The service sector continued to make significant gains in 2007. The service sectors, excluding public administration, expanded by about 10.2 percent in 2007, slightly down from the 10.6 percent in 2006 and 13.4 percent in 2005. The growth was due mainly to increases in the number of foreign tourist arrivals in Cambodia and a significant expansion in economic activity, especially trade, transportation, communication and financial service sectors. Based on current trends, service sector growth will remain strong in 2008 and is expected to grow by about 9.4 percent. Bolstered by an 18.3 percent increase in international tourist arrivals, the hotel and restaurant sector contributed significantly to the service sector’s growth, expanding by about 10.3 percent in 2007, about 3 percent less than the growth it enjoyed in 2006. The number of foreign tourist arrivals in expected to grow significantly, impacting favorably on the hotel and restaurant sector, which will grow about 11 percent in 2008. Trade represents the most significant share of the service sector, followed by transport and communication and growth in these sectors has continued to outpace increases in oil prices. Growth in trade was about 7.2 and transport and communication 9.5 percent in 2007, about 3 percent less than the growth is enjoyed in 2006. The number of foreign tourist arrivals is expected to grow significantly, impacting favorably on the hotel and restaurant sector, which will grow about 11 percent in 2008. Trade represents the most significant share of the service sector, followed by transport and communication and growth in these sectors has continued to outpace increase in oil prices. Growth in trade was about 7.2 and transport and communication 9.5 percent in 2007, compared to only 2.1 percent and 7.1 percent, respectively, in 2006. However, the country’s physical infrastructure and roads and railways, in particular, remain poor. Further rehabilitation and reconstruction of roads is essential to expanding trading opportunities is remote areas of the country. Increased mobility of people, goods and services will create a positive circle of market dynamics. The growth of trade and transportation activities will remain strong in 2008. The financial and real estate sectors grew significantly in 2007, by about 22.2 percent and 10.8 percent respectively, which was relatively the same as that of 2006. Other service sectors remained strong, but grew at slightly slower rates in 2007, averaging around 12 percent, according to the National Institute of Statistics (NIS). But financial services are still very basic and major providers continue to be concentrated in Cambodia’s main cities. Credit in rural areas is available through a few commercial banks and specialized microfinance institutions, but its dominant source appears to be informal lending. Nonetheless, the growth prospect for these sectors remains strong for the next several years.