Cambodia is one of the fastest growing countries in the world. Unexplored and undervalued, international firms such as Starbucks, Samsung and Nike are just now to starting to invest in Cambodia.
While many people are off buying stocks and property in places like Thailand, thinking they’ve successfully diversified abroad, they’re missing the far greater opportunities right next door.
Don’t get me wrong. I like Thailand and spend much of my time there. But its GDP is only growing at 3% a year – barely higher than the United States. It has an economy which entirely depends on international money, whether it be from tourism or foreign direct investment.
Cambodia, in contrast, is growing by over 7% per year. Practically all other countries are revising their GDP growth downwards. Cambodia raises it upwards, exceeding its already high expectations.
Not only that, but Cambodia is less correlated with western economies since it’s a frontier market. Diversification is important for investors, right?
That’s why I recommend investing in Cambodia. It skipped the Asian Financial Crisis of the 1990s, missed the tech bubble of the early 2000s, and outgrew the more recent recession of 2008. The country hasn’t faced a recession for over 20 years.
It probably won’t have one anytime soon either. That’s because, as a frontier market, Cambodia isn’t as dependent on capital from other countries. It isn’t reliant on more money from McDonalds to keep growing because McDonalds isn’t here yet.
Furthermore, Cambodia has a source of growth which few other frontier markets do: tourism. Millions of people visit Angkor Wat, the largest religion structure in the world, each year. This number is expected to grow exponentially.
But countries like Papua New Guinea or Armenia don’t have this luxury. Frontier markets can grow quickly, but need something to jumpstart them in the first place. Cambodia is fortunate in that it has both foreign investment and tourism to fuel its continued growth.
How to Invest in Cambodia
Now that you understand why I recommend investing in Cambodia, it’s time to learn the different ways of doing so.
Cambodia just barely has a stock market. In fact, there’s exactly five companies listed on its stock exchange. Most of them are quasi-public corporations such as the water supplier for the nation’s capital of Phnom Penh.
Real estate in Cambodia is a better bet – if you know what you’re doing. Most of the new condo projects are way overpriced. But there’s great deals to be had in buying shophouse apartments in certain areas.
Just be careful when buying frontier market real estate. It’s often difficult and labor intensive. Between doing market analysis in Khmer language, finding which area to invest in Cambodia, navigating through an unfamiliar legal system, and finding reliable contractors… you should be living in Cambodia, at the very minimum, if you want to buy property there.
Opportunities can also be had in private equity and venture capital in Cambodia. But this is arguably even more difficult than buying real estate in the country. Again, lots of research, due diligence, and effort is needed.
Investing in Cambodia, or investing in frontier markets in general for that matter, is difficult. But there’s also greater rewards to be had. Barriers to entry are a good thing if you’re willing to break them down. They help keep valuations fair.
And even if you can’t do the work yourself, there are usually others willing to do it for you. Property managers, investment funds, and similar businesses who already have the knowledge you need can help you out for a fee.
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