The past fifteen years have certainly been Cambodia’s time, at least as far as economic development and growth are concerned. Defying most trends of global slowdown, the “Kingdom of Wonder” has been noting near constant GDP growth, becoming one of the fastest growing economies in developing Asia.
As Chinese and multinational garment manufacturing companies shifted much of their production from mainland China to Cambodia, garment exports have become a major factor driving the country’s economic growth. And today, the Kingdom’s economy continues to be supported by the export sector, with garments, tourism and agriculture as key growth industries. According to experts, this upward trend is here to stay. In its latest report on the development outlook for Asia, the Asian Development Bank (ADB), the largest regional financier, stated that “economic growth [in Cambodia] is forecast to ease to 7.0% this year before picking up to 7.3% in 2015.”
But now, with all the talk of economic development and with Cambodia being on the brink of graduating from a low-income to a lower middle-income country, some are looking to the trend of local businesses investing overseas. Asked about this prospect, Dr. Tong Kimsun, programme coordinator at the Cambodian Development Resource Institute (CDRI), a local think tank, said that some enterprises are already venturing outside of Cambodia, such as ACLEDA Bank for example, which has just opened its first branch in Laos.
Although still the exception rather than the rule, the bank is not the sole example. As pointed out by Alexis de Suremain, a French developer living in Cambodia for the past 12 years, hospitality is another sector that is slowly “branching out” of Cambodia. Together with a group of Cambodian investors, the developer is now eying the Myanmar market and will soon open an eco-friendly boutique hotel in the country’s former capital, Yangon. De Suremain is confident it is only a matter of time before other local entrepreneurs start taking their capital to neighbouring countries to compete with Thai and Malaysian investors, who have been spreading their businesses across the region for years.
“Because of Cambodia’s history, development arrived here later than to other countries, so we need to wait a bit. There are many interesting initiatives here like Brown Cafe, for example. And there is no reason why Brown wouldn’t soon be investing overseas.”
His sentiments are echoed by Rajiv Biswas, Asia-Pacific chief economist at HIS – a global information company – who is also of the opinion that a new generation of entrepreneurs is rising in Cambodia. Biswas links his predictions of a soon-to-emerge class of businessmen and women with the ever-present Chinese influence in the country, which he says led to Cambodia’s “remarkable economic recovery and has brought USD 10 billion of investment over the last decade.”
With this significant capital inflow, the standard has been lifted for all aspiring business owners across the country. “It is this rising generation of entrepreneurs,” according to Biswas, “including Chinese-Cambodians, who are slowly looking to expand their businesses into other countries.”
Before this takes place, however, Cambodia still needs to catch up with its neighbours, mainly because as illustrated by a recent ADB study, it remains dominated by small, informal enterprises and farms, operating on extremely modest budgets.
And while it is unlikely that Cambodian businesses will launch an investment offensive in the Southeast Asia overnight, it appears to be only a question of when, rather than if, this will happen.
Text by Marta Kasztelan | Illustration by Cedrick Ragel