Consultation on Cambodia, Laos, and Myanmar

Cambodia’s economy continues its robust improvement in industrial production, by gaining major FDI projects that supported 5.4% GDP growth in 2023. The World Bank predicts a GDP growth of 6% for 2024. To support investment, the Council for the Development of Cambodia (CDC) promulgated the Law on Investment (LoI) in 2021 to establish a transparent legal framework, created one-stop services for investors, granted long-term tax holidays, and other incentives for Qualified Investment Projects. Additionally, the Cambodian government has a budget plan for 2023 to 2025 of USD 1.9 billion for infrastructure investment alone. Also, international donors are financing the expansion of the infrastructure such as the construction of expressways and the capital’s airport. Cambodia developed 24 Special Economic Zones (SEZs) not only in Phnom Penh, but also across the borders with Thailand and Vietnam, as well as Sihanoukville’s deep seaport, to facilitate global maritime transport. These favorable developments will attract directed sourcing requests in Cambodia.

Cambodia's advantageous geographical position, political stability, robust economic growth, favourable investment climate, abundant natural resources, competitive labor market, expanding infrastructure development, and supportive legal framework act as strong magnets for international investments. These factors also entice opportunities from neighbouring countries in Southeast Asia (SEA) to explore diversified sourcing and investment locations. Industries such as garment, footwear, electronics, automotive components manufacturing, agriculture products, furniture, plywood, and travel goods benefit from these favourable conditions. Crop production in Cambodia makes up 60% of agriculture’s contribution to the GDP and the agro-processing sector is now a priority of the government to promote higher value-added exports. Cambodia now ranks at the top place in ASEAN, and fifth in the category of global bicycle and bike part exports. Europe is the destination of more than two-thirds of their exports.

The rising middle class and the growing economy also welcome products from Germany including vehicles, mechanical engineering, chemical products, pharmaceuticals, and consumer goods. To bolster manufacturing in response to the swift advancement of Special Economic Zones (SEZs), there will be a pressing need for German industrial machinery and technologies.

Cambodia has signed multilateral free trade agreements and participates in numerous bilateral and multilateral agreements, as well as Duty-free quota-free access to the EU, with a preferential market access scheme, known as the Everything But Arms (EBA). This can open the door for various opportunities and show the country’s commitment to being a part of the global economy.

The Lao People's Democratic Republic is significantly contributing to the regional economy through its pivotal agricultural, power generation, and mining sectors, thus driving its overall development. Growing logistical infrastructure is empowering Laos from the land-locked to land-linked by connecting with 5 neighboring countries through highways, railways, and the Greater Mekong Sub-region (GMS) Corridors.

Laos is the biggest energy exporter of Southeast Asia, rich in power plants, mostly from hydropower, and from coal. As the power industry in Laos undergoes development, foreign investment is welcomed in the country’s power sector. The expansion of transmission and distribution infrastructure, including grids, engineering, and consulting, will be crucial in meeting the growing demand.

In 2023 Laos presented a GDP growth of 3.7% and the forecast for 2024 is at 4%.

Laos is gifted with enormous natural resources of gold and minerals. Mining has been a key driver of economic growth. The government is planning to increase the country's mineral processing capacity to reduce the number of raw minerals that are exported. This creates great opportunities to support the industry with machinery and technologies for mining.

Laos has always placed significant importance on agriculture, and now it requires access to enhanced technologies to add value to the export products. The government aims to increase exports of agricultural products, manufactured goods, and electricity to its more industrialized neighboring countries.

The government of Laos is making efforts to improve the business environment by setting investment promotion laws. Laos’ SEZs offer a range of incentives and tax holidays to investors, depending on the industry. Laos' advantageous factors, including the plentiful supply of affordable electricity, low labor costs, the nation's rapid growth rate, and its comparatively low capital stock, create a favorable environment that attracts new investment opportunities. Recognizing the significance of diversifying its economy, Laos has prioritized the development of other industries and positioned itself as a potential manufacturing hub in the region, offering an alternative production destination for manufacturers.

Myanmar also known as “Burma” is located in Southeast Asia. The country’s official name is the “Republic of the Union of Myanmar.” It is the largest country in mainland Southeast Asia, covering an area of more than 676,578 km² with a population of about 55 million. The country is a multi-ethnic state made up of 135 national ethnic groups with the main ones being Chin, Kachin, Kayin, Kayah, Mon, Bamar, Rakhine, and Shan. The country is almost twice the size of Germany in terms of area and has borders with five neighboring countries Bangladesh, India, China, Laos, and Thailand. It also has a total coastline of 1,930 km. Myanmar’s strategic positioning and attractive location provide the gateway between South and Southeast Asia, and between China and the Indian Ocean, thus providing access to a market of approximately three billion people.

While Myanmar continues to adjust to political instability, the economy is expected to gradually recover, supported by investment in the energy, oil, gas, construction, and garment sectors. The country possesses abundant natural resources coupled with a sizable market with wide-ranging investment opportunities. However, only little economic growth is expected in Myanmar in the near term due to rising conflict, trade and logistics disruptions, kyat volatility and high inflation. The electricity sector received the most investment, meanwhile the government permitted foreign investments in 12 sectors such as agriculture, livestock and fisheries, mining, manufacturing, electrical power, oil and gas, construction, transport and communications, hotels and tourism, real estate, industrial zones, and the services sector.

A detailed country profile can be seen right here on AHK Myanmar’s website.