2019 Index of Economic Freedom

Cambodia

overall score57.8
world rank105
Rule of Law

Property Rights37.4

Government Integrity16.7

Judicial Effectiveness27.6

Government Size

Government Spending85.9

Tax Burden89.7

Fiscal Health89.1

Regulatory Efficiency

Business Freedom29.9

Labor Freedom63.0

Monetary Freedom79.4

Open Markets

Trade Freedom65.4

Investment Freedom60.0

Financial Freedom50.0

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Quick Facts
  • Population:
    • 16.0 million
  • GDP (PPP):
    • $64.3 billion
    • 6.9% growth
    • 7.1% 5-year compound annual growth
    • $4,012 per capita
  • Unemployment:
    • 0.2%
  • Inflation (CPI):
    • 2.9%
  • FDI Inflow:
    • $2.8 billion

Cambodia’s economic freedom score is 57.8, making its economy the 105th freest in the 2019 Index. Its overall score has decreased by 0.9 point, with a steep decline in trade freedom and a lower fiscal health score overwhelming improvements in labor freedom and judicial effectiveness. Cambodia is ranked 22nd among 43 countries in the Asia–Pacific region, and its overall score is below the regional and world averages.

Through its “One Belt, One Road” program, China’s influence in Cambodia will continue to grow as it finances major infrastructure projects without making Western-style demands for domestic policy reforms. The economically crucial garment sector is gradually losing its regional cost-competitiveness and has lost tariff-free access to the European Union because of the government’s continuing crackdown on the political opposition. Weak property rights and pervasive corruption continue to constrain economic freedom, and institutionalization of a more independent judiciary remains a key area for reform.

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Background

Nominally a democracy, Cambodia has been ruled by former Khmer Rouge member and now Prime Minister Hun Sen since 1985. Hun Sen’s Cambodian People’s Party (CPP) implemented an unprecedented crackdown against the opposition Cambodia National Rescue Party (CNRP) in the lead-up to local elections in 2017 and formalized Cambodia’s status as a one-party state in the 2018 national elections. CNRP leader Kem Sokha is imprisoned, and the party itself was banned and dissolved by the Cambodian Supreme Court. Media have been censored, and civil society groups have been repressed. The economy is still heavily dependent on tourism and the garment industry. More than half of the labor force is engaged in subsistence farming, and Cambodia remains one of Asia’s poorest countries.

Rule of LawView Methodology

Property Rights 37.4 Create a Graph using this measurement

Government Integrity 16.7 Create a Graph using this measurement

Judicial Effectiveness 27.6 Create a Graph using this measurement

Property rights are regularly abused for politically favored private projects, and the land titling system is corrupt and costly. Powerful politicians, bureaucrats, and military officers have grabbed an estimated 12 percent (or more) of Cambodia’s land through state-sanctioned seizures. The judiciary is subject to bribery and political pressure and marred by inefficiency, poor training, and a lack of independence. Corruption remains a serious problem.

Government SizeView Methodology

The top individual income and corporate tax rates are 20 percent. Other taxes include excise and value-added taxes. The overall tax burden equals 15.0 percent of total domestic income. Over the past three years, government spending has amounted to 21.7 percent of the country’s output (GDP), and budget deficits have averaged 2.3 percent of GDP. Public debt is equivalent to 35.1 percent of GDP.

Regulatory EfficiencyView Methodology

Measures to modernize commercial codes and facilitate private-sector development have been implemented in recent years. All sectors of the economy are open to foreign competition and investment. Labor force participation is high, but many jobs are informal. The government provides households with annual energy subsidies costing tens of millions of dollars in an effort to lower the price of domestic electricity by 2020.

Open MarketsView Methodology

The combined value of exports and imports is equal to 124.9 percent of GDP. The average applied tariff rate is 9.8 percent. As of June 30, 2018, according to the WTO, Cambodia had one nontariff measure in force. New foreign investment may be screened by the government. Privatization has gradually improved financial-sector efficiency. Banking has become more market-oriented, with credit increasingly available to the private sector.

Country's Score Over Time

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Regional Ranking

rank country overall change
1Hong Kong90.20.0
2Singapore89.40.6
3New Zealand84.40.2
4Australia80.90.0
5Taiwan77.30.7
6Malaysia 74-0.5
7South Korea72.3-1.5
8Japan72.1-0.2
9Macau710.1
10Thailand 68.31.2
11Indonesia65.81.6
12Kazakhstan65.4-3.7
13Azerbaijan65.41.1
14Brunei Darussalam65.10.9
15Philippines63.8-1.2
16Bhutan62.91.1
17Kyrgyz Republic 62.3-0.5
18Fiji62.20.2
19Samoa62.20.7
20China58.40.6
21Papua New Guinea58.42.7
22Cambodia57.8-0.9
23Tonga57.7-5.4
24Laos57.43.8
25Sri Lanka56.4-1.4
26Vanuatu56.4-13.1
27Bangladesh 55.60.5
28Tajikistan55.6-2.7
29Mongolia55.4-0.3
30Vietnam55.32.2
31India55.20.7
32Pakistan 550.6
33Solomon Islands54.6-2.9
34Nepal53.8-0.3
35Burma53.6-0.3
36Uzbekistan53.31.8
37Maldives53.22.1
38Micronesia51.9-0.4
39Afghanistan51.50.2
40Turkmenistan48.41.3
41Kiribati47.3-3.5
42Timor-Leste44.2-3.9
43North Korea5.90.1
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