Country risk reference rating: level 7 (7/9)
Country Risk Outlook: Stable
Economic and trade risks
Cambodia has a population of 14.48 million, a nominal GDP of US$14.4 billion, a real economic growth rate of 6.4%, a per capita GDP of US$994, and an inflation rate of 2.9%. Cambodia’s economy is highly dollarized, has a single structure, and relies heavily on external sources. environment. Cambodia has a long-term fiscal deficit and relies on external aid and debt relief, but its external debt repayment pressure is low. All industries in Cambodia are open to foreign investment, but administrative efficiency is low, legal enforcement capabilities are weak, and the business environment is generally poor.
Cambodia is one of the least developed countries. Its economy is highly dollarized and mainly relies on labor-intensive industries and tourism. It has a single structure and is highly dependent on the external environment. Due to limited revenue, the fiscal balance has been in deficit for a long time, and debt relief and external assistance are still the main ways to make up for the deficit.
According to Chinese customs statistics, in 2012, the bilateral trade volume between China and Cambodia reached US$2.92 billion, of which China had a surplus of US$2.49 billion. China mainly exports textile fabrics and mechanical and electrical products, and imports natural rubber, wood, rice and other agricultural and forestry products. In terms of foreign investment and cooperation, as of the end of 2011, China’s total agreed investment in Cambodia was US$8.91 billion, accounting for 36.1% of Cambodia’s total agreed foreign investment, making it the largest source of foreign direct investment in Cambodia. The main problem in Sino-Cambodian economic and trade cooperation is the extreme imbalance of trade. China is in an absolute trade surplus. This is mainly due to Cambodia’s relatively single export products and strong import demand. In terms of foreign investment, China also faces competitive pressure from South Korea, Malaysia and other countries.
Investment risk
Cambodia implements a free market economic system and an opening-up policy. Foreign direct investment is one of the main driving forces for its economic development. All its industries are open to foreign investment, and foreign investment and domestic investment are basically treated equally. Cambodia’s performance in providing credit support, tax policies and investment protection is acceptable, but the procedures for starting a business are complicated and the bankruptcy recovery rate is low. Cambodia’s infrastructure is backward. The government has been committed to improving the level of infrastructure and has also attracted a lot of foreign investment. Cambodia’s power supply is insufficient and needs to be imported from Vietnam and Thailand. The price of electricity is expensive.
Legal risks
Cambodia is a country with a civil law system. Its legal system is still being improved and developed. It is eager to attract foreign investment to accelerate economic construction. The government is committed to promoting the construction of the legal system. Its accession to the World Trade Organization has also greatly promoted its legal system. Regulations are further improved. Almost all commercial disputes in Cambodia do not go through the traditional court system, but are negotiated and resolved by the Ministry of Commerce and the Chamber of Commerce. According to the World Bank’s 2013 Doing Business Report, after a Cambodian company files for bankruptcy, it takes creditors an average of six years to collect related debts, which is much higher than the average in the East Asia and Pacific region.
Overall risk
Generally speaking, the Cambodian People’s Party has been in power for a long time and has rich experience. However, the opposition parties have strengthened their strength through alliance, posing a certain threat to the Cambodian People’s Party. In the general election in July 2013, the People’s Party won with a small advantage, and its political situation is expected to remain stable. At the same time, Cambodia has always pursued a foreign policy of independence, peace, and permanent neutrality, and has stable relations with neighboring countries and Western countries. Although the territorial dispute with Thailand has brought some external pressure, the impact has been limited. Cambodia is one of the least developed countries, and poverty and corruption have affected social stability to a certain extent. Its economic structure is single, over-reliant on textile and garment exports and tourism, and is vulnerable to external shocks. Although Cambodia’s economic growth is still strong, it may be difficult to recover to the level before 2008 as the world economy remains sluggish and external demand is sluggish. s level. The Cambodian economy is highly dollarized, and the central bank’s policy control effect is limited. Imported inflation is prone to occur when the dollar depreciates.
Based on the analysis and assessment of the current overall situation, Cambodia’s national risk reference rating is 7 (7/9), with a significant national risk level and a stable national risk outlook. (Issuing agency: China Export and Credit Insurance Corporation)
