Charting Cambodia s Economy, 1H 2017 Designed to help executives interpret economic numbers and incorporate them into company s planning. Publication Date: January 3 rd, 2017
HELPING EXECUTIVES AROUND THE WORLD INTERPRET ECONOMIC NUMBERS Argentina Australia Brazil Brunei Cambodia Canada Chile China Hong Kong India Indonesia Laos Malaysia Mexico Myanmar New Zealand Peru Philippines Russia Singapore South Africa South Korea Taiwan Thailand Turkey United Kingdom United States Vietnam
EXECUTIVE SUMMARY ECONOMIC PROFILE ECONOMIC OUTLOOK Structure Competitiveness Development Growth Stability Within ASEAN, Cambodia s economy is only bigger than Laos and Brunei Cambodia s population of 16 million people is around half the size of Malaysia s Favorable demographic structure for Cambodia with relatively young population and increasing working age group Cambodia s economy has changed significantly over the past decade with more emphasis on Industry and trading with the world Cambodia is now following other ASEAN economies export driven model of growth, with high level of trade openness Share of Industry in Cambodia s GDP has surpassed that of Agriculture for the first time in 2015 Economic Structure Part of the country s economic profile, economic structure section gives readers useful views to understand economic fundamental and determine what matters for the country s economy. 5
Within ASEAN, Cambodia s economy is only bigger than Laos and Brunei 2015 GDP USD billion, Market Exchange Rate US China Japan Germany UK ASEAN* France India Italy Brazil* Canada Korea Russia Australia Spain Mexico 4,124 3,365 2,858 2,433 2,420 2,073 1,816 1,773 1,551 1,378 1,326 1,225 1,200 1,144 18,037 11,182 Indonesia 859.0 Thailand 395.3 Malaysia 296.3 Singapore 292.7 Philippines 292.5 Vietnam 191.5 Myanmar 62.9 Cambodia* 17.8 Brunei 12.9 Laos* 12.6 Measuring the size of an economy Size of any economy is usually measured by calculating its Gross Domestic Product (GDP) which is the market value of all officially recognized final goods and services produced within a country in a given period of time. To compare GDP internationally, there is a need to convert value in local currencies to one main currency, normally USD. There are two popular exchange rate to be used. The first one is the official exchange rate for that particular period. The second one is the so called Purchasing Power Parity exchange rate, which takes into account the difference in living expenses between countries. The first method is more popular in comparing the size of each economy. Size of Cambodia s economy Using the market exchange rate method, Cambodia s GDP is estimated to be around USD 17.8 billion in 2015, only bigger than Laos and Brunei. Note: (*) IMF Estimate Source: IMF World Economic Outlook Database October 2016 6
Cambodia s economy ranks 89 th in the world in the latest global competitiveness rankings, up 1 place from last year The Global Competitiveness rankings 1 Switzerland 5.80 2 Singapore 5.70 3 United States 5.70 4 Netherlands 5.60 5 Germany 5.60 6 Sweden 5.50 7 United Kingdom 5.50 8 Japan 5.50 9 Hong Kong SAR 5.50 10 Finland 5.40 11 Norway 5.40 12 Denmark 5.30 13 New Zealand 5.30 14 Taiwan, China 5.30 15 Canada 5.30 16 United Arab Emirates 5.30 17 Belgium 5.30 18 Qatar 5.20 19 Austria 5.20 20 Luxembourg 5.20 21 France 5.20 22 Australia 5.20 23 Ireland 5.20 24 Israel 5.20 25 Malaysia 5.20 26 Korea, Rep. 5.00 27 Iceland 5.00 28 China 5.00 29 Saudi Arabia 4.80 30 Estonia 4.80 31 Czech Republic 4.70 32 Spain 4.70 33 Chile 4.60 34 Thailand 4.60 35 Lithuania 4.60 36 Poland 4.60 37 Azerbaijan 4.60 38 Kuwait 4.50 39 India 4.50 40 Malta 4.50 41 Indonesia 4.50 42 Panama 4.50 43 Russian Federation 