Doing Business in Cambodia

Doing Business in Cambodia

Cambodia is a developing market economy that grew at an average rate of over 10 percent from 2004 to 2007, driven largely by an expansion in the garment sector, construction, agriculture, and tourism. The global economic crisis has adversely affected the economy’s key pillars and economic growth contracted by approximately 0.1 percent in 2009. Growth rebounded in 2010 and 2011 at approximately 6 to 7percent, and is forecast to increase to 6.5 percent in 2012.

Cambodia is one of the few Least Developed Countries (LDCs) to export over $2 billion. Since Cambodia became the first LDC to join the World Trade Organization (WTO) in 2004, trade has steadily increased, and the U.S. has been Cambodia’s largest trading partner. Comparing to $2.3 billion of export to the U.S and $153 million of export to Cambodia in 2010, from January to October 2011, Cambodia’s exports to the U.S. were $2.29 billion and U.S. exports to Cambodia were $152.6 million.

Cambodia‘s rapidly expanding tourism industry is led by the spectacular cultural attraction of Angkor Wat. Tourism has increased more than eleven-fold since 1998 when Cambodia received a modest 187,000 tourists, with the number of foreign arrivals approximately 2.8 million in 2011 with an increase of 14% compared to 2010. It is estimated that the international arrival will reach 4.5 million by 2015 and 7 million by 2020. In 2011, Cambodian coastal areas were recognized by the Club of the World’s Most Beautiful Bays as its members.

Despite rapid growth in garments and tourism, Cambodia remains an agrarian society, with the agriculture sector employing approximately 80 percent of Cambodia‘s population. Donors have been a driving force behind the development efforts of Cambodia with financial support accounting for at least 50% of the government budget. The U.S. is one of Cambodia‘s largest donors and official U.S. assistance amounted to over $75 million in 2011, up from $36 million in 2002.

Foreign investment in Cambodia has increased significantly since 2004 led by Asian investors from countries such as Malaysia, China, Korea, Thailand, and Vietnam. Approved investment proposals by the Council for the Development of Cambodia totaled around $500 million in 2011. The Cambodian government currently offers a generous package of incentives to foreign investors and imposes few restrictions on imports from abroad.

Trade Agreements

Cambodia joined the International Organization for Standardization (ISO) in 1995 and is also a member of the ASEAN Consultative Committee on Standards and Quality (ACCSQ). Cambodia ratified the ASEAN Framework Agreement on Mutual Recognition Arrangements. It has also signed numerous trade agreements, including the U.S.-Cambodia Trade and Investment Framework Agreement (TIFA) in 2006, which facilitates and promotes greater trade and investment of the two countries and provides a forum to address bilateral trade and investment issues. Two successful meetings were held under the TIFA in 2007 in which the U.S. and Cambodian governments discussed WTO accession requirements, trade facilitation and economic development initiatives, and progress on intellectual property rights. In 2008, several bilateral working level meetings were held to advance the TIFA agenda. Additional information on trade agreements can be found at Bilateral Trade Department of Ministry of Commerce website.

Market Opportunity

Cambodia offers potential investment opportunities in tourism infrastructure and resorts; education; architecture, construction, and engineering services; household goods and appliances; agribusiness and food processing; used cars and automotive parts; power generation equipment; fast food and beverage franchises; pharmaceuticals, medical supplies, and medical equipment; and banking.

Best Prospects

Tourism Infrastructure and Resorts
Architecture, Construction, and Engineering Services
Household Goods and Appliances
Agribusiness and Food Processing
Used Cars and Automotive Parts
Power Generation Equipment
Fast Food and Beverage Franchises
Pharmaceuticals, Medical Supplies, and Medical Equipment
Cambodia at a Glance

Location: Mainland Southeast Asia between Thailand to the west and north and Vietnam to the east and southeast. It shares a land border with Laos in the northeast

Area Total: 181,035 sq. km. (69,900 sq. mi.); about the size of Missouri.

Climate: Tropical monsoon with rainy season from June to October, and dry season from November to May

Population: 13.4 million (2008 census)

Languages: Khmer (official) spoken by more than 95% of the population; some French still spoken in urban areas; English increasingly popular as a second language

GDP Real Growth Rate: 6.9 percent (2011 estimate)

GDP – Per Capita (PPP): $909 (2011 estimate)

GDP by Sector: Agriculture: 32 percent; Industry: 22 percent; Services: 38 percent (2011 estimate)

Government Type: Multiparty democracy under a constitutional monarchy


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