Doing Business Outside Phnom Penh

on Apr, 17 2024

Phnom Penh is still the heart and centre of Cambodia’s business activity with most corporate headquarters based in the capital as well as it being the financial hub of Cambodia.

Beyond Phnom Penh’s horizon, there remains a lot of business opportunities in the other Cambodian cities and in rural areas.

Siem Reap, which has been trying to diversify, but tourism and the F&B industry remain its biggest industry. It does offer a myriad of opportunities to the enterprising business person.

Cambodia’s beautiful coastline is increasingly attracting global recognition, and that growing awareness has led to exciting prospects for businesses in Sihanoukville, Kampot, Kep and the surrounding areas.

Battambang is quickly developing as a local business hub while also establishing a unique identity as an alluring destination for stopover tourists between Siem Reap and Phnom Penh.

There are several eco-tourist areas that are growing in appeal such as in Mondulkiri, Ratanakiri and in Koh Kong.

Here are some tips about doing business in these Cambodian cities. We examine the unique regional challenges they face and the various opportunities that exist in their locations.

Siem Reap

People come to Siem Reap for one overarching reason: to visit the Angkor Wat Archaeological Park.
As a result, the town relies heavily on tourism. Siem Reap is a popular option to those in the hospitality and tourism industries and there have been improvements in creating world-class MICE (Meetings, incentives, conferences and exhibition) facilities.
The standard of quality in accommodation, food and beverage, and leisure activities in Siem Reap are some of the highest Cambodia has to offer. Adventure tourism, eco-tourism and golf courses are just a few of the new attractions available in Siem Reap.
As tourism to Siem Reap continues to grow, some infrastructure capacity issues have arisen. Both the local government and the private sector are increasingly taking steps to increase this capacity.
Water is city-sourced, which means you may encounter the occasional shortage. And if you choose to drill a deep well, it may require proper filtration. Water banks are a cost-effective solution.
During the wet season (June-October), Siem Reap invariably experiences localised flooding. However, drainage infrastructure has improved considerably, especially around the tourism epicentres.
The roads of Siem Reap, and those connecting to the temples and Phnom Penh, have undergone or are undergoing vast developments.
Electrical Power cuts can occur. But Electricité du Cambodge (EDC) has stepped up to meet the high season demand. For those businesses and individuals wishing to ensure stable electricity, backup generators are a worthwhile and affordable option.
Installing backup generators is still standard practise for most major hotels and restaurants in the city.
Human resources remain one of the chief obstacles to success in the Siem Reap tourism industry.
It’s advised to train specialised skills. Retaining staff once these skills have been taught can be difficult as opportunities abound for tourism staff once they have desirable skills. Poaching of staff happens and may come from employers outside the tourism industry.
The availability of commercial properties is usually dependent on location and the nature of the business.
The top locations are around the Old Market/Pub Street area because of the constant stream of tourists it attracts. However, the spaces are very limited, lease conditions are complex, and prices are hiked every time leases are renewed.
Although rent in high profile areas of Siem Reap has risen rapidly, in a broad sense this is good for the market.
By increasing the property prices in the Siem Reap CBD and key residential areas, the property market is naturally defining higher value areas. This will increase the value of the overall real estate market in future years.
Education in Siem Reap runs behind the capital’s (Phnom Penh) offerings, although an increasing number of international schools have opened. The city is home to the Royal Angkor International Hospital, which is affiliated with Bangkok Hospital Medical Center. There are also ambulance and medevac services available.
In 2019, 3.9 million passengers used the Siem Reap International Airport.
A new international airport is being built in Siem Reap, the Siem Reap Angkor International Airport, which is due to be completed by 2023.

Battambang

Located in the northwest of Cambodia, Battambang is the nation’s second-largest city and the fifth-largest province.
Battambang’s fertile rice fields have led to a predominantly agriculture-driven economy, earning it the moniker of “Cambodia’s Rice Bowl”.
Other forms of local agriculture are also lucrative, such as Battambang’s famous green oranges. The city is even home to a vineyard and winery, located close to Phnom Bayon temple.
Considered the arts capital of Cambodia, Battambang is the birthplace of the famous psychedelic rock/garage rock singer Ros Sereysothea. Upholding this creative tradition are various art galleries and, of course, the revered Phare Ponleu Selpak circus and art school.
In light of Battambang’s “unspoiled” image, interesting history and the wealth of well-preserved French colonial architecture in the city centre, tourism is rising and the food and beverage industry has been growing.
Consistent electricity can be a problem in Battambang, and business owners that depend on full-time power will need to factor in the cost of a generator.
Water is city sourced, or sourced via deep wells and may require filtration for safe drinking.
Tourism is growing in Battambang and the main attractions include the ancient temples including Ek Phnom and Banan, Phnom Sampov mountain (famous for its bat cave,) and the bamboo train.
In March 2020, work on the abandoned Battambang airport commenced
The train lines in Cambodia, operated by the Royal Railway, are also expanding and the northern line runs through Battambang, eventually linking up with the Thailand border. It is hoped international trains (Passenger and Freight Services) will start between Cambodia and Thailand.

