Rising from the ashes of decades of war and civil strife, the Kingdom of Cambodia made its way gradually toward an open market system. In 1994, the country opened up all its business sectors to foreign investments. Based on figures released by the Asian Development Bank (ADB), GDP grew 7 percent in 2014 and is estimate
Rising from the ashes of decades of war and civil strife, the Kingdom of Cambodia made its way gradually toward an open market system. In 1994, the country opened up all its business sectors to foreign investments. Based on figures released by the Asian Development Bank (ADB), GDP grew 7 percent in 2014 and is estimated to reach 7.3 percent in 2015.
According to Biswas Surajit, VP of Sales for ASEAN at Robert Bosch SEA, growth in the local security market in this region is at US$4 million (roughly 10 percent). He added that the current market in Cambodia is fragmented and filled with low-cost products. Furthermore, business in the country revolves around price-based selling rather than solution-based selling.
Sovan Hok, Technical Manager at NKDesign Cambodia agrees saying, “Customers in Cambodia often prioritize low prices over quality; thus, cheap Chinese products are the most popular ones on the market. Knowledge of brand products is quite limited.”
INFRASTRUCTURE
Cambodia is currently experiencing a construction boom. In the first half of 2015, the Ministry of Land Management, Urban Planning, and Construction has approved 915 projects including the construction of commercial buildings, shopping malls, and residential housing, amounting to $808 million in investments. This, according to Kuy Channeth, Sales Project Manager at Visco (Cambodia), is an important vertical market that will drive demand for access control devices.
A $143 million national railway rehabilitation project successfully restored the southern line to running condition but stalled before the northern line could be completed. However, it is reported that restoration is ongoing and a railway link to Thailand will be completed at the end of the year.
TOURISM
Based on official reports, Cambodia received 4.5 million international tourists in 2014 and this is set to increase to 7.5 million by 2020, aided by Cambodia and Thailand's “Two Kingdoms, One Destination” agreement in July 2014, which allows the use of a single visa for travel to both countries. To accommodate this expected increase in tourist volume, expansion projects are underway at Phnom Penh and Siem Reap airports which will be completed in 2016.
Foreign investors are also moving to cash in on this lucrative sector. Several luxury hotels, such as the country's first Shangri-La Hotel and The Okura Prestige Phnom Penh are set to open its doors in 2019. Likewise, a new resort, Alila Villas Koh Russey, is scheduled to open next year.
SPECIAL ECONOMIC ZONES
The UN World Investment Report showed that Cambodia's FDI for 2014 totaled $1.73 billion. There are currently 34 approved Special Economic Zones (SEZ) in the country, offering foreign investors incentives such as tax exemptions, lower electricity costs, and better infrastructure. Phnom Penh SEZ, one of the country's most developed economic zones, recently announced a $100 million investment from Coca-cola to build a second factory in the area. Several new constructions projects are underway in Phnom Penh's Dangkao district as well as in Kandal's Takhmao district, where there is a Kerry Worldbridge Logistics hub project worth $100 million.
OUTLOOK
Cambodia is clearly making its way towards economic stability and growth. With the abundance of new economic opportunities opening up in the near future, it is reasonable to be optimistic of the positive implications it will have on the emerging security market.