Cambodia is witnessing the largest rise in the working-age population, compared to any other country in the region. This demographic advantage can bring economic dividends as well but only through the right policies. Khmer Times looks into the recent study of the Mekong Strategic Capital on the advantages of a rising young population and also shares the opinions of experts who call for a strategic shift in the management of the country’s vital human resources to achieve the High-Income Country goal by 2050.
Cambodia’s demographic advantage of having a young population is profound. A study report released by Mekong Strategic Capital (MSC) earlier this month revealed that for the 2021-2050 period, the working-age population of Cambodia will rise by 24 percent, the biggest in the region.
Compared to this, in neighbouring Vietnam, the growth will only be by one percent, while in Thailand, the working-age population of this category is projected to decline by 23 percent and in China by 22 percent.
But the moot question now remains: Can Cambodia translate this demographic advantage into an economic advantage as well, especially to achieve its goals of becoming an Upper Middle-Income country by 2030 and a High-Income Country by 2050?
The MSC report, even while proclaiming that “Cambodia stands out as a clear winner” as such a young population could ensure another 20 years or more of rapid economic growth in the country, cautiously added that it needs to implement certain changes or avoid the mistakes of other countries that failed to capitalize on such advantages in the past.
Out of Cambodia’s total population of over 16 million, more than 60 percent are under the age of 35. With a labour force participation rate of about 80 percent, Cambodia has a young and active workforce that can serve all sectors of a business or investment, the study revealed.
The literacy rate in Cambodia is also growing rapidly, reaching almost 90 percent in 2019. Since 2008, the employment rate has increased with the support of the industry.
While discussing the report with Khmer Times, Thong Mengdavid, Geopolitical Analyst and Lecturer at the Institute for International Studies and Public Policy (IISPP) at the Royal University of Phnom Penh (RUPP), agreed that that the demographic advantage is huge, but at the same time Cambodia needs to manage it well.
“There is a clear prospect for Cambodia to become a high-income country by 2050, but this presupposes sustained effort in several key areas,” Mengdavid said.
In his opinion, Cambodia needs to invest more in its youth such as through education, training in STEM (Science, Technology, Engineering and Mathematics) fields, and soft skills for productivity and competitiveness to benefit fully from this demographic dividend.
At the same time, the country needs to attract more investment to sustain the growth made in the past. “Cambodia should create a favourable investment environment by simplifying legal procedures and offering tax incentives, especially from multinational corporations. Increased investor confidence will lead to more capital flowing into Cambodia, stimulating economic growth,” Mengdavid pointed out.
In addition, according to him, Cambodia should transition from a labour-intensive economy to a high-value industrial one. Key areas for growth include agricultural modernization, digital economy, and green industries, which hold the potential for value creation and sustainable development.
Mengdavid added that infrastructure development is also crucial. Better logistics, transportation, energy, and internet connectivity will enable more efficient economic activity and bring more prosperity, particularly in rural areas.
“Finally, policy reform and good governance are vital for long-term success. Strengthening institutional reforms that ensure transparency, accountability, and the rule of law will secure investor confidence for sustainable and inclusive growth,” he said.
‘Pay more attention to education’
Technology Expert Niraj Gupta who is also Director of Macro Computing Solutions Co. Ltd, told Khmer Times that Cambodia stands at a pivotal point to transform this demographic advantage into economic prosperity.
Niraj too stressed that to capitalize on this opportunity, strategic investments in education and skill development are essential.
“Equipping the youth with advanced technical skills is paramount. By prioritizing STEM education and vocational training, we can create a workforce that meets the demands of a rapidly evolving global economy. This includes not only traditional sectors but also emerging industries like information technology, renewable energy, and advanced manufacturing,” he said.
Leap Sok, founder of Cambodian startup Sala, an all-in-one platform that supports students and youth in finding college majors, and skill training, agreed that the demographic dividend of the country presents a significant opportunity for economic growth.
“However, translating this into an economic advantage will require addressing key challenges, particularly the skills gap that currently limits the productivity and employability of the Cambodian workforce,” Sok told Khmer Times.
In his view, to fully harness this demographic dividend, Cambodia needs to take decisive action in three key areas. First, the skills development needs to be aligned with market needs. Cambodia must focus on strengthening vocational and technical education programs, particularly in high-growth sectors such as technology, digital economy, and engineering.
Second, promote digital and technical skills. Cambodia should also invest in digital literacy and STEM education from early levels through to higher education. By fostering expertise in computer science, artificial intelligence, and digital transformation, the country can create a workforce ready for both local and international markets. This is crucial to becoming a high-income country by 2050, Sok said.
The third key area should be entrepreneurship and innovation. Youth should not only be equipped for traditional employment but also be encouraged to become innovators and entrepreneurs.
Initiatives such as startup incubators, tech hubs, and government-backed innovation programmes can nurture young talent and create new economic opportunities, he added.
A growing young population in Cambodia is a fact, however, the country is also facing a high migration of workers and skilled professionals to overseas with better wages, pointed out Vichet Lor, Vice-President of Cambodia Chinese Commerce Association (CCCA).
