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

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A new report by Cambodia Securities PLC considers significant factors that suggest the Kingdom has the potential to become Southeast Asia’s next major financial hub, based on the positive outlook of several renowned market insiders.

The analysis included the nation’s strong economic growth, political stability, absence of foreign exchange controls, accelerating infrastructure and labour force development, and an influx of foreign direct investment (FDI), as key indicators of strong future growth for investors within Cambodia’s capital market.

According to the report, trends suggest that Southeast Asia is likely to be the next global economic growth centre, as evidenced by large increases in international capital flows in recent years.

The International Monetary Fund (IMF) has also said that Cambodia is projected to lead the entire region in 2024 growth trends, with a gross domestic product (GDP) growth rate of 6.1 percent.

Thierry Tea, Vice President of OCIC Group and CEO of Negocia Capital, commented in the Cambodia Securities PLC report, that while Cambodia’s capital market is still in its early stages, it possesses immense growth potential.

This growth potential makes it an attractive opportunity for investors now, he said, with the possibility of substantial returns in the next ten years.

Tea also highlighted the significant efforts made by the newly instated Cambodian government, under Prime Minister Hun Manet, to drive national economic growth, and increasingly align with international economic standards.

Notably, he said that important progress has been made in areas such as digital transformation and international cooperation.

Tea also commended several major infrastructure development projects, ongoing and completed, including the Techo International Airport (TIA), Funan Techo Canal (FTC), the deepening of the Sihanoukville Autonomous Port (PAS), and major logistics connections including the Phnom Penh-Sihanoukville Expressway and the Phnom Penh-Bavet Expressway.

These projects, and others like them, will significantly modernize Cambodia’s logistics networks, Tea noted, strengthen its connections with the world, and provide efficient communication networks and stable logistics to facilitate financial operations and future expansions.

Ong Chee Keong, CEO of Singapore Global Trust, also agreed that the pace of development in Cambodia is impressive compared to global comparisons.

“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,” he said.

Meanwhile, Chy Sila, Chairman of Sabay Digital Group and founder of Kirisu Milk, said that the country’s investment potential has also become increasingly broad in recent years, and now allows financial investors to diversify successfully in the market.

Chy said, “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.”

Supporting this diverse investment portfolio, Chy said that there are now 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,” he said.

Another factor supporting Cambodia’s financial sector growth includes strong improvements to the domestic manufacturing sector, suggested the Cambodia Securities PLC report.

According to Jack Lee, founder and CEO of Smile Mall, “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.”

Increasing foreign investment in the Kingdom’s manufacturing sector is driving Cambodia’s industrial and economic transformation, Lee said, and supporting a transition from labor-intensive industries to high-tech sectors.

This continued growth in the manufacturing sector allows a solid base for financial markets to flourish, suggested the report.

Source: Khmer Times

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Introduction to Cambodia

Nestled in the heart of Southeast Asia, Cambodia is a land of rich history, vibrant culture, and stunning landscapes. Known as the Kingdom of Wonder, it offers a blend of ancient charm and modern development that attracts tourists, investors, and scholars alike. Cambodia is bordered by Thailand to the west and northwest, Laos to the north, Vietnam to the east and southeast, and the Gulf of Thailand to the south. With a total population of over 16 million people, Cambodia is on a steady path toward economic growth and social development.

Economic Overview

Cambodia’s economy has seen remarkable growth in recent decades, with industries like textiles, agriculture, tourism, and construction driving its progress. The nation’s GDP has been steadily increasing, reflecting its transformation into a lower-middle-income country. Phnom Penh, the bustling capital city, is the economic hub of the nation, with modern skyscrapers, shopping malls, and bustling markets representing Cambodia’s leap into modernity.

Religion and Culture

Cambodia is deeply rooted in its Buddhist traditions, with Theravāda Buddhism serving as the state religion and practiced by over 95% of the population. The values of compassion, mindfulness, and respect for others are woven into the fabric of daily life. Pagodas, or temples, are a common sight across the country, often serving as centers of community life.

The Khmer culture is richly expressed through traditional music, dance, and festivals. Apsara Dance, recognized as a UNESCO Intangible Cultural Heritage, is a testament to Cambodia’s artistic legacy. The Khmer New Year (Choul Chnam Thmey) and the Water Festival (Bon Om Touk) are vibrant celebrations that bring people together in joy and unity.

History and Heritage

Cambodia’s history is both glorious and complex. The pinnacle of its historical achievements is undoubtedly the Angkor Empire, which ruled much of Southeast Asia from the 9th to the 15th centuries. Angkor Wat, the largest religious monument in the world, stands as a symbol of this ancient empire’s grandeur. Beyond Angkor, the country has endured colonial rule, war, and the tragic Khmer Rouge regime. Despite these challenges, Cambodia has emerged resilient, focusing on reconciliation and development.