4.50 44 Italy 4.50 45 Mauritius 4.50 46 Portugal 4.50 47 South Africa 4.50 48 Bahrain 4.50 49 Latvia 4.40 50 Bulgaria 4.40 51 Mexico 4.40 52 Rwanda 4.40 53 Kazakhstan 4.40 54 Costa Rica 4.40 55 Turkey 4.40 56 Slovenia 4.40 57 Philippines 4.40 58 Brunei Darussalam 4.30 59 Georgia 4.30 60 Vietnam 4.30 61 Colombia 4.30 62 Romania 4.30 63 Jordan 4.30 64 Botswana 4.30 65 Slovak Republic 4.30 66 Oman 4.30 67 Peru 4.20 68 Macedonia, FYR 4.20 69 Hungary 4.20 70 Morocco 4.20 71 Sri Lanka 4.20 72 Barbados 4.20 73 Uruguay 4.20 74 Croatia 4.10 75 Jamaica 4.10 76 Iran, Islamic Rep. 4.10 77 Tajikistan 4.10 78 Guatemala 4.10 79 Armenia 4.10 80 Albania 4.10 81 Brazil 4.10 82 Montenegro 4.10 83 Cyprus 4.00 84 Namibia 4.00 85 Ukraine 4.00 86 Greece 4.00 87 Algeria 4.00 88 Honduras 4.00 89 Cambodia 4.00 90 Serbia 4.00 91 Ecuador 4.00 92 Dominican Republic 3.90 93 Lao PDR 3.90 94 Trinidad and Tobago 3.90 95 Tunisia 3.90 96 Kenya 3.90 97 Bhutan 3.90 98 Nepal 3.90 99 Côte d'ivoire 3.90 100 Moldova 3.90 101 Lebanon 3.80 102 Mongolia 3.80 103 Nicaragua 3.80 104 Argentina 3.80 105 El Salvador 3.80 106 Bangladesh 3.80 107 Bosnia and Herzegovina 3.80 108 Gabon 3.80 109 Ethiopia 3.80 110 Cape Verde 3.80 111 Kyrgyz Republic 3.70 112 Senegal 3.70 113 Uganda 3.70 114 Ghana 3.70 115 Egypt 3.70 116 Tanzania 3.70 117 Paraguay 3.70 118 Zambia 3.60 119 Cameroon 3.60 120 Lesotho 3.60 121 Bolivia 3.50 122 Pakistan 3.50 123 Gambia, The 3.50 124 Benin 3.50 125 Mali 3.50 126 Zimbabwe 3.40 127 Nigeria 3.40 128 Madagascar 3.30 129 Congo, Democratic Rep. 3.30 130 Venezuela 3.30 131 Liberia 3.20 132 Sierra Leone 3.20 133 Mozambique 3.10 134 Malawi 3.10 135 Burundi 3.10 136 Chad 2.90 137 Mauritania 2.90 138 Yemen 2.70 89 th in the world 16 th among 22 in Asia Pacific Rank / 138 Country / Economy Score 2 Singapore 5.70 8 Japan 5.50 9 Hong Kong SAR 5.50 13 New Zealand 5.30 14 Taiwan, China 5.30 22 Australia 5.20 25 Malaysia 5.20 26 Korea, Rep. 5.00 28 China 5.00 34 Thailand 4.60 39 India 4.50 41 Indonesia 4.50 57 Philippines 4.40 58 Brunei Darussalam 4.30 60 Vietnam 4.30 89 Cambodia 4.00 93 Lao PDR 3.90 97 Bhutan 3.90 98 Nepal 3.90 102 Mongolia 3.80 106 Bangladesh 3.80 122 Pakistan 3.50 Global Competitiveness World Economic Forum, who publishes annual Global Competitiveness Report, defines competitiveness as the set of institutions, policies, and factors that determine the level of productivity of a country. Since 2005, the World Economic Forum has based its competitiveness analysis on the Global Competitiveness Index (GCI), a comprehensive tool that measures the microeconomic and macroeconomic foundations of national competitiveness. More information on the report can be found on its website http://www.weforum.org. Cambodia in the Global Competitiveness Rankings Cambodia s economy ranks 89th in the world in the latest global competitiveness rankings, up 1 place from last year. Within ASEAN, Cambodia s ranking is the second lowest. Source: The Global Competitiveness Report 2016-2017, World Economic Forum 16
Weaker contributions from Investment and Export was compensated by lower Import in 2014 Source of Real GDP growth Expenditure 2010 2011 2012 2013 2014 C 7.9% 8.8% 5.6% 3.5% 3.7% I -5.5% 2.2% 1.4% 5.8% 2.3% I (capital) -5.8% 2.2% 1.4% 5.7% 2.3% I (inventory) 0.3% 0.0% 0.0% 0.1% 0.1% G -0.5% 0.6% 0.3% 0.5% 0.2% X 12.1% 15.7% 7.3% 19.4% 11.8% M -9.5% -15.7% -8.4% -25.7% -12.3% Discrepancy 1.5% -4.5% 1.1% 4.2% 1.4% Source of Growth Growth contribution shows portions of the total growth from each composition. They must add up to the total growth. Import is a deduction to GDP and the growth in Import contributes negatively to the overall GDP growth. Growth drivers for Cambodia s economy Export has traditionally been the biggest source of growth for Cambodia s economy, while Import has been on the other side of the coin. In 2014, weaker contributions from Investment and Export was compensated by lower Import. GDP 6.0% 7.1% 7.3% 7.6% 7.1% Note: (*) C = Private Consumption, I = Investment including: I (capital) = Capital formation and I (inventory) = change in inventory G = Public consumption, X = Export of goods and services, M = Import of goods and services Source: ADB; Charting Economy analysis 31
