This Pre-Emerging Market Offers the Most Upside in Southeast Asia
by Karim Rahemtulla, Investment U’s Contributing Editor
Tuesday, March 1, 2011: Issue #1459
Forget the Big Mac Index.
If you really want to compare apples to apples in Asia, someone ought to create a “Massage Index.”
While the Big Mac Index measures purchasing power parity, based on the cost of a Big Mac in cities around the world, it doesn’t give you a good idea of purchasing power in “pre-emerging” markets like Cambodia or Vietnam. In fact, Vietnam doesn’t even have any McDonalds… yet.
But massage parlors are everywhere, as it’s a normal part of life in those two nations. And on my recent trip, I was happy to take advantage of this part of the culture. The cost? $5 plus tip in Cambodia and $10 plus tip in Vietnam.
Alas, the trip wasn’t about massages. My mission was to dig up some investment opportunities. And there was no doubt about the most impressive stop on my journey…
Cambodia: Pre-Emerging Now… But for How Long?
Cambodia is a genuine pre-emerging market – one that I believe offers the most amount of upside when pitched against Singapore and Vietnam – the other places I visited on the trip.
As I mentioned last time, there are three problems that plague pre-emerging markets – infrastructure, corruption and the lack of a viable tax system.
Specifically, I discussed how these issues pertain to Vietnam. And in Cambodia, they were prevalent again. However, it’s much further ahead on infrastructure, especially when it comes to communication…
High Speed… Low Hassle
As you enter Cambodia through a major entry point like Siem Reap, the airport facilities are brand-spanking-new, with free Wi-Fi and great restaurants and bars. In addition, you can buy an entry visa effortlessly upon landing.
Better still, it’s the first country I’ve ever visited where you can apply for, and receive, a visa online within 48 hours for no extra charge. Unless you’re a frequent traveler to places that require visas, you’ve no idea how much stress this relieves, compared to sending off your passport and hoping it returns in time.
A visit to Angkor Wat, the great temple complex in Siem Reap, is more eye-opening. After you go to a central ticketing complex and collect your picture ID in five minutes, you’re then whisked to the temple complex for your journey. It was more efficient than Disney.
The efficiency at the airport and the Angkor Wat is made possible by high-tech cameras and high-speed wireless and printing equipment. There’s no hanging around or “sign the forms in triplicate” mentality. The place is efficient in all respects.
But what about the rest of its infrastructure?
Cambodia: From Third World Struggler to Up-and-Coming Asian Force
Cambodia is in a lucky spot.
Until the turn of the century, it was a Third World backwater, ravaged by civil war. But when it was time to rebuild, the country had access to the most modern technology. Almost everything is cell-based.
When it comes to transportation, there are no pedi-cabs or pollution-spewing tuk-tuks. The modern tuk-tuk is a highly efficient scooter with a wagon that seats four people. A ride across town will set you back around $2.
And with oppressive dictatorships making headlines every day so far this year, Cambodia’s leadership could be described as a more “benevolent dictatorship,” in combination with the monarchy. There is corruption, but it’s much less pervasive than in other places.
As for investment options…
The Best Way to Invest in Cambodia’s Growth Story
On the face of it, investing in Cambodia isn’t easy – there are only two publicly listed companies.
But there are ways to participate in Cambodia’s growth if you know where to look – and one way of doing it is through private equity.
Good investing,
Karim Rahemtulla
Any investment contains risk. Please see our disclaimer.
3 Responses to “This Pre-Emerging Market Offers the Most Upside in Southeast Asia”
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Dubbed a "market maven" by CNBC, Karim Rahemtulla is one of the country's foremost specialists in options trading. As founder and editor of The Smart Cap Alert, he focuses his efforts on all aspects of options trading – LEAPS, put selling/covered calls and spreads. 
Very intriquing. Please keep me informed. ALSO ADVISE YOUR READERS ABOUT THE REAL ESTATE SITUATION OVER THERE. COSTS, OWNERSHIP, ETC
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I found your article quite informative. It stirred my interest, I wish I had the capital. But until I do, I am willing to tag along.
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Great info! I will be investing in Cambodia next year. It looks like a strong emerging market for many services and products.
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