As the sliding doors divide and the first wave of heat mixed with rays of sunshine beat against my skin, I am engulfed in a cacophonic bellowing of “hellos” and “tuk-tuk here sir, where do you go?” Stepping into Phnom Penh, Cambodia is like leaving a padded room stripped of all external sound, smell, and feeling only to have all of your senses return overwhelmingly in rapid succession. It’s as if the rest of the world has been submerged in a tamed stasis and Phnom Penh is where the reality of a chaotic city truly dwells — and I loved every bit of it. But as I attempted to wrap my head around understanding the do’s and don’ts of Cambodia, learning the ropes per se, I saw myself prying into a mystery too deep and too impregnable for the likes of a one-month adventurer. The more I sought to understand the economics and the invisible hand behind innovation in Cambodia, the more I developed more questions rather than answers.
Tearing Down the Old, Building Up the New
The transition from the rural areas outside of the capital Phnom Penh to the inner city is stark. Within minutes you notice an immediate shift from roadside vendors, whose customers compete with insects and canines for the fresh produce of the day, to an evolving metropolis. Buildings and the accompanied businesses spring up on a daily basis and you begin to wonder from where is the investment and money flowing? Aside from the various chic European and Australian restaurants and shops that you can find strategically established throughout the city, the undisputed money machine behind Cambodia’s growing economy is China. The economic world powerhouse only seeks to further establish its relationship with the emerging country through longer-term projects with big bucks. For example, according to the Phnom Pehn Post, China joined in a $1.5-billion deal between Cambodian conglomerate LYP Group and China Minsheng Investment Group (CMIG) this past November. The deal underlines the development of a subsection of LYP Group’s 2,000-hectare Garden City community to be located roughly 10 kilometres to the north of Phnom Penh.
Yet, the relationship between the Chinese and Cambodian governments and companies alike is unclear. Toggling between a generous donorship to strictly business driven, the impact of China on the Cambodian economy in recent years has seeped into a socio-economic whirlwind. With the uptake in commercialization, many landmark buildings and even universities are becoming more and more displaced. This has caused tension between the local residents born and raised in Cambodia and the direction to which political officials are taking the country. Many do not wish to be pushed to the outskirts of the city in order to access jobs and education, while others seek to preserve the cultural and historical significance of buildings and the such. But this perspective is not held by all, and it is increasingly tricky to understand the overall sentiment towards high volume commercialization as many Cambodians express a desire to get rid of the old to make room for the new.
Creativity and Hustle, How Do You Survive?
The rise in economic development has not only brought a wave of mix feelings amongst towering buildings, but has also created greater financial disparity amongst locals. Residential and commercial values have increased year-over-year as new regulations and laws allow for foreigners to own property. However, the country continues to be at a high risk of spiraling into poverty traps. A recent article featured in SBS captures the economic mystery well with its title Phnom Penh, where Porsches and Poverty Exist Side by Side and suggests that there is a visual mixing of poverty and wealth everywhere that you go.
Living there, I noticed similar truths. Prices for food and everyday items were much higher than compared to other Southeast Asian counterparts. This for me was most confusing. I could not reconcile the blatant displays of wealth juxtaposed with rampant signs of poverty and unemployment. It wasn’t until I spoke with locals, particularly millennials, that I began to scratch the surface in terms of the role that entrepreneurship plays as a balancing act.
Behind the backdrop of board games whilst sharing the company of a few skater and music heads in their early twenties, I posed the question, “How do people survive here in Phnom Penh”? Their unanimous response, “You have to be smart and crafty. Work won’t come to you, you have to create it.” As I mulled over the opaque answer, one of my newly made friends respectfully dismissed himself as he had a customer to attend to. He has an online business of his own, selling vape pens to the locals in Phnom Penh through a third party platform similar to Amazon and eBay. “The average Cambodian does not know where to find most commercial products made in China, so I buy them in bulk and sell them online with profitable margins,” he says as he lays his last hand on the table and indicates it is someone else’s turn to draw. “You see, the internet has made it possible for young people in very poor situations to take control of their circumstances. There are so many online businesses started by young people here today.”
What Does this Mean for Tech in Cambodia
For me, an economist by academia, our conversation demonstrated supply and demand theory in its most simplistic form and entrepreneurship in its most appreciated. Seeing an issue, turning it into an opportunity, and profiting from it. As mentioned earlier, a dynamic is starting to develop. A growing economy where the opportunities for the local population is not growing proportionately to the cost of living and inflation. As a result, entrepreneurship doesn’t just become a want, but a necessity.
When it comes to tech, the scene is still immature; however, all of the pieces are there. Cambodia sits in a unique place in Southeast Asia. Many of the entrepreneurs who are building companies or helping to contribute to the growth of startups do not necessarily see Cambodia as the next hub. Instead, they view it as more of a startup testing ground. There exist many similarities with countries like Laos and Myanmar (places that some would argue are a few years behind in development in comparison). Additionally, many solutions and innovations in general that are successful in Cambodia can easily be replicated and applied to more mature neighboring countries such as Thailand and Maylasia. Specifically, there is a strong push for innovation around Edtech and Fintech. Equipping a population with tools to learn and train is a necessary step to escaping poverty traps and ameliorating disparities between cost of living and economic opportunity. On the other hand, Cambodia is steadfast as a cash-based society. While introducing peer-to-peer lending models that are traditionally grounded in banking institutions may not be the best route, there are companies like Wing, who are providing financial inclusion via mobile banking services to the unbanked and underbanked.
Cambodia is unique in more ways than one. The push and pull of conflicting economic and social dynamics makes it a difficult country to decipher, but there are hidden treasures of opportunity amidst a kingdom of mystery. I think one in particular that resonates with me is the strong sentiments around how startups are built in Cambodia. Two trends stick out. First, most startups innately have some social impact component built into their company. There is a strong sense of giving back to the community and not just prioritizing profit. Second, entrepreneurs shy away from accepting investment in exchange for equity. The common notion is that ownership and control of one’s business is everything, and in a country like Cambodia, you can’t afford to lose everything.
For the Global Entrepreneurship Series, Rokk3r Labs’ Jide Adebayo is on a journey across the world digging deeper into entrepreneurs’ stories, understanding the universal investor mindset, and connecting the global collective genius.
We are excited for you to follow the journey, engage with the stories and share your experiences from the region. You can also read Jide’s personal anecdotes and connect with him over at jideadebayo.com.
More from the Rokk3r Labs Global Entrepreneurship Series:
- Prague: Cultivating a Promising Market
- Lisbon: Punching Above Its Weight
- Serbia: From Outsourcing to Entrepreneurship
- Thailand: Carving out a Space on the Entrepreneurial Map
- Cambodia: Kingdom of Mystery
- Vietnam: Resisting and Reinventing
- Kuala Lumpur: A Melting Pot of Culture, A Recipe for Ideas
- Kuala Lumpur
Rokk3r Labs is a venture builder and the world’s first ‘cobuilding’ platform for entrepreneurs, corporations and investors to create exponential startups. In 2017, Rokk3r Labs launched Rokk3r Fuel EXO, its first global venture capital fund. As a partner, Rokk3r Labs increases value, mitigates risk and helps to remain at the edge of innovation. With a focus on leveraging exponential technologies (e.g., the blockchain, artificial intelligence, and Internet of Things) and implementing new-age methods of raising capital, Rokk3r Labs is harnessing the global collective genius to cobuild companies that change the world. Currently, the Rokk3r Labs portfolio includes over 40 ventures. Visit www.rokk3rlabs.com.
