BGA Brainstorm: Asia StreetBeat: What Business Should Watch in Cambodia’s Election Season

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Asia StreetBeat: What Business Should Watch in Cambodia’s Election Season

BGA Asia StreetBeat is the company’s mini-series that takes an on-the-ground pulse of Indo-Pacific markets from its leaders across the 26 Indo-Pacific markets in which we operate, with over 180 people in total and growing. In each segment, we periodically ask our team leaders questions on what clients should watch: one on macro developments; one on sectors and industries; and one on under-noticed or over the horizon developments.

For this segment of BGA Asia StreetBeat, we spoke to BGA Cambodia Managing Director Bora Chhay.

What is one political or economic development that remains important for businesses to watch in the coming months?

Cambodia is heading for election season, with commune elections in June this year and then general elections in 2023. Prime Minister Hun Sen’s ruling Cambodian People’s Party (CPP) is expected to win because there is no strong opponent that can rival the CPP and the opposition is fragmented.  The focus will be on changes along the way, including a cabinet reshuffle and transfer of power to a younger generation of CPP leaders.

Within this political environment, CPP ruling government will strongly promote investment and prioritize political stability to facilitate economic recovery and growth. Ease of doing business will continue to be a priority amid wider changes including COVID-19 and the impacts of the Russia-Ukraine conflict.

What is a sector within the economy that you think clients should carefully monitor in the coming months?

The automotive and electronics (A&E) industry. There is a big push to diversify and expand the country’s economy beyond garment, footwear and travel goods (GFT), increase competitiveness and boost post-COVID-19 economic growth. The A&E sector offers opportunities to connect Cambodia to regional and global value chains.

Companies should note this because the A&E sector has untapped potential in several areas, including the development of more complex technologies and upscaling. Roadmaps on the sector could be launched for implementation sometime later in 2022.

What is one relatively more under-noticed development or trend on the ground that you think international businesses with an interest in potentially investing in Cambodia should pay more attention to in terms of their planning?

The development of transportation. The government has invested heavily in the public transport infrastructure for more than two decades. It understands that Cambodia must address its high transport, logistics and storage costs by investing in critical infrastructure at home, and that this is also the gateway to link the country with Mekong countries and China, Japan, South Korea and others abroad.

Businesses should look into infrastructure investment opportunities in Cambodia, be it for the shorter-term or longer-term opportunities. Top officials including Senior Minister and Minister of Public Works and Transport Sun Chanthol have also encouraged private sector participation and investment in this area, including on roads and railways.