Everything Else is HR # 4 – Cambodia’s Economy
Join Tim Montero and Kevin Britten, as they discuss Cambodia’s economic performance in 2024 and insights into 2025 on this episode of “Everything else is HR.”
Duration: 19 minutes
Full transcript
TM: Hello everyone and welcome to another episode of Everything Else is HR. My name is Tim Montero and with me is my Managing Director Kevin Britten. Kevin how are you?
KB: Hi Tim.
TM: Hi how are you?
KB: I’m good first of all, Happy New Year.
TM: Happy New Year to you too. And Advanced Lunar New Year. How is everything for you Kevin?
KB: Lovely starting off really well in 2025 and I’m quite happy with how things are going.
TM: Yeah and the business is going well as well for us.
KB: Yeah. A lot of new projects coming in, picking up.
TM: So is it safe to assume that finally we could say that business is back to normal?
KB: Well, after an usual 2024 with a lot of insecurity in the market I think 2025 is looking a lot better.
TM: Very good, very good. Kevin let’s start off with you could start with the Cambodia economy back last year and then what should we be expecting this year?
KB: Well I can see improvements going on. We can say well okay last year was not a bad year.
There was 8.5 billion US$ in FDI foreign direct investment in Cambodia from September 23 to September 24 and that direct investment was in a range of sectors, although real estate was involved there was also manufacturing and agriculture as big features of it. Yeah we’re talking about things like commodities like rice, cashews, rubber and what we’re seeing is increasingly this is in activities related to adding value, adding value to agriculture products like making tires from the rubber. And this is way better for the country than simply exporting the rubber to be processed elsewhere. And value has got to be the future.
TM: Right yeah and what are the impacts of what you just mentioned yet?
KB: Well, if you want to add value to a product that means your workforce has got to have higher skills.
TM: Right so skills development is becoming crucial.
KB: A really good example would be there are proposed EV electric vehicle assembly plants. The skills needed to by the workforce of an EV assembly plant are much higher than the kind of skills required for agricultural in the past. So we’re looking at assembly plants coming in and the wind farms in Mondolkiri. All of these things require skills development in the country which means vocational training has got to rise to global standards. And so this is having impact on the human resources part of the national economy.
TM: Right and then speaking on EV there’s been a lot of EV vehicles coming in here. And are you saying that those are being assembled and manufactured here?
KB: There’s a plan to start assembling EVs right here. So this is a big step forward for Cambodia. And a lot of it is to do with the way investment has become easier.
Investment procedures are more streamlined than they were in the past. Partly because they’re now online. The Ministry of Commerce single portal has registered 40,000 build businesses in the past four years. So this is an amazing increase and this is a great change for the country.
TM: Negatives? What do you think is a negative impact on this?
KB: Well not about those things. If we think about the country as a whole, okay the Credit Bureau of Cambodia’s most recent report shows that overdue loans have increased. This is showing that there’s some kind of credit bubble in the country which I think gave rise to a lot of insecurity last year. But the national banks’ directives to banks telling them to restructure loans. I think that’s helped.
And don’t forget this is a fast-evolving market. For example, credit card use was very close to zero. Now it’s increasing rapidly. Partly because of digital payments there’s been a rapid move to digital payments which has increased things like credit card use. So the economy generally is modernizing. Yeah, I think most of the non-performing loans that the banks have are related to real estate.
TM: I see. So 2025 Kevin, what should we be expecting for 2025?
KB: Well it’s, well we’re optimistic. Okay so exports, when we think about exports with the incoming Trump administration talking about tariffs, this brings insecurity and all business hates the unknown.
Last year, okay, year on year exports to the US increased nearly 10%, and don’t forget, Cambodia, of all Cambodia’s exports, 38% go to the United States market. Mostly textiles, garment, footwear, travel goods.
So this actually makes Cambodia vulnerable to tariff changes. And well the manufacturers know what this means and of course it comes back to value added again. The way of increasing local value, the amount of value added locally to any given product, well that’s the way out of this situation.
And I think the manufacturing sector knows that. And we’re also seeing shifting production from China. We’re seeing manufacturers moving production into Cambodia.
Something of a negative is the fact that Cambodia’s GDP rising. So we’re facing the loss of most favored nations status. Meaning things like the everything but arms policy, which is exporting into the EU tariff free. That means those kinds of policies, those kinds of statuses will change.
But I think because there’s time, it’s about two, three years away that this will happen, there’s time to change and Cambodia is really, really good at changing.
TM: Other changes that we see coming in 2025?
KB: Well recently Cambodia banned access to I think 16 cryptocurrency exchanges. That might have some impact. But you know things like cryptocurrency and areas like that, these are very fast moving. So I’d look to expect more changes in that area.
TM: Yeah and speaking of Trump, he’s a big supporter of cryptocurrency.
KB: Apparently, but I think the uses cryptocurrency was being made. The uses being made of it here were not what the national bank wanted.
TM: I see, I see. So Kevin talk to me about the niche industries and culture and social insights, the effects of this.
KB: Well, I think about future of AgriTech. You know Cambodia is an agricultural producer moving to using more innovative technologies to transform the agricultural production. And perhaps being used to add secondary processing to agricultural product, which is what we are going down the path of.
And going back to the, well, the garment sector, perhaps we’ve never explored the potential of Cambodia’s garment industry in terms of its impact as a design centre for the global market.
These things have not been looked at.
In terms of culture and society, well, Cambodian business culture, Cambodian work culture, these are always questions of balancing tradition and modernity, the way in which Cambodian traditional values meld, mix, blend with modern business practices. Anybody running a business here sees that. And these are kind of continued to be features of business life in Cambodia. And I think most serious managers accept that and use it to their advantage.
