Cambodia Economic Framework

Financial policy and capital market

Cambodia has benefited from continuous fiscal stabilization in recent years. Tax revenue grew between 2010 and 2015 from ten percent to 15.1 percent of the gross domestic product, and in the 2016 budget year, according to the World Bank, the increasing expenditure contributed a not inconsiderable part to the economic growth of around seven percent. The national budget for 2020 grew by 22.7% to 8.23 billion US dollars, which increased the government ratio from 24.7% to 28.0% of GDP. The expenses are generated by own income of 6.5 billion US dollars and borrowed around $ 1.7 billion, equivalent to a net new debt of 5.8% of GDP. According to World Bank estimates, the current account deficit grew by 0.7 percentage points to 10.4% of GDP in 2018.

According to the World Bank, national debt was a good 30% of GDP in 2018; With an estimated 40 to 50% of the foreign debt, China remains by far the largest creditor in the country. The currency reserves have grown steadily over the past few years and amounted to 10.1 billion US dollars in 2018. The inflation was never in the past decade more than five per cent, in 2018 at 4.1%. The national currency Riel has been constant for two decades at around 4,100 Riel to one US dollar. The government is still striving to reduce the importance of the US dollar in favor of the Cambodian riel, in which, however, only 20% of capital movements are processed.

The banking sector consists essentially of the central bank, 58 commercial banks (44 general and 14 specialized banks) and 74 microfinance institutions, including some international banks. The banking sector grew 19.4% to $ 40 billion in 2018. Deposits in the amount of 22.1 billion US dollars are set against loans to the value of 24.5 billion US dollars, according to the National Bank. According to calculations by the World Bank, a third of the loans granted flowed into the real estate sector, followed by retailing with 19%. Despite the risk of a real estate bubble bursting, which has been discussed for years, the banking sector is considered healthy, and loan defaults in particular are comparatively rare. One of the downsides is still the high vulnerability to money laundering, which is why Cambodia has been under special observation by the OECD-based international Financial Action Task Force on Money Laundering since February 2019. In contrast, the is comparatively positive degree of financial inclusion, which can be attributed to the relatively high number of microfinance banks and a growing fintech industry.

Cambodia capital market

Infrastructure and transportation

According to, Cambodia has made enormous efforts to expand its transport infrastructure in recent years. Since 2012 alone, more than three quarters of the national road network (more than 5600 km) has been repaired. However, the deficits in the transport infrastructure are still considerable. Transport costs, in particular, are hardly competitive in regional comparison and will require further substantial investments in the coming years. In 2013, only a quarter of the 47,000 kilometers of road network was paved. Often the building fabric is new highways built by Chinese companies so bad that the asphalt dissolves completely after a few years. There are only two railway lines: on the one hand from Phnom Penh via Pursat and Battambang to Poipet and on the other hand from the capital via Takeo and Kampot to Sihanoukville.

Another obstacle to integration into world trade is the lack of a deep-sea port, even if the opening of a new multi-purpose terminal in Cambodia’s only deep-sea port (13.5 meters) in June 2018 more than doubled the loading capacity to up to 50,000 tons. As a result, larger ships should also arrive in Sihanoukville in the future and the handling times should increase. In the future, 70% of all imports and exports of Cambodia are to be processed via the port, which clearly underlines its importance for the country.

The expansion of the rudimentary rail network continues. In April 2019, the rail connection to Thailand was restored, which had been interrupted for more than 45 years and should now again enable continuous goods and passenger transport from Bangkok to Phnom Penh. At the same time, this is expected to give a considerable boost to bilateral trade relations, which up to now have mainly been carried out via cumbersome trucking. The signs are also pointing to change in aviation: after plans to build a new airport for the tourist metropolis of Siem Reap, Phnom Penh will also get a new airport. It is being built south of the capital and is scheduled to open between 2023 and 2025 and will be one of the largest in the world in terms of area at 2,600 hectares. Another airport is to be built in the north-eastern province of Mondulkiri to replace the existing dust runway.

It remains to be hoped that Cambodia has learned from its mistakes in road construction. In most of the construction work carried out by Chinese companies, unsuitable materials were often used, which means that many highways have to be completely renovated after a few years. The litmus test is likely to be the new four-lane highway that will connect Phnom Penh with the coastal city of Sihanoukville in the south from 2023. The 1.9 billion US dollar project is being funded by a Chinese consortium that wants to refinance the investment with tolls.

Infrastructure quality in Southeast Asia (2014)

Source: World Bank Group 2018
country Access to electricity (in% of the population) Export costs (US dollars per standard container) Port infrastructure – scale from 1 (bad) to 7 (very good)
Malaysia 100 525 5.6
Singapore 100 460 6.7
Thailand 100 595 4.5
Vietnam 99.2 610 3.7
Indonesia 97.0 572 4.0
Philippines 89.1 755 3.5
Laos 78.1 1950 2.6
Cambodia 56.1 795 3.6
Myanmar 52.0 620 2.6


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