Cambodia's ease of doing business (EoDB) index remains positive despite external challenges including global inflation and the Russia-Ukraine conflict, according to the Business Confidence Survey 2023 by the European Chamber of Commerce (EuroCham).

It reveals that while most companies have met their profitability targets and remain optimistic about the future, local challenges persist. These include diminished access to financing and the availability of skilled workers.

According to the survey, 62 per cent of respondents expect their business to grow over the next year, a rise from 56 per cent in 2021. However, this optimism has not yet returned to the pre-pandemic level of 72 per cent.

“Businesses in Cambodia have shown resilience and adaptability. With adequate government support, they are well-poised to navigate these challenges and continue their growth trajectory,” the EuroCham report stated.

However, there is rising uncertainty about future EoDB in the country. The report indicated a slight increase in respondents (31%, up from 29% in 2021) who anticipate a more challenging business environment, while those expecting an easier path dropped from 31% in 2021 to 27%.

Despite the Kingdom’s low labour costs providing a competitive edge, businesses still “struggle” to find a skilled workforce. Previously, easy access to finance boosted the business environment, but the business community now seeks more support in this area.

“Although more companies are meeting or surpassing their profitability goals, challenges like informal practices, unofficial fees and unfair competition persist. The need for a skilled workforce has notably intensified over the past year. Despite improvements in Cambodia’s business climate, these challenges remain significant,” the report said.

Chea Vuthy, deputy secretary-general of the Council for the Development of Cambodia (CDC), highlighted the country’s economic potential at the 2023 Cambodian Business Forum on August 11. He pointed out the country’s peace, security, political and economic stability, and emphasised the private sector’s pivotal role in the national economy’s progression.

“Even with the Covid-19 crisis and geopolitical issues, including the Sino-US trade tensions, Cambodia maintained stable foreign investment inflows, nearly $4 billion annually. In 2020, foreign investment across ASEAN dropped by about 40 per cent, but we held steady at around $3.6 billion,” he said.

CDC data shows a total of 128 projects valued at $1.254 billion in the first half of 2023, compared to 111 projects valued at $3.135 billion over the same period last year.

Companies are planning expansions in the country, with emphasis on Corporate Social Responsibility (CSR) and Environmental, Social and Governance (ESG) programmes. EuroCham noted the importance businesses place on these initiatives to enhance their images.

The Covid-19 pandemic significantly influenced the 2021 survey, but clearer trends have since emerged. For instance, over three years after the Everything But Arms (EBA) trade preferences were withdrawn by the EU, EuroCham reported that 71 per cent of businesses felt no impact from the withdrawal.

EuroCham reported that 62 per cent of respondents plan to further invest in Cambodia, primarily focusing on business expansion (62 per cent), marketing and communication (46 per cent) and human resources (44 per cent).