KPMG Cambodia lead advisory partner James Roberts has said that, despite the unprecedented shocks from the Covid-19 pandemic impacting countries across the globe, he considered the Kingdom’s economy to be “robust”, with “strong upside growth available”.
KPMG is an Anglo-Dutch global network of professional companies providing audit, tax and advisory services, and one of the world’s “Big Four” accounting firms.
“The Cambodian economy has performed very well in comparison with the large developed economies in north America and Europe, and even in comparison with the larger Asean economies such as Singapore.
“Most of these economies have experienced a significant double-digit reduction in GDP compared to Cambodia’s relatively modest reduction of circa six per cent growth reduction in 2020.
“While this is obviously an imperfect comparison given the scale and complexities of these large economies, it does display the vulnerability of these economies to economic shock and the robustness of frontier markets, which tend to be more simplistic with stronger under-lying economic growth since the 2008 financial crisis,” Roberts told The Post.
While he saw continued opportunities with the Kingdom’s economy expected to remain resilient – on the back of sustainable economic growth resulting from sound macroeconomic policies, political stability and continued foreign direct investment – Roberts called for vigilance.
“Do your due diligence and understand the market for every investment. There is strong upside growth available in a variety of sectors, but my firm belief is that agriculture presents the best overall investment thesis of any sector currently. This is driven by the country’s demographics, economic fundamentals, trade balance and monetary policy,” he said.
Roberts sounded a note of caution regarding whether Cambodia’s macroeconomic and fiscal policies are ready to weather all challenges to the national economy as the Covid-19 crisis continues into 2021.
“Cambodia has been the beneficiary of a sustained period of high single digit economic growth averaging seven per cent over the past 20 years. This high growth has facilitated the development of many new and successful industries.
“However, it has also created an environment where the government has limited experience of managing economic shocks and this could create some risks for the economy in the event of a sustained financial crisis,” he said.
While there has been a dramatic impact on the Kingdom’s established revenue generating industries such as garment manufacturing and tourism, Roberts said that well managed businesses in Cambodia’s manufacturing sector are already recovering through product diversification, such as meeting increased demand for personal protective equipment.
“Sectors such as consumer-focused industries are positioned to bounce back much more quickly across the Southeast Asian nations than the larger economies of Europe and North America.
“This is because of the solid under-lying growth and fundamental demand for consumer goods and services driven by the stage of development in these respective countries and their demographics driving growth in consumer demand,” said Roberts.
He added that he expected change to be imminent in the apparel industry as it faces challenges throughout the supply chain, with traditional retail frameworks giving way to more efficient business models and delivery channels.
In comparison, Roberts said he viewed the recovery of the tourism industry to be more challenging, with the cost of travel likely to be adversely impacted by the need to fund and repay the losses incurred by airlines during the crisis in a broader environment focused on carbon reduction and fighting climate change with the goal of governments to achieve neutral carbon emissions.
“The impact of the economic crisis will vary significantly between industries. However strong underlying growth, driven by growing populations and strong economic fundamentals will contribute to a rapid recovery following the Covid-19 crisis, ” said the Briton.