On May 27th, a workshop titled “Beyond Borders: Bringing Cambodian Products to the Global Market Through Alibaba.com” attracted over 350 local entrepreneurs. H.E. Mrs. Cham Nimul, the Minister of Commerce, addressed the workshop, emphasizing the vast potential of Alibaba’s platform. She explained how it allows Cambodian businesses to showcase their products and increase export sales.

Alibaba.com provides a platform to enter the giant Chinese market, initially through retail sales. As highlighted by Mr. Lor Vichet, Vice President of the Cambodia-Chinese Commerce Association (CCCA), this initial step allows businesses to test the waters and establish brand recognition for Cambodian products.

He added, this could pave the way for future wholesale opportunities. The platform grants businesses the opportunity to showcase their products to a global audience. Listing products online allows businesses to tap into new international markets, leading to a significant boost in sales.

The Ministry of Commerce and Alibaba signed a Memorandum of Understanding in October 2023. This collaboration aims to directly sell Cambodian products in China and ASEAN countries through the eWTP Platform, further promoting e-commerce in Cambodia.

This partnership aligns with Cambodia’s broader strategy to propel its digital economy forward. The Royal Government of Cambodia is actively investing in infrastructure development and promoting e-commerce adoption among both businesses and consumers.

While Cambodia’s e-commerce sector is still young, it’s experiencing rapid growth. The partnership with Alibaba is expected to accelerate this growth and solidify Cambodia’s position as a key player in the region’s e-commerce landscape.

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Lor Vichet, Vice President of the Cambodia Chinese Commerce Association, points to recent high-level visits from China, including one by Shohrat Zakir, Vice Chairman of China’s National People’s Congress (NPC), who visited Cambodia from May 21 to 24, as a sign of expanding cooperation across various sectors.

He emphasizes the importance of continued collaboration between the Cambodian and Chinese parliaments to strengthen trade, tourism, and other strategic partnerships.

Vichet highlights the potential of China’s involvement in modernizing Cambodia’s industrial infrastructure and technology. He believes this will significantly improve the quality and competitiveness of Cambodian exports by ensuring they meet international standards.

“Fruitful discussions between Cambodia’s National Assembly and the visiting NPC delegation are crucial,” Vichet stresses. “These discussions will pave the way for a robust legal framework that can propel bilateral trade to new heights.”

This sentiment was echoed by Shohrat Zakir during his visit. Zakir pledged China’s support for modernizing Cambodia’s economic corridors and expanding cooperation in trade, tourism, education, and vocational training. This collaboration, as highlighted by the expert, aims to elevate Cambodia’s export sector to meet international standards.

Cambodia earned over US$3.36 billion from exports to members of the Regional Comprehensive Economic Partnership (RCEP) in the first four months this year, up 16.2 percent from US$2.89 billion recorded in the same period in 2023.

Cambodian exports to RCEP countries accounted for 44.57 percent of the Kingdom’s total exports of US$8.82 billion in the four-month period, it pointed out. Cambodia’s two-way trade with RCEP rose by 13.98 percent to US$11.19 billion, or 66.2 percent of the country’s total international trade of US$16.91 billion, stated the report.

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The CCIA aims to unite various business chambers, fostering collaboration and growth. This will attract foreign investors from all over the world, contributing to Cambodia’s economic development in line with RGC’s policies.

The hard work of CCIA members has already brought billions in foreign investment to Cambodia. This is a positive development, creating job opportunities and attracting new technologies and skills. These efforts align perfectly with the RGC’s Pentagon Strategy – Phase 1.

Lor Vichet, Vice President of CCCA, spoke after the event, praising the RGC for its proactive approach to business development. He highlighted the government’s creation of trade strategies and a supportive business environment. The Prime Minister’s inauguration of CCIA further emphasizes the government’s commitment to attracting private sector investment for economic growth.

Mr. Vichet added that the event fostered connections between businesses and explored strategies to attract even more foreign direct investment (FDI). The Premier’s participation underscores the RGC’s dedication to becoming a magnet for global investors, a key element in achieving Cambodia’s goal of becoming a middle-income country by 2030 and a high-income country by 2050.

The CCIA was launched in June 2023 with six founding chambers of commerce, including prominent names like the Cambodia Chinese Commerce Association (CCCA), Cambodia Footwear Association (CFA), Cambodia Travel Goods and Leather Association (CTLA), China Sichuan & Chongqing Chamber of Commerce in Cambodia (CYZSH), Malaysian Business Chamber of Cambodia (MBCC) and Singapore Club Cambodia (SCC).

