The American Chamber of Commerce in Cambodia (AmCham Cambodia) on Monday released its annual ‘Business Climate Survey 2024’ report, compiling insights shared by over 500 registered Cambodian-based companies.
The AmCham survey results suggest generally optimistic growth prospects among responding businesses, including increased profitability and planned investment expansions in 2024, as well as increasingly strategic investment conditions found in the market.
The findings, however, also highlight some current challenges facing businesses in the Kingdom that are hindering investment growth, including transparency in the legal system and costs of electricity and logistics.
The survey, titled ‘AmCham Cambodia’s 2024 Business Climate Survey – Insights and Opportunities’, was distributed from May until June 2024 to AmCham member representatives, as well as chief executive officers and company chairmen and chairwomen listed in the Cambodian Ministry of Commerce (MoC) online business directory.
The resulting report compiles 542 responses from distinct companies, 110 of which were AmCham members or American-owned businesses.
While survey respondents represent a broad range of industries, most respondents were engaged in retail trade or services, and the education sector, as according to the report.
Key insights from the survey data included a general proclivity towards business profitability and growth of operations among respondents.
Over 70 percent of surveyed companies expect profit growth in 2024, and more than 65 percent of respondents said that they are planning increased investments in the market.
According to the findings, positive economic fundamentals are driving this optimistic outlook, including a 7 percent average GDP growth annually over the past ten years, as well as an ongoing post-Covid economic recovery.
These factors are making Cambodia an increasingly competitive market in the region, and attracting more foreign investment from key global markets such as the US and China.
In terms of what factors make the market most attractive to foreign owned businesses, respondents said that a significant advantage in doing business in Cambodia is the availability of 100 percent foreign ownership of enterprises.
This benefit effectively removes the necessity of local partnerships to launch businesses in Cambodia, and means that foreign shareholders are able to exert full control over their business operations and any adjoining intellectual property (IP).
According to the survey results, another key benefit for Cambodian-based businesses includes the use of the US dollar as a dual currency in the market, which not only supports stability for the broader economy but also allows businesses to conduct
Surveyed businesses also noted that Cambodia represents a strategic location in the middle of the Southeast Asian region, which means swift access for businesses to trade and cooperate with other major nearby economies.
Other key drivers for investment noted by survey respondents included political stability and an attractive tax incentives framework, including exemptions from income taxes for qualified investment projects (QIP).
Favourable trade agreements were also noted as a key incentive for investment by survey respondents, including the Cambodia-China Free Trade Agreement and other major free trade agreements (FTA) connecting Cambodia to major global export markets.
Respondents also commended the growing role of digitalization in Cambodia’s business landscape.
The drive towards improved digital infrastructure, by both the public and private sector, is expected to create new opportunities for businesses, especially in the e-commerce and fintech spheres, driven by swift increases in internet penetration and digital literacy.
Despite the positives, the survey respondents also highlighted several current challenges for investors which threaten to hinder future growth.
Regulatory uncertainty was a chief concern, with respondents noting uncertainty and unpredictability regarding the interpretation and enforcement of laws and regulations while doing business in Cambodia.
According to the report, respondents would like to see stronger consistency and clearer guidelines in order to reduce risks for investors, and improve predictability in the legal system.
The survey also found that the cost of electricity in Cambodia is a key constraint for investors currently, and considerably higher than other regional markets.
Respondents also raised concerns regarding the current reliability of electricity supply in the Kingdom.
Transportation infrastructure was also identified as a factor currently limiting business efficiencies, according to the survey results.
Despite huge improvements to logistics networks in recent periods, many businesses said that they still encounter logistical and transportation issues that reduce their businesses’ efficiency and profitability.
By improving logistics networks, businesses said they could reduce costs and gain easier access to local and international markets, supporting investment expansions inside the Kingdom.
