As Cambodia’s economic growth continues to set the pace in the Southeast Asian region, its government has responded with a series of moves towards liberalising trade and investment that have made the country not just an exciting but also a highly attractive destination for foreign investors. The kind of growth Cambodia is seeing is worth talking about, which is why Thalias’ CEO Arnaud Darc was invited to speak during a panel discussion on Developing Business in Cambodia hosted by the French Chamber in Singapore in collaboration with the European Chamber of Commerce in Singapore on 14 January.
The day’s presentations were led by HE Mr Sok Chenda Sophea, Minister attached to the Prime Minister and Secretary General of the Council for Development of Cambodia, and HE Ms Eva Nguyen Minh, Ambassador of France to Cambodia.
Joining Arnaud on the panel were Mr Philippe Baudry, Economic Counsellor at the French Embassy, Mr Sopha Min, Deputy CEO of BRED Bank Cambodia & Laos, Mr Guillaume Massin, Partner and Managing Director of DFDL Cambodia, Mr Michel Cassagnes, Managing Director of Archetype Cambodia, Mr Nicolas Olivry, Director and Chief Commercial Officer at Clik, Mr Soreasmey Ke Bin, the founder of Confluences Consulting, and Mr Alain Brun, the CEO of Cambodia Airports and Vice Chairman of CCIFC.
The panel addressed a range of issues across sectors including tourism infrastructure, logistics, construction, engineering, energy, finance and insurance, fintech, agribusiness, and pharmaceuticals and healthcare. Mr Baudry also gave a presentation on the French economic system in Cambodia.
Last year, investment in Cambodia hit a high of $9.4 billion, more than half of which came in the form of foreign direct investment, dominated by China which accounted for just under 40% of total investment. It is worth noting that the level of investment in Cambodia last year almost doubled the amount reached in 2015, just five rapidly evolving years ago.
The targets for investment have evolved too. In 2015, the bulk (67%) of investment went into infrastructure, with industry and agriculture accounting for 30% of the remainder. Last year, the share dedicated to infrastructure dropped to 10%, industry remained level at 21%, while Cambodia’s tourism sector absorbed all but 2% of the rest.
This evolving pattern of investment is occurring within an evolving context of national reforms designed to facilitate the ease of doing business in Cambodia. HE Sok Chenda Sophea outlined a range of recent reforms, including reducing the cost of electricity, simplified VAT procedures, cutting out six public holidays starting this year, and finalising the draft Laws on Investment and on Special Economic Zones.
His Excellency also expanded on how these draft laws should facilitate investment by, inter alia, simplifying legal and official procedures, implementing Cambodia’s obligations under the WTO, and providing incentives for investment into research and development, educational and vocational training, as well as management and protection of the environment.
As ever though, one of the greatest reasons to invest in Cambodia is its people, in particular a young and dynamic workforce with a median age of 24, and a growing middle class that is increasingly urbanised. Out of a population of 16 million, half are social media users, while 74% are connected to the internet in some way. Also, Cambodia’s location, within an hour and a half of some of the world’s most important markets, cannot be ignored.
New laws and policies that should smooth the path for investment in the future are also in the works. These include the implementing regulations of the Law on Construction, as well as laws on land management and urban planning, coastal management, gaming and PPPs. Changes are also afoot in relation to taxation of land transfers and occupational health and safety.