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The canal promises a direct water route to Cambodia’s deep-sea port, significantly streamlining trade and reducing transportation costs. This positions Cambodia as a strategic logistics hub in Southeast Asia, attracting foreign investment and fostering job creation across various sectors. Additionally, coastal areas like Kep and Kampot could see a surge in tourism due to the improved accessibility.

The canal is just one piece of the puzzle. Cambodia must prioritize workforce development by equipping its citizens with the skills needed for a logistics-driven economy. Establishing special economic zones (SEZs) along the canal route with tax incentives can further attract businesses and leverage the improved logistics network.

Embracing digital transformation is also crucial. Investments in high-speed internet, e-commerce platforms, and digital trade measures will ensure Cambodia’s seamless integration into global supply chains.

Lor Vichet, a vice president of a Cambodian commerce association, believes Vietnamese politicians should avoid politicizing trade issues. Instead, he says, Vietnam should embrace competition as a way to improve its economy.

According to Vichet, competition between ASEAN countries will drive down business costs and boost trade. He highlights a future trade project (FTC) that will streamline customs procedures, benefiting both Cambodia and Vietnam. This project, he argues, will increase trade volumes and generate government revenue that can be used to modernize Cambodia and invest in new technologies.

The Funan Techo Canal, coupled with a strategic and multifaceted approach, presents a golden opportunity for Cambodia. By prioritizing workforce development, fostering innovation through SEZs, embracing digital transformation, and ensuring environmental responsibility, Cambodia can unlock its true economic potential and earn its rightful place among the Asian tigers.

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The visit aims to strengthen the existing “ironclad friendship” between the two nations and expand cooperation across various sectors. Both countries hope to build a “community of shared future” and enhance cooperation within regional and international forums.

During his visit, Foreign Minister Wang Yi will pay his respects to Cambodian King Norodom Sihamoni and hold meetings with Samdech Techo Hun Sen. President of the Senate and Samdach Hun Manet, Prime Minister of the Kingdom of Cambodia.

Mr. Lor Vichet, Vice President of the Cambodia-Chinese Commerce Association (CCCA) talked to Estatedia, the latest visit of China’s top diplomat to the region is to strengthen existing bilateral cooperation mechanisms as well as to further promote high-quality projects under the BRI aimed at accelerating physical infrastructure development.

The visit is also seen as an opportunity to enhance regional economic integration and achieve shared prosperity. Mr. Lor Vichet believes the talks will focus on China’s commitment to boosting trade and investment in Cambodia and the region.

Foreign Minister Wang Yi will also co-chair the 7th Cambodia-China Intergovernmental Coordinating Committee Meeting with Deputy Prime Minister Sun Chanthol. Additionally, he is scheduled to hold bilateral talks with Deputy Prime Minister and Foreign Minister Sok Chenda Sophea to discuss further strengthening Cambodia-China relations.

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The discussion, held at the headquarters of the Council for the Development of Cambodia (CDC) on April 9, saw participation from H.E. SUN Chanthol, Deputy Prime Minister and First Vice President of the CDC, Mr. Hong Kian Lim, CEO of Surbana Jurong (SJ) Group of Singapore, and Mr. Yang. According to Mr. Yang, Manhattan SEZ intends to collaborate with major companies like SJ Group and Suzhou Industrial Park in China.

H.E. SUN Chanthol welcomed the investment plans and reassured that the CDC would facilitate all investments following Cambodian laws and regulations.

Lor Vichet, Vice President of the Cambodia-Chinese Commerce Association (CCCA), provided valuable insights into the two levels of national mechanisms for Chinese investments in Cambodia.

The first level operates on an intergovernmental level, requiring agreements between government representatives from both countries. An intergovernmental coordinating committee was established to oversee such agreements.

The second level functions on a broader scale, involving collaboration between Cambodia’s National Assembly and China’s National People’s Congress (NPC). Here, the focus lies on establishing interconnected laws and achieving consensus on implementing joint legal documents aligned with shared development goals, echoing the “Common Prosperity and Common Destiny” vision.

Vichet further explained that when the heads of China’s Communist Party and NPC agree to invest in priority sectors, broad-based support and consensus from both the party and the congress pave the way for project implementation.

This openness to collaboration is reflected in the CDC’s approval of 173 investment projects worth some US$4 billion during the last six months, from September 2023 to February 2024.

