Doing Business in Cambodia

Sector-specific opportunities

Research

You should carry out as much market research and planning as possible before exporting to Cambodia, using both desk research and visits to the market. You need to determine if there is a market for your product or service and whether your pricing is competitive.

DIT’s trade specialists can help you identify local representatives for your products in Cambodia. See: https://www.gov.uk/overseas-customers-export-opportunities.

DIT provides free international export sales leads from its worldwide network. Find export opportunities in Cambodia at: https://opportunities.export.great.gov.uk/.

Agriculture sector

The agriculture sector continues to contribute to Cambodia’s economic growth although not yet to its full potential. While it offers the majority employment in Cambodia, much of this labour can be considered “informal” and unskilled in nature. Agriculture is a key focus in government and investment policies as Cambodia looks to diversify its economy and generate more value-added jobs with more industrial opportunities.

Agricultural production, by its very nature, is heavily dependent on rainfall and seasonal weather patterns, all impacted today by climate change. Cambodia’s main crop is rice, which generates an estimated 70% of total country production during the wet season. Irrigation systems play an important role in managing water supplies, addressing weather changes, and diversifying agriculture production in Cambodia. Despite the importance of irrigation, current irrigation systems in Cambodia can be described as large works of public infrastructure, covering an estimated 22% of area under paddy rice cultivation in 2015.

For further information on the agriculture sector, including rice production, rubber production, subsidiary and industrial crops, the fruit and vegetable market, livestock, dairy production, organic agricultural products and fisheries see the BDLINK Cambodia/BritCham Cambodia report: ‘Agriculture and Agro-Processing Sector in Cambodia – Taking Stock: A detailed review of current challenges and investment opportunities in Cambodia (May 2017)’ on the UKABC site at: http://www.ukabc.org.uk/publication/taking-stock-detailed-review-agriculture-challenges-opportunities-cambodia/, or contact DIT Cambodia at: commercial.phnompenh@fco.gov.uk.

[Source – BDLINK Cambodia/BritCham Cambodia/UKABC]

 

Construction sector

Cambodia’s construction sector is undergoing dynamic growth, evidenced by the construction of satellite cities, modern skyscrapers, residential blocks, condos, commercial buildings, modern shopping centres, office buildings, and international-standard hotels.

This has happened in large part due to the confidence both local and international investors have in the political and economic stability in the Kingdom. The government considers the construction sector to be one of the nation’s economic pillars, and has allowed the Cambodia Constructors Association (CCA) to aid in the sector’s development to bring it in line with its development goals and to boost construction standards, especially during the process of ASEAN economic integration.

These efforts will help Cambodia conform to ASEAN’s overarching goal of “One Community, One Destiny.” CCA is a non-profit association registered in full compliance with the laws of the Kingdom of Cambodia. In order to carry out government policy and cement the private sector’s role as the nation’s economic driver.

For more information on the construction sector in Cambodia, contact the CCA at: http://www.cca.org.kh/; or contact DIT Cambodia at: commercial.phnompenh@fco.gov.uk.

[Source – UKABC/CCA]

 

Education sector

Cambodia recently attained lower middle-income status and its GDP growth is a steady 7%. Cambodia’s population is 16 million with more than half its people under the age of 25 years. Cambodia’s membership in the ASEAN Economic Community is driving a step-change in the country’s education system. The government recognises the urgent need for human resource development and a future skilled workforce to support the country’s future economic growth.

Economic diversification has important implications for Cambodia’s education system and the labour market. A more relevant and responsive education and training system is required to equip students with the knowledge and skills needed to become productive members of the workforce. The Ministry of Education, Youth and Sport (MoEYS) has overall responsibility for formulating national education policies.

In 2017 the government allocated US $677 million (over 3% of GDP) of its budget to education, which is expected to increase to over US $700 million in 2018. The Education Strategic Plan 2014-18 covers reforms from primary to tertiary education including curriculum development, teacher training, STEM, quality improvement, and educational infrastructure. This addresses the government’s immediate focus on improving the quality of its education and increasing access to education and vocational training opportunities.

