The price of this market report covers 4 quarterly reports on this sector. This quarterly report will be downloadable instantly as a PDF document, with the 3 remaining reports delivered at regular intervals throughout the year.

The number of approved projects in Cambodias construction sector grew rapidly in 2011, supporting our robust outlook for the sector. Real growth for the sector is estimated to have reached 10.8% for the year, pushing the nominal industry value to KHR2.88trn (US$700mn). Going into 2012, however, we see significant headwinds adversely impacting construction activity over the near-term, including a weakening global economy and the impact of the devastating floods that occurred in Cambodia and Thailand over the latter part of 2011. These factors are taken into account in our forecasts, with construction real growth forecast to slow to 6.8% in 2012.

Key developments contributing to forecasts include:

- In September 2011, Shanghai Construction Group (SCG) had announced plans to complete transport projects worth US$700mn (financed by Chinese loans) in Cambodia over the next five years. SCG, which has previously laid more than 870km of roads in Cambodia and constructed the Phnom Penh Autonomous Port, is currently involved in nine road and bridge construction projects in Cambodia, according to government officials.

- In November 2011, Cambodia Airports CEO Emmanuel Menanteau stated that Cambodia requires US$270mn for the expansion of its three airports in Phnom Penh, Siem Reap and Sihanoukville, in order to serve increasing demand in the tourism industry. The international terminal of Phnom Penh International Airport is expected to expand to cater for 4mn visitors by 2015, while Sihanouk International Airport aims to serve 4mn passengers by 2020.

- In November 2011, the Phnom Penh Post reported that Nanning Survey and Design Institute Co Ltd, a subsidiary of China Railway Siyuan Group, is holding discussions with the Cambodian Ministry of Public Works and Transportation to conduct a US$5mn feasibility study on a 700km rail line in northern Cambodia. The study, expected to begin in 2012, would evaluate a railway line that runs across Preah Vihear, Stung Treng, Kampong Thom and Kratie provinces, connecting Cambodia to the Laos and Vietnam borders. At present, the discussion is focused on the technical aspects of the study and has yet to lead to a formal agreement.

Cambodias business environment has a long way to go before it can compete with its regional neighbours, let alone developed countries. There are several major factors holding the country back, not least the poor state of existing infrastructure and regulation. Furthermore, a haphazard financial landscape and widespread corruption impinge on future growth rates.