With Cambodia celebrating its New Year and taking a national break, it’s also a time for businesses to reflect on a promising first quarter of 2024. There’s a renewed sense of economic momentum with a rise in tourism and investments. But more importantly, there’s a feeling that Cambodia might be on the right track, and attracting investors is a key part of that journey.
So, what are the top reasons investors are setting their sights on Cambodia?
Investing in Cambodia’s Future
The Council for the Development of Cambodia (CDC) greenlit a whopping 106 investment and expansion projects worth a total of $2.2 billion in Q1 2024. This is a significant jump compared to 2023, and while the full picture isn’t available yet, it reflects a continued flow of investment into the Kingdom’s development. So far, the biggest beneficiaries have been in the industrial sector (accounting for over 90%), but agriculture, agro-industry, infrastructure, and tourism have all seen a boost as well.
Cambodia has a history of impressive economic growth, with many sources pointing to an average annual GDP growth rate of around 7% for a decade, making it one of the fastest-growing economies in Southeast Asia (though it’s worth noting it started from a lower base compared to some other countries). Prime Minister Hun Manet himself predicted a 6.6% rise in Cambodia’s economy for 2024.
Building on this positive outlook, the CB EIC (Economic Intelligence Center) of the Siam Commercial Bank forecasts a 6% growth in foreign direct investment (FDI) this year. According to Seasia Stats’ projections for Southeast Asia’s 2024 GDP growth, Cambodia takes the top spot with an estimated 6.1% increase. The same projections rank Cambodia third among the top 25 fastest-growing economies in 2024.
This growth has been driven by sectors like tourism, garments and textiles, construction, and agriculture. Investors continue to seek opportunities in these areas, along with those aligned with government strategies, such as the ones detailed in the Special Investment Promotion Program for Sihanoukville and the Pentagonal roadmap outlined by Prime Minister Hun Manet’s administration.
The Cambodian government has actively implemented various reforms to attract foreign investment. Special economic zones (SEZs), simplified business registration procedures, and tax breaks for specific industries all create openings for a range of businesses. The Kingdom is rapidly diversifying and improving its infrastructure, including transportation networks and energy supply. Public, private, and partnership models are all encouraged to support investment activities. These are large-scale projects, some reaching billions of dollars, that promise to improve accessibility within the region.
Cambodia is also expanding its global connections through more trade offices and agreements. The DHL Global Connectedness 2024 Report ranked Cambodia 60th out of 181 countries included in the index. The Australia-Cambodia Business Forum was established in 2024, and the Cambodia-United Arab Emirates Comprehensive Economic Partnership Agreement (CEPA) came into effect in Q1 2024.
Visas and Passports for Cambodia
The range of investments from different countries highlights the widespread international interest in Cambodia. So far this year, aside from domestic investment, just over a third has come from China, with Singapore, Vietnam, South Korea, the US, and Malaysia making up the rest of the foreign investors. You can find more details on visa options, but it’s worth noting Cambodia’s strategic location in the heart of ASEAN offers businesses easy access to regional markets and trade routes.
Diversification of Cambodia’s Skills Market
While it might be a point of contention for some, Cambodia undeniably boasts a young and relatively inexpensive workforce, which is attractive to businesses, particularly those in labor-intensive industries like garments and textiles, construction, and others. However, the biggest long-term benefit will likely come from upskilling this workforce, which has already seen improvements in education and skill levels. This opens doors for more advanced and potentially lucrative opportunities for businesses requiring higher-level expertise in technology, manufacturing, and even the growth of SMEs (small and medium enterprises). The government estimates that SMEs provide 70% of jobs and contribute 58% to the nation’s GDP. These businesses are crucial if Cambodia wants to achieve its goals of reaching middle and higher-income status in the coming decades.
Tourism and Property Sectors Remain Fundamental
Cambodia’s location in the heart of Southeast Asia offers access to a growing regional market for tourism, which also benefits the property and real estate sectors in terms of logistics. In April, the economic strategy for Sihanoukville was revamped into the rather lengthy “Master Plan to Develop Preah Sihanouk Province into a Model Multi-Purpose SEZ and Develop Cambodia’s Coastal Provinces into a Multi-Purpose and Comprehensive Economic Corridor
