With Cambodia on the cusp of a major infrastructural milestone, the upcoming Techo International Airport (TIA) near Phnom Penh stands out as a transformative project with significant potential for regional growth.
Designed by Foster + Partners and scheduled for completion in 2025, the airport is expected to handle over 27 million passengers in its first phase, positioning it among the largest airports in the world. This development not only aims to boost Cambodia’s connectivity but also holds the promise of transforming Phnom Penh into a strategic business and trade hub, potentially on par with major regional centers like Singapore.
The implications of this development extend far beyond aviation, as Phnom Penh’s burgeoning infrastructure will likely play a crucial role in shaping Southeast Asia’s economic landscape. This article explores the multifaceted opportunities that TIA brings, from investment prospects to regional trade advantages, and how businesses can leverage Phnom Penh’s evolving status.
Techo International Airport: A Project of Strategic Importance
TIA is being built on a sprawling 2,600-hectare site 20 kilometres south of Phnom Penh. Funded primarily through a public-private partnership led by the Cambodian government and backed by Chinese investments, the project has garnered significant attention both regionally and internationally. Representatives from countries including Australia, Japan, and France have visited the site, underscoring the importance of TIA as a strategic project with global implications.
The airport’s size and capacity will address long-standing limitations at the existing Phnom Penh International Airport, which is close to reaching its maximum capacity. With TIA, Cambodia seeks to tap into the ASEAN (Association of Southeast Asian Nations) market by providing enhanced connectivity across the region and creating a more dynamic travel and trade route.
TIA will initially serve regional flights with plans to expand to long-haul routes, connecting Phnom Penh to major international cities and positioning it as a viable alternative to established hubs like Bangkok, Singapore, and Kuala Lumpur.
Economic and Trade Opportunities for Cambodia
Cambodia’s economy, traditionally reliant on textiles, tourism, and agriculture, is increasingly diversifying. The TIA’s potential to improve logistical efficiency aligns with the government’s vision to expand its manufacturing and services sectors, making the country more attractive to foreign direct investment (FDI).
- Manufacturing and Export Growth: As a result of enhanced infrastructure, Cambodia stands to gain from the “China Plus One” strategy adopted by multinational companies to reduce their reliance on China alone. Phnom Penh’s lower labour and operational costs provide a compelling alternative for businesses looking to establish manufacturing bases in Southeast Asia. With quicker access to ports and airports, products manufactured in Cambodia will find a smoother route to global markets, reducing time and cost inefficiencies for companies.
- Boosting Regional Trade: The TIA is expected to bolster Phnom Penh’s trade relations, especially within ASEAN. As part of ASEAN’s Regional Comprehensive Economic Partnership (RCEP), Cambodia enjoys tariff reductions and easier access to markets like China, Japan, and South Korea. By positioning itself as a transport hub, Phnom Penh could see increased cross-border trade with both ASEAN and non-ASEAN countries, helping companies optimise supply chains and expand market reach.
- Financial and Service Sectors: The increased business activity surrounding TIA could also act as a catalyst for Cambodia’s financial services sector. Banking, insurance, and fintech companies will likely see growth opportunities as FDI and trade volumes increase. There’s also the potential for Phnom Penh to develop as a regional financial center, further boosting employment and economic diversification.
A New Business Landscape: Opportunities for International and Local Investors
Foreign Direct Investment and Business Relocation
For foreign investors, Cambodia’s pro-business policies, including tax incentives and special economic zones, make it an attractive destination. TIA adds another layer of appeal by enhancing accessibility and infrastructure reliability. As Phnom Penh positions itself as a gateway to Southeast Asia, businesses in industries such as logistics, real estate, and technology may find unique advantages in establishing a presence in the city.
Real Estate Development: With TIA projected to draw more international visitors, demand for commercial and residential properties around Phnom Penh is expected to grow. Real estate developers are already seizing this opportunity by investing in mixed-use developments, hotels, and luxury apartments aimed at expatriates and tourists. This trend is likely to continue as Phnom Penh becomes more integrated into the region’s business network.
Industrial Zones and Logistics Hubs: The Cambodian government has earmarked areas surrounding TIA for the development of industrial zones and logistics hubs. Companies in e-commerce, warehousing, and distribution will benefit from the proximity to the airport, enabling them to streamline their supply chains and access Southeast Asia’s markets more efficiently.
Tourism and Hospitality: A Revitalised Sector
The new airport is expected to reinvigorate Cambodia’s tourism sector, which was hit hard by the COVID-19 pandemic. With easier access for international tourists, Phnom Penh can position itself as a regional tourism hub, offering an array of cultural, historical, and recreational attractions. From the iconic Angkor Wat to Phnom Penh’s Royal Palace and the country’s growing eco-tourism offerings, Cambodia’s appeal as a travel destination will only grow with better connectivity.
The hospitality industry, in turn, will see opportunities in the form of new hotels, restaurants, and entertainment venues. As tourism rebounds, local and international businesses in hospitality can expect increased foot traffic and demand, adding value to Cambodia’s economic recovery efforts.
Potential Challenges and Considerations
While TIA offers tremendous potential, businesses will need to be aware of the various challenges in the Cambodian market:
- Regulatory Environment: Though Cambodia has made strides in improving its business climate, regulatory transparency and efficiency remain concerns for investors. Businesses will need to ensure they stay informed of local regulations and seek reliable local partnerships to navigate these complexities.
- Infrastructure Development Beyond TIA: Although TIA is a major advancement, other infrastructure elements—such as roads, utilities, and telecommunications—also require improvements. Ongoing investments in these areas are essential for fully realising the potential benefits of TIA and making Phnom Penh an attractive investment destination.
- Environmental Considerations: As TIA and the surrounding developments grow, environmental sustainability will be a key issue. Cambodia’s government and private sectors are likely to face increasing pressure to adopt sustainable practices. This could represent both a challenge and an opportunity for businesses willing to implement sustainable practices.
Comparing Phnom Penh and Singapore
While it is ambitious to compare Phnom Penh with Singapore—one of the world’s most advanced economies—TIA represents a significant step forward in positioning Phnom Penh as a regional hub. With proactive economic reforms, Cambodia could establish a competitive edge in industries that require lower operating costs. However, the development of robust governance, transparency, and sustained infrastructure investment will be critical for Phnom Penh to reach its full potential.
Singapore’s advantages, such as a strong rule of law, sophisticated infrastructure, and a skilled workforce, cannot be replicated overnight. Yet, Phnom Penh’s emerging role as a logistics and manufacturing center offers distinct advantages for cost-conscious businesses targeting the ASEAN market. As Southeast Asia continues to grow economically, Cambodia’s strategic location and improving infrastructure could make it a viable alternative to higher-cost cities.
The Opportunity
With Techo International Airport on the horizon, Phnom Penh is certainly poised to play a larger role on the regional stage. For businesses looking to enter or expand within Southeast Asia, Cambodia offers an interesting mix of advantages: a young and dynamic workforce, competitive costs, and growing connectivity to key global markets. By considering both the opportunities and challenges, investors and businesses can develop a strategic position to benefit from Phnom Penh’s evolution into a hub of economic activity and innovation.
The coming years will be pivotal for Phnom Penh. As TIA opens its doors, businesses in sectors from logistics and real estate to tourism and finance have a golden opportunity to tap into an emerging market poised for growth. Cambodia’s transformation is well underway, and for those with a forward-thinking approach, the country’s new infrastructure may very well pave the way to new and prosperous ventures in Southeast Asia.
