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.
Cambodia Country Risk
The National League for Democracy continues to consolidate its position as Myanmar's new government, having installed leader Aung San Suu Kyi in the powerful new role of 'State Counsellor' in order to circumvent constitutional restrictions regarding the presidency. Nevertheless, the government faces an increasingly difficult uphill battle in accomplishing its wide-ranging goals around economic and political reforms in the country. Its first major test will be the upcoming 21 st Century Panglong Conference, targeted for July. The conference represents an attempt to move forward with the country's decades-long national reconciliation process, the heart of which is a national ceasefire agreement which has only been signed by 8 out of 15 major ethnic rebel groups. Should the government find a way to accomplish even a limited peace (its lack of control over the military,...
Cambodia Operational Risk Coverage (9)
Cambodia Operational Risk
Cambodia Operational Risk
BMI View: Investors considering setting up businesses in Cambodia do stand to benefit from the large potential labour pool, low minimum wages and openness to foreign investment which help to make the country an attractive investment destination, particularly in light of its natural resource wealth. However there are considerable risks presented by a lack of adequate education, the underdeveloped transport network, high fuel costs and, especially, corruption which is endemic in Cambodia. These risks largely offset the growth potential presented by Cambodia, and as a result the country is a regional underperformer on the BMI Operational Risk Index, with a score of 43.0 out of 100 placing Cambodia 2...
Cambodia Crime & Security
Cambodia Crime & Security
BMI View: Cambodia presents limited security risks to individuals and businesses despite its violent history. Domestic terrorist organisations are restricted in their capacity to launch attacks and are unlikely to target foreigners, while interstate tensions are contained for the most part and will not escalate to the point of major conflict. Crime rates are also low, and no significant security measures are required to protect workers or assets. Nevertheless, there are some areas of concern. Rising crime rates, including for violent crime, may affect foreigners in the capital and tourist areas. In addition, weak legislation and inadequate law enforcement capacity increases the risk of exposure to financial crime and cyberattacks. Consequently, Cambodia receives a moderate score of 48.6 out of 100 in the BMI Crime and Security Risk Index, ranking it 20th out of 35 states in...
Cambodia Labour Market
Cambodia Labour Market
BMI View: Businesses operating in Cambodia benefit especially from the country's young and rapidly increasing population dynamics, as well as the fact that the majority of this working-age population is in formal employment. Due to the current low levels of education and low costs of employment such as wages and labour taxes, the country is a popular location for garment and textile factories of many international brands. Companies requiring highly skilled and technically qualified individuals will in most cases be required to rely on importing workers for these types of positions, as the low levels of education paired with high emigration levels mean that such professionals are few and far between. Additional risks stem from the increased politicisation of trade unions and frequent bouts of labour unrest which occur. Consequently, Cambodia ranks...
BMI View: Investors in Cambodia face major operational challenges due to the country's underdeveloped transport and utilities infrastructure. Decades of conflict destroyed much of Cambodia's road and rail network and since the end of conflict the country has struggled to attract significant investment in its internal infrastructure. As a result, businesses are faced with a crumbling road and rail network, causing substantial risk of delays to supply chains, as well as poor water quality and a limited internet network. Compounding these risks is the high cost of fuel and electricity due to a reliance on imports, along with frequent blackouts due to the ageing transmission and distribution grid. Overall, therefore, Cambodia has a subdued score of 35.0 out of 100 on the BMI Logistics Risk Index, placing the country 27 thregionally...
Cambodia Trade & Investment
Cambodia Trade & Investment
BMI View: Cambodia has had some success in attracting international investment and as such domestic manufacturing capacity is expanding alongside greater utilisation of the country's extensive natural resources. There are, however, major risks facing potential investors. The rule of law is exceptionally weak in Cambodia and corruption is prevalent throughout the government and judicial system. The market also suffers from a lack of capital and businesses will face significant challenges when attempting to access credit or other formal financial services. There are also extensive restrictions placed on foreign investment, clouding an already opaque investment environment. As a result, Cambodia is a regional underperformer on the BMI Trade and Investment Risk Index, ranking 21st out of 35 Asian states (and 133rd out of 201...
Cambodia Industry Coverage (7)
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 area for firms to develop a toehold in these frontier markets.
Between 2015 and 2020, 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, which we believe will take place when these countries achieve GDP per capita of USD3,000. Based on our forecasts, Myanmar and Laos will reach this stage in 2019 and 2021 respectively, while Cambodia will not yet have attained this by 2024. Firms which have built up their brand awareness and loyalty will then be able to reap the benefits of the motorisation boom...
Food & Drink
Cambodia Food & Drink
BMI View: We believe that Cambodia, Laos and Myanmar will offer substantial opportunities for investors 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. Nonetheless, the risks of operating in the region are still high, which means that multinational companies need to be here for the long run.
Key Trends & Industry Developments
Food sales per capita in Cambodia, Laos and Myanmar (CLM) are still low by regional and global standards, and food...
BMI View: Continued political stability will help ensure that Cambodia's business environment remains favourable, which will bode well for foreign investment. Over the longer term, the country is likely to benefit from China's outward infrastructure expansion, which will likely lead to increased investment in Cambodia's infrastructure sector.
Forecast And Latest Updates
The country's underdeveloped road and rail system and the importance of road infrastructure to economic growth suggest that the government will continue to focus on developing the country's transport system. We also expect China's increasing interest in the country to benefit investment in the domestic rail network.
Despite a gradual increase in foreign investment, Cambodia...
Oil & Gas
Cambodia Oil & Gas
BMI View: Being a frontier region for oil and gas exploration, Cambodia does not have any proven reserves or production. A deferral of development at KrisEnergy's Block A, which is the most progressive development in the country, prompted us to remove our forecast of 80mn bbl of proven oil reserves in 2016 and for first oil in 2018. The Cambodian government confirmed that exploration is inactive in licensed areas, which reinforces our bearish outlook for Cambodia's upstream sector.
Pharmaceuticals & Healthcare
Cambodia Pharmaceuticals & Healthcare
BMI View: Cambodia's pharmaceutical market will remain favourable for low-cost generic drugs. This is due to the low per-capita pharmaceutical and healthcare spending in the country as well as the growing chronic disease burden in the country, which will drive up demand for treatments. Firms seeking to leverage opportunities in Cambodia will face competition from traditional medicines, which remain entrenched in the country.
Headline Expenditure Projections
Pharmaceuticals: KHR1,008.1bn (USD250mn) in 2015 to KHR1,113.5bn (USD280mn) in 2016; +10.5% in local currency terms and US dollar terms. Forecast remains unchanged from previous quarter.
Healthcare: KHR3,981.1bn (USD1.0bn) in 2015 to KHR4,181.1bn (...
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 about 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 power due from about 2016. Domestic gas resources could contribute additional capacity,...
BMI View : Viettel has reportedly been chosen by the government as the foreign partner for Myanmar's fourth and final mobile operator, to be licensed by end-2016. Through a joint venture model, Viettel can replicate its tried-and-tested developing market strategy. However, the new operator's challenges include slowing organic mobile subscriber growth, ongoing price competition and corporate governance. Meanwhile Cambodia's mobile market has experienced significant growth in the last few years, but the momentum has come at the cost of one of the lowest ARPU levels in the Asia Pacific region. The lack of growth opportunities, coupled with intense price competition and a crowded market has seen prominent companies exit the market. In Laos,...