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Cambodia: Economic Update




The Cambodian government hopes to use its status as the ASEAN chair this year and the recent 29th ASEAN Summit in Phnom Penh to attract investors from Southeast Asia and beyond.

  • Industrial and Manufacturing - SEZ investments increased

The total value of investment projects in Cambodia's Special Economic Zones (SEZ) increased 683% year-on-year in 2011, according to the Council for the Development of Cambodia.  The Council approved 39 projects worth US$715.25 million, compare with 22 projects worth $91.25 million in 2010, reported the Phnom Penh Post.

Revenues from shipments through Sihanoukville Autonomous Port rose 7% year-on-year in 2011 to US$30.5 million.  The growing Cambodian economy spurred manufacturers to expand production, thereby increasing cargo traffic, said Lou Kim Chhun, the port's general director.  Shipments included exports of rice, clothes and wood, and imports of building materials, electronics and garment raw materials.

However, for manufacturing, even though lower wages in Cambodia are appealing, but some investors still have their doubts.  Cambodia still has a challenge on workers' unions. In the recent Bangkok Post's interview with Mr. Van Sou Ieng, the president of the Cambodia Federation of Employers and Business Associations (CAMFEBA); he explained that more attention is being paid to the business and investment climate, with a particular focus on labour rights. He believed there had been steady progress on many fronts. Cambodia is the only country apart from Jordan and Haiti that link trade and labor standards, in order to export. For example, garment and footwear companies are regularly inspected by international auditors. "It’s quite extremely stable for workers; workers have been protected by International labour Organization (ILO) standards. Buyers also check compliance", reported the interview. The challenge is for employers that workers have abused their freedom of association by setting up too many trade unions. Now, there are 2,300 unions for 400 factories, meaning one plant with some 7 to 10 unions, which are very difficult to manage. The government is trying to pass a new law to manage the situations."

  • Infrastructure & Communication:

Improvement on IT and mobile connections

The number of mobile subscribers in Cambodia surpassed the country's estimated population in November of 2011 according to data compiled by the Phom Penh Post. The country had 14.96 million mobile subscribers in November, against an estimated population at 14.7 million.  Many Cambodians have two or more SIM cards in order to take advantage of competing phone company tariff promotions in a fiercely competitive market.

Still slow improvement on railways

Some experts say Cambodia would not be fully ready by 2015 when the AEC is due to take effect. Aun Porn Moniroth, Secretary of State for the Ministry of Economy and Finance also expressed concerns about the country's infrastructure, especially Cambodia’s railway system.    He spoke specifically about how the country did not have the financial capability to construct a planned 257-km railway stretching from Phnom Penh to Vietnam, which if finished would markedly improve the country’s chances of smoothly joining the AEC, the Secretary of State told the Bangkok Post.

"We need to seek partners not just in Asean but outside too, because our project is big and needs a lot of money," he said, reported Xinhua News. He declined to estimate the total cost to complete the project because it was still at a tentative stage. "We don’t know how much money will be needed for the project because the technical study was just finished, and they still need to study the finances.’’

Chheng Kimlong, a professor of business and economics at the University of Cambodia, noted that Asean member states’ development levels differed greatly from each other in terms of resources, funds, connectivity and human resources. In this respect, Cambodia was still far from matching some of its more wealthy regional neighbors and this distance is likely to persist.

Bloomberg news reported recently that Cambodian official said the government had been educating Cambodian people about the importance of the AEC and was encouraging them to support its work in the ASEAN community so the country and its citizens would reap benefits from the initiative.






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