Capitalise on the region’s numerous opportunities in infrastructure development.
Cambodia is one of the world’s fastest growing economies, with its annual GDP growth averaging 7-8% over the last two decades1. This fast growth is complemented by economic stability. Cambodia has maintained a low and manageable inflation rate of below 3.5% since 20092 and a stable exchange rate of KHR4,000 to the USD, with fluctuations within 5%.
1: World Bank
Cambodia has a young and dynamic labour force. With a median age of 25.3 and 31% of the population aged 14 years or younger3, the country can expect to enjoy this demographic dividend for decades to come.
Indeed, with approximately two-thirds of its 16 million population under the age of 30, the country presents itself as one of the youngest workforce in Southeast Asia. The availability of manpower has attracted a host of manufacturing activities to take place across the country, supported by the 33 Special Economic Zones (SEZ) in various provinces.
3: CIA World Factbook, 2017
Cambodia has a slew of business-friendly policies and incentives for investors. It is ranked 20th in the world for ease of getting credit4 and has a competitive corporate tax rate of 20%.
Foreign and local investors are treated equally under the law. Furthermore, there are no restrictions on foreign exchange or capital and no requirements for local equity participation. Investor incentives include tax exemptions for up to 9 years, and full import duty exemptions on production equipment and machinery as well as production inputs.
4: Ease of Doing Business Ranking, 2017
With Cambodia now in the midst of a major industrialisation push, this is an opportune time to venture to this swiftly-developing economy and seize first-mover advantages. Launched in 2015, the ten-year Cambodia Industrial Development Policy aims to transform the country’s labour-intensive industrial sector into a modern skill-based one by 2025.
We see much potential for Singapore companies to further contribute to Cambodia’s growth and development, especially in the areas of infrastructure, education and training, as well as the growing tourism sector
Notwithstanding the pro-business investment regime, Singapore companies should still consider working with a local partner who are better placed to navigate the local conditions with their connections. A local partner can facilitate market entry through knowledge of the market in areas such as local customs and regulations, as well as via their personal networks. This is especially significant for countries like Cambodia, where personal relationships can be the key to successful business transactions. The younger generation of Cambodian business owners are more global in their mindset and are more open to working with foreign companies.