Cambodia Rapid eTrade Readiness Assessment

The potential for e-commerce development is significant in Cambodia, promising to diversify the economy, provide new jobs, and increase financial inclusion, as well as contributing to improved lives and livelihoods.

Cambodia is in a stage of development in which e-commerce is becoming visible, with an IT-hungry urban middle class that has emerged over the past 10 years, and with 60 per cent of the population below the age of 25. Consumers prefer traditional markets or retail stores and the financial market still relies on cash. The demand for e-commerce is currently limited to products that customers cannot find through regular retail outlets.

There is nonetheless a real opportunity in Cambodia for small entrepreneurs buying products overseas to sell them online, mainly through Facebook or Instagram platforms. There is already a potential clientele of some 15,000 consumers for most current e-commerce ventures.

The transformation of Cambodia into a digital economy is advancing with rapid improvements in Internet accessibility and affordability. The Ministry of Posts and Telecommunications expects the number of citizens with regular Internet access to almost double to 9.5 million by 2020 (60 per cent of the population). Cambodia has considerable advantages that could be leveraged to create ICT jobs and benefit the national economy, such as the highest rate of Internet connectivity growth in the Asia-Pacific region and a very young population.

Over the coming years, enhanced connectivity will continue to create new opportunities and online platforms for Cambodian businesses to reach customers. If effectively harnessed, these opportunities can significantly improve financial performance and contribute to economic growth and sustainable development.

E-commerce, however, remains limited compared to other ASEAN countries, and the potential for export development is relatively low. Despite recent progress, Cambodia ranked only 119 out of 137 in the UNCTAD B2C e-commerce index 2016.

A relatively small market size, low broadband Internet penetration (especially in rural areas), payment issues and poor logistics networks are cited as stumbling blocks to e-commerce development in questionnaires and interviews.

Going further, the eTrade readiness assessment conducted with key stakeholders confirmed that barriers to further e-commerce development include:

  1. Confusion within and between relevant government agencies and public institutions over priorities and implementation processes.

  2. Technical factors, including accessibility and affordability of broadband Internet infrastructure, the digital divide between cities and the countryside; limited access to financial services, and logistical challenges related to the delivery of goods.

  3. Trust factors, i.e. moving from a cash to a cashless society, building consumer trust in online platforms and mobile payment solutions.

  4. Unclear legal and regulatory framework.

  5. Focus on copying existing platforms for quick return rather than on innovating or investing in new skills and knowledge to bridge a persistent market mismatch.

Cambodia Rapid eTrade Readiness Assessment (UNCTAD/DTL/STICT/2017/2)
25 Apr 2017