For further information on the education sector in Cambodia, see the UKABC’s summary assessment at: http://www.ukabc.org.uk/wp-content/uploads/2017/11/Cambodia-Education-Sector-Info.pdf; or contact Romdoul May, Head of DIT Cambodia at: romdoul.may@fco.gov.uk

[Source – UKABC]

Case study

Young children across Cambodia will soon be able to learn English with Pingu, thanks to a new and exclusive Master Franchise announced by the Linguaphone Group.

Pingu’s English is a three-level pre-school English language program for 3-8+ years. It is already transforming the way that young children learn English in over twenty countries worldwide, using the entertaining and loveable character, Pingu™. Pingu’s English is produced by the Linguaphone Group, a global language training provider with a presence in over 40 countries worldwide, and over 110 years of experience in the language training sector.

Following an initial introduction by the British Chamber of Commerce in Cambodia, Sok Im Holding, a holding company with investments across a diverse range of key growth sectors, including telecommunications, trading, and hospitality has been appointed the exclusive Master Franchise partner for Pingu’s English across Cambodia. The Cambodian-based company has extensive experience of managing international brands, as well as building substantial businesses from scratch.

Pingu’s English Cambodia will launch their first Pingu’s English School in central Phnom Penh early in 2018. They will also offer Pingu’s English Unit Franchise opportunities to investors across Cambodia.

Appointing a partner for Cambodia has been a key target for the Linguaphone Group’s expansion plans across Southeast Asia (SEA). Launching their pre-school brand in Cambodia early in 2018 will further build on their existing strong presence in the ASEAN markets of Indonesia, Malaysia, Myanmar, Singapore, and Thailand.

[Source – UKABC]

 

Retail sector

Modern Cambodia’s young population – half under the age of 25 – is tech-savvy and worldly: avid users of Facebook and YouTube, with increasing awareness of the world outside of Cambodia. This awareness shapes their preferences for how they want to live – and they want to live like the world they see through their smartphones: individual, independent but family-orientated, self-directed, and with all the choices and accoutrements of a middle-income society.

In 2016, Cambodian incomes moved into the World Bank’s Middle Income bracket, passing US $1,045 GNI per capita. Income levels are now rising across all socio-economic classes. A small but significant group of highly-affluent families have emerged, of particular interest to luxury goods sellers. In remote rural villages subsistence farmers now have income for the first time in their lives, and in the cities – where much of the action of economic growth is visible – educated young adults’ income is growing, and they expect to have more highly-paid careers.

With this growth in earnings comes a growth in disposable incomes. Borders are opening up, trade is increasing, and there are many more products to buy. Against this backdrop, tastes, preferences and habits are forming and changing rapidly. In a unique inversion of the mature market process, it is the young population that is driving new product preferences – guiding habit formation, and influencing the adoption of branded products by their parents. Young people are teaching their parents about products “new to Cambodia”, and how to use them. They are leading the way in the adoption of new technologies.

The market for consumer goods is still underdeveloped in Cambodia. Consumers need to be educated about the value and use of products. Marketing support is critical to successfully growing sales and market share.

It can be challenging to find qualified local management and a professional workforce, so companies should be prepared to be hands-on, and plan to provide education and support for local teams.

For more information on the retail sector, including the packaged foods, beverages, personal care, home care goods, clothing and accessories, luxury and consumer electronics markets see the BritCham Cambodia/DIT report: ‘An Insider’s Look at the Changing Cambodian Consumer: Executive Summary’ (April 2017) at: http://www.ukabc.org.uk/publication/insiders-look-changing-cambodian-consumer-executive-summary/; or contact DIT Cambodia at: commercial.phnompenh@fco.gov.uk.

[Source – BritCham Cambodia/DIT]

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