NO.6 (MARCH 25, 2019)

MARKET INDUSTRY TRENDS

CAMBODIA DIGITAL ECONOMY NEEDS 10 YEARS. This month Cambodia in cooperation with the World Bank held a workshop on Policy and Direction of Cambodia’s Digital Economy, remarking the gradual progress of the new business activities in digital payment, online entertainment and e-commerce and the increasing number of the users who adapt themselves to such technologies. The Deputy Prime Minister and Minister of Economy and Finance said that Cambodia needed to spend the first five years to set the fundamental elements in place and achieve digital readiness and spend another five or ten years growing the digital economy toward a technology-driven economy. A demographic dividend for such emerging driver of growth include an increasing number of educated youth who are fast absorbing digital technology, a rapid increase in the use of cell phones and smart devices, fast technological spillovers from foreign direct investment inflow, and a fast digitalization of all key economic sectors. (Phnom Penh Post)

KINGDOM SEEKS FTA WITH EAEU. Cambodia is negotiating a free trade agreement (FTA) with the Eurasian Economic Union (EAEU), hoping the new market will maintain the Kingdom’s economic growth. The EAEU – comprised of Armenia, Belarus, Kazakhstan, Kyrgyzstan, and Russia, with 183 million people and a combined GDP of $2.2 trillion. So far EAEU has provided tariff-free access for 46 Cambodian made products for three years due to the Kingdom’s Least Developed Countries (LDC) classification. The existing preference covers Cambodia goods such as rice, silk, textiles, meat, vegetables and coffee. Cambodian agricultural products are the huge necessity for the new market. In Asean bloc only Vietnam has reached an FTA with EAEU in 2016 while Singapore is in the middle of negotiation. At the FTA, Vietnam-EAEU bilateral trade grew to $3.9billion in 2017, a growth of 31% from 2016. Russia is the main trading partner in the bloc accounting for almost 90% of trade with Vietnam. (Phnom Penh Post).

KINGDOM PLANNED TO HIRE TURKISH POWER SHIP. At the current sparking electricity shortage, Cambodia is considering negotiating with Turkey to hire 200MW capacity power ship to cover the supply gap. Early this month, the EDC also signed agreement with Laos for a 200MW increase in electricity supply starting from 2021. According to the EDC top management, the electricity demands have increased due to a boom in the construction sector. (Phnom Penh Post).

MARKET DEALS

JT CAPITAL, a new local derivative brokerage firm, officially launched operations in Cambodia on March 24. In line with this launch, the senior official of SECC informed that trading activity in the derivative sector had a significant surge in 2018. Based on existing regulations of SECC (set late in 2015), a brokerage firm must meet the minimum capital requirement of $250,000 and the central counterparty must cover $5million. At this regulation background, there are more than 10 licensed derivative brokerage firms in Cambodia and four licensed counterparties. SECC in 2017 capped the number of central counterparty licenses at four, claiming that was a sufficient number to satisfy the current demand. (Phnom Penh Post).

GOVERNMENT APPROVES THE JAPANESE SMARTCITY INITIATIVE IN PRINCIPLE. The establishment of the Asean-Japan Smart City Network and of a Private-Public Forum on Asean-Japan urbanization development in Cambodia may soon be a reality after the government approved the initiatives in principle. Under these initiatives, the three largest urban areas of Cambodia namely Phnom Penh, Siem Reap town and Battambang town are set to be incorporated into the Asean Smart City Network. The network aims to increase regional connectivity and is presents in 26 cities across the Asean region. Smart City refers to a city development with smart and sustainable technology to tackle the effects of rapid urbanization such as traffic jams, water and air quality, peace and security. (Phnom Penh Post).

SPECIAL REPORTTrend of the digital start-ups in Cambodia

Note: The results above are based on the on-site data collection and should represent the estimates only. We aim at providing the general picture on the sector coverage of the tech statups in Cambodia. Also, we found among these startups, 10% locates in co-office space.
Source: 3E-Fii Flash Survey (on sample basis) on the First and Biggest National Tech Expo in Cambodia held from March 15 to 17, 2019.