Cambodia Economics and Business

According to cheeroutdoor, Cambodia is a small, landlocked country located in Southeast Asia. It has a population of over 16 million people and is one of the poorest countries in the region with a GDP per capita of just $1,257. Despite its low income levels, Cambodia has made considerable progress in recent years with economic growth averaging 7% per annum since 2012. The economy is largely dependent on agriculture which accounts for around 30% of GDP and employs around two-thirds of the population. Other important sectors include tourism, manufacturing and garment production.

The government has implemented a number of economic reforms including liberalizing trade, encouraging foreign investment and improving access to credit. These measures have helped to stimulate economic growth which has been further supported by increased access to electricity, roads and telecommunications infrastructure. In addition to this, the government has also taken steps to diversify the economy away from its reliance on agriculture by promoting tourism and light manufacturing such as garments and footwear.

Despite this progress, Cambodia still suffers from high levels of poverty with nearly 40% living below the poverty line according to World Bank estimates. The government has begun taking steps to reduce poverty by investing in education, healthcare and social protection programs but much more needs to be done if Cambodia is going to become an upper middle-income country by 2030 as per its stated goal. In addition to this, corruption continues to be an issue in Cambodia with Transparency International ranking it as one of the most corrupt countries in Southeast Asia making it difficult for businesses operating in the country.

Tourism and gastronomy

After peace has returned to most of Cambodia, the number of foreign visitors has also increased. This is not a form of mass tourism, however.

Cambodia GDP (Nominal, $USD) 2003-2017

According to COUNTRYAAH, tourism started in the latter part of the 1980s and grew significantly until 1996. Then a decline followed, first as a result of domestic conditions and later as a result of the Southeast Asian financial crisis. The government then invested in direct foreign flights to Siem Reap near Angkor Vat, and as early as 2002, 1/3 of the close to 800,000 tourists came that way.

The outbreak of the disease in 2003 led to a decline in tourism, but since then it has increased significantly every year, and in 2012, 3.6 million tourists arrived. However, most people stay only a few days in the country. Studies have shown that only 30 percent of tourism revenue will benefit Cambodia, as flights and hotels are foreign-owned. Foreign investors are interested in tourism projects in the country, but these are being realized very slowly.

The ruin city of Angkor in the northwestern part of the country, including with the Angkor Vat temple complex, is a world attraction that has received more and more tourist visits in recent years. In Phnom Penh is Tuol Sleng, a well-visited museum where the Red Khmer genocide is documented. At Sihanoukville in southwestern Cambodia there are beautiful beaches. The country also has a rich natural life, not least in the country’s northwestern parts.

Note: the capital city of Cambodia is Phnom Penh with a population of 1,700,000 (2015 estimate). Other major cities include Sihanoukville with a population of 157,000, Battambang with a population of 150,000, Siem Reap with a population of 139,000 (2014 estimate).

The Cambodian food is influenced by the Thai. Strong, fairly dry curries are typical, rice is a basic ingredient and nuoc-mam, fish sauce, a universal spice. The most common breakfast dish is a soup; In soup chinoise, lemongrass is an important ingredient. The green tops of the lemongrass turn into tea, the white bottoms of the stalks a cooling element in hot curry dishes. Phoat khsat, royal rice, which is served as a specialty in the capital, consists of a mixture of chicken, pork, shrimp and rice. The desserts are often cooked with coconut milk and honey and flavored with jasmine.


Abbreviated as KHM by, Cambodia was a prominent agricultural country in the 1960s, self-sufficient with basic foods and with export of rice and raw rubber. The war of 1970-75 brought chaos to the economy and serious food shortages. After the end of the war, the Red Khmer nationalized the whole business and collectivized agriculture, but the country became dependent on rice imports and in 1985 GDP per capita was considerably lower than twenty years earlier. Trade was conducted with other communist states and from there also came development assistance. Transport began to function again and simpler industrial production resumed. Since 1986, the regimes have implemented numerous economic reforms that have opened up to private enterprise and foreign investment.

Cambodia is still an agricultural country. Almost 60 per cent of the population works with agriculture, a large part of which is self-sustaining. Most households can be counted on the informal sector and many data on the structure and changes of the business sector are difficult to interpret, as it is unclear what is included. During the period 2000-08, GDP grew by just over 9 percent a year and foreign trade by almost 15 percent annually, but the country is still, along with Laos, the poorest in Southeast Asia. On the welfare list HDI (Human Development Index), Cambodia in 2017 was ranked 146th among 189 countries. Both education and healthcare as well as technical infrastructure have major shortcomings.

