Cambodia
In-depth country-focused analysis on Cambodia's economic, political and operational risk environment, complemented by detailed sector insight

Our comprehensive assessment of Cambodia's operating environment and the outlook for its leading sectors are formed by bringing together a wealth of data on global markets that affect Cambodia, as well as the latest industry developments that could impact Cambodia's industries. This unique integrated approach has given us an impeccable track-record for predicting important shifts in the markets, ensuring you’re aware of the latest market opportunities and risks in Cambodia before your competitors.

Country Risk

Cambodia Country Risk

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November's ASEAN summit in Myanmar shone the spotlight on the country's political reform drive, which we believe has lost considerable momentum over recent months. In particular, the government has not shown the willingness to make substantive amendments to the constitution, suggesting that opposition leader Aung San Suu Kyi will not be allowed to run for president in 2015's general elections. Furthermore, it looks increasingly likely that the military (Tatmadaw) will retain its automatic 25% share of seats in parliament. Combined with efforts from the ruling USDP to adopt a proportional voting system rather than the first-past-the-post system that has been used in the past, it is likely that the USDP and Tatmadaw will maintain a considerable preference beyond the upcoming elections. At the same time, we also note rising risks that general elections may be postponed, as the government has tied the elections to a nationwide ceasefire which is looking more tenuous by...

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Cambodia Operational Risk Coverage (9)

Cambodia Operational Risk

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Cambodia's low labour costs, minimal trade barriers and growing market size should mark it out as one of the most attractive investment destinations regionally. However, a number of key risks limit the market's overall appeal, not least the country's inadequate logistics infrastructure that drives up the cost of doing business in Cambodia, its poorly educated and under-skilled workforce that leaves investors reliant on foreign workers and expatriates, and diverse legal risks that undermine property rights. Furthermore, corruption is a theme that is consistent throughout this report, increasing risks to investors in the form of high lead times, expensive transport costs and delays in conducting simple operational procedures, such as opening and closing a business.  

BMI considers the foremost advantage for businesses in Cambodia to be the country's low risk of crime and terrorist threat. Cambodia...

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Cambodia Crime & Security

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BMI View: Cambodia poses modest security risks to foreign business travellers and tourists. For the most part, the greatest risks to these groups are petty crime s, such as pick-pocketing and theft, rather than violent crimes. Although there is considerable organised crime in Cambodia, stemming from the country's role in the regional drug trade, fraud , and human trafficking, this is unlikely to affect foreigners.   Cambodia's police tends to be underfunded and underequipped, meaning that their effectiveness is limited, especially outside the major cities. Corruption is also a major problem in Cambodia, and erodes the integrity of the country's law enforcement agencies.

The risk of a terrorist attack in Cambodia is low, as there are few domestic terrorist...

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Cambodia Labour Market

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BMI View: Although the Kingdom of Cambodia is rich in natural resources, decades of war and internal conflict have left it one of the world's poorest countries. The legacy of strife includes social and economic scars, such as poor rates of urbanisation, widespread poverty and low levels of education. Although 81.2% of the working age population is in employment, investors in Cambodia will struggle to source skilled workers from a labour pool that is largely characterised by very poor levels of literacy and basic education. Furthermore, despite an impressive female participation rate in the workforce, unequal access to education means that women are more likely to be educated than men, suggesting that female workers will be less skilled than ma le workers. Cambodia scores 43. 6 out of 100 for Labour Market...

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Cambodia Logistics

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BMI View: Cambodia's logistics network faces challenges as a result of decades of armed conflict. There are s tructural issues in terms of roads, railways and ports, which have not kept pace with the country's rapid economic development in recent years . A booming garment and construction industry have meant that Cambodia's infrastructure has required significant development over the past decade. However, instead of upgrading the existing infrastructure, the government has poured money into new projects, leaving many of roads and railway s in disrepair. Corruption also poses a threat to investors, delaying the speed at which goods are...

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Cambodia Trade & Investment

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Cambodia's reputation as one of the most corrupt countries in the world severely hampers its attractiveness as an investment location to businesses. A lack of observance for the rule of law, significant government intervention and high levels of red tape mean that doing business in Cambodia is lengthy and costly ordeal. In addition, the country's underdeveloped financial services means that businesses are often reliant on microfinance institutions to finance business ventures. High levels of corporate tax also make Cambodia less competitive than its regional neighbours. That being said, Cambodia has seen a significant increase in foreign direct investment in the past decade in response to its open attitude to foreign businesses and integration into the international economy through regional and international partnerships. Overall, we score Cambodia 34.0 out of 100 for Trade And Investment Risk, ranking it 21st out of 29 countries in Asia.

