As we discussed in a previous article, the cost of living is low in Cambodia.
This is one of the freest markets in the world when it comes to small businesses. The government simply doesn't have the sophistication or desire to enforce obtrusive regulations on the little guys. It's only when you start making real money that someone will come knocking, and even that can be less worrisome than it sounds.
Phnom Penh is a place which compels entrepreneurship from residents. Anyone with a ground floor apartment is a business owner, almost by default, so the place is saturated with small, usually family-owned businesses, including our cafe. The cafe would not be financially sound were it not for the fact that we make it our home in order to save on rent.
Previously, we saw how this highly competitive, mostly free market is the catalyst for tight margins and low consumer goods prices. Here, I'd like to go into a bit greater detail on the general cost of living in Phnom Penh, Cambodia, one of the most efficient markets in the world.
At one point recently, Cambodia had the highest mobile subscription rate per capita in the world. The telecom market has been one of Cambodia's most fiercely competitive since its nascent days when it seemed like new mobile and internet providers were springing up every week. Eventually, cries from observers began ringing the hollow refrain, "there is too much competition," and the government responded by introducing a regulatory scheme and fixing prices. The industry experienced a period of consolidation shortly thereafter and now it is rare for new players to enter the scene.
On the bright side, Cambodian phone companies don't currently require you to sign a contract, and phones are not 'locked', which means you are free to buy whatever phone you like and use it with any provider by purchasing their sim card. Your sim can then be 'topped up' with a scratch card from your provider, sold everywhere in Cambodia. I can't imagine there being a more fluid market than that for mobile phones, phone cards, and data plans. Phone sellers and re-sellers are everywhere, and pretty much every retail shop in the country has phone cards for sale if you need to top-up your sim.
Prices for internet access are reasonable in Cambodia. At our cafe we pay $75 for 6 months of wired connectivity including equipment rentals and good bandwidth. Some mobile internet plans start at $5 per month at not-too-bad speeds in Phnom Penh, and wireless and 3G coverage in the province is surprisingly good in many places.
Gasoline prices in The Kingdom are a bit higher than average, recently running about $0.80 per liter ($3 per gallon). That's nothing to complain about considering Cambodia produces no petroleum domestically. Major Gulf of Thailand drilling plans fell out of the news last year after Chevron sold its stake in a Cambodian-controlled bloc, so don't expect Cambodian gas production to outperform global averages any time soon.
Cambodia has been experiencing a steady increase in electricity consumption for quite some time. Just five years ago there were hardly any power lines in the countryside, but now don't be surprised to find most places on the grid.
A large chunk of what gets consumed in Cambodia is supplied from neighboring countries like Vietnam. However, In the last few years Chinese companies have completed several major hydro-electric projects in Cambodia, helping to alleviate the demand. In fact, the electrical grid has suddenly become stable in Cambodia when contrasted with the frequent rolling blackouts of just a few years ago.
Electricity prices, as might be expected, are slightly higher than regional averages. We pay $0.25 per kilowatt-hour, but it can cost less depending on where you live in Phnom Penh. At our house in Takeo province we pay $0.30/kwh.
Cheap prices are only half the story in Phnom Penh. The other half is convenience. Imagine living in a city where everything you need is right around the corner from you, regardless of where you are. Recently, I had some leather dress shoes tailored for $25 and the hardest part was deciding which of the several shoe-makers to choose in our neighborhood. When I tore my dress pants, I took them to a tailor one street over and had 3 pairs cloned for a total of $55.
If you buy your clothes off the shelf then you'll have no trouble finding a retail store near you, not to mention the many open-air markets in town, each with dozens of clothing stalls. Name-brand outlets are all over Phnom Penh (don't ask me if they're legitimate) and there are several western style malls dotting the city, as well. From a simple man's perspective you won't have trouble finding anything you need.
It's true that Cambodia is not a place where you should go for major medical procedures, but things are changing and the day will come when that is no longer true. In the meantime, neighboring Thailand is a popular destination for medical tourism and Vietnam is loaded with quality doctors as well. As for most medical necessities, however, you could do a lot worse than Cambodia. I recently went to the emergency room to get about 10 stitches and the total cost was $25; no lines, no paperwork, paid cash, out in no time. Try and beat that.
I'll give you some more perspective on how out-of-control prices for basic services have gotten in the West. In Phnom Penh it costs $10 to get your teeth cleaned - no insurance, no appointments. $10 is less than the insurance copay in the USA. But we're not talking about some back alley operation here. I walked in on a weekday with my girlfriend recently and we were serviced immediately, each with a dentist and an assistant, in a clean, westernized, sanitary environment. You really could not tell the difference between the procedure here and what you would encounter in the West except for the lack of bureaucracy and waiting. And, oh yeah, there are 3 dental clinics within a block of our cafe.
Need a pharmacy? They are everywhere, too. Not only are the prices for generic medicines extremely cheap, you don't need a prescription to get what you need.
One last note, my friend had crossed eyes since birth so I volunteered to pay for his corrective eye-surgery. It cost me less than $150 for the procedure including the several follow-up visits. The ophthalmologist did excellent work and, of course, insurance was not required.
There is very little that has me concerned in terms of basic medical care in Phnom Penh. Just don't expect to find me booking an appointment for bypass surgery here if I need it.
In closing, here are a few brief examples of cheap prices in Phnom Penh. All of these things can be found within 1 block of our cafe:
You can achieve a quality of life in Cambodia very close to what you're accustomed to from the West for much less money and with greater convenience. An entrepreneurial society and a lightly regulated economy keep margins tight and prices low. This is great news for consumers, but not the greatest news for cafe owners!
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