As a result of a determined regulatoryreform process and an economic modernization process overthe past two decades, Cambodia has experienced extraordinaryeconomic growth. In 2004, Cambodia became the firstlow-income country to join the World Trade Organization(WTO). Since then, Cambodia has grown to become one of EastAsia s most open economies, especially in the servicessector. Cambodia s impressive economic growth owes much ofits driving force to the boom in services trade. Servicesexports grew more than 20 percent a year for most of thepast decade led by a rapid expansion in tourism. Foreigndirect investment (FDI) particularly in tourism,construction, infrastructure, agro-processing, andtelecommunications also supported the expansion of servicestrade, not only by attracting foreign capital and expandingemployment into Cambodia, but also by improving domestictechnology and enhancing domestic skills. Cambodia isquickly becoming a sophisticated economy that needs to movebeyond the pillars of textiles and tourism exports bydiversifying into the export of modern services. Cambodianfirms are already tentatively exporting some niche servicessuch as computer-based animation. Modern services exports toother East Asian countries, including information technology(IT)-related services, are likely to play a more importantrole in Cambodia as a source of employment, revenue, andinvestment. In the regional context, Cambodia stands tobenefit from its chairmanship of the Association ofSoutheast Asian Nations (ASEAN), by showcasing its economicreform and modernization process, and increasing thepotential to attract investments from services firmsinterested in serving the region as whole. Cambodia shouldact quickly to address potential competition from otherleast-developed (LDC) and developing countries across theregions that are also expanding their services industries.
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