The...

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Cambodia Industry Coverage (7)

Autos

Cambodia Autos

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The common theme in Cambodia, Myanmar and Laos is that used vehicles make up the overwhelming majority of their auto markets. The low GDP per capita of these economies makes it difficult for consumers to afford new cars. However, as long as carmakers maintain their expectations, we do see an advantage for firms to develop a toehold in these frontier markets.

Over our 2014-2020 period, we forecast GDP per capita to exceed 6.0% annual growth in all these economies, aided by their young demographics. As incomes rise, new vehicle sales will inevitably increase when motorisation finally takes off. Firms which have built up their brand awareness and loyalty will then be able to reap the benefits of the motorisation boom.

We also see tremendous opportunities for parts makers and after-sales service providers in these markets due to their large used vehicle fleets. In order to keep their vehicles in a roadworthy condition,...

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Food & Drink

Cambodia Food & Drink

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BMI View:  We believe that Cambodia, Laos and Myanmar (CLM) will offer substantial opportunities for investors over the coming decade, as their economies grow rapidly and become more integrated with the world economy. Growing populations, growing GDP, increased urbanisation and a demographic profile favouring a young target base all offer opportunities for food and drink operators looking to establish a foothold in the region. Additionally a forecast increase in tourist numbers over the next few years will also fuel growing interest in more sophisticated food and drink products amongst the domestic populations. 

Headline Industry Data (local currency)

Cambodia

? 2014 total food consumption sales growth (local currency): +2.22%; compound annual growth rate

(CAGR) 2013-2018: +2....

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Infrastructure

Cambodia Infrastructure

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  • BMI View:   Despite a relatively strong performance in 2013, several risks continue to dampen the near-term growth potential of Cambodia's infrastructure sector - namely growing competition from Myanmar, limited upside to foreign investment, and the resolution of land disputes in the favour of local residents. That said, the recent reconciliation between the ruling Cambodia People's Party (CPP) and opposition Cambodia National Rescue Party (CNRP) is a positive development.   Nevertheless, we envisage only a moderate pick-up in activity for 2014, with the industry's real growth forecasted at 8.2%.

Key Trends And Developments

  • Following a lengthy political deadlock between the...

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Oil & Gas

Cambodia Oil & Gas

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BMI View:   Like many of its oil-producing neighbours in South East Asia, Cambodia is hoping to tap its potential resources. Progress is moving slowly, however, owing to a need to build the industry from scratch. Not only is there a lack of understanding of Cambodia's geology and hydrocarbons potential, it needs a hydrocarbons law to provide investor certainty and to increase its appeal vis-a-vis bigger, more established neighbours such as Vietnam, Thailand and Myanmar.

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Headline Forecasts (Cambodia 2012-2018)
  2012e 2013e 2014f

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Pharmaceuticals & Healthcare

Cambodia Pharmaceuticals & Healthcare

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BMI View: The current lack of investment in healthcare in Cambodia will continue to deter foreign pharmaceutical firms from entering the country .   Consequently, we highlight that Cambodia will remain one of the least attractive markets in South East Asia.  

Headline Expenditure Projections

  • Pharmaceuticals: KHR821.7bn (USD204mn) in 2013 to KHR908.9bn (USD227mn) in 2014; +10.6% in local currency terms and +11.2% in US dollar terms. Forecast slightly downgraded from previous quarter.

  • Healthcare: KHR3,260.6bn (USD810mn) in...

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Power

Cambodia Power

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BMI View:   The major players in Asian power supply are clamouring to invest in Cambodia, with the result that huge capacity expansion can be expected from around 2015, as hydro - , gas - and coal-based schemes are introduced. This should leave the country with plentiful spare generation. Neighbouring Vietnam, which will finance a number of power projects, plans to make good use of Cambodia's potential export capability, as does Thailand if a major coal-fired scheme comes to fruition.

Hydropower expansion is already under way in Cambodia and there is a long queue of potential projects with strong regional backing. Several are set to proceed, with a surge in hydro-based supply due from about 2016. Domestic gas resources could contribute additional capacity, while the use of renewables is set to rise...

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Telecommunications

Cambodia Telecommunications

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BMI View :   Demand is already outstripping supply in Myanmar following the launch of mobile services by Ooredoo , Telenor and the rebranding of MPT in partnership with KDDI and Sumitomo . Affordable prices for SIM cards has seen each operator sell over 1mn new subscriptions in the first month of operation, with the competition expected to drive further uptake. A s a result of this, Myanmar is set to become the fastest growing market in the world. The influx of foreign capital into the telecoms sector highlights the...

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