Courtesy of Capitalist Exploits, some interesting comments on Cambodia:

“…With a GDP per capita of just US$2,300, Cambodia is a poor country, make no mistake about it. Yet just 10 years ago per capita income was just US$1,000. This means that the Cambodians have enjoyed a 230% increase in income, and thus a vastly improved lifestyle in just one decade. Of course we’re benchmarking to the not-so-mighty greenback here, so we have to consider that as well, but it’s still a nice bump.

Look around and ask yourself if you are living in a country where incomes have doubled over the last 10 years..? Where economic freedoms have been increasing, opportunities expanding, and where living standards are rising rapidly.

Cambodia is such a country. Among ASEAN countries only Laos is set to have faster growth than Cambodia, forecasted at 7.5% for 2013-2014. Cambodia’s 2012 growth was an estimated 6.6%, with a forecast of 6.7% for this year and 7% for 2014.

We love macro tail winds. One of those tailwinds is demographics. Like it or not as we get old we aren’t particularly good at working and contributing to economic growth. Instead most in the West tend to retire to the porch, sip scotch, play golf and visit the doctor. Economies filled with old people are not so good for the balance sheet.

So, you might notice a certain trend in our investing thesis. We are discriminatory. We discriminate against ageing demographics, we discriminate against investing our capital in countries and companies that we don’t believe will make us wealthier, and we discriminate against “stupid” people. Capitalism works like that.

So you could say that Cambodia is the opposite of, say Japan…

Japan, now there is a tail wind we want to be involved with, but from a decidedly different angle. With adult diaper sales now exceeding infant diaper sales, and 26% of their population now over 65 years of age we’re betting on a giant fiscal SPLAT in the land of the rising sun. 

Incidentally, I am presently working with some friends on a means of accessing the commercial side of this market for retail investors. If…and it’s still an “if” at this stage that we can do it, the potential payoff could be absolutely HUGE. It’ll definitely be something that our CPAN members get shown first if we can put it together. 

Back to Cambodian demographics… Due in no small part to the mad man Pol Pot and his genocidal atrocities, Cambodia carries essentially no demographic baggage. The average age is around 25. As you can imagine, the skills shortage is simultaneously a MASSIVE problem and also one of the BIGGEST OPPORTUNITIES for intrepid entrepreneurs.

Overall the opportunities in Cambodia are profound. The entire supply chain is largely missing. Agriculture, manufacturing, and tourism are all growth sectors. Adding value and capacity along the chain will make someone very rich. Additionally, Cambodia has open sea access, with reasonable port infrastructure.

One of the easiest ways we’ve found to make money almost anywhere is to find a successful player in a particular market, then finance them when they decide to expand into a similar market that is yet untouched.

On that note a Cambodian company which we have been following for some time is Acleda Bank. It’s Cambodia’s largest commercial bank, and it has been very successful in both Cambodia and recently Laos. We have detailed this company before in these musings.

Acleda have recently inked a deal with the IFC (International Finance Corporation), a World Bank development lender. Under the terms of the deal the IFC will provide US$ 2M to Acleda to set up a micro-finance institution in Myanmar, which is another market we are actively researching a number of private equity deals in (our CPAN members have already participated in one).

This micro-finance unit will have an initial paid-up capital of US $10M, and will advance funds to individuals and SME’s. At least 5 branches will be opened in Yangon and Bagan.

With 126,237 registered SMEs in Myanmar this is a sector set to explode. SMEs in Myanmar account for 99.4% of all companies across all sectors, so we’re talking about almost the entire Myanmar economy, which is in desperate need for capital.

Southeast Asia if open for business…”