Cambodia’s business community say diversifying the nation’s economies, building human resources, and offering investment incentives should be prioritized by the new government to keep the Kingdom’s development on an upward trajectory.
Anthony Galliano, Group CEO of Cambodian Investment Management Holdings, which has been in the Cambodian market for 15 years, said he does not expect much immediate change once Prime Minister Hun Sen hands over the reins to his son, Hun Manet, in August.
However, he said with a new generation of leaders poised to take over, policy changes may teeter on the horizon. He added that he does not anticipate Cambodia’s international standing will shift much in the wake of the transition.
“There are expectations that newer and younger blood may result in futuristic policy changes, but that remains to be seen,” Galliano said.
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“The government has been transparent on its strategic development plans, such as the six political agenda, changing its strategy from rectangular to pentagon. I expect most of these established policies will continue as planned.
“While it is anticipated Cambodia will become more integral in the region, I don’t expect much of a change, if any, in terms of Cambodia’s place internationally now that the ASEAN chair and SEA games are behind us.”
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Benefits of young blood
Entrepreneur Vannary San remains optimistic that the shift in power to younger leaders will regenerate the nation, providing a platform for the younger generation to shine.
“The handover will give a lot of hope to business in Cambodia, she said. “Young energetic leaders will be pushing more economic growth through more open ideas, creative innovation and bringing all ecosystems to work more closely together.”
“The opening opportunities will be interesting to international investors to invest and start different industries in Cambodia, specifically all green businesses,” San, who owns several businesses including Lotus Silk, Silk House museum, and House Boutique Eco Hotel among others, added.
Sinan Thourn, chairman of B2B Cambodia and PATA Cambodia, said the future of the nation relies on Hun Manet’s policies, economic vision, and ability to maintain stability. He added that domestically the transition has the potential to bring about changes in governance, economic priorities and policies that directly affect businesses operating in the country.
“The extent of these changes and their impact on business will depend on the new government's approach to economic development, regulatory frameworks, and engagement with the private sector,” he added.
On the international arena, Thourn believes the handover of power may influence international perceptions of Cambodia as a business destination.
“It will be important for the new government to maintain political stability, promote a favorable investment climate, and engage in diplomacy to foster international cooperation and attract foreign investment. The international community's confidence in the new leadership will play a role in shaping perceptions of business opportunities in Cambodia.”
Strengthening business and investment opportunities
Galliano noted that Cambodia has been on the road of rapid economic development in the last decade, and the government has played a major role in crafting and executing domestic economic policies.
“I anticipate a more aggressive push on foreign investment, especially in terms of diversification. While China is likely to remain the largest and most influential investor in the Kingdom for the time being, I would expect a greater emphasis on foreign direct investment (FDI) flows from other sources,” he said.
“The government is increasingly pro-business and is taking appropriate measures to build a brighter economic future, especially through infrastructure development, trade treaties, capacity building, and investment incentives. I expect this to continue, if not accelerate, as the Kingdom transforms into a more influential player in the region.”
Thourn said to ease business operations in Cambodia, there are several changes stakeholders may demand from the new government. These include streamlining and simplifying bureaucratic processes.
“Reducing administrative burdens, paperwork, and unnecessary regulations can significantly improve the ease of doing business in Cambodia,” he noted, adding that enhancing transparency and efficiency is also key.
“Implementing measures to increase transparency in government processes, such as public procurement and licensing, can foster a more conducive business environment.”
Fostering a favorable investment climate is another essential element. Thourn said this can be achieved by implementing investor-friendly policies, ensuring the protection of intellectual property rights, and offering FDI incentives. “[This] can encourage both domestic and international businesses to invest and operate in Cambodia.”
Promoting a skilled workforce
As Cambodia continues on its path to attaining upper-middle income status by 2030, nurturing a skilled workforce and diversifying economic pillars are essential. “We need to promote a skilled workforce,” said Thourn. “Prioritizing education and vocational training programs to develop a skilled and adaptable workforce can attract investment and support the growth of various industries.”
Galliano added that economic diversification is an area of opportunity for Cambodia. “Cambodia’s garment industry is a pillar of the economy, but is dependent on low-skilled labor. With the global push to restructure supply chains, de-risk from China, and improve trade security, Cambodia has a generational opportunity to upscale its manufacturing capabilities.”
He added, “The capital markets are finally on a development trajectory with recent milestone IPOs and can be a large source of FDI, also for building saving pools. The further development of the financial markets would create another economic pillar and a saving pool which would stimulate and boost growth.
“I expect more emphasis on supporting SMEs, capacity building, and trade as part of the overall development plans.”
San said she would like to see the new government provide more support in terms of private-public partnership loans, especially in the tourism sector which is still struggling to rebound in a post-pandemic world.
“A lot of businesses still need maintenance after Covid, especially in the tourism industry,” she said. “They need support with reopening and expanding into other target markets. A lot of human resources investment, capacity building and the training of new staff is needed, as most of the human resources in the tourism sector have moved into other industries.
“The whole value chain of the tourism sector has a lot of impact on the economic development of the country. So, I hope that the national budget will prioritize promoting the tourism industry and more friendly policies to grow the industry.”
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