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Cambodia’s Major Industries

Cambodia Major Industries: Agriculture, Construction, Development, Tourism & More

Cambodia has seen consistent solid economic growth since 2011, with GDP at an average of around 7 per cent each year and expected to remain so until at least 2020. These figures are very good compared to other nations in Asia.

According to the World Bank, “Cambodia’s economy has sustained an average growth rate of 8% between 1998 and 2018, making it one of the fastest-growing economies in the world.”

The four pillars supporting the Cambodian economy, or the key industries, are the export of garments and footwear,  tourism, agriculture, and construction which generally experience positive growth.

Updated May 2021

Cambodia’s Biggest Industries 

Read on to learn about the progress of Cambodia’s key industries, the outlook for the future, and the impact of Special Economic Zones (SEZ).

What GDP growth are Cambodian key industries experiencing?

  • Cambodia has seen solid growth since 1998, with GDP growth averaging at about 8% each year.
  • This economic growth is expected to trend upwards, with a growth of 7.0% projected for 2019 and 6.8% for 2020, according to the Asian Development Bank. (These were made before the COVID-19 impacts early in 2020).
  • This strong performance is largely being driven by the continual expansion of the Kingdom’s key industries.
  • One of Cambodia’s key industries, the export of garments and footwear, were valued at $10 billion in 2018, up 24 per cent from $8 billion in 2017 according to NBC’s (National Bank of Cambodia) 2018 report.
  • Other key industries such as light manufacturing, tourism and agriculture and construction have also experienced positive growth.
  • The impact of the global COVID-19 pandemic affected Cambodia too and the World Bank projected the Kingdom’s economy to contract by 2 per cent in 2020 but is expected to grow by 4 per cent in 2021.

Tell me more about the textile/garment manufacturing industry?

  • Growth in the garment sector is a significant success story for Cambodia’s economic development.
  • The garment industry (garments and footwear production) represented a 74% share in Cambodia’s merchandise exports in 2018 according to the International Labour Organisation’s Cambodian garment and footwear sector bulletin in August 2019.
  • As a result of the International Labour Organisation’s (ILO) “Better Factories Cambodia” social compliance programme and various Government reforms, the minimum wage has been increased and recent talks even suggest a new rent ceiling and employment benefits assurance for garment workers will be enacted in coming reforms.
  • The most respectable brands demand full and diligent audits on the factories they source from and try their best to ensure that these factories live up to the brands own corporate social responsibility policies too. However, not all do.
  • The labour and technology efficiencies are lower in Cambodia than in other established garment markets, such as Vietnam and China, but still, the labour pool is younger, larger and lower-cost here. Training is part and parcel of operating in Cambodia, however, and specialised training must be accorded into predicted operations costs.
  • Cambodia also relies on imports for textile raw materials  – predominantly from China, Taiwan, Vietnam, South Korea and Japan. Potential investors might consider opening a factory in areas other than the traditional epicentres located in outer Phnom Penh.
  • Areas closer to the Thai or Vietnamese borders offer better access to a new labour pool of Cambodians rather than the currently oversaturated labour market located around Phnom Penh.
  • Likewise, Special Economic Zones in Cambodia, especially those located close to ports of export, offer advantages for setting up efficient garment production factories.
  • Always ensure any factory and its management are reliable and responsible before agreeing to any production contract – many contracts break down based on poor relationships between buyers, sellers and producers. To be sure, find an expert sourcer to seek the ideal factory for your needs.
  • On the 12th February 2020, the European Commission decided to partially withdraw Cambodia’s preferential access to the EU market under the European Union’s Everything But Arms (EBA) trade scheme. 
  • This is due to take effect on 12 August 2020 and will affect selected garment and footwear products, all travel goods and sugar exports.
  • Under EBA, Cambodia is granted full duty-free and quota-free access in the EU market for all products except arms and ammunition, making it Cambodia’s largest trading partner.
  • The garment, footwear and travel goods industry is the kingdom’s biggest export sector, employing about 750,000 people in approximately 1,100 factories and branches, according to the Labour Ministry in 2020.
  • The garment, footwear and travel goods sector earned Cambodia a gross revenue of US$9.32 billion in 2019.
  • Cambodia’s export of industrial products, including garment products, were valued at $6.37 billion in 2020 (a decrease of 43 per cent compared to 2019).

Tell me more about the construction industry in Cambodia?

  • The construction industry has been experiencing a significant boom in Cambodia.
  • Cambodia’s construction sector saw a total investment of 9.35 billion U.S. dollars in 2019, up 79 per cent from 5.22 billion dollars in 2018 according to the Ministry of Land Management, Urban Planning and Construction (MLMUPC).
  • China, South Korea and Japan are the biggest investors in the Cambodiás construction and real estate sector.
  • Both The World Bank’s East Asia and Pacific Economic Update predicted that Cambodia’s economy will grow due to the country’s positive performance in the construction sector.
  • The demand for office space serviced apartments, condominiums, and commercial buildings in Phnom Penh, and in Sihanoukville from 2017-2020, was contributing to the growth.
  • Realestate.com.kh reported that the construction and real estate sectors in Cambodia are expected to see renewed activity in 2021 in line with the entry of foreign direct investments, revenue recovery, and the overall economic growth to follow.

