Cambodia
This chapter reviews the investment trends and industrial structure in Cambodia. It describes the relatively strong performance of the Cambodian economy in attracting foreign investment but also the need to further diversify sources of FDI by sector and by country.
This chapter considers other aspects of the policy framework for investment of relevance to Cambodia, namely corporate governance, competition policy and the role of development partners in promoting private sector development. It documents improvements made recently in the corporate governance framework, as well as the challenges in its overall implementation. On competition policy, it discusses the absence of a general competition law in Cambodia and makes recommendations concerning what should be included in the draft law as it makes its way through the legislative process. And lastly, the chapter reviews what development partners are currently doing to promote private sector development in Cambodia.
This chapter looks at the improvements in Cambodia’s infrastructure over time and the continuing needs for new investment to keep pace with rapid economic growth. It suggests that the policy, legal and institutional frameworks governing private investment in infrastructure are ripe for reform and that, given a decline in donor-financing for infrastructure, private sector involvement will have to be increased from its current low level.
This first OECDInvestment Policy Review of Cambodia uses the updated OECD Policy Framework for Investment to present an assessment of the investment climate and to discuss the challenges and opportunities faced by the Royal Government of Cambodia in its reform efforts. The Review takes a broad approach to investment climate challenges facing Cambodia, with chapters on foreign investment trends and industrial structure, competitiveness and diversification challenges, business regulation, investor protection, investment promotion, good regulatory practices, infrastructure, responsible business conduct, investment in renewable energy, corporate governance, competition policy and the role played by development partners in improving the business climate in Cambodia.
This chapter documents the overall development context in Cambodia since the Paris Peace Agreement in 1991, describing how far Cambodia has come since then and describing key challenges going forward. It summarises the key findings in each policy area and provides tailored recommendations.
Cambodia has demonstrated a strong capacity for rebirth and resilience. The Khmer Rouge period removed a generation of politicians, judges and other civil servants, technical experts and skilled workers, and many others. Land titles were completely destroyed. The civil strife which followed inflicted further damage on whatever infrastructure remained. Starting from the Paris Peace Agreement in 1991, Cambodia has been one of the fastest growing economies worldwide which has made Cambodia one of the best performers in terms of reducing poverty.
Cambodia’s SME policy has principally focused on improving the legal and regulatory environment to support SME development. The country is at a relatively early phase in the development of targeted SME policies, but it has undergone a wave of long-term economic planning over recent years with the aim of accelerating diversification and maintaining robust economic growth. SME policy is a pillar of this. A policy priority is to increase SME integration into GVCs, particularly higher value-added activities.
Cambodia today is synonymous with progress. A prolonged period of political and social stability since the Paris Peace Accords of 1991 has provided the basis for rapid economic development. Since the early 2000s, Cambodia’s average economic growth rate has been among the highest in the world; the success of its garment industry, its attractiveness to tourists and the growth in construction have driven a transformation of the economy. Poverty has fallen dramatically as a result, accompanied by a decline in inequality. In 2016, Cambodia graduated to become a lower middle-income economy.
Heir to the ancient Khmer Empire, the Kingdom of Cambodia is a parliamentary constitutional monarchy located in Southeast Asia and bordering the Gulf of Thailand, between Thailand, Viet Nam, and Lao PDR. Its population of about 16 million is among the youngest in Southeast Asia, with half the population aged under 25. The population is predominantly Khmer. Other ethnic groups represent less than 10% of the population and are composed mostly of Vietnamese and Chinese. Cambodia is also among the poorest economies in Southeast Asia, with a gross domestic product (GDP) per capita of USD 1 225 in 2015.
In 2016 Cambodia crossed the middle-income threshold, marking the transformation from a largely agrarian economy to the latest Asian Tiger. At the same time, Cambodia recorded one of the world’s most impressive declines in poverty over the past decade.
This chapter proposes a scaling-up of social assistance and a consolidation of social insurance arrangements in line with Cambodia’s 2017 Social Protection Policy Framework (SPPF). While domestic resource mobilisation policies are proving highly successful, the sustainable implementation of the SPPF will require a financing strategy. Finally, this chapter recommends measures to improve coherence across the social protection system and the expansion of tools for implementing, monitoring and evaluating social protection provision.
This chapter provides a forward-looking assessment of risk and vulnerability in Cambodia. While monetary poverty has fallen rapidly since the early 2000s and inequality has also declined, a large population is vulnerable to falling back into poverty. The analysis demonstrated that deprivation levels have not declined as quickly as monetary poverty. Climate change, large-scale internal and international migration, rapid urbanisation and changes to the age structure of the population are likely to determine demand for social protection over the longer term. The extent to which Cambodia is able to diversify its economy will also be a critical factor.
This chapter focuses on the impact of existing social protection programmes on poverty and inequality. It finds that social assistance in Cambodia is well targeted through the IDPoor system but has little impact on poverty and inequality because of low levels of coverage and low benefit levels. Health Equity Funds, however, do ease the burden of health spending for a significant number of poor households. Pension benefits for retired civil servants and military veterans dominate social protection spending and are unsustainable. Social protection spending in Cambodia is low by regional standards. The tax system is progressive but increases poverty, an impact that public transfers are too small to offset.
Since 2000, Cambodia has posted one of the strongest and most sustained periods of economic growth in the world. Between 2000 and 2015, annual growth in its gross domestic product (GDP) averaged 7.8%, raising GDP per capita to USD 1 225 and reducing poverty rates from over 60% to 13.5%. The national poverty gap, which indicates the severity of poverty, fell from 21.8% in 2004 to 2.2% in 2014.
This chapter examines the adequacy of social protection in Cambodia in light of the risks and vulnerabilities identified in . Social protection in Cambodia is well established in legal and policy frameworks, including the Social Protection Policy Framework approved in 2017. While Cambodia has a variety of social assistance, social health protection, social insurance and labour market programmes in place, coverage is low and provision is highly fragmented. The current capacity of social protection to reduce poverty and vulnerability is therefore limited.Health Equity Funds are emerging as an exception to this situation. These provide relatively high levels of coverage among the poor population and are growing rapidly, thus providing a potential avenue towards universal health coverage.
This chapter presents provisional road safety data for Cambodia for 2016. It looks at recent trends in traffic and road safety as well as road user behaviour patterns, including sections on the ageing population, speed, drink driving and seat belt and helmet use. The chapter also reviews Cambodia’s road safety strategy and national targets to 2020.All data stem from National Road Safety Committee unless otherwise noted. The National Road Safety Committee joined the International Road Traffic and Accident Database (IRTAD) group in 2010. Data presented in this report are under validation by IRTAD. Actual numbers are likely to be higher. For more information please contact: [email protected].
Migration has been a major agent in Cambodia’s recent demographic and labour market change. Migration is not a new phenomenon, but it is becoming more dynamic, diverse and complex. As well as witnessing a marked increase in the number of emigrants, Cambodia is benefitting from increasing remittances from migration. This chapter gives a brief overview of migration in Cambodia: its drivers and impact, who the migrants are and where they have gone, and what the existing literature tells us about the impact of migration on those left behind. Finally, it lays out Cambodia’s policy and institutional framework governing migration.