Pepper plantation in Kampot province Farmers in Cambodia Overcoming the perception gap More than a rural backwater Thriving economy Rising consumption Cambodia Riel (KHR): 1USD ≈ 4,100 KHR. Currency Dollarized economy between 82 to 84% GDP $ 22 billion (2017) GDP growth rate 7.1% (2017) GDP per capita $1,384 (2017) Official language Khmer, English widely used Capital city Phnom Penh Major cities Siem Reap, Sihanoukville, Battambang Government type Constitutional Monarchy Head of State His Majesty King Norodom Sihamoni Head of Government Prime Minister Hun Sen Population 15.76 million (2016), annual growth 1.5 %, <25 years old: 52% Economy Garments, Tourism, Construction, Agriculture Wet season: May to October, Climate Dry season: November to April, average temperature: 27°C Major religion Buddhism (96.9%) Cambodia German-Trade Bilateral Trade Between Cambodia and Germany (US $ millions) $1.980 German imports from Cambodia $1.776 German exports to Cambodia $1.535 $1.408 $1.296 $1.145 $880 $719 $470 $397 $287 $170 $155 $76 $97 $135 $20 $35 $44 $58 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Cambodia German-Trade Import from Export to Germany % Value (US $ m) % Value (US $ m) Cambodia 1 Textiles 73% $1,440.9 1 Transportation 43% $66.50 2 Foot & headwear 14% $277.3 2 Machines 35% $54.35 Chemical 3 Transportation 10% $192.1 3 4.60% $7.14 products 4 Vegetable products 2.40% $47.5 4 Paper goods 4.40% $6.83 5 Animal hides 0.51% $10.1 5 Instruments 2.50% $3.88 Vegetable 6 Miscellaneous 0.31% $6.1 6 2.40% $3.73 products 7 Chemical products 0.12% $2.4 7 Textiles 2.40% $3.73 8 Plastics and rubber 0.11% $2.2 8 Metals 1.80% $2.80 9 Foodstuffs 0.05% $1.0 9 Foodstuffs 1.30% $2.02 10 Machines 0.01% $0.3 10 Plastics / rubber 0.72% $1.12 Others 0.03% $0.5 Others 2.06% $3.20 Total 100.00% $1,980 Total 100% $155.30 TRENDS Agriculture in the Economy 77% of Cambodian’s live in rural areas…. Agriculture’s contribution to Cambodia’s GDP has almost halved in two decades… …And so has its share of total employment 90 90 80 80 70 70 60 60 50 50 23% Employmentof Total % 27% 40 40 % of Total GDP of Total % 30 30 20 20 10 10 0 0 1996 1997 1993 1994 1995 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: The World Bank TRENDS Rising Production In absolute terms, general output has significantly increased for most major crops over the past ten years. This trend implies a tremendous increase in land and labour productivity over this period. Crop production in Cambodia (2005-2016) 700000 12000000 600000 10000000 500000 8000000 Cane 400000 cassava 6000000 output (tons): output 300000 and Sugar 4000000 (tons): output 200000 Annual 2000000 100000 Annual Paddy RicePaddy 0 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Paddy Rice Cassava Sugar cane Source: FAO Stats GOVERNMENT STRATEGY Cambodia’s focus is modernization, diversification away from rice, increased use of high-quality inputs, and a shift towards export-oriented crops. 1. Agriculture → 1. Improve productivity Manufacturing & Agro- 2. Diversification from rice industry 3. Land reform 2. Improve productivity 4. Investment incentives 3. Export growth promotion 5. Streamline procedures (12% of all exports by 6. Tax free imports on 2025) agricultural inputs & 4. Agro-processing zones machinery 5. Logistics development Rectangular Strategy IDP 2015-2025 1. 8 strategic value 1. Improve productivity ASDP 2014-2018 Draft Crop Production Plan chains for export 2. Diversification from rice 3. Export growth 2015 Prod. # Value Chain US$ m promotion 1 Rice 3,134 4. Sustainable forestry and 2 Maize 118 fisheries practices 3 Cassava 770 5. Strengthen institutional 4 Mungbean 76 and technical capacity 5 Mango 334 6 Cashews 110 7 Pepper 95 8 Vegetables 199 Source: EuroCham Analysis OPPORTUNITIES Agriculture Inputs Machinery ▪ Low initial investment ▪ No upfront investment ▪ Strong demand for required (distributor) appropriate products ▪ Strong demand to ▪ Regional competition improve productivity ▪ Exempt from import ▪ Currently supplied by tariffs US/JP ▪ Uncertain regulations ▪ Exempt from import tariffs Post Harvest & Horticulture/Crop Processing Plantations ▪ Significant initial ▪ No foreign land ownership investment ▪ Economic Land ▪ Investment incentives Concessions available ▪ Few local ▪ High quality unique competitors but products strong regional ▪ Strong local and ▪ Listed as priority by international demand Govt. SWOT ANALYSIS ▪ Natural endowment of resources ▪ Limited organised crop supply chains ▪ Limited use of pesticide and other ▪ Limited R&D for agri-development chemicals ▪ Limited processing or storage facilities ▪ Supportive government policies – new ▪ Lack of food testing bodies for SME Bank, tariff exemptions compliance with SPS standards and food ▪ Geographic Indicators (Rice, Kampot safety Pepper, Kampong Speu Palm Sugar, ▪ Surrounded by competitive neighbours Kampot Durian) (Thailand, Vietnam). ▪ Logistics infrastructure improving S W O T ▪ Niche Agricultural Products ▪ Crop diversification into more profitable ▪ Cambodian agriculture is vulnerable to export-oriented products climate change (15th most affected ▪ Feed supply for ASEAN Economic country 1997-2016). Community ▪ Social and environmental tensions in ▪ Modernise practices to increase certain Economic Land Concessions productivity ▪ Unsustainable use of natural resources ▪ Rising Protein Demand.