Cambodia has steadily risen as one of the most dynamic economies in Asia, earning its reputation as a free and open economic environment. This openness was reaffirmed by Samdech Moha Borvor Thipadei Hun Manet, Prime Minister of Cambodia, during the recent Global Chinese Economic & Technology Summit (GCET) at Sofitel Phnom Penh Phokeethra.
In his keynote speech, the Prime Minister emphasized Cambodia’s commitment to creating an inclusive and conducive environment for businesses and investments. He attributed this success to factors such as the Kingdom’s peace and stability, strategic location in ASEAN, forward-thinking policies, and a uniquely open investment framework.
“Cambodia offers 100 percent foreign ownership and imposes no restrictions on remittances of profits and capital, unlike some other countries in the region. The role of the government is not to drive economic growth directly but to create a business-friendly environment. I believe the success of investors is also the success of the government,” Hun Manet highlighted.
This blog explores why Cambodia stands out as one of the most free and open economies in Asia, delving into its policies, strategies, and the unique advantages that have propelled its rise in the global economic arena.
1. A Stable Political and Economic Foundation
A key driver of Cambodia’s open economy is its long-standing political and economic stability. After decades of rebuilding, Cambodia has enjoyed consistent growth over the past two decades. This stability fosters investor confidence and creates a reliable environment for businesses.
Peace as a Pillar of Progress
Hun Manet’s government continues to prioritize peace and security, recognizing these as prerequisites for economic prosperity. With a stable governance framework, Cambodia has avoided significant political disruptions, providing predictability for foreign and domestic investors alike.
2. Strategic Location in ASEAN
Cambodia’s geographic position in Southeast Asia is another key advantage. Situated at the heart of the ASEAN region, the Kingdom acts as a gateway connecting major markets such as China, Vietnam, Thailand, and Malaysia.
ASEAN Integration
Cambodia’s participation in ASEAN trade agreements, along with its proximity to major trade routes, allows businesses operating in the country to tap into a vast market of over 600 million people. The ease of access to nearby ports and airports strengthens the Kingdom’s appeal as a regional logistics hub.
3. Business-Friendly Policies and Investment Laws
Cambodia’s policies rank among the most open in Asia. The country’s Law on Investment, revamped in 2021, has made significant strides in streamlining processes and offering competitive incentives to investors.
Open Investment Framework
Cambodia is one of the few countries in Asia offering 100 percent foreign ownership across most sectors. Investors are also allowed to freely remit profits and capital without restrictions. These provisions eliminate bureaucratic hurdles, making it easier for companies to establish and expand their operations.
Tailored Incentives
The law also provides tailored tax breaks, reduced customs duties, and specific incentives for industries such as manufacturing, technology, and green energy. These benefits are designed to attract long-term investors and high-impact projects.
4. Free Trade Agreements and Market Access
Cambodia’s integration into global trade networks has amplified its economic openness. The Kingdom has signed multiple free trade agreements (FTAs) with key partners, including ASEAN, China, and Korea, and is a member of the Regional Comprehensive Economic Partnership (RCEP).
Expanding Market Reach
These agreements provide duty-free or preferential access to some of the world’s largest consumer markets. The RCEP alone connects Cambodia to a combined GDP of over $25 trillion, opening up unprecedented export opportunities.
Diverse Trade Portfolio
Cambodia’s free trade network extends its economic reach beyond traditional markets. Key exports, including garments, agricultural products, and technology components, are now finding new buyers worldwide.
5. Dynamic Workforce and Young Demographics
Cambodia’s young and vibrant population is one of its strongest assets. Over 65% of its population is under 35, representing a dynamic and adaptable workforce ready to meet the demands of a fast-changing global economy.
Skilled Labor
The government has prioritized education and vocational training, ensuring a steady pipeline of skilled workers. These efforts align with Cambodia’s ambitions to expand into higher-value industries such as technology, digital services, and manufacturing.
Affordable Labor Costs
Despite improvements in skill levels, Cambodia maintains competitive labor costs, attracting global companies looking to optimize production expenses.
6. Infrastructure Development
Cambodia’s investment in infrastructure has been transformative. Roads, airports, and seaports have been upgraded, making it easier for goods to flow in and out of the country.
Connectivity Projects
Major projects such as the Phnom Penh-Sihanoukville Expressway and the upcoming Techo International Airport demonstrate Cambodia’s commitment to enhancing connectivity. These initiatives significantly reduce transportation times and costs, benefiting businesses.
Digital Infrastructure
Cambodia is also investing heavily in digitalization. Programs to expand broadband access and digital platforms are creating new opportunities for e-commerce and tech-focused enterprises.
7. Sustainable Energy and Environmental Policies
As the global economy pivots toward sustainability, Cambodia has embraced green initiatives to ensure its long-term growth aligns with environmental goals.
Commitment to Renewable Energy
Cambodia has made significant progress in adopting solar and hydropower solutions. Investors in renewable energy projects benefit from government support, as the Kingdom seeks to balance growth with environmental responsibility.
Sustainability in Action
Cambodia’s efforts to combat climate change are evident in its participation in global initiatives such as the Paris Agreement. These actions not only attract environmentally conscious investors but also enhance Cambodia’s global reputation.
8. Technology and Innovation as Growth Drivers
The GCET summit underscored the importance of technology in shaping future economic trends. Cambodia has positioned itself as a leader in embracing digital innovation, particularly in sectors like fintech, e-commerce, and digital payments.
Bakong Digital Payment System
The introduction of Bakong, Cambodia’s digital payment platform, exemplifies how technology can drive financial inclusion and efficiency. Such innovations enhance the ease of doing business and pave the way for further growth in the digital economy.
9. Commitment to Global Partnerships
Cambodia has consistently championed international collaboration. Through forums like the GCET and partnerships with global organizations, the Kingdom has cemented its role as a reliable partner in regional and global development.
Focus on the 4Ps: Planet, People, Prosperity, Partnerships
The emphasis on these pillars reflects Cambodia’s holistic approach to growth. By prioritizing sustainable development, fostering human capital, and leveraging partnerships, Cambodia ensures its economy remains open and resilient.
10. The Global Chinese Economic & Technology Summit: A Platform for Progress
The recent GCET summit is a testament to Cambodia’s commitment to fostering economic cooperation and innovation. The forum highlighted the Kingdom’s ability to host high-profile events and facilitate meaningful discussions on global challenges and opportunities.
A Legacy of Collaboration
Since its inception in 2009, the Summit has played a pivotal role in connecting economies and cultures. Cambodia’s hosting of this year’s event further showcases its readiness to lead in the global economic landscape.
A Model of Openness and Growth
Cambodia’s free and open economy is no accident. It is the result of deliberate policies, strategic partnerships, and a vision that prioritizes inclusivity and sustainability. From its business-friendly laws to its commitment to global trade, Cambodia exemplifies how a nation can thrive by embracing openness.
As Hun Manet aptly stated, the government’s role is to create an environment where businesses can succeed. Cambodia’s rise as one of Asia’s most open economies is a testament to the effectiveness of this approach.
Do you agree that Cambodia’s policies and strategies make it one of the most free and open economies in Asia? Share your thoughts in the comments below—we’d love to hear from you!
Source: AKP