Investment Insight: A Perspective On What Growth In Tourism Means To Cambodia

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An airplane from China Southern (CZ) at Siem Reap International Airport. The number of Chinese tourists visiting the Kingdom has skyrocketed in recent years.

Not long ago, in the mid 1990s, the streets of downtown Phnom Penh had very minimal traffic – some bicycles, motorbikes, cyclos, and very few cars. The nicest accommodation in town was the Hotel Cambodiana and a Toyota Camry was considered a luxury car. Since Cambodia has reached certain level of peace and stability, things have undeniably changed with growth manifesting itself across multiple sectors; among them, tourism and hospitality is definitely a frontrunner.

The two most outstanding effects deriving from the growth in the tourism sector are the economy and human resource development.

Data from the Ministry of Tourism (MOT) demonstrates that tourism has a major role in Cambodia’s economy over the past decade. Yes, it is due to the direct income from tickets sale to tourists visiting Angkor Wat; and tourists’ expense on local products and services, but it goes beyond that. The country has, more than ever before, attracted significant foreign direct investments into different sectors, many of which are hotels, restaurants, and tour companies. This has fueled Cambodia’s economy to be more open, to meet higher demand for better and more varieties of products and services leading to market expansion, more businesses, more income for the locals, and more revenue for the nation.

Understanding its major significance, the Royal Government of Cambodia (RGC), established a Working Group on Tourism (Working Group B), as part of the public-private dialogue mechanism known as the Government Private Sector Forum. Working group B is a collaboration between private sector and the RGC—dedicated to seeking solutions, making improvements and expanding the sector to benefit both parties; and the country as a whole. Currently, Working Group B is exploring various initiatives that will encourage Cambodia as a tourism destination and contribute to the greater success of the private sector, making it more convenient to develop more standardized and sustainable business.

Regulatory developments and incentives being implemented by the RGC govern and encourage the sector to prosper at a fast sustainable pace—streamlining licensing with the MOT and Ministry of Commerce. Upscale hotels are eligible to attain a Qualified Investment Project (QIP) status, for import duties exemption on all materials to be used to construct the hotel, and for profit tax exemption at the initial operation stage.

Tourism also contributes to Cambodian human resource development through job creation, and skill-based training. Although a number of Cambodian workers have lower-income jobs requiring minimal education, those who work hard and thrive in the opportunities presented to them, are able to expand their skills, gain valuable experience and achieve notable positions within their organization. Many are able to even start their own business successfully.

Today, our capital is busy, vibrant and expanding, our coastal areas are being developed tremendously and Siem Reap welcomes over two million tourists in 2015, and counting. Cambodia is, more than ever before, exposed to more demand, more choices in products and services, diversity and cultures, taking its place in the integrated ASEAN region. These changes raise our standards of living, our work ethics, our level of competitiveness, and our expectations for the future—the generation to come.

This article was written by Kanika Tan, senior associate at Sciaroni & Associates, and originally published in Asia Life Magazine (December 2016). If you are also interested in sharing your business-related articles with B2B Cambodia, please send us a message to dan@cambodiapocketguide.com