Quick facts about Cambodia
- Did you know that natural oil & gas has been discovered in Cambodia's territorial waters?
- Cambodia is the only country that has a building on her flag
Why invest in Cambodia?
Cambodia has came a long way. In 1920s, Phnom Penh was known as the “Pearl of Asia”, it was considered one of the loveliest French-built cities in Indochina. Over the next four decades Phnom Penh continued to experience rapid growth with the building of railways to Sihanoukville, and Phnom Penh International airport. Things changed and the Cambodians went through a tumultuous period in the 1970s. The country is now back on it’s feet and will only emerge stronger. So why Cambodia?
The population stands about approximately 16 million. Boosted by a young population with a median age of 24.9, one can only imagine the growth potential the country has as the new middle class emerge.
Strong GDP growth
Cambodia has experienced strong economic growth over the last decade; GDP grew at an average annual rate of over 8% between 2000 and 2010 and at least 7% since 2011. The tourism, garment, construction and real estate, and agriculture sectors accounted for the bulk of growth. Around 600,000 people, the majority of whom are women, are employed in the garment and footwear sector. An additional 500,000 Cambodians are employed in the tourism sector, and a further 50,000 people in construction. Tourism has continued to grow rapidly with foreign arrivals exceeding 2 million per year since 2007 and reaching around 4.5 million visitors in 2014. Mining also is attracting some investor interest and the government has touted opportunities for mining bauxite, gold, iron and gems.
Additionally, the One Belt One Road initiative linking Asia to Europe is expected to provide more trade opportunities for Cambodian products. Currently, Cambodian properties are not taxed on arrival in EU.
The establishment of the ASEAN Economic Community (AEC) in 2015 is a major milestone in the regional economic integration agenda in ASEAN, offering opportunities in the form of a huge market of US$2.6 trillion and over 622 million people. Cambodia products exported out from free trade area to ASEAN countries are subjected to only 0 to 5% tariffs.
Cambodian products exported to EU are granted duty free status too.
Labour costs are still considerably low. In view of rising business costs in China, Vietnam and Thailand, Cambodia appears to be an attractive alternative for foreign corporations to relocate their business. Notable companies over in Cambodia include Coca Cola, Combi, Toyota, Ajinomoto, and Heineken.
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Angkor Wat, Khmer Rouge, landmines and perhaps Angelina Jolie’s children are the things that come into one’s mind when they think about Cambodia. I first set foot into Cambodia in 2006 and like many others, I had pre-conceived ideas about the country – backward and poor. While it is true to some extent, but that didn’t stop me from returning every year, and sometimes 3 times a year. It is a place with rich culture, history and most importantly, it’s transformation. From travelling on the dirt road to travelling on their highway, from beautiful architecture with french influence to a changing city skyline, and (some advertisment here), from drinking $0.50 Angkor beer to seeing how my husband has helped to set up the first microbrewery in Phnom Penh, Siem Reap and how the craft beer scene has evolved and many more.
Cambodia is going through massive transformation and is now classified “lower-middle income country” by World Bank Group. Like many developed and developing nations, there are always the less fortunate who are left out in this upside growth. Many have seen opportunities in the country. I attend the Singapore Shiok Night in Phnom Penh whenever I get the chance and spoke to many Singaporeans who have businesses and own properties in Cambodia. And I have compiled some of the common questions from those who do not know much about the country, and gathered responses from those who has invested there. Read on..
Why should I buy property in emerging markets?
- Real estate investments in emerging markets are typically seen as investments with higher risks, yet they also come with higher potential returns. Emerging markets benefit from more attractive capital growth rates than developed ones while still offering increasingly safe investment environments.
- Pricing is typically a fraction of the cost of comparable properties in first-home markets, yielding higher returns on investment as a result. Developed markets, on the other hand, usually offer low rates of return.
- A slowdown in economic growth is particularly visible across many developed markets, which can lead to uncertainty in capital growth and yields. The pace of economic growth in countries like Cambodia can achieve is generally higher than the development markets.
Is now a good time to start buying property in emerging markets?
- Economic uncertainty has knocked confidence among investors everywhere, but consultants believe that Asia remains the global growth engine and the fastest-developing region in the world. Cambodia with a constant GDP and FDI of 7% on average over 10 years and many more good years to come.
What are the typical risks involved when it comes to investing in property overseas?
- Additional risks come with real estate investments in a foreign country compared with those made locally. They include foreign exchange and political risks.
- If the currency of the country that your property is in depreciates against the Singapore dollar, the gains made by your investment will be eroded even if your property value rises.
- Cambodia uses US dollars and the US currency had been stable against the Singapore dollar.