(Last updated: 24 Jan 2012)

Current business situation

The Department of Foreign Affairs and Trade (DFAT) provides advice for business travellers and tourists going to Cambodia. This is regularly updated, and should be checked before planning travel.

Country facts

(Source: Department of Foreign Affairs and Trade - Country economic fact sheet)

Economic climate

On 1 January 2010 the ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA) came into force; Australia’s most ambitious trade deal to date. Australian business is urged to take a close look at the opportunities created by the agreement, as it will deliver real commercial benefit for Australian exporters and investors doing business in Cambodia. More information on AANZFTA is available here.

The emerging Cambodian economy is heavily reliant on imported goods and services, given its very weak infrastructure and low industrial base. There are signs that a fledgling middle class in Cambodia is gradually beginning to emerge, consequently leading to an increased demand for quality products, including pharmaceuticals and wine and dairy products.

Cambodia has a relatively open trading regime, and acceded to the WTO in 2004. Its accession provisions require Cambodia to enact and implement a wide range of commercial laws.

Cambodia’s narrow-based economy was affected by the global economic downturn. Three of its four main drivers of growth, garments, tourism and construction registered significant contractions. The garment and tourism sectors were particularly vulnerable to decreased international demand. Reduced foreign investment capital resulted in a slow-down in the construction and property sectors and affected bank liquidity. The Cambodian Government announced measures to mitigate the impact of the global financial crisis and provide a more coordinated response. These included US$1 billion investment in 2009 in infrastructure (primarily transport and irrigation) to stimulate growth.

(Source: Department of Foreign Affairs and Trade - Cambodia country brief)

For the latest key economic indicators and statistics, please see the Department of Foreign Affairs and Trade country economic fact sheet.

Political climate

The Royal Government of Cambodia is a constitutional monarchy with His Majesty King Norodom Sihamoni as Head of State. The Prime Minister, who wields executive power, is chosen by the King from the party which wins the most seats in the National Assembly elections held every five years.

The Cambodian Parliament is bicameral. The National Assembly has 122 members elected from Cambodia’s 24 provinces and municipalities, while the Senate (formed in early 1999 as part of the political compromise that broke the post election deadlock) has 61 members, nominated by political parties in proportion to their representation in the National Assembly. The Council of Ministers (Cabinet) is formed by members of the Royal Government. The Provincial Governments are presided over by Governors, with further division of provinces into districts (srok), communes (khum) and villages (phum).

The Royal Government has acknowledged the existence of widespread corruption in the bureaucracy and is currently undertaking a number of reforms to bring about good governance and the rule of law in public institutions. Nonetheless, most bureaucratic decisions continue to involve a process of negotiation at the enterprise level, rather than the application of law. The problem of impunity continues, with perpetrators of crimes often avoiding apprehension and prosecution.

Trade relations and statistics

Cambodia was accepted as the 10th member country of the Association of South East Asian Nations in April 1999.  It is also in the process of acceding to the World Trade Organization. Cambodia’s recent history and relationships with other countries have been very fluid and are a result of its position as a small and underdeveloped country sandwiched between its larger neighbours, Thailand and Vietnam.

Cambodia’s reliance on the aid dollar has structured its relations with the international community in the 1990s, including its major donors such as Japan, France, USA and Australia.  At the same time, Cambodia maintains strong and close relations with its traditional allies as evidenced by the growing economic and political relationship with China. Major foreign investors in Cambodia include China, Malaysia, Taiwan, USA, Hong Kong and Singapore.

Please see the Department of Foreign Affairs and Trade country economic fact sheet for key trade statistics.