The economy has a narrow base. The country’s income comes mainly from international tourism, which increased sharply during the 1990s and from the export of clothing, mainly to the US and EU countries. In both cases, operations were adversely affected by the global economic crisis of 2008-09. Foreign investments have so far been mostly intended for tourist facilities and only to a small extent industrial expansion.

Cambodia depends to a great extent on international aid, and during the period 2002-07 it amounted to SEK 600-700 million annually. Lenders are increasingly demanding from the government before they deliver the aid. Above all, they demand better enforcement and accounting, as well as decentralization and measures against corruption and illegal logging.

Through Sida, Sweden is developing development cooperation with Cambodia. During the latter part of the 1990s, it focused on human rights, democratic development and education, mainly for girls. Much international aid was also used to improve agriculture and increase access to health care and clean water.


Agriculture is extremely vulnerable to abnormal weather with drought or flooding, and it is aggravated by inadequate infrastructure and a great lack of irrigation and manure. In the mid-00s, only a tenth of the wet rice fields could be irrigated. Wet rice is the staple food and by far the most important crop, and during “normal” years an excess is exported. Other important crops are cassava, corn, soybeans, sugar cane and bananas. Vegetables are grown on a small scale and vegetable food is traditionally obtained from forests and lakes as well.

The most fertile agricultural areas are around Tônl谷 Sap and in the lowlands around the Lower Mekong. But agriculture faces major problems. Deforestation has caused severe erosion on the slopes and the watercourses are filled with sludge, which makes the irrigation of the wet rice fields more difficult. In many areas, ownership limits and ownership conditions are still unclear since the war years and out in the fields there are undetected landmines. Bad roads, poor trade organization and lack of information to growers are obstacles to increased sales production. Local and international support organizations are working to disseminate information on new crops, especially vegetables, that could improve food standards and raise income levels in many areas. After all, however, agriculture has shown a fairly good growth rate in 1995-2007 with an annual production increase of 4.5 percent,

Until the late 1960s, raw rubber was by far the most important export commodity, but plantations were badly damaged during the war years. The trees have aged without being replaced and during the 00s the rubber exports were small. The number of pets was halved during the war and emergency years. Since then, the stock of cattle has increased slowly, and in the mid-00s it was slightly larger than thirty years earlier. Poultry, cows and pigs are the most common domestic animals.


At the end of the 1960s, close to 75 percent of Cambodia’s area was covered by forest, partly with valuable woods. The harvested timber was then used to 90 percent as fuel in households and for the production of charcoal, while the remainder was exported. War then destroyed much forest, but above all, it was the Thai company’s predatory logging that greatly reduced the forest area, and in 2005 it amounted to 59 percent. In addition, forest areas in the east are still contaminated with undetected landmines.

For several periods in the 1990s there were short-term prohibitions on timber exports and also harvesting. It had then started to raise awareness that the unrestrained logging resulted in serious ecological damage, such as severe erosion and water sludge sludge. However, Thai forest companies received continued exploitation permits from the central government or, illegally, from local authorities, opposition politicians or military leaders. The smaller part of the revenue from the harvest fell to the state, promised re-planting did not happen and environmental degradation continued. In 1999, the campaign against illegal logging intensified. The donors demanded that the regime implement the sustainable forestry programs; if not, general assistance would be withheld. Since then, the government has given over 5 percent of the total forest area to the local population, whereby about 200 ※village forests§ have been established. This may be sufficient to meet the local need for fuel and building materials. However, the large-scale harvesting of timber for export and timber for the sawmills continues beyond the control of the state and much greater efforts are required from the central government to achieve sustainable forestry.


Fish is the most important source of animal protein in the diet in Cambodia. Tônl谷 Sap, Mekong and the lowland’s many watercourses have been rich in fish, and freshwater fishing has traditionally accounted for more than 80 percent of the total fish catch. In the 1980s, fish farming was introduced by aid agencies and Vietnamese. Catches of freshwater fish then increased but have subsequently declined, mainly as a result of deteriorating ecological conditions. Increasing logging means that materials are brought down to the waterways that are filled with sludge. The swamp forests are grazed, which also negatively affects the migrants’ migration, reproduction and growth. By the end of the 1990s, less than 40 percent of the swamp forests had retained their original vegetation and harvesting has continued.

