Cambodia's development prospects
Cambodia is one of the most watched countries in Southeast Asia in recent years. Its open economic policy, adoption of the US dollar and free foreign exchange system, as well as the advantages of a young population, have attracted the attention of many overseas investors and enterprises, making it one of the emerging economic powers in Asia. In addition to previous observations on global economic development, let us explore Cambodia's development in the next decade from a population perspective.
Changing demographics
1. Rapid population growth, reaching 20 million in the next decade
According to the World Bank, Cambodia, as an ancient country in Indochina, had a slow and stable population growth in the early days. However, the wars during the Khmer period led to a sharp decline in population. Since its rebirth in 1980, Cambodia's population has grown rapidly. Today, Cambodia's population has reached 16.5 million, and its population structure is relatively young, with 75% of the population under the age of 35.
Cambodian Prime Minister Hun Sen said in a public event that Cambodia's population is expected to increase to 20 million in the next decade (2030) and may reach 25 million by 2050. The increase in population will have a significant impact on social life, real estate, and medical care. This rapid growth trend tells us that we must continue to pay attention to Cambodia's development in the next decade, especially in terms of the challenges and opportunities brought by population growth.
2. The increase in the number of young and middle-aged people has driven steady growth in real estate demand
Young and middle-aged people aged 30 to 44 have certain economic capabilities in Cambodia and are the main buyers of houses. According to current data, the young and middle-aged population in Cambodia is about 3.42 million, and it is expected to increase to 7.7 million in the next decade. The growth of the young and middle-aged population will stimulate the increase in real estate demand.
According to a report from the Ministry of Land Management, Urban Planning and Construction of Cambodia, population growth will lead to an increase in housing demand. It is expected that by 2030, the demand for residential housing will increase to 850,000 units, in other words, 50,000 units will be provided to residents every year, and at least 7,000,000 people will gather in large cities across the country by then. This huge housing demand indicates the potential of the real estate market, especially the real estate market in large cities such as the capital Phnom Penh is even hotter.
Therefore, the future outlook for the country's real estate market is quite promising, especially in large cities. With the growth of the young and middle-aged population and the increasing demand for housing among residents, this will bring more opportunities to Cambodia's real estate market.
3. With the expansion of the middle class, Cambodia's domestic demand has increased significantly
In recent years, Cambodia's economic performance has been quite outstanding, attracting a large number of foreign investors to drive the country's development. The average annual economic growth rate of 7% is in the leading position in the world. This has greatly improved people's lives and their incomes are continuing to grow.
According to the International Monetary Fund (IMF), Cambodia's average GDP in 2018 was $1,508, more than five times that of 2000. However, the performance of Cambodia's per capita income is even more striking when calculated using purchasing power parity. Since countries have different living standards and price levels, using the purchasing power parity method allows us to better measure the consumption power of a country's people.
Starting from 1986, Cambodia's per capita income can be seen as a "leapfrog" growth based on purchasing power parity, and it rose rapidly in 2000. The International Monetary Fund (IMF) predicts that by 2024, Cambodia's per capita income will reach 6,516 international dollars, which means that people's purchasing power and consumption capacity will increase significantly in the next decade, far exceeding today's level. This shows the country's huge potential for economic development.
In addition, according to the International Labour Organization, the proportion of the middle class in Cambodia's labor force has increased significantly since 2004. At that time, the middle class accounted for about 9.8%, equivalent to about 642,000 people. By 2008, the middle class proportion increased to 16.1%, about 1,200,000 people. In 2017, about 31.6% of the labor force belonged to the middle class, reaching about 2,800,000 people. According to the government's plan, Cambodia's goal is to become a middle-income country in 2030. By then, the number of middle-class people will be very large, they have purchasing power and are eager to improve their quality of life, which will greatly promote the growth of Cambodia's domestic demand.
4. Emerging wealthy population drives the expansion of the medical services market
The Cambodian healthcare market is worth more than $1 billion and is growing at a double-digit rate every year. As society develops, the country's demand for advanced medical equipment is rising year by year. In the past, the Cambodian Ministry of Health was the main purchaser of medicines, equipment and medical supplies, but the rise of private hospitals in recent years has led to an upward trend in demand for advanced medical equipment. The middle class has sufficient financial resources to support them in obtaining high-quality medical services, so the emerging wealthy population has become a driving force for Cambodia's medical progress. It is expected that in the next 10 years, Cambodians will be able to enjoy high-level treatment at home without having to go to places like Singapore or Thailand for medical treatment.
5. Cambodians’ life expectancy increases, and insurance demand grows substantially
In recent years, the average life expectancy of Cambodians has reached 69 years, 11 years older than 20 years ago. According to the Cambodian government's estimate, there are currently about 1.2 million people over the age of 60, accounting for 8% of the country's population, and this number is expected to increase to 11% by 2030. As life expectancy increases and the elderly population increases, the demand for insurance and care will also increase accordingly.
Currently, Cambodia has not implemented a mandatory social health insurance system, and only 5% of the population has private health insurance, and these insured people are mainly middle-class people. Considering the high medical costs in Cambodia, the middle class hopes to avoid the burden on their families due to medical expenses, so life insurance and health insurance will be popular in the future, and the market potential is huge. In addition, products and services for the elderly population, such as elderly care services, healthy food, etc., will also become a huge business opportunity.
Population growth, the increase of the middle class and longer life expectancy will completely change Cambodia's current situation. The next decade will be Cambodia's "demographic dividend explosion period".