For years, Cambodia has lived under the shadows of its economically superior neighbors-Malaysia and Thailand. This Southeast Asian country has made a gradual transition from an agro-based economy to an emerging manufacturing hub of Asia.
Its open economy, investment-friendly environment and unexploited commercial avenues are appealing to the Indian SMEs to explore business opportunities in this largely untapped market.
View of the past …
In the 1990s, Cambodia initiated efforts to promote industrialization across sectors. This strategic move received a major jolt in 1997-98 when the Cambodian economy went through its worst crisis. Economic activity in the country plunged to a record low and prospects of achieving financial prosperity became bleak.
A major turning point came in 1999 when the Cambodian economy made a recovery, and the government began implementing developmental policies. That year, Cambodia became a member of the Association of Southeast Asian Nations (ASEAN) and agreed to lower tariff rates for trade with other ASEAN members.
Consequently, the Cambodian economy registered a 4% growth during the period, reviving examples of business enterprises in the country. Today, Cambodia is an ideal business destination for investors looking at setting up manufacturing units for export. In view of this positive business outlook, Cambodia is also trying to attract Indian investors, especially the SMEs.
Growing sectors …
Tourism, garments, fishing, wood and wood products, rubber, rice milling and gem mining are some of the key industries in Cambodia. It is a major exporter of rice, rubber, timber, clothing, tobacco and footwear, while cigarettes, gold, motor vehicles, petroleum products and pharmaceutical products dominates its import basket.
Analyzes opine that Cambodia is a lucrative market for the Indian SMEs to export raw materials used for pharmaceutical products, garment industry, machinery and automobile components. Alternately, chief articles that the Cambodian SMEs can supply to India include rubber and fish products. Market experts further suggest that the Indian SMEs should step up efforts to foray into sectors such as the pharmaceutical industry, information technology (IT) services and education sectors in Cambodia.
Notably, some of the leading Indian companies in the real estate and hospitality sectors have shown a keen interest in undertaking property development projects in Cambodia.
Trade ties …
Government authorities in both India and Cambodia realize that to boost the Indo-Cambodian trade ties in the near future, it is extremely pivotal to implement appropriate policies. This understanding led to the formation of the Cambodia-India Entrepreneurship Development Center (CIEDC) in 2006. CIEDC is a unique platform serving the new entrepreneurs who want to set up their business in Cambodia.
Similarly, the Indian government runs the Indian Technical and Economic Cooperation (ITEC) program to train Cambodian entrepreneurs. These technical changes aim to provide the best industrial training to the next generation of entrepreneurs in India and Cambodia as well as an impetus to the SME sector in particular. According to Indian analysts, these initiatives will pave a new way for domestic SMEs who are looking to expand their reach in the international market.