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However, promoting the riel domestically requires a multi-pronged approach. Vice President Lor Vichet of the Cambodia Chinese Commerce Association (CCCA) emphasizes the importance of encouraging savings in riel. Historically, the dollar’s influence grew alongside the UN’s presence in Cambodia.

Shifting consumer behavior takes time. Vichet acknowledges the need for refined financial policies and payment infrastructure. Additionally, import costs and car purchases often rely on USD, creating a hurdle.

Simple solutions exist. Malls and supermarkets displaying prices in riel can normalize its use. Similarly, mobile phone top-ups could transition from USD to riel, leveraging Cambodia’s booming mobile payment sector.

The National Bank highlights the success of mobile payments, with transactions reaching 1,100 million in 2023. The Bakong system is a prime example, boasting millions of accounts and facilitating payments across numerous businesses.

By embracing technology, the NBC aims to streamline transactions, promote financial inclusion, and ultimately, strengthen the riel. This aligns perfectly with the government’s vision of a digital, socio-economic Cambodia.

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Contiguously, Cambodia’s economic prospects are soaring, with the International Monetary Fund (IMF) predicting a growth rate of 6.1% in 2024 – the highest in the ASEAN region. This impressive leapfrog over regional giants like Vietnam and the Philippines has caught the attention of experts, who attribute the rise to a combination of factors.

Experts like Mr. Lor Vichet, Vice-President of the Cambodia Chinese Commerce Association (CCCA), believe trade agreements like the Regional Comprehensive Economic Partnership (RCEP) and the Belt and Road Initiative (BRI) are instrumental in propelling Cambodia’s long-term economic success. These agreements create new market opportunities and attract potential investors.

Despite a global economic slowdown, Cambodia’s exports to RCEP countries thrived in 2023. This robust performance, highlighted in a report by the General Department of Customs and Excise, underscores the resilience and strength of the country’s export sector.

The broader ASEAN region, which includes Cambodia, is projected to remain a major driver of global economic growth. The burgeoning fintech sector and increased engagement from major players like China and the US, as observed by Mr. Vichet, further bolster optimism for the region’s future. Forecasts from institutions like the Asian Development Bank (ADB), IMF, and the World Bank all point towards a promising future for ASEAN, with its diverse and multifaceted economies fostering the growth of a thriving middle class.

With the highest projected growth rate in ASEAN and a government actively seeking foreign investment, Cambodia is poised for a period of significant economic expansion. The combined strength of the country’s initiatives and the broader regional upswing paints a bright picture for Cambodia’s economic future.

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While boasting a prime location for tourism, strong infrastructure, and established economic zones, Preah Sihanouk faces challenges. Numerous stalled construction projects and infrastructural gaps have hampered its progress. Recognizing this, the government’s ambitious program aims to breathe new life into the province, particularly the coastal city of Sihanoukville.

Experts like Mr. Lor Vichet, vice president of the Cambodia-Chinese Commerce Association (CCCA), see this program as a game-changer. He emphasizes the need to complete stalled projects, attract businesses, and strengthen Sihanoukville’s master plan to create a multi-purpose economic zone.

Beyond infrastructure, Mr. Vichet highlights the crucial role of developing deep-sea ports, which will drive export growth and economic diversification. The ultimate goal: transform Sihanoukville into a thriving business center, a modern hub for IT and regional commerce, and a vibrant multi-purpose economic zone.

Mr. Vichet emphasized the importance of local participation, urging local investors to spearhead the initial investment package for revitalizing stalled projects. He believes local involvement will showcase the full potential of the initiative and demonstrate confidence to foreign investors.

He stressed the need for local investments to reach $300 million to $500 million, serving as a testament to the faith local investors have in Sihanoukville’s potential, exceeding even the government’s expectations. This, he believes, will pave the way for attracting the targeted $1.1 billion in foreign investment, marking the first step towards realizing the government’s vision.

With a clear roadmap and a $1.1 billion investment, Preah Sihanouk is poised for a remarkable comeback. This initiative could unlock its true potential, creating jobs, attracting businesses, and propelling the province towards a brighter future.

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While Cambodia maintains a relatively healthy inflation rate, it’s not entirely immune to the wider trend. Cambodia’s inflation rate is expected to return to normal for 2024, about 2.5 percent, the same as last year, according to a report recently published.

National and international experts offer their perspectives on the extent of inflation’s impact on Cambodia’s economic and investment landscape.