Tell me more about the light manufacturing assembly industry in Cambodia?

  • Clothing, textiles, and shoes still make up almost three-quarters of total exports in Cambodia, the share of ‘other’ items is expected to rise.
  • Low costs of labour make Cambodia attractive for the labour-intensive stages of light manufacturing production tasks including wire harnessing, producing parts for digital information appliances, chassis and auto body components, bicycle manufacture, and even gemstone polishing.
  • Increasingly, global companies are outsourcing these parts of the production process to Cambodia, especially to SEZs.
  • Still, most components, parts and raw materials are sourced from neighbouring countries including Thailand, Vietnam, China and Malaysia.
  • Cambodia’s light manufacturing assembly sector, located primarily but not exclusively in special economic zones, covers principally labour intensive operations.
  • This includes in bicycle manufacturing, electronics and electronic manufacturing and assembly, and a mix of other light manufacturing products.
  • In 2017, Cambodia became the largest bicycle supplier to the European Union (EU). There are a number of bicycle manufacturers in Cambodia, from Taiwan and the USA (Trek Bicycle, Ken International, Atlantic Cycle, Smart Tech, Worldtec Cycles)
  • Duty-free status for exports to Europe for a number of manufactured goods such as bicycles has brought investors to move production from neighbouring countries to Cambodia. As of 2020 the European Union’s Everything But Arms (EBA) trade scheme was being reviewed which may impact this.
  • Since 2018, the Cambodian government has made Industry 4.0 a top priority, prioritising the adoption of new technologies in manufacturing.
  • Part of the focus in Industry 4.0 are technologies such as artificial intelligence, robotics, virtual reality, blockchain technology and 3D printing.

Tell me more about the tourism industry in Cambodia?

  • Southeast Asia remains one of the fastest-growing tourist markets in the world with Cambodia also benefiting from “side-trips” from Thailand, Vietnam and other regional hotspots. 
  • The tourism industry has continued to grow rapidly in Cambodia, in part due to regional low-cost airlines opening new direct lines and the simplification of visa procedures.
  • In recent years, from around 2017, China represents the biggest number of tourist visitors to Cambodia.
  • In 2020, it was predicted the number of foreign tourists will hit 7 million before the COVID-19 outbreak affected the global travel industry.
  • The Cambodian Tourism Ministry has set a goal to attract at least 11 million foreign tourists by 2025 and 25 million by 2030.
  • Most tourists spend a small amount of time in Cambodia generally, their stays are gradually lengthening as remote provinces like Sihanoukville, Kampot, Kep, Mondulkiri and Ratanakiri begin to attract tourists away from the temples at Siem Reap.
  • Due to the global pandemic, Cambodia’s three international airports received 2.13 million passengers (international, domestic and transit) in 2020 – a drop of around 80 per cent. A number of tourism plans are under review to revitalise the industry post-COVID-19.

Tell me more about the agriculture industry in Cambodia?

  • Despite rapid growth in garments and tourism, Cambodia remains an agrarian society, with over half the population engaged in the agriculture sector. 
  • Regionally too, agriculture is the dominant industry in Cambodia, hence, products are intensively traded with neighbouring countries.
  • Duty-free access granted to Cambodia by the EU and Russia has been a key driver of rapid export growth since 2009. This may change when the (EBA) trade scheme comes to end.
  • Rice production is extensive and widespread. The cost of rice paddy production in Cambodia is one of the lowest in the world.
  • Cambodia also has a long history of rubber cultivation, dating back to French colonial times, and it remains an important crop. Cambodia exported 282,071 tons of dry rubber in 2019, an increase of 30 per cent to 2018 according to the Ministry of Commerce.
  • Meanwhile, the Cambodian organic export markets in the USA and Europe continue to expand, especially for organic rice, pepper and moringa. 
  • With higher prices offered globally for organic rice, producers and post-harvest processors are well rewarded for converting fully to international organic standards.
  • The Cambodian Minister of Agriculture, Forestry and Fisheries announced that the Kingdom exported $4.037 billion in agricultural products in 2020 despite the impact of COVID-19.
  • The date for some exports in Q1 2021 can be seen here.

Rice production in Cambodia

  • Rice is a traditional crop of cultural and historical significance and its production is extensive and widespread in Cambodia
  • The cost of rice paddy production in Cambodia is one of the lowest in the world (about 0.95 ton of unmilled rice per hectare).
  • Duty-free access granted to Cambodia by the EU and Russia has been a key driver of rapid export growth since 2009.
  • Cambodia harvested 7.9 million tonnes of wet season paddy rice in 2019 while the milled rice exports were reported at 620,106 tonnes. The Cambodia Rice Federation (CRF) released regular data on rice production and exports in Cambodia.
  • The main rice export destinations are China and the EU as well as Malaysia and Gabon. Efforts have been made to reach new markets such as South Africa (2019), Kuwait (2020).
  • By Q1 2021, Cambodia’s milled rice exports were down 36 per cent. In total 192,495 tonnes of milled rice were shipped, generating more than USD $161.69 million in the face of the global pandemic.

