Cambodia has got a developing market economy that has been growing at an average rate of 10 % since the year 2004. Due to the global economic crisis, this growth rate slowed down in the year 2009. There are only one third of the 13.3 million Cambodians who are living in poverty but government hopes and are struggling to raise the standard of living of these poor citizens. The constitutional and the democratic system which was reestablished in the year 1993 killed most of the intellectuals and the capitalists of Cambodia. The warring parties in Cambodia fought for national parliamentary elections in the year 1993, 1998, 2003 and 2008. A coalition emerged between the Cambodian People’s Party and the royalist FUBCINPEC party emerged during 1933, 1998 and 2003 elections. The CPP won the elections in July 2008 but FUBCINPEC was selected as minority coalition party.
Cambodia is one of the LDCs having an export of 2 billion dollars. It was the first less developed country that managed to join the World Trade Organization (WTO) in the year 2004 and because of this the trade of the country steadily increased and now United States of America is considered to be the biggest trading partner of Cambodia.
That is not all, Cambodia is also a member of the Association of Southeast Asian Nations (ASEAN) and the Asia Free Trade Area (AFTA). These two associations will help in increasing the regional trade because the ASEAN tariffs will be decreased to 0 to 5 % by 2015. It has managed to develop a series of powerful, highways, railways and telecommunications plants with the help of ASEAN. Because of this the intra-regional trade will certainly expand. Angkor Wat has been leading the tourism industry in Cambodia. A large number of tourists come from EU, USA, Japan, China, Vietnam and Korea explores this amazing place. As it is a major tourist spot, the government in order to promote more tourists is trying to open up more options by expanding the beach tourism attractions and ecotourism.
Though there is a lot of tourism, export of garments but still Cambodia is an agrarian economy. Almost 80 % of Cambodia’s population is employed in the agricultural sector.
The major crop of Cambodia is rice whereas it also exports cassava, corn, rubber, fish, and many other crops. If the Agricultural inputs, farming practices and the infrastructure is improved then this can certainly increase the Agricultural produce. There are plenty of such land in Cambodia that are uncultivated and because civil war and communist rule, their ownership has not been titled yet.
The steps taken for development in Cambodia were because of the financial support of the donors among which the World Band, Asian Development Bank support and the IMP are important names to mention. It has been since the year 2004 that foreign investment in Cambodia was increased. Investors from countries like china, Thailand, Malaysia, Korea and Vietnam started projects here. Generous incentive packages are offered to the foreign investors in order to promote more and more investment in the country.
Though Cambodia flourished a lot in the years after the communist rule and the civil war but the country still has got a poor rank in the World Bank, Global Forum Surveys and Transparency International. The country has to face plenty of challenges such as undeveloped human resources, poor infrastructure and weak institutions.
Being a less developed country, there are plenty of market opportunities in Cambodia. Investments can be made in tourism, resorts, architecture, infrastructure, education, household sector, automobile industry, construction, power generation, pharmaceutical, banking, food, engineering services medical supplies and equipment etc.
Entering into the Cambodian market is easy. All one has to do is find an agent or a distributor and you will easily reach to plenty of potential buyers. As the agent will have plenty of knowledge over the market and established networks, he will be able to promote the business here. For successful business transactions, it is important to have good personal relationships with the Cambodian business partners.
The importance of due diligence for the Cambodian market cannot be denied. In the 2008 corruption index, Cambodia was at 166 out of 180 countries. There is minimum transparency in the commercial as well as government sectors in Cambodia. One publicly held company is present in the country. This can be a problem for the SMEs for sure. Therefore, it will be important for the SMEs to find reliable partners and make sure all the terms and policies are properly decided. Here, connections work well in making relationships that are trustworthy.
Cambodia being a hot country is not a good choice for those who are formal western business persons. However, when it comes to a strict formal meeting, then everyone must wear a decent suit in which tie is must for men and dress for women.