Cambodia’s economic outlook is bright due to its steady GDP growth, low-cost labor, and upcoming integration into ASEAN’s single market

By John Enos

As the 10-member Association of Southeast Asian Nations (ASEAN) prepares for its single-market Economic Community in 2015, Cambodia is poised to benefit tremendously from this unification. With President Barack Obama in attendance, Cambodia played host to the 2012 ASEAN Summit in Phnom Penh in November. The most salient topic was the upcoming regional economic integration and how it will stimulate new foreign investment by removing tariffs, creating Free Trade Areas (FTAs), and forging pivotal transportation links both within ASEAN and in hegemonic China.

Cambodia, as an emerging low-cost manufacturing hub with tourism appeal, a stable government, and a crescent consumer class, will prosper from this ASEAN unification. The Kingdom’s strategic location and recurrent economic durability – 7% GDP growth is expected for 2013, in line with previous years – has propelled foreign direct investment (FDI), which increased by 44% last year to reach US $1.3 billion. Hun Sen, the country’s Prime Minister, believes that Cambodia will transition from a low-income country to a lower-middle-income country by the end of this year as classified by the World Bank.

This article is an excerpt from Leopard Asia Frontier Fund’s March 2013 newsletter. You can subscribe to the newsletter here. More…