To combat rising inflation in the United States the Federal Reserve (FED) has raised interest rates 11 times since March 2022, the benchmark rate is now 5.25% to 5.50%, Mr. Anthony Galliano, Group CEO of Cambodian Investment Management shared with Estatedia.

He said the central banks around the world followed the FED in boosting rates, and the dollar hovers at two-decade highs against a basket of major currencies. Cambodia is a substantially dollarized economy and is aligned with higher U.S. rates, increasing the cost of funds for banks and consequentially higher borrowing costs for consumers and corporations. Higher interest rates suppress borrowing demand and have particularly impacted real estate and construction in the Kingdom.

He continues that it costs more to borrow a mortgage for buying a property and for developers to borrow money for projects, Thus construction is impacted by less property development. As Cambodia is still a bank-dominated economy in terms of capital, businesses are more reluctant to borrow for expansion. Inflation also reduces consumer demand as higher prices discourage spending. Many Khmers are watching their wallets as the cost of goods increases globally.

He also explained, as it said that inflation can be a good thing. That would apply to the U.S., the culprit for rising rates given the strong performance of its economy, however being dollarized, Cambodia’s economy may not be performing as well and therefore inflation can only be a bad thing. The bright spot is that being substantially dollarized, Cambodia benefits from the strong dollar, which has higher purchasing power against depreciating currencies. Commodities are priced in U.S. dollars.

Therefore the cost of oil, for example, a major import, is the dollar based is not more expensive as compared to other countries whose currencies have depreciated. On the other hand, Cambodia is still heavily reliant on exports with 60% of the exports going to countries other than the U.S., whose currencies have depreciated, and therefore Cambodian goods are more expensive. This was evident in the decrease in exports in 2023, except in the U.S.

While Asia grapples with high inflation, Cambodia’s relatively stable economic situation positions it to attract increased foreign direct investment (FDI) from China, believes Mr. Lor Vichet, Vice-President of Cambodia Chinese Commerce Association (CCCA). He predicts China will remain the leading source of FDI in Cambodia throughout 2024.

Mr. Vichet attributes Cambodia’s resilience to its unique dollarization policy. As the only dollarized economy in the region, including both ASEAN and RCEP nations, Cambodia experiences milder inflation compared to its neighbors. This stability, coupled with a moderate inflationary response to the US Federal Reserve’s interest rate hikes, makes Cambodia an attractive investment destination, particularly for Chinese investors.

He said that Cambodia’s priority exportation is garment, footwear, and travel goods (GFT), however, recent data have shown a decrease of about 15 percent, therefore, the CDC is seeking to strengthen other export avenues, especially agricultural products such as rubber. The total investments from the Chinese businessmen into the Kingdom’s tire production reached over $1 billion and these projects have added value to the nation’s industry as well as created thousands of jobs for the Cambodians.

In an interview with Estatedia, His Excellency Penn Sovicheat, Secretary of State and Spokesperson for the Cambodian Ministry of Commerce acknowledged the impact of global inflation on the Cambodian economy but emphasized that its effect is moderate due to shifting consumer trends.

“While global inflation is undeniable, its impact on Cambodia is mitigated by changing consumption patterns,” explained His Excellency. “Across many countries, individuals are prioritizing essentials like food or winter coats over non-essential items.” He sees this trend as a potential buffer against economic turbulence.

His Excellency expressed optimism and confidence in Cambodia’s economic resilience, citing that Cambodia has built strong trust with its customers and the country’s established position in global production chains. “We expect the global situation to eventually return to normal, much like it did during the COVID-19 pandemic,” he added, expressing faith in the world’s ability to overcome economic challenges.

“The Ministry of Commerce is actively striving to maintain stability in existing markets, ensuring fair prices and preventing unnecessary product shortages,” he assured. “Cambodia is strategically expanding its reach to new markets, particularly in Africa, the Middle East, and within RCEP countries, which boasts a 60% global market share,” he elaborated, stressing the potential of these untapped markets.

His Excellency also underscored the importance of promoting Cambodia’s agricultural exports, a key sector for the nation’s economy. Additionally, he highlighted the development of robust online sales channels, further diversifying economic opportunities.

Cambodia’s international trade stood at $46.82 billion in 2023, recording a decline of 1.9 percent compared to 2022. While exports were marginally up by 1.8 percent, the imports showed a decline of five percent, according to the trade data released by the General Department of Customs and Excise (GDCE) yesterday.

The Kingdom’s total exports in 2023 stood at $22.64 billion while the imports were estimated at $24.18 billion. The country recorded a trade deficit of $1.53 billion last year.

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