Member's Corner 

Comments by Douglas Clayton, CEO of Leopard Capital


The Asian Development Bank has maintained its Cambodia GDP growth projection of 7.0% in 2014, rising to 7.3% in 2015. This projects a slight dip from 2013’s 7.2%, attributed to political and labor tensions earlier in the year. 2015’s anticipated growth acceleration is based on improving political stability amidst sound macroeconomic management and increasing foreign direct investment.  The recent fall in oil prices may further accelerate growth, as Cambodia is reliant on fuel imports.


The Government defused political unrest by persuading the Opposition party to end their Parliamentary boycott in August 2014, after advancing the next election date to February 2018 and offering a few other political concessions.  The Government has tried to ease labor unrest by offering workers another 28% hike in the minimum wage to $128 per month, resisting union demands for $140-177 per month. Thirdly the Government sought to relieve some of the lingering border tensions with Thailand by warmly receiving Thailand’s Prime Minister.


Exports of Cambodia’s garments and footwear, the country’s largest contributor to GDP, decelerated to 7% YoY growth, totaling USD 3.92 billion in the first 8 months of the year, as a rash of labor strikes troubled the sector. It remains to be seen as to what effect the increasing minimum wage will have on the profitability of this key sector and its ability to attract future foreign investment.                         

Construction, meanwhile, is booming and has overtaken tourism and agriculture as Cambodia’s second largest sector, according to the World Bank. This increase is most noticeable in the capital city, Phnom Penh, where new towers and shopping malls are changing the cityscape amidst rising land prices. Cambodia’s construction sector reportedly attracted $2.5 billion of foreign direct investment during the first half of 2014, including some well-known international developers such as Japan’s Aeon, Singapore’s Oxley Holdings, Malaysia’s Parkson, and Hongkong Land that are all undertaking major projects in Phnom Penh. 


Tourism, now Cambodia GDP’s third most important sector, is feeling the effects of Thailand’s military coup in May which precipitated a slowdown of bundled Thailand-Cambodia tours. Cambodia’s tourist arrivals reached 2.54 million over the first 7 months of 2014, an increase of 4.5% YoY which is sub-par for Cambodia. Tourists from China registered the largest growth rate, up 19% YoY, while visitors arriving through Phnom Penh airport outpaced overall arrivals with 10% YoY growth, suggesting an increase in business travelers to the Kingdom.


Cambodia’s agriculture sector has been adversely affected this year by falling prices for key commodities. Global rice prices hit a 7 year low in 2015 while rubber prices slumped to five year lows.. Cambodia’s rice exports edged up 1.2% YoY in volume terms during the first nine months of 2015 amidst fierce regional competition with neighboring exporters Vietnam and Thailand.


Non–garment manufacturing is increasing as various multinationals relocate production to Cambodia’s borders to take advantage of inexpensive labor and land costs.  Retailing and consumption are also growing rapidly, as evidenced by the ubiquitous coffee chains and worsening traffic jams that have begun to plague Phnom Penh.



Foreign Direct Investment – Cambodia



















Views expressed are personal views of the author and do not constitute any investment recommendation