The economy of Cambodia distributes mainly from three factors including tourism, garment industrial, agriculture, and real estate. In the ASEAN community, Cambodia is increased by 7.5 percent in 2018 and is considered to be one of the rapid economic growth in the recent decade. However, this number has slowed down to almost 2.3 percent in 2020 due to the Covid-19 pandemic which led to a decrease in each main factor differently.

No matter what happens to the Cambodian economy, these three factors remain crucial for Cambodia in the post-pandemic period. And this article will detail these three factors elaborately regarding how these factors contribute and enhance the Cambodian economy regardless of Covid-19 impacts.

1. Tourism Factor in Cambodia

Talking about the most crucial factors, we need to put tourism first to discuss. According to New Straits Times reports that Cambodia’s tourism sector contributes to 12.1 percent of the country’s gross domestic product growth and employs up to 630,000 people. In 2018, according to news reports, the number of foreign tourists reached 6.2 million reinforced by a huge rise in Chinese tourists. A large number of tourists are attracted to the Siem Reap province in order to visit the historical site of Angkor Wat temple, however, a growing number of foreigners are also visiting the beaches in the southern town of Sihanoukville which led to gain annual revenue from this sector was estimated to $4 billion.

2. Garment Industrial in Cambodia

In the garment industry in Cambodia, approximately $5.7billion in clothing and shoes were exported last year, responsible for almost 95 percent of all Cambodia exports. With a population of 15 million in Cambodia, the garment industry employs around 500,000 people, mostly women. However, the industrial owners are mostly not Cambodian, but Chinese, Taiwanese, Malaysian, Korean, and other nations. According to this, foreign investors can gain this opportunity to invest their money in this factor in Cambodia in the way to gain more revenue and profit. Along with low labor cost, strategic locations, many labor forces available, and many other advantages.

3. Agriculture Factor in Cambodia

The agriculture factor remains a crucial element of the Cambodian economy which provide Cambodia almost US$5.47 billion or 22% of GDP in 2018. According to the National Institute of Statistics have shown that subsectors from 2013 to 2018, like crop cultivators, the average annual growth rate was 1.18%, fisheries grew at a rate of 1.73%, however, the livestock sector set out to only 0.50% raise. The sector expects to confront climate challenges since climate change is getting worse. However, a will, there a way to overcome such issues, especially, during this modern age. Anyway, there is a possible way for an investor to think about agriculture factors in Cambodia. Cambodia needs to modernize regarding agriculture factor rather than just only depend on the traditional method to harvest.

4. Real Estate Sector in Cambodia

Industrial estates are another excellent investment currently. This past year, there was a shortage of supply in the market for warehouses and factories. Around the area along National Road No 4, the rental price for a warehouse is approximately US$2 to US$2.5 per square metre, while within industrial zones such as PPSEZ, the rental price can be approximately US$3 to 3.5 per square metre. However, the investor will gain more incentives. Dangkor, Prek Pnov, and Sen Sok districts will be the potential areas as the industrial zones are moving there.

It has been another great year for real estate development sector in Cambodia due to increasing demand from both local and international investors in 2019. According to the Ministry of Land Management, Urban Planning and Construction (MLMUPC), a total of US$9.3 billion worth of investments came into the kingdom, spread across 4,446 approved investment projects, which represented 55% growth over 2018. What about 2020? Early 2020 has not been going that well because of factors such as the shutdown of online gambling in Sihanoukville, the Coronavirus outbreak, the China economic slowdown, the uncertainty over the EBA withdrawal, the trade war between China and the united states, widespread protectionism, and geopolitical issues around the world, among others. Given these factors, the Ministry of Economy and Finance has recently lowered the forecast of GDP growth in 2020 from 6.5% to around 6.1%. Last few weeks, the World Bank also predicted on Cambodia’s economic growth to slow to 2.5% in 2020 because of COVID-19.
Similarly, many local experts also project that the true estate and construction sector in the kingdom would also experience hook slowdown this year.

Nevertheless, according to analysts, Cambodia is still among the best places in the Southeast Asia region to invest in real estate, despite the projections of a slowdown. The most apparent example distributed by CBRE Cambodia is that land prices in Ho Chi Minh City, as of the fourth quarter of 2019, cost up to US$30,000 per square metre in the central dis usuallytrict, in comparison to only US$6,000 per square metre in Daun Penh.

GDP growth rate projected at 6.8% in 2019
Population estimated to reach 16.3m in 2019
The construction sector grew by 18.1% in 2018
Total volume of international tourists increased by 11.5% in 2018

Land: Investing in land remains the best type of investment above all if one is qualified to receive property ownership because the capital gain from land is very high. When investing in the right property, the capital gain can increase by up to 50% or 100%. For 2020, property prices in Phnom Penh will see a slight drop, but expenditure continues to represent high potential depending on the area.

Condo: For foreigners who are not eligible for buying land, landholding companies can be among the remedies. Nevertheless, co-owned space investment such as office spaces, strata offices, or condominiums is the more suitable types for foreigners. According to Mr Sorn Seap, investing in low and mid-end types of condos will be the best choices at this moment. There is more demand for these types than others; thus, they are simpler to sell. However, some high-end condo projects are exceptional.

Apartment: If one is interested in investing in an apartment kind of property, Chamkarmon district such as Boeung Keng Kang and the Russian market areas should be the ideal locations. Chamkarmon district is the business dis usuallytrict centre, where there are a lot of company workers, both local and foreigners living there; thus, a rental apartment remains a good business to invest in. Moreover, apartment investment projects have lately started to move to Touk Kork as well, since several office projects are also moving there. One of the reasons is that the land supply in Boeung Keng Kang is definitely very limited and expensive.

Borey: Investments in the Borey segment are actually moving to the southern part of Phnom Penh, Dangkor district along National Road No2, specifically. Prek Pnov district has also been attracting a lot of big Borey projects. For Prek Pnov district, investing in low-end Boreys is recommended, due to the high demand for low-end Boreys driven by industrial development in the area. The cost of Boreys in that area range from US$35,000 to US$100,000.

These four factors are the important factors that help Cambodia to grow from year to year. This article just shows generally how each factor contributes to economic growth in Cambodia that investors can take this information to consider before deciding to invest.

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