With a population of almost 17 million, Cambodia is a global leader in reducing poverty. Established as one of Southeast Asia’s “new tiger” economies, Cambodia was reclassified by the World Bank as a ‘lower-middle income economy’, having enjoyed three decades of sustained improvement, with GDP growth for 2023 at 5.2%.

Cambodia’s return to self-rule in 1993 has corresponded with an increase in living standards that brings considerable hope for the country’s future. The economy is heavily dollarised, with US dollars representing around 80% of deposits in Cambodian bank accounts. This has supported the Cambodian economic recovery, heavily dependent also on export-oriented sectors, particularly in garment manufacture and agriculture, as well as through a surge in construction. GDP has grown steadily in recent years, and per capita GDP in 2023 is almost USD 1,900.

Cambodia’s remarkable achievement of more than seven-fold increase in GDP per capita since 1995 is responsible for the raising of the country to middle-income country status in 2016. The Royal Cambodian Government now aspires to be classified as an upper-middle income economy by 2030, requiring an almost doubling of present per capita GDP. The country is becoming more integrated into the regional and global economy, for example through ASEAN customs initiatives and bilateral free trade agreements such as the Cambodia-China FTA. New laws such as those in e-commerce, consumer protection and investment also speak to promising steps Cambodia has taken going forwards.

Foreign direct investment is strongly encouraged with a range of foreign-friendly regulations in place including 100% foreign ownership of ventures and unrestricted rights to transfer funds back abroad. A range of further mechanisms exist and are being implemented including qualified tax investment projects (QIP) and special economic zones (SEZ). Recent new investment projects are in construction and real estate, in tourism and expanded manufacturing, with the bulk of these projects coming from other Asian nations. However, around 30% of Cambodia’s total exports flow to the European Union, where Cambodia has access to the EU’s  Generalised System of Preferences (GSP), allowing developing countries to pay reduced or no duties on exports.

In 2019, The Cambodian government rolled out a series of structural reforms aimed at improving Cambodia’s export competitiveness, including streamlining customs payments, reduced compliance fees, expanded digitisation of public services and a reorganisation of government regulation around exports and customs. As Cambodia’s exports have grown, especially to Europe and the USA, so have their relative imports in raw materials, machinery and services, as well as in consumer products, food and beverages etc. Western brands are increasingly visible on Cambodian streets. Cambodia is also a beneficiary of the Regional Comprehensive Economic Partnership (RCEP) signed between ASEAN states and major Asia-Pacific economic partners and representing a market of over 2 billion people.

The population of Cambodia is relatively youthful with rapidly growing levels of education, although there remains a skills-gap requiring further national effort. Other challenges include high energy costs and challenges in local infrastructure.

Cambodian politics remains stable, although dominated by the leader, Hun Sen’s Cambodian People’s Party. While described as somewhat autocratic, the country benefits from strong, stable leadership and international recognition as a growing, stable economy in the region. Cambodia however remains a country where personal relationships are critical to successful engagement with government and industry. Asian Insiders is available to connect you with whom you need to know, support you to build and maintain relationships while working on your long term plan for prosperity and success.ssG