Rubber production in Cambodia

  • Cambodia has a long history of rubber cultivation that began in French colonial times and it remains an important crop.
  • Cambodia exported 217,500 tonnes of dry rubber in 2018 and 282,071 tons of dry rubber in 2019 according to the Agriculture Ministry. This equated to gross revenue of roughly 377 million U.S. dollars from exports.
  • The main trading partners for rubber are China, Vietnam, Singapore, Malaysia and some European countries.
  • The sector is also seeing an increasing number of domestic farmers as well as foreign investors who use land concessions to build large scale rubber plantations.
  • The Cambodian Ministry of Agriculture, Forestry and Fisheries (MAFF) claims that $99.87 million of natural rubber exports were made in Q1 of 2021.

Cassava production in Cambodia

  • Cambodia has more than doubled the cassava growing area from 2005–2013, and by 2019 cassava plantations covered 400,000 hectares.
  • Cassava, which is used to produce animal feed and ethanol, has been sold mainly to Thailand, Vietnam, and China.
  • In the first 7 months of 2019, Cambodia exported 960,550 tons of dried cassava and 612,200 tons of fresh cassava to Thailand and Vietnam. It also exported 33,287 tons of cassava powder to Vietnam, China, The Netherlands, the Czech Republic, Canada, Italy and India.
  • These crops are also subject to disease., but as the second-largest agricultural crop in Cambodia after rice, it could have substantially social and economic gains.
  • In 2019, Cambodian Commerce Ministry Secretary of State Mao Thora said the government’s long-term vision is to become the world’s most reliable producer and supplier of cassava.

Tell me more about the Mining and Exploration industry in Cambodia?

  • A number of large international mining companies are currently prospecting in Cambodia.
  • There is huge potential for production of a number of minerals such as gold, copper and other base metals, bauxite, iron ore, coal as well as oil and gas, both on and offshore in Cambodia.
  • Gold is due to be mined on a commercial scale in Cambodia in 2020 through Renaissance Minerals (Cambodia) Ltd. after they had completed their scoping and feasibility study on their 1.2 million-ounce Gold deposit in Mondulkiri.
  • MESCO Gold Cambodia Limited (in association with Angkor Gold Corporation, a Canadian Company) is also in the process of sourcing gold at its Phum Syarung mine in Ratanakkiri province.
  • Oil also exists off the coast of Cambodia. KrisEnergy of Singapore announced in early 2020 that it will focus on its operations in Cambodia – in particular the development of the Apsara oil field in Cambodia Block A which it had purchased in 2014. In late 2020, Cambodia became an oil producer but it has been beset by problems in 2021.
  • The Japanese Government Oil Company and the Vietnamese Government Oil Company have carried out exploration and seismic surveys of their onshore blocks, suggesting they will begin drilling sometime in the near future.
  • A Petroleum and Petroleum Products (“Petroleum Law”), the country’s first legislation governing the extraction of oil from onshore and offshore fields, was adopted in July 2019. I

What are Special Economic Zones (SEZs) and how can they help me do business in Cambodia?

  • In 2020, there are 54 active SEZs in Cambodia operating under the authority of the Cambodia Special Economic Zone Board. These employ a combined 130,000 people and have over 450 factories operating in them.
  • This number continues to grow each year. Cambodia exported $2.7 billion worth of goods through its SEZs in 2019, up 27% from 2018, Ministry of Economy and Finance data shows.
  • SEZs provide better infrastructure in terms of water, wastewater treatment, logistics and communications, then elsewhere in Cambodia. However, according to the World Bank, SEZs are not yet delivering the benefits expected by foreign investors and needs to be addressed to improve the competitiveness of firms in Cambodia.
  • Firms located in SEZs benefit from Qualified Investment Project (QIP) status. QIP grants new investors both within and outside SEZs a number of investment and tax incentives, however, these do not apply to investment expansion.
  • In 2020 a new SEZ Law is set to be approved to attract foreign investment.
  • Government officials on-site provide a one-stop-shop to handle foreign investors; submissions, requests and complaints, and streamlined trade administrative procedures.
  • Special Economic Zones may be established by the State, private enterprise or a joint venture between the State and private enterprise.
  • The zone developer has to possess sufficient capital and means to develop the required infrastructure in the zone, including the human resources to manage the activities in the zone.
  • They also require the legal rights to possess the land for establishing the SEZ, lease the land and provide services to zone investors and arrange security personnel.
  • The size of the land must be more than 50 hectares with precise geographical boundaries.
  • Fences should be installed to surround the export processing zone, free trade area and the premises of each investor in the zone.
  • Special Economic Zones are special areas created for the development of economic sectors which bring together all industrial and other related activities. Including general industrial zones and export processing zones with production and free trade areas, service areas and some residential areas.
  • A good example of the benefits of SEZs occurred when the Coca-Cola Company announced its second factory in Cambodia, investing $100 million into a new plant in the Phnom Penh Special Economic Zone, which enabled it to triple its current output.
  • The PPSEZ met all the criteria that the multinational company needed to significantly expand its operations within Cambodia: capacity, utilities and onsite services.
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