Sihanoukville

Sihanoukville’s commercial and tourism industries have both expanded enormously since around 2018 with massive Chinese backed property and infrastructure developments.
Domestic and international tourism has risen substantially and the airport has been undergoing upgrades to keep up with demand. The offshore islands (Koh Rong and Koh Rong Sanloem) are also tourism destinations driving part of that growth, alongside the rapid increase in casinos, flights and cruise ships.
The expansion of Sihanoukville’s deepwater port and the boom of the Special Economic Zones (SEZs) makes it Cambodia’s commercial gateway to local and international trade.
Cambodia’s only deep-sea port is located in Sihanoukville and considerable international financial aid has been spent to improve the infrastructure in the province.
The expansion of the city is also driving land value and rental cost appreciation, especially where development is spilling over into new areas. Most of the Otres beaches have seen wholesale changes from the holiday villas and affordable backpacker accommodation to condos and hotels.
Sihanoukville has been developed as a tourism destination in a short space of time. This placed pressure on amenities such as water supply and electricity, although power cuts and water shortages are much less frequent than in Kep or Battambang.
Growth has far outstripped the wastewater infrastructure. The Sihanoukville Provincial authorities are well aware of the sewage issues and looking to improve the situation.
With improvements being made to the airport, and plans in the pipeline to build an international airport on the island of Koh Rong, business in the province is expected to be boosted greatly. Many new routes have also opened directly to Sihanoukville airport.
The rapid number of Chinese backed casinos up until the end of 2019 lead to an increase in charter flights to support the industry although the ban on online gaming from 2020 has halted a lot of growth.
A new road linking Phnom Penh to Sihanoukville alongside National Road 4 is part of the Cambodian Road Development Masterplan. This will make a big difference in terms of speed and safety for trade and tourism.
The islands off Sihanoukville are increasingly being sold to large developers, and a string of luxury resorts are gradually laying claim to large stretches of beach, some of which were already occupied by smaller hospitalities operators. Keep in mind, any new beach- or island-based business cannot guarantee their land will not one day be sold from under them, as many vendors have experienced in the last ten years.
Ensure proper due diligence is done in checking the legitimacy of all titles and/or lease agreements when considering any investment in these popular areas.
Since 2016, passenger rail services have been offered from Phnom Penh to Sihanoukville, in addition to the cargo trains.

Kampot

The Sonja Kill Hospital in Kampot is regarded as one of the best medical centres on the Cambodian coast. Although, any serious injuries are referred to Phnom Penh or abroad.
The riverside town has a diverse range of lodgings from hostels to high-end hotels and a fantastic F&B scene.
The Bokor National Park is a key attraction, with the Thansur Bokor Highland Resort offering a resort, casino and other attractions.
Tourism is popular with Khmers and expats and can be seasonal with the optimal time to visit being the winter months (November-January).
The river offers some activities and the Kampot pepper farms and nearby caves are also popular attractions.
The Kampot Seaport is due to be completed in 2020, and is expected to appeal to domestic and international tourists.
The Southern Train line operated by Royal Railways, connects Kampot to Phnom Penh and Sihanoukville.

Kep

Kep Tourism has grown steadily since the 90s and Kep is now among the top five Cambodian tourist destinations. The Government is working on a Kep Tourism masterplan to be completed in 2020.
The power grid situation has been vastly improved and there are less power cuts.
Schooling-wise, The Kep International School (KIS) is available. They follow the Cambridge curriculum and cover classes until the 6th grade.
There is an ATM at the Beach (ABA Bank, near Koki Restaurant) and an ACLEDA Bank with an ATM at the Damnak Changeur which also facilitates Western Union payments.
The Crab Shuttle, which runs between Kampot and Kep (and is seasonal), gives tourists the possibility to travel by boat from Kampot to Kep, spend the day here and then take the sunset cruise back to Kampot.
Water in Kep is generally drawn from personal wells, or bought. And as more guest houses are built, less and less water is left in each well, and each new well must be deeper than the last.
The South Korean financed Road 33, from Kampot to Kep, Kompong Trach and Angka Saum (a historically hazardous transfer),have improved the trips between Kep and Kampot.
Tourism is the main drawcard as well as the lure of fresh seafood, in particular at the crab market in Kep.

Mondulkiri, Ratanakiri, Koh Kong

All three are popular ecotourism destinations and have seen improvements in their infrastructure and connectivity.
In April 2020, The National Assembly (NA) approved draft laws paving the way for the construction of two coal-fired power plants worth $1.665 billion with the plants to be located in Koh Kong and Oddar Meanchey provinces.
Mondulkiri is expected to have an airport built, with the Mondulkiri authorities selecting an area in 2019.
The Provincial Mondulkiri Master Plan” which includes the development of airport infrastructure is hoped to be submitted by August 2020. 39 tourist destinations have been identified in the province.
The Dara Sakor International Airport is under construction in Koh Kong and expected to be complete by 2023.
In September 2019, Chinese-owned Union City Development Group announced that it had invested about $1.2 billion on a project in Koh Kong province called ‘Tourism Vacation Town’.
Elephant sanctuaries are found in the mountainous areas of Mondulkiri and Ratanakiri