Current business situation
Cambodia is one of the fastest-growing developing countries in Asia. Real gross domestic product (GDP) was expected to grow by seven per cent in 2016 after gains of 6.9 per cent in 2015. Impressive rates of economic growth have led to sharp wage increases which undermine the degree of competitiveness. At the same time, growth has generally been sufficient to create new jobs needed to absorb the rising working-age population, which has been increasing at three per cent annually (faster than the population). Unemployment is officially at 0.6 per cent of the economically active population in 2015.
With a median age of 24.2 years, Cambodia has one of the youngest populations in Southeast Asia (Source: Worldometers). It is anticipated that the Cambodian population will continue growing, reaching nearly 17 million by 2020. This provides good opportunities for economic development, given the large base of young and dynamic workforce. Although the majority of Cambodians lived in rural areas, economic development and improving employment opportunities in the largest cities are anticipated to sustain the urbanisation process in the future.
The economy is driven by:
- real estate
- manufacturing (exports of garments and footwear)
- food and beverage
The manufacturing sector is Cambodia’s primary economic driver. Textiles and clothing industries dominate the sector and attract increasing interest from foreign investors. The real value of tourism rose by 7.6 per cent in 2015 and was expected to gain 6.2 per cent in 2016 as a result of arrivals from other parts of Asia.
Australia ranks 18th of Cambodia’s most important trade partners in both directions of trade. Total two-way trade between Australia and Vietnam in 2015 was around A$451 million. Australia’s main exports to Cambodia are wheat, cereal preparations, computers and beef, while it mainly imports textile clothing, footwear, men and women clothing from Cambodia (Source: DFAT, December 2015).
Australia and Cambodia enjoy a close relationship and there are many opportunities in industries including:
- premium food and wine
- agribusiness (dairy and live cattle)
- banking and finance
Many of these are shared in other parts of Asia, with Thai business practice bearing perhaps the closest resemblance.
Cambodians traditionally greet each other by pressing their palms together in front of their bodies and bowing, called a 'sompeah'. Generally a younger or lower rank person initiates the greeting. This custom has been partially replaced by the Western practice of shaking hands. It is considered acceptable for foreigners to shake hands with Cambodians of both sexes.
The head is regarded as the highest part of the body, both literally and figuratively. As a result Cambodians don’t approve of touching anyone there, even in a friendly gesture.
If possible, a business card in both English and Khmer should be presented during the initial greeting.
While English is becoming more widely spoken, foreigners should try to ascertain whether their partner is fluent in English. If not, utilise an interpreter to ensure a smooth meeting and follow-up.
While the Khmer language is not easy, Cambodians will sincerely appreciate any efforts to learn their language. Basic greetings or several words in Khmer, even if mispronounced, will act as a good icebreaker in business dealings and show that you are keen to understand an integral part of Cambodian culture.
Cambodian businessmen can be addressed with 'Mr' and their first name, or for women, 'Madam'. Many senior managers of Cambodian companies or high level officials also have the title 'Your Excellency'.
In Cambodia, social engagements such as eating or playing golf, are useful to create a level of mutual trust and understanding between business partners. Foreign businesses who have been successful in Cambodia have taken considerable time to build the necessary business and government contacts to operate successfully.
Face-to-face contact is very important in initial dealings with Cambodians and a capacity to understand very different set of viewpoints. Foreigners should take care to avoid a confrontational or aggressive style in their business meetings. Cambodians are generally not direct or forthright in their dealings and take to subtle, rather than blunt, messages. Cambodians will often say yes to direct questions, but this may only mean that they hear and understand you, but nothing more.
It is very important to determine at the outset in any business dealings the hierarchy and seniority of whom you are dealing with, and those responsible for decision-making. Correspondence and communications should be addressed to the senior decision-makers. Bear in mind that decisions often take a considerable length of time as they are relayed up and down the chain of hierarchy due to the lack of delegation within companies or government ministries.
A small token of gratitude in the form of a gift is always appreciated when visiting a Cambodian. Gifts should always be offered with the right hand.
Links and resources
Government, business and trade
Australian Embassy in Cambodia
International Monetary Fund (Economic update)
Ministry of Commerce
Ministry of Foreign Affairs and International Cooperation
Phnom Penh City Government
General Department of Customs and Excise
General Department of Taxation
News and media
The Cambodia Daily
The Phnom Penh Post
Please note: This list of websites and resources is not definitive. Inclusion in this list does not imply endorsement by Austrade. The information provided is a guide only. The content is for information and carries no warranty; as such, the addressee must exercise their own discretion in its use. Australia’s anti-bribery laws apply overseas and Austrade will not provide business related services to any party who breaches the law and will report credible evidence of any breach. For further information, please see foreign bribery information and awareness pack.