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Economy of Cambodia

The economy of Cambodia at present follows an open market system (market economy) and has seen rapid economic progress in the last decade. Cambodia had a GDP of $13 billion in 2012. Per capita income, although rapidly increasing, is low compared with most neighboring countries. Cambodia's two largest industries are textiles and tourism, while agricultural activities remain the main source of income for many Cambodians living in rural areas. The service sector is heavily concentrated on trading activities and catering-related services. Recently, Cambodia has reported that oil and natural gas reserves have been found off-shore.

After four years of improving economic performance, Cambodia's economy slowed in 1997-98 due to the regional economic crisis, civil unrest, and political infighting. Foreign investments declined during this period. Also, in 1998 the main harvest was hit by drought. But in 1999, the first full year of relative peace in 30 years, progress was made on economic reforms and growth resumed at 4%.

Currently, Cambodia's foreign policy focuses on establishing friendly borders with its neighbours (such as Thailand and Vietnam), as well as integrating itself into regional (ASEAN) and global (WTO) trading systems. Some of the obstacles faced by this emerging economy are the need for a better education system and the lack of a skilled workforce; particularly in the poverty-ridden countryside, which struggles with inadequate basic infrastructure. Nonetheless, Cambodia continues to attract investors because of its low wages, plentiful labor, proximity to Asian raw materials, and favorable tax treatment.

Sectors

Garment industry

The garment industry represents the largest portion of Cambodia's manufacturing sector, accounting for 80% of the country's exports. In 2012, the exports grew to $4.61 billion up 8% over 2011. In the first half of 2013, the garment industry reported exports worth $1.56 billion.The sector employs 335,400 workers, of which 91% are female.

Agriculture

Agriculture is the traditional mainstay of the Cambodian economy. Agriculture accounted for 90 percent of GDP in 1985 and employed approximately 80 percent of the work force. Rice is the principle commodity.

Major secondary crops include maize, cassava, sweet potatoes, groundnuts, soybeans, sesame seeds, dry beans, and rubber. The principal commercial crop is rubber.

Tourism

In 2006, Cambodia's tourism sector generated a revenue of US$1.594 billion, which made up approximately 16% of the country's GDP. Cultural heritage tourism is especially popular in the country, with many foreign tourists visiting the ancient Hindu temple of Angkor Wat located in the Siem Reap province. Other popular tourist attractions include the Royal Palace, Phnom Penh, as well as ecotourism spots such as Tonlé Sap Lake and the Mekong River.

Gambling industry

The gambling industry of Cambodia supports its tourism industry, which is mostly concentrated around the Siem Reap province. The introduction of casino on border cities and towns created an industry that has thrived and contributed to the generation of employment and a steady stream of revenue for the government.

Construction

The increase in tourist arrivals has led to growing demand for hotels and other forms of accommodation surrounding tourist hotspots. Siem Reap in particular has seen a construction boom in recent years. The capital Phnom Penh has also witnessed a growth in the construction and real estate sector.

Resources

Sok Khavan, acting director general of the Cambodian National Petroleum Authority, estimated that once the contracts are finalized and legal issues resolved, the Cambodian government will receive approximately 70% of the revenues, contributing to an economy in which the GDP is projected to increase five-fold by 2030. In addition, there are 10,000 square miles offshore in the Gulf of Thailand that holds potential reserves of 12-14 trillion cubic feet of natural gas and an unspecified amount of oil.

Banking

There is no significant barriers to bank entry. At the end of 2013, there stood 35 commercial banks of which most have majority foreign ownership. Since 2011 new banks with offshore funding have begun to enter the market.

This article is licensed under the GNU Free Documentation License. It uses material from the Wikipedia article "Economy Of Cambodia"

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