Except in 2008, Price stability in Cambodia has been rather mild and the trend is toward mild inflation in 2017 Cambodia s Inflation Percentage change in consumer price index Projected Inflation* 2017, annual percentage change in CPI 30% 25% 20% 15% 10% 5% 0% -5% Myanmar 9.1% India 5.2% Russia 5.0% Indonesia 4.2% Vietnam 3.7% Philippines 3.4% World 3.3% Malaysia 3.0% Cambodia 2.7% US 2.3% China 2.3% Laos 2.3% Australia 2.1% Thailand 1.6% Singapore 1.1% Euro area 1.1% Japan 0.5% Brunei 0.0% 2005 2007 2009 2011 2013 2015 2017 2019 2021 Inflation Inflation is normally calculated from the change in the Consumer Price Index (CPI). CPI is the general price level of goods and services purchased by consumers. Inflation in Cambodia Except in 2008, Price stability in Cambodia has been rather mild and the trend is toward mild inflation in 2017. Note: (*) Forecasted by IMF in World Economic Outlook report, October 2016 Source: IMF 35
Starting a business in Cambodia is harder than in any other ASEAN country Starting a business rank Cost - Paid-in min. Procedure - Cost - Men Procedure - Time - Time - Men Women (% capital (% of Economy Rank DTF* Men (% of income Women Women (days) of income income per (number) per capita) (number) (days) per capita) capita) New Zealand 1 100.0 1 0.5 0.3 1 0.5 0.3 0.0 Hong Kong SAR, China 3 98.2 2 1.5 0.6 2 1.5 0.6 0.0 Singapore 6 96.5 3 2.5 0.6 3 2.5 0.6 0.0 Australia 7 96.5 3 2.5 0.7 3 2.5 0.7 0.0 Korea, Rep 11 95.8 2 4.0 14.6 2 4.0 14.6 0.0 Taiwan, China 19 94.4 3 10.0 2.1 3 10.0 2.1 0.0 Thailand 78 87.0 5 25.5 6.6 5 25.5 6.6 0.0 Brunei Darussalam 84 86.7 7 14.0 1.6 8 15.0 1.6 0.0 Japan 89 86.1 8 11.2 7.5 8 11.2 7.5 0.0 Malaysia 112 83.7 8 18.0 6.2 9 19.0 6.2 0.0 Vietnam 121 81.8 9 24.0 4.6 9 24.0 4.6 0.0 China 127 81.0 9 28.9 0.7 9 28.9 0.7 0.0 Timor-Leste 145 77.1 4 9.0 0.5 4 9.0 0.5 260.1 Myanmar 146 77.1 11 13.0 40.4 11 13.0 40.4 0.0 Indonesia 151 76.4 11.2 24.9 19.4 11.2 24.9 19.4 0.0 India 155 74.3 12.9 26.0 13.8 12.9 26.0 13.8 0.0 Lao PDR 160 72.4 8 67.0 4.6 8 67.0 4.6 0.0 Philippines 171 68.9 16 28.0 15.8 16 28.0 15.8 3.1 Cambodia 180 54.9 9 99.0 57.2 9 99.0 57.2 22.5 Central African Republic 190 31.4 10 22.0 209.4 10 22.0 209.4 556.6 Starting a Business This topic measures the paid-in minimum capital requirement, number of procedures, time and cost for a small- to medium-sized limited liability company to start up and formally operate. To make the data comparable across 190 economies, Doing Business uses a standardized business that is 100% domestically owned, has start-up capital equivalent to 10 times income per capita, engages in general industrial or commercial activities and employs between 10 and 50 people one month after the commencement of operations, all of whom are domestic nationals. The most recent round of data collection for the project was completed in June 2016. Starting a Business in Cambodia Starting a business in Cambodia is harder than in any other ASEAN country. Note: (*) An economy s distance to frontier score is indicated on a scale from 0 to 100, where 0 represents the worst performance and 100 the frontier Source: Doing Business 2017 44
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