According to Sim Vireak, strategic adviser at the Phnom Penh-based Asian Vision Institute (AVI), three key trends will propel the Cambodian economy. The first thing to watch, he said, is to what extent the nation can build on the success of the inoculation campaign. Despite great efforts to reopen the country and the economy, tourists and investors are not yet ready to return. The government-led vaccination campaign provides assurance that Cambodia’s productive capacity and overall worker preparedness are intact.
Cambodia’s global non-gold trade topped $36 billion in the first 11 months of 2021, growing more than 24% year-on-year. Merchandise exports amounted to $15.613 billion, up 22.6%, driven by textiles, bicycles, furniture, furs, rubber, plastics, wood planks, building materials , cables and wiring components, electronic components, sugar, bananas, cassava, mangoes and other agricultural products.
Similarly, imports amounted to $20.4 billion, up 25.3%, mainly fabrics, building materials and fuel.
The second key trend according to Vireak is the silent but steady progress of public investment and reform. He explained that it was about turning the crisis into opportunities. The pandemic has turned into a stimulus for national reforms aimed at building resilience, for solid investments in infrastructure and for the formulation of various long-term policies.
Regarding reforms, Vireak believes that the long-awaited updated investment law which was enacted on October 15, 2021, will provide better business facilitation and tailored incentives, and encourage investors to focus on areas priorities that promote industrial diversification, as well as encouraging the provision of support for capacity building and worker welfare.
The third key trend is the constant search for industrial diversification, which goes hand in hand with market diversification. It should be noted that in recent years, the non-textile sector has followed a growth trajectory. The garment sector played a prominent role in Cambodia’s economy, accounting for 74% of total merchandise exports in 2018.
Despite the accelerated growth rate of 6.8%, apparel exports no longer account for the majority of goods exports but rather 45.9% of the total, amounting to $5.82 billion in the first nine months of 2021.
Cambodia’s exports of travel goods surpassed those of footwear to become the second largest item, with $1.04 billion. Footwear exports come third, reaching $1.0 billion. The fourth largest manufacturing export is bicycles, worth $470 million.
Vireak noted that as of November, 87.7% of the population of about 16 million had been fully vaccinated and COVID-19 was under control with less than 3,000 deaths.
Citing the Ministry of Economy and Finance (MEF) forecast that Cambodia’s growth for 2021 will be 3.0% and 5.6% for 2022, he expects the economy to gradually reach its medium-term potential, supported by global demand and a gradual recovery in investor confidence.
- Keywords: AVI, economic development