Cambodia is one of the fastest growing countries in the world. Unexplored and undervalued, international firms such as Starbucks, Samsung, and Nike are just starting to invest in Cambodia.
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 though.
Don’t get me wrong – I like Thailand and spend much of my time there. But their GDP is only growing at 3% a year. This is barely higher than the United States.
Thailand’s economy depends almost entirely on international money, whether 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 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.
Cambodia probably won’t have one anytime soon either. That’s because, as a frontier market, they aren’t as dependent on capital from other countries. They aren’t reliant on more money from McDonald’s to keep growing because McDonald’s isn’t even here yet.
Furthermore, Cambodia has a source of growth which few other frontier markets do: tourism. Millions of people visit Angkor Wat, the largest religious 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, yet often need a catalyst to propel growth.
Cambodia is fortunate because they have plenty of foreign investment and tourism to fuel a sustained boom.
How to Invest in Cambodia
You hopefully understand why I recommend Cambodia. Now it’s time to learn the different ways to invest here.
Cambodia just barely has a stock market. In fact, there’s exactly five companies listed on their stock exchange. Most of them are quasi-public corporations such as the water utility provider in 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 overpriced, yet shophouse apartments are great deals 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, navigating through an unfamiliar legal system, and finding reliable contractors… you should live in Cambodia, at the very minimum, if you want to buy property here.
Cambodia has opportunities in private equity and venture capital too. However, this is arguably even harder than buying real estate. Once more, lots of research and due diligence is needed.
Investing in Cambodia, or any frontier market for that matter, is difficult. Barriers to entry are a good thing if you’re willing to break them down though. They help keep valuations fair.
Plus, 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 required knowledge can help you out.
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