Fishing is not sustainable. The authorities have poor control and the state’s income from fishing has fallen sharply. Rules are not followed and corruption is common when fishing rights are allocated. Two-year fishing permits are auctioned at the highest bid, which further stimulates predatory operations. Of the total fishing catch in 2007, 13 percent came from fish farms and slightly more from sea fishing. More than 70 percent came from traditional freshwater fishing, while the remainder was shrimp.

Minerals and energy

Mineral extraction has so far had very little significance in Cambodia. Phosphate is mined on a small scale to be used for artificial fertilizers as well as limestone for cement production. The longest tradition has been extraction on a local scale of sapphires and rubies, mainly in the border areas to Thailand. On a commercial scale, it gained great importance in the area controlled by the Red Khmer, around Pailin, when the smuggling of gems gave money for arms purchases.

Geological surveys during the 1990s have shown that there is great potential for mining industry in the country. In the north and east there are deposits of copper, gold, iron ore, manganese, zinc, tin and bauxite, but so far there is no information as to how large they are. Some sixty companies, both foreign and domestic, have shown interest in mining, but plans and projects were abandoned during the global economic crisis of 2008-09. A major obstacle to the growth of a mining industry is the very inadequate transport and energy supply, as well as corruption and inefficient administration.

Significant deposits of oil and natural gas are found about 15 km offshore, and land of low quality coal has been found on land. So far, it has not been possible to agree on the distribution of future oil revenues between the Cambodian state and the foreign oil company, and all fossil fuels must also be imported in the 2010s. Firewood is by far the most important domestic energy source. In 2008, only 20 percent of households had access to electricity. There is still a nationwide electricity grid and electricity is very expensive. In 2007, 85.5 percent of the electricity came from diesel-powered power plants and only 3.5 percent came from hydropower plants, while other electricity was imported. However, there is great potential for hydropower in the Mekong in the northeast and in the smaller watercourses of the mountain regions.


During the period 2000-08, the indutris sector grew annually by 12 percent. Construction was particularly strong, mainly due to roads and tourist facilities. The manufacturing industry is dominated by risk hedges that are small and are found in all regions and by cladding production that is mainly found in the metropolitan area. In addition, household appliances, soft drinks, cigarettes, textiles, rubber tires, wood and construction products and simple pharmacy products are manufactured.

The limited industry that emerged in the 1960s was seriously damaged during the war in the 1970s. Subsequently, a slow rebuild with Soviet support took place and private small companies also began to grow up. In 1988 it also became possible to establish joint ventures jointly owned by the state and foreign companies. In the mid-1990s, very favorable conditions for foreign investors came, but industrialization nevertheless slowed down. A number of state factories were at a loss and most of them were leased to private companies. The main obstacles to a more extensive industrial expansion during the 1990s were substandard infrastructure, inefficient administration, extensive corruption, lack of both educated manpower and spare parts and insecure energy supply.

Foreign trade

During the 1980s, exports mainly consisted of raw rubber (3/4) and timber, and trade was carried out at about 80 percent with communist states, mainly the Soviet Union and Vietnam. Thereafter, it ceased to be closely linked to the Eastern Bloc as well as the Western embargo on trade. A free trade zone with Thailand and Singapore was established on the coast and trade across the border with Thailand was legalized. From the beginning of the 1990s, foreign trade changed radically. Import costs increased sharply for oil, machinery and consumer goods and since 1997 clothing has been the most significant export item.

  • COUNTRYAAH: Find major trading partners of Cambodia, including major exports and major imports with latest trade value and market share as well as growth rate.

Reexport was very extensive in the 1990s but now has little significance. Cambodia became a member of the World Trade Organization in 2004 and thereafter, foreign trade grew even faster. In 2017, clothing was the dominant product group, followed by timber, raw rubber and rice. Imports mainly consisted of oil products, followed by gold, vehicles, cigarettes and cement. In 2017, just over 20 percent of exports to the United States and just over 10 percent to the UK. Other exporting countries were Germany, Japan, China and Canada. Almost 35 percent of imports came from China, just over 12 percent from each of Singapore and Thailand. The trade deficit grows every year. In contrast, the service exchange shows a surplus as a result of growing tourism. Also, home-sent money from foreign-resident Cambodians contributes to reducing the current account deficit.

Cambodia Economics and Business

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