The People and Food

Cambodians are known for their warmth, hospitality, and strong sense of community. The Khmer people, who make up the majority, coexist with minority ethnic groups like the Cham, Vietnamese, and various hill tribes.

Cambodian cuisine is another treasure trove of the nation’s culture. Dishes like amok trei (steamed fish curry), samlor korkor (a traditional vegetable soup), and bai sach chrouk (pork with rice) tantalize the taste buds of locals and visitors alike. The street food culture, offering treats like fried tarantulas and sugar palm cakes, adds an adventurous twist to dining in Cambodia.

Tourist Attractions

Cambodia’s diverse attractions make it a magnet for tourists. While Angkor Wat is the star, places like Phnom Penh’s Royal Palace, the Killing Fields, and the Tuol Sleng Genocide Museum provide insights into Cambodia’s history and resilience. Nature lovers can explore the Cardamom Mountains, Tonlé Sap Lake, and the serene islands along the coast. Cambodia’s coastal area, particularly around Sihanoukville, Kampot, and Kep, is a rising destination for beach lovers and eco-tourists.

Cambodia’s Coastal Region and Islands

Cambodia’s coastal area spans 17,237 square kilometers (6,655 square miles) and is distributed among four provinces: Sihanoukville, Kampot, Koh Kong, and Kep. The length of the coastline has been debated, with estimates ranging between 435 km (270 mi) and 557 km (346 mi) depending on the source. What is certain is the coastline’s stunning beauty and ecological significance. Souce: WikiPedia

The region is home to extensive mangrove marshes, particularly in Koh Kong Province and Ream National Park. The southern mountain ranges feed rivers that drain into the shallow sea, creating rich habitats for marine life.

How Many Islands Are in Cambodia?

The coastal waters of Cambodia contain 60 islands, each with unique characteristics. They are primarily under the administration of the four coastal provinces. The distribution of the islands is as follows:

• Koh Kong Province: 23 islands
• Kampot Province: 2 islands
• Sihanoukville Province: 22 islands
• Kep City: 13 islands

These islands range from lush, uninhabited islets to developed tourist havens. Most are close to the mainland, except for a few outer islands. The islands near Koh Kong, particularly around the Prek Kaoh Pao delta, are low-lying and surrounded by mangroves, while others feature rugged sandstone formations.

Cambodia’s Islands: A Gateway to Economic Transformation

Imagine if 50% of Cambodia’s 60 islands were fully developed into world-class tourist attractions. How would this transformation impact Cambodia’s economy?

1. Boost to Tourism Revenue
   With enhanced infrastructure, luxury resorts, and eco-tourism projects, Cambodia’s islands could attract millions of international tourists annually. This influx would generate significant revenue through accommodation, dining, transportation, and recreational activities.
2. Job Creation
   Developing the islands would lead to the creation of thousands of jobs in construction, hospitality, and services. Local communities would benefit from employment opportunities, raising living standards and reducing poverty.
3. Increased Foreign Investment
   A well-planned island development initiative would attract foreign investors keen to capitalize on Cambodia’s rising profile as a tourist destination. Investors from neighboring countries like China, Thailand, and Vietnam, as well as from Europe and the United States, would bring expertise and capital.
4. Infrastructure Development
   Island development requires robust infrastructure, including roads, ports, airports, and utilities. These improvements would have a spillover effect, enhancing connectivity and economic activity in coastal provinces.
5. Promotion of Eco-Tourism
   Cambodia’s islands, with their pristine beaches and diverse ecosystems, are ideal for eco-tourism. Sustainable tourism initiatives could ensure environmental protection while generating income.
6. Cultural Exchange and Global Recognition
   As the islands attract tourists from around the world, Cambodia’s culture and hospitality would be showcased on a global stage. Increased visibility could elevate Cambodia’s status as a preferred destination in Southeast Asia.
7. Revenue Diversification
   Expanding tourism on the islands would diversify Cambodia’s economy, reducing reliance on traditional sectors like textiles and agriculture. This would enhance economic resilience.

Challenges and Considerations

While the potential benefits are immense, island development must be approached with care. Overdevelopment could lead to environmental degradation, loss of biodiversity, and disruption to local communities. Sustainable practices, community involvement, and regulatory frameworks are crucial to ensuring that development benefits both people and nature.

Conclusion

Cambodia’s islands hold immense potential to transform the nation’s economy. By balancing development with sustainability, these coastal gems could elevate Cambodia into a global tourism hotspot while preserving its natural and cultural heritage.

What do you think? Should Cambodia prioritize developing its islands? Share your opinions and thoughts in the comments below!

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