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Economy and commerce


Counting money. Photo by Aaron Gilson, taken on 5 April 2013. Licensed under CC BY-NC-ND 2.0.

Cambodia re-opened for international trade in the 1980s, opened up to foreign investment in 1994, joined ASEAN in 1999, and became a member of the WTO in 2004. Its bilateral trade agreement partners include China, Laos, Switzerland, Philippines, Bangladesh, Germany, Malaysia, the United Kingdom, Thailand, Indonesia, Singapore, Vietnam, India, Uganda, Japan, North Korea and South Korea.1


Cambodia’s gross domestic product (GDP) grew from 56,617 billion riel in 2012 to 73,543 billion riel (approximately US$18 billion) in 2015.2 The country has had one of the fastest growing economies in the region in the last decade. Growth slowed from 7.4 percent in 2013 to 7.1 percent in 2014 and 7.0 percent in 2015, but is forecast the remain at this level for 2017.3

Source: Asian Development Bank. “Asian Development Outlook 2016.” p.276. Created by ODC, 4 April 2016. Licensed under CC-BY-SA-4.0.

In July 2016, the World Bank officially revised the status of Cambodia’s economy, moving it from ‘low-income’ to ’lower-middle income’. The move is based on Cambodia’s estimated gross national income (GNI) per capita. Low-income economies are those with a GNI per capita of less than $1,025, while lower-middle-income countries are those between $1,026 and $4,035. While the change reflects an improved economy, it may eventually lead to a scale-back of foreign aid and preferential trade access.4

The World Economic Forum ranked Cambodia at 90 out of 140 countries (up from 95 in 2014) in its Global Competitiveness Index for 2015-2016,5 with Myanmar the only other ASEAN country ranked lower.6 Cambodia’s lowest performances in the study were in the areas of “Higher education and training” and “Innovation”, while its highest performances were in the areas of “Health and primary education” and “Macroeconomic environment”.

Cambodia’s current account balance deficit of $542 million in the fourth quarter of 2015 was the equivalent of 11.5 percent of GDP.7

In March 2017 the ratings agency Moody’s confirmed its B2/stable sovereign rating for Cambodia, pointing to the country’s economic growth and stable external payments. The risks it saw were private sector credit growth, high dollarisation and a narrow economic base.8


Cambodia’s trade reached $22 billion in 2016 following double-digit growth in both exports and imports. Exports were over $10 billion (an 18 percent annual increase) while imports were $12.3 billion (a 16 percent increase).9

Ministry of Commerce figures show that garment and footwear exports make up two-thirds of exports by value. Almost 90 percent of exports fall under two reduced-tariff or duty free schemes: the Generalised System of Preferences (GSP) and Most Favored Nation (MFN schemes).

Cambodia’s biggest market is the European Union ($4 billion), followed by the United States ($2.1 billion). Exports have grown quickly to Japan, however ($827 million, 45 percent annual growth) and China ($609 million, 50 percent growth).

The biggest source of imports is China ($4.5 billion, 16 percent annual growth), with neighbors Thailand and Vietnam also being key sources ($1.9 billion and $1.4 billion respectively).10

In compliance with WTO requirements, Cambodia conducted its first review of trade policies and practices in November 2011 and scheduled the next review for 2017.11 Cambodia is currently reviewing its investment laws and regulations in connection with the formation of the ASEAN Economic Community (AEC) in 2015.12 The country’s Trade Integration Strategy 2013-2018 and Trade SWAp Road Map 2013-2018 highlight the industries, products and areas that the government plan to adapt to global markets and to nurture most.13


The country has an open and liberal foreign investment regime with a relatively pro-investor legal and policy framework. The 1994 Law on Investment established formal processes for, and provided incentives to, both local and foreign investors to participate in Qualified Investment Projects (QIP) in Cambodia.14 QIP can receive preferential tax treatment and simplified and faster administrative procedures from government.

The only formal restrictions on foreign investors regard land ownership, employment of foreigners, and limits on foreign control in selected sectors.15 Under the Land Law 2001, foreign investors may secure control over land through Economic Land Concessions (ELC).

Between 1994 and 2013, US$28.14 billion flowed into the country in the form of foreign direct investment (FDI) and fixed assets.16 Since 2007, total FDI entering Cambodia has exceeded development assistance received from foreign governments.17  Key investment sources in 2016 were mainland China ($511 million), Hong Kong ($237 million), Vietnam ($192 million), Japan ($185 million) and Singapore ($169).18

In 2005, Special Economic Zones (SEZ) were formally introduced in Cambodia. Firms in SEZ benefit from QIP. As of January 2015, 30 SEZ had been granted. An ADB report labeled Cambodia’s SEZ policy a success, having created about 68,000 jobs through foreign investment rather than government spending.19

In 2016, foreign direct investment rose to $2.15 billion20 (from $1.8 billion in 2015). This made up 10.7 percent of GDP.21 Most of the money was chanelled into the financial and manufacturing sectors.


