Investment and financial services policies and migration
Cambodia has undergone significant change in its investment and financial regime over the last three decades, from a regime controlled by the state to a more open policy. This transition has brought major shifts in favour of international trade, investment and private sector development, as well as in building solid economic foundations, such as macroeconomic stability, economic openness and a more favourable investment climate.
In parallel, the financial sector has seen substantial change, including structural reforms and the development of a financial service sector. Structural reforms were initiated in 1989 through a government decree establishing a two-tier banking system which separated out the function of commercial banks from the National Bank. Foreign banks have been permitted since 1991, and significant progress has been made in transforming financial institutions to create a market-based, private sector-dominated sector. The banking sector has grown rapidly in terms of the number of banks and services provided. In the same vein, microfinance institutions have expanded to fulfil the greater demand for financial services, especially in rural areas. In 2014, the number of commercial and specialised banks was 44, with 556 local offices nationwide. There were 36 microfinance institutions, with more than 100 000 village-level offices and a consequent wider geographical coverage than banks (National Bank of Cambodia, 2016).
Despite the rapidly expanding financial sector, the shares of individuals with a bank account and savings in a financial institution are still lower in Cambodia than in other Association of Southeast Asian Nations (ASEAN) countries. Only about 22% of adults (people over 15 years old) have a bank account and only 4% reported having savings in a financial institution, considerably lower than most other countries in the region (World Bank, 2016b).