Population (2017): 16,005,370 GDP (2017): US$22,158,210,000 World Bank “Ease of Doing Business” Rank (2018): 135 Bilateral Trade with Singapore (2017): S$4,467,300,000 Trading Partner Rank (2017): 28
Cambodia is one of the world’s fastest growing economies. It grew at an average rate of over 7% in the last decade, driven largely by an expansion in the garment manufacturing, real estate, construction, agriculture, and tourism sectors1.
The country has maintained a low and manageable inflation rate of below 3.5% since 20091 and a stable exchange rate of KHR4,000 to US$1, with fluctuations within 5%.
Given the relatively small market size of 16 million and evolving business landscape, small and medium-sized enterprises (SMEs) tend to be nimbler in identifying the niche opportunities and navigating the Cambodian market. There is much potential for Singapore SMEs to contribute to Cambodia’s growth and development, especially in the areas of agriculture, education, healthcare and tourism.
1 “The World Bank in Cambodia”, World Bank, 20 September 2018
Singapore companies expanding to Cambodia can count on expanding air and sea connectivity in recent years. In 2017, the international airports in Phnom Penh, Siem Reap and Sihanoukville received a combined 8.8 million passengers, a 25% year-on-year increase. At the same time, cargo shipments grew by almost 40% to a record 65,000 tonnes2.
Cambodia's aviation sector is expanding quickly due to the government’s efforts to promote Cambodia as a leisure and business destination to key Asian markets such as China, Vietnam and South Korea. To cope with the expected growth in passengers and cargo traffic, Cambodia will be embarking on plans to build or expand its international airports. For instance, there are plans to build a new international airport in Siem Reap.
There are more than 40 weekly flights connecting Singapore to Siem Reap and Phnom Penh. This makes it easier for you to travel between Singapore and Cambodia’s key cities.
2 “Cambodia Airports handles 8.8M passengers, ready for future growth”, The Phnom Penh Post, 27 April 2018
Cambodia has one of the youngest populations in Southeast Asia, with approximately two-thirds of the 16 million population below 30 years old. This translates into a large pool of manpower you can draw from when you expand your business to Cambodia. However, there is a need to invest in training to upskill your local employees and to bridge the language differences.
The younger generation of Cambodian business owners are more global in their mindset and are very open to working with foreign companies, including Singapore companies.
The Cambodian government’s stance on foreign investment is one of the most open in Asia. Full foreign ownership is allowed for any business in any industry, with foreign businesses receiving the same treatment as their local counterparts.
The Cambodian government currently offers a generous package of incentives to foreign companies and imposes few restrictions on imports. These include 100% foreign ownership of companies, profit tax exemptions of up to six years3, duty-free import of capital goods, and no restrictions on capital repatriation.
Cambodia is also ranked 20th in the world for ease of getting credit. The entire process of starting a business in the country – from company registration to getting approval to hire locals – takes approximately four months4.
With Cambodia’s slew of business-friendly policies and incentives for investors, many Singapore companies have ventured there and made their mark in real estate, finance, energy and logistics. For example, agriculture and property company HLH Group is developing a mixed-use development in Sihanoukville, and solar company Sunseap Group will roll out a large-scale solar farm project in Svay Rieng province.
3 “At a glance: Taxes in Cambodia”, The Business Times, 4 July 2018 4 Ease of Doing Business Ranking, 2018