Cambodia

Cambodia’s economy continued robust improvement in industrial production by gaining major FDI projects that supported 5.2% GDP growth in 2022. The World Bank predicts new foreign investment will rise to US$ 4.4 billion in 2023. To support investment, the Council for the Development of Cambodia (CDC) promulgated the Law on Investment (LoI) in 2021 to establish a transparent legal framework, one-stop services for investors, granted long-term tax holidays, and other incentives for Qualified Investment Projects. Additionally, the Cambodian government has a budget plan for 2023 to 2025 of US$ 1.9 billion for infrastructure investment alone. Also, international donors are financing the expansion of the infrastructure such as the construction of expressways and the capital's airport. Cambodia developed 24 Special Economic Zones (SEZs) not only in Phnom Penh, but also across the borders with Thailand and Vietnam as well as Sihanoukville deep seaport to facilitate global maritime transport. These favorable developments will attract directed sourcing requests towards Cambodia.

Cambodia's advantageous geographical position, political stability, robust economic growth, favourable investment climate, abundant natural resources, competitive labor market, expanding infrastructure development, and supportive legal framework act as strong magnets for international investments. These factors also entice opportunities from neighboring countries in Southeast Asia (SEA) to explore diversified sourcing and investment locations. Industries such as garments, footwear, electronics, automotive components manufacturing, agriculture products, furniture, plywood, and travel goods benefit from these favorable conditions. Crop production in Cambodia makes up 60% of agriculture’s contribution to GDP and the agro-processing sector is now a priority of the government to promote higher value-added exports. Cambodia now ranks the top place in ASEAN, and fifth global bicycles and bike parts exporter. Europe becomes the destination of more than two-thirds of their exports.

The rising middle class and the growing economy also welcome products from Germany including vehicles, mechanical engineering, chemical products, pharmaceutical, and consumer goods. To bolster manufacturing in response to the swift advancement of Special Economic Zones (SEZs), there will be a pressing need for German industrial machinery and technologies.

Cambodia has signed multilateral free trade agreements, and participation in numerous bilateral and plurilateral as well as Duty-free quota-free access to the EU with preferential market access scheme, known as the Everything But Arms (EBA), which can open the door for various opportunities and show its commitment to be a part of the global economy.