November 11, 2024
PHNOM PENH – The results of the US Congressional elections concluded on November 6, with the Republican Party, led by Donald Trump, securing victory. Trump will become the 47th president of the US and is set to assume office in January 2025.
What will be the positive and negative impacts of the change in presidential leadership from the Democratic to the Republican Party in early 2025 on the economic cooperation between Cambodia and the US?
On the afternoon of November 8, Duch Darin, a former economics professor at Tallahassee University in Florida, met with The Post’s business reporter Hin Pisei, to discuss and analyse the potential impacts on economic relations between Cambodia and the US over the next four years under Trump’s leadership.
In general, how would you compare the economic policies of the Republican Party to those of the Democratic Party?
The economic policies of the Republican Party generally emphasise a free-market economy, reducing tax rates to keep them low, and minimising government intervention in the economy. The Republican Party advocates for reducing excessive regulations and legal frameworks that obstruct business operations, especially in sectors such as energy, finance and manufacturing, in order to promote business growth and economic expansion.
In contrast, the Democratic Party tends to prioritise a more active role for the government in managing the US economy. The Democratic Party’s policies often focus on increasing taxes (progressive taxes that increase with income), public spending to support social programmes and creating laws and regulations to manage commerce and industry in order to protect consumers and the environment. This approach aligns with Keynesian economics, which posits that government intervention is sometimes necessary to ensure economic stability.
What is your perspective on economic relations, particularly in trade and investment, between the two countries in 2025?
In terms of trade and investment relations between Cambodia and the US, under president Trump’s second term in 2025, we can look at the historical context of relations between the two countries during his first term from early 2017. This can help predict future economic relations between Cambodia and the US in the coming years.
During this period, Cambodia exported a variety of goods to the US, including textiles, bags, handbags, wallets and other products like bicycles, rice and light bulbs. For instance, in 2020, total trade volume reached $5.51 billion, and US investment in Cambodia significantly increased from $7.84 million to $33.33 million between 2019 and 2020.
From 1994 to 2022, total US investment in Cambodia reached $1.4 billion. US investments have covered key sectors such as tourism, services, construction, agriculture, energy, manufacturing and hospitality. Major US companies investing in Cambodia include Caltex, Chevron, Coca-Cola, Unocal, Conoco, Jupiter, Northbridge and R.M. Asia. Recently, Ford opened a vehicle assembly plant in Pursat province.
The American franchise sector has also found significant support in Cambodia, especially in food and beverage, retail and hospitality. Well-known brands such as Starbucks, Burger King, KFC, Domino’s, Century 21, Papa John’s, Marriott and Hyatt have contributed to the country’s economic development by offering quality options and creating local jobs.
I am confident that Cambodia will continue to strengthen its exports and trade growth both regionally and globally. Despite challenges in the global economy, Cambodia’s export growth has demonstrated resilience and the quality of its products. I hope that Cambodia will continue to attract and strengthen trade and investment relations under the new US president.
Duch Darin, a former economics professor at Tallahassee University in Florida. PHOTO: THE PHNOM PENH POST
Do you think that Trump’s rise to power will provide Cambodia with economic benefits as well?
Regarding the opportunities for Cambodia under Trump’s leadership, I firmly believe that Cambodia will continue to strengthen its economic relations with the US, focusing on boosting international trade and investment.
If there is renewed emphasis on trade and investment, especially under policies that favour US companies seeking new markets, Cambodia will have even more opportunities because the country offers a favourable environment with peace, political stability and a free market economy open to American investors.
When Trump was the 45th president, he implemented the “America First” policy and exerted strong pressure on China, the second-largest economic power, which led some companies to relocate from China to other places, including Cambodia. Do you think this situation could happen again?
Regarding the relocation of some companies from China, I am confident that Cambodia has a favourable environment to attract new investments because Cambodia currently maintains macroeconomic stability, with inflation rates expected to remain manageable in 2024 and 2025, and sustained economic growth.
Cambodia offers a conducive investment climate with a free-market economy, new investment laws and streamlined approval processes facilitated by digital technologies.
Additionally, Cambodia has a young, active and skilled labour force with competitive wages in the region. Furthermore, Cambodia benefits from free trade agreements that support its business community, being close to major regional markets.
What should Cambodia do to better attract US investors?
On this point, I believe Cambodia should continue to maintain peace, political stability and further enhance economic freedom. Economic freedom helps build trust among American investors and encourages long-term investments.
Economic freedom, combined with peace and political stability, provides an environment where investors can view Cambodia as an attractive long-term investment opportunity, which will benefit the development and growth of Cambodia’s economy in a sustainable manner.
Do you think Cambodia’s economy in 2025 will be more positive compared to 2024?
I expect Cambodia’s economy to perform better in 2025 than in 2024. Projections indicate that Cambodia’s GDP per capita will reach nearly $3,000 in 2025, with an overall GDP growth rate forecast at 6.3%.
Key sectors, such as industry, are expected to grow by 8.6%, services by 5.6% and agriculture by 1.1%. Inflation is forecast to stay within the range of 2.5% in 2025. Cambodia’s economy is continuing to develop, supported by strong export growth, rising tourism, increased public investment and active participation from the private sector. Cambodia has also maintained macroeconomic stability while strengthening sustainable development and its business environment.
How will the presence of large international companies benefit Cambodia’s economy?
The presence of large international companies brings multiple benefits, including a larger capital base, job creation for Cambodian citizens and the strengthening of workforce skills. These companies also help raise local business standards and encourage technology transfers, innovation and global competitiveness.