TM: Yeah, Kevin, you yourself, you’re a business man here for many, many years.
KB: Yeah, 18, 20 years.
TM: And in 20 years? Has there been any changes so far throughout, when you started year one year to year 18 or 19?
KB: Sure, we’ve seen massive amounts of professionalisation. We’ve seen massive amounts of change in the way in which Cambodian professionals have become, we could say, more professional. That 20 years ago, everybody complained about job hopping and so forth. Cambodian professionals realise now that job hopping is not the way to that better future. They’re concerned about job security, but more importantly, I think they’re involved,, they’re concerned with personal and professional development. So that has become more of a focus in the HR market.
TM: Cool, Kevin, talk to me about Cambodia’s regional integration.
KB: Oh, this is most important. Cambodia as part of ASEAN as being part of the ASEAN economic community means that there are lots of opportunities within the AEC framework.
Of course, there’s the CAFTA, the China ASEAN free trade area. There’s benefits for Cambodia of participating in CAFTA.
Basically, in terms of business, that means companies are looking at regional value chains. How Cambodian businesses integrate into regional value trains to improve their competitiveness.
And of course, ASEAN is doing lots of things related to reducing tariff barriers, but more importantly, working on the hard stuff, which is non-tariff barriers. So the things which stop trade happening smoothly and easily across borders, besides the improvements to labor skills and training that Cambodia needs to operate at ASEAN standards, whatever standard that particular industry is in.
So we’ve got people addressing those needs.
We’ve also got infrastructure development going on, connecting us more closely to ASEAN.
And of course, going back to non-tariff barriers, removing or reducing things like technical barriers to trade, so product standards. A standard, for example, for a product might be different in Malaysia, Thailand and Cambodia. Bringing those standards into harmony means that products can move across borders, products can be assessed through the same procedures, and that always opens up a trade. So this is involved with product standards, sanitary and phytosanitary, that means related to plants and animals, food safety, those kind of standards.
Harmonizing those means that products and other items can move across borders more easily. Relaxing, harmonizing customs procedures, shortening the time it takes for the paperwork for a product across a border.
And then we’re also looking at licensing requirements, a company which is licensed to operate in one country might not be accepted for operation in a neighboring ASEAN country.
So these challenges are what ASEAN member states are working on, to harmonize these standard streamline procedures, basically with the goal of promoting regional cooperation. And that is going to be such clear improvements for which will help Cambodia.
So it’s to do with regional cooperation, the ASEAN economic community and regional comprehensive economic partnership. These are deepening ASEAN’s economic integration.
These are important initiatives and I think the Cambodia government is working hard to improve all of this integration because it means that Cambodia’s products can be exported more easily and more freely to the whole of the region.
And although our focus, like we said, the garment industry has been always exporting to Western markets, there’s a lot of products that Cambodia has and which we’ll certainly have in the future, which we’ll be looking at our closer neighbors, the ASEAN markets.
So looking at strengthening cooperation in the greater Mekong sub-region. There are other regional entities which mean that the overall economy will improve. So harmonizing standards, recognizing each other’s customs procedures to become, make things more efficient, make things more transparent.
And of course, the driving force behind a lot of that is digitalization.
TM: Right, there we go.
KB: Because of course the digital world doesn’t recognize borders very easily. So these things have to be done internationally. Digital trade and e-commerce cross borders easily. Now often the focus is on the digital crime and e-commerce crime. But actually the e-commerce, digital commerce moving across borders is another great way in which ASEAN can harmonize, can grow together.
TM: And yeah, there’s digital infrastructure issues.
KB: Cambodia is constantly investing in digital infrastructure. Broadband has improved massively. We have new data centers because that supports economic growth. And the implementation of regional agreements on these issues is where ASEAN is looking.
So another great thing is of course this actually helps SMEs as much as it helps big companies.
Big companies can afford this kind of large scale infrastructure. But SMEs benefit from investment in digital infrastructure because they can access them immediately, and because they’re fast moving very often, they can immediately take advantage of it.
So yeah, I think we’ve got a lot going on in 2025. And I think we will continue to see more of the kind of changes we saw last year. I think we’ll see more security in the economy, certainly internally security. Of handling the credit issue, the debt issue that we’ve been working with.
And I think what we’re also looking at is, well, obviously we have great political and social security here. And so building on those strengths is what Cambodia, I think is going to spend 2025
TM Right. And this is why they’re having this ASEAN business summit. Actually, we have Cambodia hosting it this year in March 2025. And like what you just mentioned, they’re focused on skills development. That will be the theme for this business summit.
KB: Right. So there is an ASEAN business summit here in March. And skills development is the main theme.
TM: Yeah. And one of the things that I could see is with all these FDI’s that you mentioned coming in and all these digitalizations and everything, we need people to be able to use it properly.
KB: Yeah. So that’s why skills development definitely is a need. And this is why we’re talking about it because we are HR consultants and specialists.
TM: So just for a little bit of commercial break here, Kevin, sorry. So we are Top Recruitment Cambodia. We are Top Recruitment and Consulting, Cambodia.
So if you have any recruitment needs anywhere in the world, I would say just come to us. We have a website you can contact me every time, anytime in LinkedIn, my WhatsApp and Telegram details are listed on our on the website. So if you need anything, HR related business related, we can definitely help you.
Kevin, thank you for your time. Thank you for sharing all these insights regarding what to expect and what we experienced last year. We have a lot to look forward through. Anyways, guys, thank you for your time. See you in the next episode. Thank you and have a great day. Thanks, Kevin.