Cambodia as a whole looks very positive from an investment aspect because it’s like a carbon copy of Thailand 30-40 years ago. The poor economic situation is mainly due to colonial rule and a brutal dictatorship in recent history and in my opinion is the reason why it’s so far behind economically, but is now the right time to invest in Cambodia?
Disclaimer – This is not personal financial advice and I am not suggesting you invest in Cambodia. If you want personal financial advice, please speak to a qualified and competent advisor.
However, the country is opening up fast and large multinational companies are flocking to the country to get a piece of the pie. Personally, I first went to Cambodia in 2015 and it had no tall buildings and one AEON in PP (Phnom Penh) now a short time later in 2022 it has numerous tall buildings, malls, and office blocks and it continues to grow. That shows the rapid expansion which the country is going.
This looks likely to continue for a while as its GDP per capita is still very low at around $1700. Thailand is around 4-5 times this amount.
https://www.focus-economics.com/countries/cambodia
Furthermore, Cambodia for a frontier market has a somewhat stable government compared to others in the region such as Burma, and would be a likely place for companies to keep investing in.
All this looks promising for the country as it would be hard not to keep growing from such a low level of GDP.
The only red flag I see is the Chinese debt trap as China is investing heavily in the region in the form of Casinos, hotels, and real estate this can be a positive as many come to Cambodia to gamble, as it’s banned in China, and it creates jobs. Recently, I have seen Cambodia aligning with China’s military allowing bases in the country for China.
But, this could also be a Sri Lankan style problem if not controlled. I don’t think this will happen in Cambodia but there is always a possibility.
Overall from an economic point of view, the next few years I see it hard for anything but growth in Cambodia at 5-7% a year, however, again, this is not guaranteed.
Ways to Invest in Cambodia
In terms of investing in the country from the stock market point of view, it is hard as the exchange only has a handful of listings and is not very liquid.
https://en.wikipedia.org/wiki/Cambodia_Securities_Exchange#Listings
The highest percentage ETF I could find (they might have some specialist funds) only has 2.23% weighting in Cambodia.
https://etfdb.com/etf/ERSX/#etf-ticker-profile
You can invest directly in the market by opening an account with Cambodian exchange:
http://csx.com.kh/operation/market/listPosts.do
The other area is property, I have written a few articles about investing in property in Cambodia, and don’t think it is really for anyone unless they know the area and laws, and a confident property investor (like with any frontier markets property investor). This becomes even more prevalent as properties in popular areas are reaching the same levels per square meter as other more developed cities such as KL.
Alternative Areas
Other areas in the region that might be a good investment that has more liquid/developed exchanges are Indonesia due to its land and nickel resources and Vietnam as the markets are down 30-50% YTD while the economy is growing at 6-7% and I am very optimistic about Vietnam’s economy. Personally, I have been looking at investing in Vietnam right now due to the discrepancy in the market and the economy.
Conclusion
Cambodia presents an opportunity for those investors who can handle sophisticated and volatile investments, however, it’s not for everyone as the risk is high.
Investing in Cambodia is quite difficult as it’s not easy to invest in Cambodia’s market and there are some funds out there but there aren’t many funds that have a majority weighting, the highest I have found is 22%.
There is the option to look at property within Cambodia, however, this is risky and volatile as you must know the areas and laws surrounding property as an expat.
There are some alternatives for investors to look at, these can be Vietnam and Indonesia.
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