The National Bank of Cambodia is the sole supervisor of the banking sector in Cambodia. In 2013, the country’s banking system consisted of 35 commercial banks, nine specialized banks, six representative offices, 38 licensed Micro Financial Institutions (MFI), 33 registered rural credit operators, two financial leasing companies, one credit bureau, and three third-party processors.22 Among the 35 commercial banks, the four leading institutions in terms of asset, loan portfolio size and deposits include Acleda Bank, Canadia Bank, Cambodian Public Bank and ANZ Royal Bank, which together represent more than half of the banking assets in total.23

The World Bank’s financial inclusion data for 2014 suggests that the majority of Cambodians are yet to use banking institutions for regular account services, and still prefer informal means of borrowing as opposed to borrowing from institutions.24

Percentage of people aged 15 and older who have:20112014

Account at a financial institution4%13%
Borrowed from a financial institution19%28%
Borrowed from a private informal lender13%18%
Borrowed from family or friends39%36%
Credit card0%3%
Debit card3%5%

A major regulatory change in the banking sector is the gradual introduction of a higher liquidity coverage ratio (LCR) by Cambodian banks from 2016.25 A prakas from the National Bank of Cambodia in December 2015 set out criteria for calculating LCR and a minimum LCR for deposit-taking banks and financial institutions. This process will eventually help banks withstand a crisis better.

In March 2016 the Bank announced that there would be higher minimum capital requirements for banks operating in the kingdom. The National Bank of Cambodia requires all locally-incorporated commercial banks (including foreign bank subsidiaries) to increase minimum capital to the equivalent of $75 million.26 Branches of parent banks with investment-grade ratings need capital of $50 million. The banks have two years to comply. 

The International Monetary Fund stated in November 2015 that current credit growth could pose a risk to the financial sector.27 The ratio of private sector credit to GDP almost doubled in 4 years to over 60%, and banks’ average loan-to-deposit ratio breached 100 in February 2015.28 However, estimates indicate that growth in credit to the private sector slowed to 27.1 percent in 2015 from 31.3 percent in 2014.29 Credit growth slowed again in 2016, increasing by 18.3 percent to $17.6 billion.30

Growth in the money supply (M2) halved to 14.7% in 2015, from 29.9%.31 Dollarization remained high, with a ratio of foreign currency deposits to broad money at 83% in 2015.32 This limits the effectiveness of the country’s monetary policy. The National Bank of Cambodia has flagged that it will move to increase use of the riel, tackling transaction costs on riel payments, setting out riel liquidity provisions and eventually requiring financial institutions to lend more money in riel.33

Loans in the microfinance sector totalled $2.9 billion at the end of 2015. Loans were made to 2 million borrowers; the average loan was $1,460. Microfinance deposits and lending both grew more than 40 percent in 2015.34 A prakas issued in March 2016 says that microfinance deposit-taking institutions must have a minimum registered capital of $30 million, and microfinance institutions a minimum capital of $1.5 million. The institutions must meet the requirements within two years.35 

In March 2017, the National Bank of Cambodia issued a Prakas that set a ceiling on the interest rates on loans by microfinance institutions of 18 percent per annum.36

There are big challenges to E-commerce in Cambodia according to a research report released in early 2017. It found that the country’s culture is mostly cash-based, with limited trust in online transactions or in financial institutions.37 A draft e-commerce law covers credit and debit card usage, the use of online signatures to purchase goods over the internet, and obligations on companies to ensure the security of online payments.

Securities exchange

The Cambodia Securities Exchange (CSX) was launched in July 2011 to facilitate flows of capital, investment, and reallocation of capital based on capital market mechanisms. The Securities and Exchange Commission of Cambodia (SECC) regulates the securities industry, while The Law on Government Securities 2008 and the Law on the Issuance and Trading of Non-Government Securities 2007 govern the operation of the CSX.38

Only four companies had listed between the stock exchange launch in 2011 and the start of 2017— the state-owned Phnom Penh Water Supply Authority (CSX: PPWSA) in April 2012, garment manufacturer Grand Twins International (Cambodia) Plc (CSX: GTI) in June 2014, and the Phnom Penh Autonomous Port (CSX: PPAP) in December 2015 and Phnom Penh SEZ Plc (CX:PPSP) in May 2016.39 The four companies have a market capitalisation of just over US$200 million. Liquidity is a problem as some stocks see days without a trade.40  

One of the three registered securities brokerage companies registered with the SECC, Sonatra Securities Plc, suspended its operations in October 2015 citing the slow progress and low trading volume of the CSX.41


The total gross premium of Cambodia’s insurance industry was US$113.6 million in 2016 according to the Insurance Association of Cambodia. This was a 35.6 percent increase from 2015. Cambodia’s insurance penetration rate is the lowest in ASEAN.42 

 Last updated: 28 March 2017


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