Cambodia’s Digital Economy: A New Engine of Growth

Explore insights into Cambodia's digital economy, and discover ambitious initiatives driving innovation, efficiency, and sustainable growth.
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As the digital revolution sweeps the globe, countries worldwide are realizing the tremendous potential that comes with embracing the digital economy. Cambodia, located in Southeast Asia, is on an ambitious path to digitalize its economy, aiming to spur innovation, enhance efficiency, and drive sustainable growth. Recognizing this vast potential, Standard Insights conducted a short survey involving over 500 Cambodian consumers to capture their perspectives on Cambodia’s digital economy,

This article not only presents insightful findings and an in-depth analysis of the survey but also explores the key initiatives and advancements that Cambodia has embraced to harness the power of technology. From expanding internet access to supporting emerging industries, Cambodia is positioning itself as a rising star in the digital era, ready to reap the rewards of a thriving digital economy.

What is a digital economy?

Overview into Cambodia's Digital Economy

The digital economy refers to economic processes, transactions, interactions, and activities that rely on and are based on digital technologies. These technologies encompass a wide range of electronic tools, systems, devices, and resources that involve the generation, storage, and processing of data. Examples of such technologies include social media platforms, online games and applications, multimedia content, productivity tools, cloud computing, interoperable systems, and mobile devices.

At present, the global digital economy holds a substantial value of US $11.5 trillion, which accounts for approximately 15.5% of the global GDP. This sector has experienced a remarkable growth rate over the past 15 years, expanding two and a half times faster than the overall global GDP. In fact, it has nearly doubled in size since the year 2000. According to a study conducted by Huawei and Oxford Economic in 2018, it is projected that by 2025, the global digital economy will reach a staggering value of US $23 trillion, contributing to approximately 24.3% of the global GDP. In the Southeast Asian region, the digital economy currently holds a value of approximately US $200 billion, which accounts for around 7% of the total GDP of the ASEAN nations.

Overview of Cambodia’s Digital Economy

Although there are various definitions of the digital economy, it fundamentally refers to economic processes, transactions, interactions and activities that are based on digital technologies, which include electronic tools, systems, devices and resources that generate, store or process data such as social media, online games and applications, multimedia, productivity applications, cloud computing, interoperable systems and mobile devices.

The COVID-19 pandemic has had a profound impact on Cambodia’s economy, particularly in key sectors like garment manufacturing, tourism, construction, and agriculture, which have historically been driving forces for growth. As a result, Cambodia’s GDP experienced a contraction of 4.49% in 2020, with the total declining from $27.09 billion to $25.87 billion. Despite these challenges, there is a growing realization of the immense potential held by the digital sector as a catalyst for economic development. With its ability to enhance productivity, drive economic efficiency, promote diversification, and generate employment opportunities, digital technology is now recognized as a crucial tool for fostering economic progress and addressing poverty and inequality.

In Standard Insights’ continuous Market Research in Cambodia, our recent survey involving over 600 participants revealed that an impressive 90.8% expressed their belief in the potential of the digital economy to generate new job opportunities for the Cambodian population. However, it is worth noting that within this group, 15.9% acknowledged that the number of job opportunities generated may not meet the high expectations that people have.

Cambodia's Digital Economy: Empowering Job Creation

Nevertheless, Cambodia’s digital economy is experiencing remarkable growth, with projections indicating substantial revenue of USD 1,453.32 million by 2023. Among the various segments within the digital economy, eCommerce stands out as a major contributor, accounting for a significant portion of this revenue at USD 1,287.00 million. This surpasses the combined contributions of digital media and eServices, highlighting the increasing importance of online commerce in Cambodia’s digital landscape.

Read to learn more: Cryptocurrency in Cambodia

Key Drivers of Cambodia’s Digital Economy

1. Increased internet penetration and mobile usage

One of the primary drivers of Cambodia’s digital economy is the rapid increase in internet penetration and mobile usage across the country. Over the past decade, there has been a significant expansion in internet connectivity throughout Cambodia, resulting in a consistent growth in the number of internet users. By the beginning of 2023, Cambodia boasted 11.37 million internet users, representing an impressive internet penetration rate of 67.5%. This widespread connectivity has empowered a substantial portion of the population to access the internet and actively engage in the digital sphere.

The surge in internet penetration in Cambodia has been accompanied by a significant increase in social media usage. In January 2023, the country recorded a staggering 10.95 million social media users, which accounts for approximately 65.0% of the total population. Social media platforms serve as more than just communication channels, as they also provide online marketplaces for buying and selling goods. Our study reveals that a majority of Cambodian respondents (78.4%) utilize social media platforms multiple times throughout the day, indicating the significant role these platforms play in the daily lives of Cambodian internet users.

