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Despite global gloom, Cambodia’s corporate sector sees positive prospects

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The corporate sector can expect a vibrant 2019 as consumer spending remains high. Shutterstock

Despite global gloom, Cambodia’s corporate sector sees positive prospects

The economic outlook for the world remains challenging and uncertain as the ongoing trade war between the US and China exacerbates already stretched resources and factors of production.

Against a backdrop of regional and global gloom, Cambodia’s corporate sector outlook remains bright and is being seen as a magnet for investment with companies looking to expand in Asean.

Experts are confident that Cambodia’s growth of seven per cent over the last few years, is expected to continue in 2019 and beyond. In fact, Cambodia’s growth is the highest among Asean members.

However, the disruption and slowdown in the world’s economy by the current US-China trade war is seen by many as an opportunity for Cambodia’s corporate sector to exploit the vacuum and uncertainty by making rigorous reforms to support this growth and to make the country competitive on a global level.

The buoyant environment in Cambodia is further reflected by the FDI inflow which increased for the fifth consecutive time in the last two years to $832 million, that started in the second quarter of 2018.

Meanwhile, the the garment and tourism industries provided a strong growth impetus to the Cambodian economy in 2018. Both sectors were the main stay of the economy, driving up performance.

The garment industry grew in 2018 as a result of relocation to Cambodia due to rising wages in China while several factories in Bangladesh faced difficulties. Total garment output increased by 11 per cent.

Tourism also increased by 11 per cent resulting from increased international arrivals.

For 2019, the garment industry is again expected to dominate the economy, which accounts for 16 per cent of the gross domestic product (GDP) and 80 per cent of the total exports.

However, this sector can expect to see some challenges as a result of twin pressures.

The first challenge comes from the EU after itinstituted a withdrawal procedure. During this withdrawal period, the EU will probe human rights issues. About 40 per cent of all Cambodia’s garment exports go to the EU. While this issue could affect the garment industry, pundits are confident that exports to the US, accounting for about 30 per cent, could see greater expansion.

The other challenge facing the garment industry as well as all other sectors is energy to fuel manufacturing.

While Cambodia is resource rich, the energy sector needs to be further developed. Plans are already afoot to connect all 25 provinces to the national grid by 2020. There are also plans to diversify energy needs using solar energy, wind power and biogas to meet current and future needs.

The construction sector provides a huge potential to investors as much of Cambodia has yet to be opened up to development.

Construction of infrastructure, roads, commercial buildings, housing and schools provide investors with massive opportunities for investments and good returns.

Cambodia’s corporate sector can expect a vibrant and active 2019 as consumer spending remains high with potential to go up as investors start pouring in to exploit low production costs, increasing labour productivity and efficient utilization of local natural resources.

A bright future awaits Cambodia’s people as they march into a future filled with potential and opportunities.