in the kingdom. China plans to spend $8 billion in 360 projects in the first seven months of 2011. It is also the largest source of foreign aid, providing about $600 million in 2007 and $260 million in 2008. The older population often lacks education, particularly in the countryside, which suffers from a lack of basic infrastructure. Fear of renewed political instability and corruption within the government discourage foreign investment and delay foreign aid, although there has been significant aid from bilateral and multilateral donors. Cambodia’s economy can be broken down according to the following sectors, agriculture: 33.4%, industry: 21.4%, services: 45.2%, as estimated in 2011. It’s main export partners are the US 54.5%, Germany 7.7%, Canada 5.9%,UK 5.5%, Vietnam: 4.5% . While it major imports are petroleum products, cigarettes, gold, construction materials, machinery, motor vehicles, pharmaceutical products.

Overall, Cambodia is a decent market to invest in. Their are some serious problems with governance, which is why the World Bank ranked it as the 138th easiest country to do business in for 2012, in its annual survey. In that same survey Cambodia was ranked 79th for protecting investors, 120th for trading across borders, and 142nd for enforcing contracts. These ranking seem to indicate that for all its economic progress, Cambodia still remains a difficult country to do business or trade in.

 

Tags: , ,

Author:Globial International Business Team

The Globial International Business Team researches, analyzes, and reports on all things related to global trade and business.

Subscribe

Get our news and articles

No comments yet.

Leave a Reply

CommentLuv badge