According to him, Cambodia may end up with a shortage of labour as a result of this trend. “Cambodia needs to double its efforts towards attracting more foreign direct investments from industries and create more opportunities for medium-skilled and high-skilled workers within the country,” he said.
Vichet said that Cambodia should also capitalize on the growing young population by providing specialized training that is suited to current and future market employment demands.
While reacting to the MSC report, an official statement from the Ministry of Information said that the country’s growing young labour force will make Cambodia an attractive manufacturing destination for more investors, especially for the labour-intensive industries.
At the same time, more and more people in the region including in Cambodia are moving into the 30-49 age group, which is a group that needs and promotes credit in the economy and thereby the growth of financial services.
Quoting Lim Heng, Vice President of the Cambodia Chamber of Commerce, the statement said that human and technological factors are equally important for the economy.
“There is guidance from leaders to increase human resources, especially the country’s population to between 20 and 30 million so that the country can have more resources,” Heng noted.
According to Heng, the young workforce between 18 and 35 years old is a human resource to stimulate economic growth but it also requires expert guidance and training with specific skills. This calls for increased training programmes for young people.
Massive skills initiative
It may be noted that Prime Minister Hun Manet on November 14, 2023, launched a massive national vocational training programme for 1.5 million young people from poor and vulnerable families. The programme will provide at least one life skill to young people to increase their income.
According to the findings of the Asian Development Bank (ADB), the share of Cambodians engaged in medium-and higher-level technical occupations constitutes only 10.7 percent of the total labour force in the country. This indicates the non-availability of suitably skilled local hands for such jobs and that many industries and service sectors in Cambodia are relying on foreign experts to fill those positions now.
The labour productivity in Cambodia calculated as $3.6 per hour worked remains lower than that of several other countries in the Southeast Asian region such as Vietnam ($7.3) and Indonesia ($13.1). This low productivity has been widely attributed to the absence of adequate skills education.
The move of the skills development initiative is to close this gap and equip more Cambodians with higher skills and higher income.
Moreover, fostering partnerships between educational institutions, the private sector, and government agencies can ensure that curricula are aligned with industry needs. Initiatives such as internships, apprenticeships, and mentorship programs can provide practical experience and enhance employability.
Investing in digital infrastructure and promoting digital literacy will also play a critical role. As the world becomes increasingly interconnected, proficiency in digital tools and platforms will enable our youth to participate in global markets and attract foreign investment.
By taking these steps, Cambodia can effectively harness its demographic dividend, driving sustainable economic growth and moving closer to its goal of becoming a high-income country by 2050.
Moreover, according to the MSC study, there will be a billion retirees globally by 2050 (two-thirds in China and India) which constitutes an enormous market for tourism, aged care and retirement services.
The imperative to develop local, institutional investment will boost capital markets and lead to significant capital deepening. Cambodia can expect the value of local capital markets to rise exponentially over the next 20 years, the study said.
Meanwhile, the latest Skills Gap Assessment Report of the European Chamber of Commerce (EuroCham), disclosed that as many as 62 percent of companies in Cambodia planned to recruit more staff in 2024, with leadership, quality control and project management topping the list of most needed skills, according to The report, based on a survey participated by 106 companies, indicated the relative confidence of the business community about short-term economic growth in the country but it also highlighted the issue of skills shortage – both soft skills and technical skills.
Same way, in the ‘Cambodia Outlook for American and AmCham Member Businesses,’ 65 percent of businesses said they would increase their investments in the country in the next 12 months and 73 percent said they would hire more staff.
Again, 73 percent expected that they would increase their income in 2024, compared to 2023, indicating their continued confidence in the Cambodian economy.
It may be noted that Cambodia’s economy is projected to grow around six percent in 2024, arguably the fastest growth rate in the ASEAN region this year. Between 1998 and 2019, Cambodia also managed to have an average yearly growth of over seven percent, a major achievement for the war-torn country.
As an offshoot of this growth, Cambodia lifted 2.8 million people or 50 percent of the country’s total poor out of poverty in the last seven and half years, disclosed the UNDP Country Programme Document 2024-2028.
In the past seven and a half years, multidimensional poverty fell from 36.7 percent to 16.6 percent and the number of people living in poverty dropped from 5.6 million to 2.8 million. Cambodia’s total population is estimated at 16.9 million.
However, the document added that income inequality is high in the country and large gender and rural-urban gaps persist. Despite a high rate of labour force participation, women face obstacles in accessing financing and are underrepresented in senior and high-salary jobs in many sectors, it said.
Although Cambodia regressed to 2018-equivalent Human Development Index (HDI) levels in 2020 and 2021 in the aftermath of Covid-19, the HDI increased by 57 percent overall since 1990, placing the country in the medium human development category.
It may also be recalled that the UN’s preliminary evaluation for the 2024 triennial review has found Cambodia in a good position for exiting the Least Developed Country (LDC) status with the country scoring well in all three relevant criteria.
While Cambodia’s Gross National Income (GNI) per capita score of $1,546 is well above the threshold of $1,306 set for graduation, it achieved a good score of 77.7 on the Human Assets Index (HAI), which is above the graduation threshold of 66 or more.
The Kingdom progressed well in the Economic and Environmental Index as well with a score of 23.3 (the threshold is 32 or below).
Source: Khmer Times