Responsible Finance Forum


Bora Kem, Jolyda Sou, Zoë Ng and Penhleak Chan
Source:  Mekong Strategic Partners

In the wake of the fourth industrial revolution, startups and the technology sector need to be a critical part of the Cambodian economy to achieve aspirations of becoming an upper-middle income economy by 2030. Although the country has experienced strong GDP growth of 7% per annum, its primary growth sectors are at risk. With an economy dominated by agriculture, textile and manufacturing, the country needs to look to alternative sectors for long-term growth and value creation. Automation is expected to replace a significant proportion of low-skilled labour, such that the digital economy can be part of the answer for fundamental challenges in employability and the future of work.

Cambodia has positive market conditions for foreign investment and government support for the tech startup ecosystem. A 90% US-dollarized economy reduces currency risk compared to more volatile emerging market national currencies. Capital flows are significantly less restricted than neighbouring ASEAN markets coupled with aspects that improve ease of doing business, such as registration and immigration. A foreign national can move to Cambodia, register their tech business, and wholly own their company in a matter of weeks, making it an attractive destination for tech entrepreneurs. A number of undeveloped sectors present opportunities for innovation and “leapfrogging”. On the consumer side, 78% of the population remains unbanked in a largely cash-based economy. While this could be considered a challenge for tech startups in areas such as e-commerce, it also represents opportunity. There are many consumer problems to solve, with
international entrants Grab and iflix starting to infiltrate the market in very early stages (within the past two years or less at the time of publication). However, localized solutions are required and may provide a stronger, more relevant proposition, exemplars included later in this report. With the market gathering momentum and ready to adopt digital products, now is the time to catalyse the growth of the digital sector.

Perceptions of becoming a tech entrepreneur are rapidly improving amongst young people. Increased media coverage of international startup success stories, as well as local role models, is reducing the perceived risk of choosing an entrepreneurial career versus a more traditional pathway. Government support for the digital economy as defined in the Rectangular Strategy IV, shows public support for the startup agenda as an economic priority.

Cambodia has the building blocks to create a positive environment for startups to flourish and solve some of the economy’s most pressing needs. Given the increased digital literacy of the young, as well as scalable nature of tech solutions, this could be the gateway to boosting Cambodia’s competitiveness in regional markets while solving large-scale market inefficiencies domestically.

This research project was undertaken to provide an independent snapshot of the tech startup sector up to Q3 2018, characterising existing challenges and an outlook for the future of the sector. While the research synthesises the views of over 100 startup founders, it is not exhaustive coverage of all startups nationwide, but takes a systematic stakeholder approach to provide a comprehensive perspective of the ecosystem. This report aims to be a basic resource for all stakeholder groups in the market, including organisations or individuals outside of Cambodia who are already working in, or interested in participating in, the Cambodian tech startup ecosystem. It serves to:

  • Provide an overview of the landscape of the current tech and startup ecosystem for potential corporate, institutional or individual investors.
  • Identify and compile key challenges and existing support resources in the ecosystem.
  • Catalyse constructive discourse by providing recommendations to enable more systematic approaches by all stakeholders to develop the digital economy

Above text included in introduction