What's driving growth in Cambodia, Laos security?

As far as security is concerned, Cambodia and Laos are growth markets in Southeast Asia. Both countries are developing rapidly amid investments from the public and private sectors. These factors combine to increase demands for the Laos and Cambodia security market.
 
In terms of economic growth, Cambodia and Laos are growing at rates that are higher than most of their ASEAN counterparts. According to Word Bank estimates, Cambodia’s GDP grew 6.9 percent in 2018, while growth rates for 2019 and 2020 are forecasted to be 6.7 percent and 6.6 percent, respectively. Laos, meanwhile, was estimated to have grown 6.6 percent in 2018 and are expected to achieve higher growth of 6.9 percent for both 2019 and 2020. This is higher than the below-6 percent growth rates forecasted for other ASEAN countries, for example Malaysia, Thailand and Indonesia.

One driver for such growth is spending on infrastructure projects by the Cambodian and Lao governments. These include highways, railways and airports. “The government is building roads, planning new airports and expanding and renovating old ones, such as the ones in Siem Reap and Sihanoukville,” said Kuy Channeth, Sales Project Manager at Cambodia-based V-SAFE.
 
Some of the projects are summarized as follows.
 
According to the portal worldhighways.com, a new highway project is planned for Cambodia that will improve transport connections to and from its capital, Phnom Penh and the coastal area of Preah Sihanouk. Construction of the 190-kilometer route carries a price tag of US$1.8 billion, with the Cambodian government managing the project itself through the Ministry of Public Works, the portal said, adding once the highway is complete it will provide an improved transport link between Phnom Penh and the port of Sihanoukville.
 
Meanwhile, according to the Phnom Penh Post, the Cambodian government has signed off on a proposal to build a new airport to serve Phnom Penh, a $1.5 billion project whose location will be in Kandal province about 30 kilometers south of the capital city. Construction is set to begin early this year, the report said.
 
As for Laos, they are focused on infrastructure projects as well. According to the Borgan Project, in 2017 the World Bank and Laos Ministry of Finance signed an agreement to dedicate $25 million to the Second Road Sector Project in the country, which is mainly designed to create climate resistant road infrastructure and to improve road connectivity in parts of Laos that are susceptible to natural disasters.

 

Arin Alois Loy, Channel Business Manager for APAC at Milestone Systems, adds: “Laos is now one of the fastest growing economies in East Asia and the Pacific and has improved access to electricity, schools and roads. The country is seeing major infrastructure investment, such as the construction of its $6 billion high-speed railway link with China and hydro-electric dams which are enabling it to become a major producer and exporter of hydro-electricity.”
 

Robust private investment

Another growth engine is private investment, a lot of which are from foreign countries. Take Cambodia, for example. “Cambodia economics have become better and better, since there are a lot investors from overseas like China, Japan, EU and others. They are coming to Cambodia for investment in construction, property development, agriculture and other sectors,” said Sovan Hok, GM of NKTECH Cambodia.
 
“While around two-thirds of the population (of Cambodia) are employed in agriculture, other industries are expanding and the country has seen an influx of foreign investment into infrastructure, real estate and construction, garment and textile manufacturing and its burgeoning tourism industry,” Loy said.
 
These factors will combine to drive growth in security. “The security market in Cambodia keep growing as property, construction, casino, hotel and shopping mall are the drivers,” Hok said.