Southeast Asia has experienced unprecedented change over the past half-century transforming itself from a poor, undeveloped, and conflict-ridden region, to one with political stability, booming economies, and some of the most highly educated and skilled workforces in the world. Countries like China & Singapore have received a large portion of the limelight and even countries like Thailand and Vietnam are being labeled, ‘The Next China’.
But one country that might not be on your radar is Cambodia.
Located between Vietnam and Thailand, this country of just 17 million has experienced two decades of stable economic growth. In 1999 Cambodia joined ASEAN and from 2010 – 2019 saw an average GDP growth rate of 7%, making them one of the fastest-growing economies in the world. The government is predicting continued growth in the future and is currently aiming to become a middle-income country by 2030 and a high-income country by 2050.
As of 2021, the GDP is 29.8 billion with a GDP per capita of $1,730. Impressive as these numbers are given the tumultuous history, they still lag behind the per capita GDP of their neighbors, Vietnam ($2,800) and Thailand ($7,100).
Over 30% of the economy comes from the manufacturing sector, of which, garments and footwear are the two biggest industries accounting for 72% of the nation’s total value in exports. Of the country’s 1,528 factories, 643 produce garments, and the industry as a whole, provides 635,000 jobs, 90% of which go to women. From 2016 – 2017, garment exports rose by 9.5% and footwear by 14.4%. Despite this growth, the government has plans to reduce the county’s dependency on these two industries by shifting the focus to light manufacturing, which currently accounts for just 3% of total manufacturing.
In 2017, Cambodia became the EU’s largest supplier of bicycles, and other industries such as, electrical parts, automobile components, milled rice, and rubber are currently seeing growth.
Most of the country’s growth is currently coming from the SEZs (Special Economic Zones) of which, there are four main ones. Phnom Penh (the nation’s capital), Sihanoukville, Manhattan, and Tai Seng Bavet. Companies doing business in these zones will receive 100% corporate tax exemption for up to 9 years, 100% VAT exemption, import/export duty exemption as well as free repatriation profits.
As with any developing market though, challenges certainly exist. From finding a supplier to language and cultural barriers, doing business in Cambodia will have its difficulties, but, if the right supplier can be found, the benefits of doing business in a country where the cost of labor is roughly half of China's will be enough to put you ahead of the competition.
As the largest product inspection company in Asia using full-time inspectors only, members of the V-Trust team based in Cambodia can help make sure you choose the right supplier and be your eyes on the ground. Please visit www.v-trust.com or go to our YouTube page for more information.