Social Media Usage in Cambodia

Mobile technology has become a driving force behind digital engagement in Cambodia, thanks to its wide accessibility, convenience, and affordability. With a mobile penetration rate of 131.5%, exceeding the total population, it is clear that mobile devices have become an integral part of daily life for many Cambodians. This widespread usage has facilitated convenient access to digital services such as eCommerce platforms and mobile banking, with a significant majority of Cambodians (90.6%) utilizing these services regularly. The affordability and accessibility of mobile technology have effectively bridged the digital divide, enabling more individuals to participate in the digital economy and experience the benefits of digital engagement.

Usage of Digital Services in Cambodia

2. Government Support and Initiatives

The Cambodian government has played a crucial role in supporting the growth of the digital economy through the implementation of favourable policies and initiatives. In June 2021, the government introduced the Cambodia Digital Economy and Society Policy Framework 2021-2035 as part of its efforts to drive inclusive and sustainable post-pandemic growth. This policy framework outlines a long-term vision for digital transformation, focusing on key areas such as innovation and investment ecosystems, building trust in the digital system, and infrastructure development for connectivity and technology. By addressing these responsibilities, the government aims to create an environment conducive to digital innovation, enhance trust in digital services, and promote the necessary infrastructure to facilitate connectivity and technological advancements.

3. Growing Tech Startup Ecosystem

Cambodia’s digital economy has also been bolstered by the emergence of a vibrant tech startup ecosystem. Since 2015, there has been a remarkable surge in the number of local startups focusing on various digital sectors. In just a few years, the startup community has expanded substantially, with the number of startups increasing from less than 50 in 2013 to approximately 300 by 2018. The majority of these startups are involved in fintech, followed by media and advertising, e-commerce, development services, and digital marketplaces. This growth can be attributed to several factors, including the supportive regulatory environment, the availability of funding from venture capital firms and angel investors, and the presence of co-working spaces and incubators. These favourable conditions have fostered entrepreneurial activity, fueling innovation, generating job opportunities, and contributing to the overall development of Cambodia’s digital economy.

Challenges and Opportunities

1. Develop Digital Infrastructure

One of the key challenges in Cambodia’s digital economy is the need to develop a robust digital infrastructure. While internet penetration has been increasing, there is still a significant digital divide in terms of access and connectivity, particularly in rural areas. This challenge is corroborated by the experiences shared by survey respondents, with many citing poor internet connectivity (23.7%), slow internet speed (16.7%), and limited availability of digital services in rural regions (10.3%) as significant hindrances to accessing and utilizing digital services in Cambodia.

To fully leverage the potential of the digital economy, Cambodia must invest in expanding broadband coverage, improving network quality and reliability, and bridging the urban-rural divide. This will require collaboration between the government, private sector, and international partners to ensure that adequate infrastructure is in place to support the growing digital demands.

Top Challenges When Using Digital Services in Cambodia

2. Enhance Digital Literacy

Enhancing digital literacy among the population remains a significant challenge in Cambodia’s digital economy. Despite the rise in internet penetration, many individuals lack essential digital skills and knowledge across various sectors of society. To ensure active participation in the digital economy, it is crucial for individuals to possess the necessary abilities to effectively use digital technologies, navigate online platforms, and understand digital risks, including the ability to recognize and avoid false data, fraud, and offensive content.

To address this challenge, there is a pressing need to prioritize comprehensive digital literacy programs, training initiatives, and educational campaigns. This will require collaboration between the government, educational institutions, and private organizations to develop accessible and inclusive digital literacy programs that empower individuals with the skills and knowledge needed to harness the benefits of the digital economy.

3. Build Trust and Security in Technology

Trust and security are fundamental for the growth of the digital economy. Our study revealed that a significant 52.9% of Cambodians express extreme concerns regarding the security of their personal data when using digital services. Additionally, an alarming 50.4% of the population reported experiencing data breaches or cyber-attacks resulting in the theft or misuse of their personal information.

Security Concerns When Using Digital Services in Cambodia
Cyber Attacks in Cambodia

Cambodia needs to address concerns related to data privacy, cybersecurity, and online fraud to instill confidence in the use of digital technologies. Implementing robust data protection regulations, strengthening cybersecurity measures, and promoting digital ethics will be crucial to building trust among users, businesses, and investors. Collaboration between the government, industry stakeholders, and cybersecurity experts is essential to develop and enforce effective policies and practices that safeguard the integrity and security of digital transactions and communications.

To Wrap Up

In conclusion, Cambodia’s digital economy is poised for remarkable growth and transformation. With increased internet penetration, widespread mobile usage, and strong government support, the country is laying the foundation for a thriving digital ecosystem. However, challenges such as developing digital infrastructure, enhancing digital literacy, and building trust and security in technology must be addressed to fully unlock the potential of the digital economy.

By investing in these areas and fostering collaboration between various stakeholders, Cambodia is on the way to a prosperous future, where the digital economy becomes a driving force for innovation, efficiency, and inclusive growth. The opportunities are immense, and with the right strategies and investments, Cambodia is well-positioned to reap the benefits of a dynamic and vibrant digital landscape.

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