As international capital continues flowing into Southeast Asia, ASEAN is increasingly seen as the next global economic growth center. In recent years, Cambodia’s economic growth has strengthened its role in the region. According to the International Monetary Fund, Cambodia ...Read more
As international capital continues flowing into Southeast Asia, ASEAN is increasingly seen as the next global economic growth center. In recent years, Cambodia’s economic growth has strengthened its role in the region. According to the International Monetary Fund, Cambodia is projected to lead Southeast Asia with a growth rate of 6.1% in 2024. This raises the question: from the perspective of international financial experts, could Cambodia be on track to become the next regional financial center? Mr. Ong Chee Keong, CEO of Singapore Global Trust, is optimistic. He believes that if everyone works towards a shared goal, Cambodia certainly has the potential to become a financial hub for the region.
Political Stability: The Foundation of Cambodia’s path to becoming a financial hub
Political stability is key to attracting both domestic and foreign financial investment and encouraging financial institutions to set up in Cambodia. By maintaining consistent and stable policies, the Cambodian government provides a strong political foundation and supportive environment for the long-term growth of its financial sector. This stability allows investors to feel more secure amid global uncertainties.
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Cambodia’s political stability and consistent policies have been key drivers of its development. Former Prime Minister Hun Sen, who led the country for 38 years, greatly advanced Cambodia’s growth, and the new government under Prime Minister Hun Manet is building on this foundation. In addition to maintaining existing policies, the new administration has introduced fresh initiatives to strengthen economic strategies, notably the “Pentagon Strategy,” which aims to diversify the economy. This strategy includes ongoing improvements in transportation, electricity, telecommunications, and water infrastructure, as well as initiatives to build a digital government and develop local talent efforts that all strongly support Cambodia’s aspiration to become a financial hub.
Mr. Ong Chee Keong noted, “From my personal experience, Cambodia’s airport services have been upgraded at least three times between 2017 and 2024. On my previous visit, there was no option for online processing, but now I can enter Cambodia using an electronic entry card filled out online. This pace of development is impressive, and it strengthens my belief that, with the united efforts of the government and the people, Cambodia can indeed become Southeast Asia’s next financial center.”
The absence of foreign exchange controls: A key factor for Cambodia’s emergence as a financial hub in Southeast Asia
The lack of foreign exchange controls is a crucial condition for any region aspiring to become a financial center. Cambodia stands out as one of the most open countries in Asia to foreign investment, with a highly open economy and no foreign exchange restrictions. This environment allows investors to move their capital in and out of Cambodia with greater confidence and freedom, paving the way for significant inflows of capital as the economy develops.
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Mr. Thierry Tea pointed out that while Cambodia’s capital market is still in its early stages, it possesses immense growth potential, making it an attractive opportunity for investors now, with the possibility of substantial returns in the next ten years.
Currently, global manufacturing is rapidly shifting, and Southeast Asia is on track to become the next global economic development center. Among Southeast Asian nations, Cambodia is emerging as a preferred investment destination due to its political stability, open foreign investment policies, youthful population dividend, and low labor and land costs.
The concentration of foreign investment will drive Cambodia’s industrial and economic transformation, transitioning from labor-intensive industries to high-tech sectors. “Cambodia’s manufacturing has evolved from an initial focus on textiles to include emerging industries with high added value, innovation, and competitiveness, such as auto parts, tires, and photovoltaic materials, introducing skill-intensive industries that bring advanced production technologies and management experience to Cambodia,” said Mr. Jack Lee, founder and CEO of Smile Mall, who has been deeply involved in e-commerce in Cambodia for six years and is well-acquainted with the Southeast Asian market and adept at tapping into its potential.
Strong Economic Growth Fuels the Acceleration of Cambodia’s Financial Hub Development
Historically, the rise of international financial centers like London, New York, and Singapore has been driven by their unique advantages and continuous government efforts. Currently, Cambodia, with over eight consecutive years of GDP growth exceeding 7%, has become one of the fastest-growing economies in the world. This remarkable economic performance, combined with its geographical location, status as a transportation hub, favorable policies, and diversified economic development strategies, provides strong momentum for building a financial center, attracting more and more investors to this “new tiger of Asia.”
Moreover, local large groups and seasoned investors are confident in Cambodia’s economic growth.
Mr. Chy Sila, Chairman of the well-known Cambodian company Sabay Digital Group and founder of Kirisu Milk, stated that Cambodia holds immense potential as an emerging investment hotspot, continuously capturing the attention of global investors. There are abundant business opportunities and development space to explore across various sectors.
“Twenty-five years ago, I invested in the restaurant industry; in early 2007, I ventured into the internet sector; later, I entered the film industry, and now I’m investing in agriculture. Many might wonder why I diversify like this, but I believe there are vast potential business opportunities waiting to be uncovered in every sector in Cambodia. Especially with the new government’s Pentagon Strategy clearly identifying agriculture as one of the key industries for development, it provides investors with clear direction and goals.”
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Accelerating Infrastructure Development and Talent Training to Support the Financial Hub
Situated in the heart of ASEAN, Cambodia shares borders with Thailand, Laos, and Vietnam, making it a vital transportation hub for connecting Southeast Asian countries and serving as a gateway to significant global markets. This strategic position offers investors ample opportunities for establishing manufacturing operations in Cambodia, further enhancing the country’s economic standing in the region.
In recent years, the Cambodian government has launched a comprehensive multi-modal transport plan, continuously advancing infrastructure development in areas such as roads, railways, waterways, aviation, and ports. The aim is to build a modern logistics system and transform Cambodia into a regional logistics hub by 2030.
Mr. Thierry Tea, Vice President of OCIC Group and CEO of Negocia Capital, highlighted the significant efforts made by the Cambodian government, under the leadership of a younger generation, to drive national economic growth and align with international standards. Notably, important progress has been made in areas such as digital transformation and international cooperation.
Mr. Thierry Tea noted that next year, the new Phnom Penh International Airport, designed by the renowned British firm Foster and Partners, will begin operations. Coupled with the launch of the “Bakong Tourist App” by the National Bank this year, these changes will greatly enhance convenience for international tourists and investors.
Stable Logistics To Facilitate Financial Operations
Particularly noteworthy is the announcement of the construction of the Funan Techo Canal, which will connect the Mekong River in Phnom Penh to the Gulf of Thailand, capturing global attention. Additionally, infrastructure projects are underway, such as the deep-water port in Sihanoukville to increase port capacity, the new container terminal to significantly reduce logistics costs, and the completed Phnom Penh-Sihanoukville Expressway along with the ongoing Phnom Penh-Bavet Expressway, as well as various new airports and upgrades to existing ones. Once completed, these projects will significantly modernize Cambodia’s infrastructure, strengthening its connections with the world, and providing efficient communication networks and stable logistics to facilitate financial operations.
At the same time, the Cambodian government is actively nurturing financial professionals, increasing investment in education, and continuously improving the education system. Policies are being implemented to provide support, practical opportunities, and career guidance, aimed at developing finance professionals with international perspectives and expertise.
Moreover, Cambodia is also implementing programs to attract financial talent, including offering incentives, enhancing communication and collaboration with international financial institutions, and showcasing market potential. As Cambodia’s economy grows, it is expected that more financial professionals will be drawn to the country, injecting new vitality into Cambodia’s financial market.
Currently, the government is actively promoting and accelerating Cambodia’s emergence as the next financial hub. For Cambodian enterprises, finding ways to seize the opportunities presented by the capital market in the coming years is a topic worthy of deep consideration!
This article was first published by Cambodia Securities PLC.
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