Experience • Insight • Local Knowledge • International Standards
Investment Insight - A Perspective on What Growth in Tourism means to Cambodia
By Kanika Tan
This article was first published in Asia Life Magazine, December 2016 Issue
Not long ago, in the mid 1990s, the streets of downtown Phnom Penh had very minimal traffic - some bicycles, motorbikes, cyclos, and very few cars. The nicest hotel in town was Hotel Cambodiana and a Toyota Camary, was considered luxury. Since Cambodia has reached certain level of peace and stability, things have undeniably changed. Growth has manifested itself across multiple sectors; among them, tourism and hospitality, is definitely a front runner.
The two most outstanding effects deriving from the growth in the tourism sector are the economy and human resource development.
Data from the Ministry of Tourism (MOT) demonstrates that tourism has a major role in Cambodia’s economy over the past decade. Yes, it is due to the direct income from tickets sale to tourists visiting Angkor Wat; and tourists’ expense on local products and services, but it goes beyond that. The country has, more than ever before, attracted significant foreign direct investments into different sectors, many of which are hotels, restaurants, and tour companies. This has fueled Cambodia’s economy to be more open, to meet higher demand for better and more varieties of products and services leading to market expansion, more businesses, more income for the locals, and more revenue for the nation.
Understanding its major significance, the Royal Government of Cambodia (RGC), established a Working Group on Tourism (Working Group B), as part of the public-private dialogue mechanism known as the Government Private Sector Forum. Working group B is a collaboration between private sector and the RGC—dedicated to seeking solutions, making improvements and expanding the sector to benefit both parties; and the country as a whole. Currently, Working Group B is exploring various initiatives that will encourage Cambodia as a tourism destination and contribute to the greater success of the private sector, making it more convenient to develop more standardized and sustainable business.
Regulatory developments and incentives being implemented by the RGC govern and encourage the sector to prosper at a fast sustainable pace—streamlining licensing with the MOT and Ministry of Commerce. Upscale hotels are eligible to attain a Qualified Investment Project (QIP) status, for import duties exemption on all materials to be used to construct the hotel, and for profit tax exemption at the initial operation stage.
Tourism also contributes to Cambodian human resource development through job creation, and skill-based training. Although a number of Cambodian workers have lower-income jobs requiring minimal education, those who work hard and thrive in the opportunities presented to them, are able to expand their skills, gain valuable experience and achieve notable positions within their organization. Many are able to even start their own business successfully.
Today, our capital is busy, vibrant and expanding, our coastal areas are being developed tremendously and Siem Reap welcomes over two million tourists in 2015, and counting. Cambodia is, more than ever before, exposed to more demand, more choices in products and services, diversity and cultures, taking its place in the integrated ASEAN region. These changes raise our standards of living, our work ethics, our level of competitiveness, and our expectations for the future—the generation to come.
Sciaroni & Associates, one of Southeast Asia’s leading professional services and investment advisory firms, has been providing skilled counsel and knowledgeable business insights for over two decades. Based in Cambodia with legal offices in Laos and Myanmar, our experienced team of advisors brings considerable general and sector-specific expertise to the challenges confronting companies doing business in emerging markets. We are proud that our clients comprise many of the world’s premier companies, banks, financial institutions, governments and global development organizations.
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Sciaroni & Associates is a leading professional and investment advisory firm doing business in Southeast Asia since 1993. Based in Cambodia with legal offices in Laos and Myanmar, we provide experienced advice and business insights to many of the world’s leading companies, governments, economic think tanks, global development funds, international NGOs and the Royal Government of Cambodia in accordance with strict international standards.
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