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Logo of Phnom Penh Post newspaper Phnom Penh Post - Business outlook still positive

A woman casts her vote at a polling station yesterday in Phnom Penh.
A woman casts her vote at a polling station yesterday in Phnom Penh. Hong Menea

Business outlook still positive

Cambodia’s business environment retained a positive outlook during the commune elections held yesterday, with several experts saying they expected the Kingdom’s economy to benefit from continued political stability.

Despite at times heated rhetoric and threats of violence, political campaigning leading up to the commune elections remained peaceful and without any major altercations, with unofficial preliminary results showing that the Cambodian People’s Party (CPP) took nearly 60 percent of the Kingdom’s communes. Though historically, economic uncertainty increased dramatically during the electoral process, the outlook for investments and business remained relatively unchanged according to members of Cambodia’s business community.

Ngeth Chou, senior consultant at Emerging Markets Consulting (EMC), a firm advising foreign companies on doing business in Cambodia, said that long-term investors showed few concerns regarding the commune election. Many firms continued to conduct feasibility studies in Cambodia and expected to expand their businesses in the Kingdom, he said.

“Investors believe that whoever wins the election, they will treat the private sector well,” he said. “They believe that the government acknowledges that the private sector is the main tax payer to boost government revenue and reduce dependency from foreign aid.”

Chou added that some small businesses or family-run firms had been affected by the election due to lower consumer demand, particularly in Phnom Penh as residents left the city to vote in their home communes.

Cambodia’s financial sector became a major focus of government policy leading up to the election following a series of regulatory changes, including efforts to make clear to Cambodians that the microfinance sector was not part of any government institutions. The government also intervened in the sector by imposing an 18 percent interest rate cap on microfinance loans.

Bun Mony, advisor to the Cambodian Microfinance Association (CMA) noted that though the interest rate cap could lower revenue and cut profit margins in the sector, overall neither the election nor the cap would have a lasting impact for the industry.

“We don’t have any worries and we, microfinance operators, still operate as usual and will expand our business according to market demand,” he said. “I think that whatever the results that are announced, there will not be any negative impact for this industry.”

Ngoun Meng Tech, director general of the Cambodian Chamber of Commerce said the situation surrounding the election was not as agitated compared to during previous election cycles. He said he had no concerns regarding the country’s future economic growth.

“Our economic situation is stable and growth is positive currently, so the election result will not be a concern or a risk to the process of economic growth,” he said.

“However, there are some concerns that still exist for businesses regarding possible future uncertainty but those fears are much smaller than previous elections.”

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