NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Wednesday, September 28, 2011

Phnom Penh, Cambodia (CNN) – The most common image of Cambodia is the land of ancient temples and budget travelers. There’s now something else putting Cambodia on the map: foreign investors.

Cambodia’s devastating recent history set the country back a generation. From 1975-78, the Communist Khmer Rouge killed intellectuals, destroyed the education system and pushed for an agrarian society that required families to be uprooted and separated.

By the end of the terror, between 1.7 million to 3 million Cambodians are estimated to have died at the hands of the Khmer Rouge. The Vietnamese occupation that followed and civil war between a weakened Khmer Rouge and the Cambodian government also stripped the country of stability for another two decades.

Today the country is politically stable with a democracy that’s a constitutional monarchy. The children who survived the Khmer Rouge era are now parents. Half the country is now under the age of 25. Every year, a quarter million young Cambodians enter the job market and the government needs to create jobs for them, says Stephen Higgins, CEO of ANZ Cambodia.

“The Cambodian government is remarkably pro-business particularly coming from a Communist background. Any sector you can own 100%. There are banks here that are 100% foreign owned. Most manufacturing is 100% owned by foreigners.”

Cambodia is one of the poorest countries in Asia with more than 80% of the population living in rural areas. Labor is cheap in Cambodia – cheaper than China, Vietnam or Thailand. Minimum wage is $61/month.

“My success story is labor. My labor force is very young. If there’s a manual skill set or artistic aptitude I need, these folks are good at it. And I’m paying one-third of the cost of my Chinese counterparts,” says Scott Huff, owner of Innovate International which makes a niche pet treat in Cambodia for the U.S. and European markets.