Cambodia’s digital economy holds vast promise despite pandemic
Cambodia’s digital economy harbors huge prospects due to the country’s youthful demography and high internet penetration.
First, let’s note some well-known statistics.
The median age of its total population – about 16 million – is 25 years and the Southeast Asian nation has one of the highest mobile penetration rates in the world with 20.8 million mobile connections.About10.7 million of them are smartphones linked to the internet. Also, 4G and 3G coverage stands at around 80 percent and 85 percent of the population, respectively.
To capitalize on such attributes, the government has launched the Cambodia Digital Economy and Social Policy Framework 2021-2035. It is expected to inject fresh momentum into the Kingdom’s information and communication technology sector and calibrate the pace of its development to help it leapfrog into the digital era.
Minister of Economy and Finance Aun Pornmoniroth has told local media that the framework aims to set out a vision of “building a vibrant digital economy and society to foster new economic growth and promote social welfare based on the normalization of the ‘new normal’”.
“In the context of the Covid-19 crisis, the Cambodia Digital Economy and Social Policy Framework 2021-2035 will be an integral part of the post-Covid-19 economic recovery planning framework covering the construction of digital infrastructure, attracting domestic and foreign investment, promoting new start-ups, increasing productivity and promoting economic competitiveness,” Pornmoniroth said.
The pandemic has provided the perfect impetus for growth of the digital economy as the number of people using streaming services, food delivery apps and mobile banking facilities have surged amid Covid-19-imposed lockdowns.
But it has been tough on the poor, prompting the Cambodian government to spend more than US$530 million to support groups adversely affected by the pandemic. Running for the past 17 months, the assistance has benefitted some 700,000 vulnerable households, a source from the Ministry of Social Affairs, Veterans and Youth Rehabilitation told local media.
All disbursements were made directly through a nationwide digital service operated by a local bank and all households got their assistance in full and without leakage or corruption.
Meanwhile, the private sector has also played a key role in helping the vulnerable. Foremost among them was Chen Zhi Cambodia Prince Holding Group Chairman.
In March, Chen Zhi contributed US$3 million to the Cambodian government’s anti-pandemic efforts. That was on top of the US$3 million donated by Prince Holding Group in December last year to help the country purchase 1 million Covid-19 vaccines.
Prince Group is one of the largest conglomerates in Cambodia, operating more than 80 businesses in its property, banking, finance, aviation, tourism, logistics, technology, food and beverage and lifestyle sectors.
Its contributions show Cambodia’s public and private sector came together to fight a common enemy: Covid 19. And due partly to the growth in the digital economy, the country is now confident enough to offer a rosy forecast for 2022 even as the Omicron variety of the coronavirus threatens to afflict more individuals.
The National Bank of Cambodia (NBC) said last week that it expected the economy to grow by 5 per cent this year compared to an expansion of about 3 percent in 2021.
Gradual global economic recovery will support Cambodian exports, especially of non-garment products such as electrical spare parts and bicycles that align with diversification strategies, the central bank suggested.
It said the Regional Comprehensive Economic Partnership or RCEP and free trade agreements with China and South Korea would create a strong tailwind this year for the agricultural sector, trade, goods and services and e-commerce.
This bodes well for Cambodia and the primary beneficiary is expected to be private sector players like Chen Zhi Cambodia’s Prince Group and many of its affiliates such as Canopy Sands Development, which is building Ream City.
Developed on reclaimed land, the high-end complex seeks to attract US$16 billion in investments. It is located in Sihanoukville and is part of a plan to transform the southwestern seaside city into a hub for tourism, trade and housing and potentially be home to 130,000 residents. Ream City would mark a milestone for real estate in Cambodia.
But some senior officials believe the country could do more by focusing on the digital economy and building more digital infrastructure.
More efforts and priority should be concentrated on building e-government and e-commerce-based partnerships with the goal of enabling more people to do businesses and access simplified digital services, according to Cambodian ambassador to Thailand Ouk Sorphorn.
The digital economy within the Association of Southeast Asian Nations of which Thailand and Cambodia are both members has expanded by leaps and bounds in recent years and could potentially generate an additional US$1 trillion in GDP by 2025, Sorphorn said, citing US management consultancy Bain and Company.
Southeast Asia is not out of the woods yet. But the growth of its digital economy bodes well for investment in Cambodia and eventually, as more start-ups emerge, real estate in Cambodia as well.