- GDP per capita USD693
- Inflation (Dec/Dec) 5.3%
- Economic growth, 2009 -1.0%

Industry suffered the biggest contraction, down 8.5 percent in 2009. The reign of Cambodia’s garment industry as the driver of the economy could be over, as the sector contracted by a massive 14.7 percent. The industrial sector as a whole is projected to grow just 1.5 percent in 2010, and the garment sector predicted to grow even less, at 0.6 percent. A declining market share in the most valuable markets, especially the US, suggests Cambodia is less competitive than other producers such as Bangladesh.

Real estate prices—which have increased rapidly in recent years—tumbled by as much as 40 percent in 2009, with a knock-on effect for residential real estate and construction activities: these are now in decline. There are few signs of a recovery in real estate, so prices are likely to remain stagnant or decline further in 2010. There are some signs of nonperforming loans linked to the decline in the sector, though data are not comprehensive.

Services have also suffered in the wake of the downturn, posting only 1.2 percent growth in 2009, down from 9 percent the year before.

Tourism still showed growth in 2009, but only 0.6 percent, a large fall from the 9.8 percent growth seen in 2008. Air tourist arrivals fell sharply in 2009. While there was growth in arrivals by land and by water, these visitors tend to spend less than tourists arriving by air. The total number of foreign visitors to Cambodia did continue to increase up to October 2009, but the increase, just 0.3 percent, was tiny compared to previous years.

The financial sector seems to be stable despite increasing nonperforming loans, mostly related to real estate speculation, though available data is far from comprehensive.

In short, Cambodia’s economy has in 2009 been pulled down by a sharp decline in the industry sector that solid positive growth in agriculture and anemic growth in services could not offset. This contraction is in stark contrast to the brisk 6.7 percent positive growth seen in 2008.

Microfinance Environment

The entry of various international non-government organizations (NGOs) in Cambodia in the 1990s led to the recognition of microfinance as a tool for combating poverty. Microfinance started in Cambodia (commonly) primarily as NGO projects and without any legal provisions with usually higher charged interest rates. Microfinance began in Cambodia primarily as individual NGO projects, without any legal provisions and usually charging high interest rates.

In January 2000, the National Bank of Cambodia (NBC) issued a law requiring microfinance institutions to become licensed. This law stipulates that all NGOs, associations and MFIs engaged in credit services with more than 1,000 clients or 100 million Riel of loans outstanding must register with the NBC.

As of September 2008, there were 17 licensed Microfinance Institutions serving approximately 767,164 clients, with USD $262,894,203 in loans outstanding. In addition to these licensed MFIs, there were 25 registered MFIs and some 60 NGO projects providing loans to other parts of Cambodia.

In 2002, several leading MFIs agreed on the importance of establishing an entity to lobby the needs of microfinance institutions. Hence, in 2004, the Cambodia Microfinance Association (CMA) was formalized and registered with the Ministry of the Interior as an NGO.  In recent years, the Cambodia Microfinance Association (CMA) has played a major role in the institutional development of Cambodia’s MFIs.  However, since Cambodian law only allows for one professional association related to banking services, the CMA became a subsidiary of the Association of Banks of Cambodia (ABC) in 2007.

Mandated and supervised by the National Bank of Cambodia, existing MFIs have shown improvement each year and competed well with one other, enabling services to be more efficient and better designed to help the poor. Microfinance regulations are updated by NBC accordingly to better protect the public and the borrowers. There has been an update in savings regulations that enables MFIs to register to become a Deposit Taking Institution. Those MFIs who would be able to complete requirements for registration can now mobilize public savings.

The new savings regulation slowed down the mobilization of public savings, as most MFIs are only allowed to maintain current accounts. In mid 2007, the 17 registered MFIs generated only a total of USD $5 million in 25,000 accounts (much of which is a required counterpart for loans), compared to ACLEDA Bank’s USD $466 million in 344,657 deposit accounts. Transformation of MFIs into deposit taking institutions is a great challenge for all stakeholders in the microfinance sector in order to continue to actively mobilize public savings especially in the rural areas.