The Kra Canal – A Long-Standing Dream

The concept of the Kra Canal dates back to 1677 when Thai King Narai commissioned French engineer de Lamar to survey the Kra Isthmus for a possible canal. At the time, the idea was not to connect the Gulf of Thailand with the Andaman Sea but rather to establish a navigable waterway between Songkhla and Marid (now Myanmar). De Lamar’s assessment concluded that the mountainous terrain, dense jungles, and the technological limitations of the era rendered the project unfeasible. The immense effort required to dig through the isthmus using 17th-century engineering methods made construction virtually impossible, leading to its abandonment.

In the 19th century, as European colonial powers expanded their influence in Southeast Asia, the concept of the Kra Canal resurfaced. The British, who controlled key maritime trade routes through Singapore and the Strait of Malacca, viewed any alternative shipping channel with suspicion. They feared that a canal through Thailand would weaken Singapore’s strategic importance and threaten British dominance in regional trade. Meanwhile, France, eager to strengthen its presence in Indochina, saw the canal as a way to establish a stronger foothold in the region and counterbalance British influence. However, the Siamese government, wary of foreign intervention and territorial disputes, strategically resisted both British and French involvement. By carefully balancing diplomatic relations with European powers while preserving its sovereignty, Siam managed to prevent any progress on the canal during this period.

Kra Canal in the Contemporary Context

 The Kra Canal attracted renewed interest in 1972 when an American firm, Tippetts-Abbett-McCarthy-Stratton (TAMS), proposed a 102-km-long canal connecting Satun to Songkhla. This proposal was driven by the need for an alternative shipping route to alleviate congestion in the Malacca Strait and provide a more direct maritime passage between the Indian Ocean and the South China Sea. The plan involvedadvanced engineering techniques of the time, envisioning a deep-water canal capable of handling large cargo vessels and oil tankers. However, with a projected cost of $5.6 billion and a projected 10–12 year construction period, the Thai government ultimately rejected the plan. Concerns included the massive financial burden, environmental impact, and the risk of regional instability, particularly stemming from foreign influence and internal security challenges.

More recently, China has become increasingly interested in reviving the project as part of its Maritime Silk Road initiative, a key component of its Belt and Road Initiative (BRI). In 2015, an MoU was signed between private entities from China and Thailand to explore the feasibility of the canal, highlighting its potential to reshape trade routes and reduce reliance on the Malacca Strait. However, both governments quickly distanced themselves from the agreement, likely due to political sensitivities and opposition from regional players like Singapore and India. The canal never progressed beyond preliminary discussions. As of 2025, Thailand has instead opted to prioritize a $28 billion land bridge project—an overland transport corridor designed to facilitate cargo movement between the Gulf of Thailand and the Andaman Sea. This alternative aims to achieve similar economic benefits without the political and environmental challenges posed by a canal, making it a more viable and strategically balanced solution.

For centuries, the idea of the Kra Canal, a proposed waterway through southern Thailand connecting the Andaman Sea to the Gulf of Thailand, has intrigued policymakers, investors, and maritime experts. Dubbed Southeast Asia’s “Impossible Dream,” the Kra Canal could significantly reshape global trade routes by offering an alternative to the congested Strait of Malacca. If realized, this project could revolutionize regional logistics, benefiting or challenging neighboring economies, including Cambodia.

Although the canal remains a concept rather than a reality, its potential economic, geopolitical, and infrastructural impact cannot be ignored. This blog explores how the Kra Canal could transform Cambodia’s logistics system and economy, assessing both opportunities and challenges.

1. Reducing Cambodia’s Trade Dependence on Vietnam and Thailand

Currently, Cambodia relies heavily on neighboring countries—particularly Vietnam and Thailand—for maritime trade. Most Cambodian exports and imports are transported through the ports of Sihanoukville, Ho Chi Minh City, or Bangkok before reaching international markets.

If the Kra Canal were constructed, Cambodia could bypass the need for transshipment via these countries, leading to:

• Faster shipping times for goods moving to and from Europe, the Middle East, and Africa.
• Lower dependency on the Vietnamese and Thai ports for exports.
• Enhanced competitiveness of Cambodian products in global markets.

This shift could reduce logistics costs, improve profit margins for exporters, and make Cambodia’s ports, such as Sihanoukville, more attractive to international shipping lines.

2. Enhancing Cambodia’s Role in Regional Trade

With the Kra Canal in operation, Cambodia could emerge as a key logistics hub in Southeast Asia. The country’s strategic location near the Gulf of Thailand means that international shipping companies may reconsider Cambodia’s ports for cargo handling. This could:

• Increase investments in port infrastructure, leading to modernization and expansion.
• Attract more foreign direct investment (FDI) in warehousing and logistics.
• Boost Cambodia’s re-export industry by handling goods from regional manufacturing hubs.

This transformation would align with Cambodia’s long-term vision to become a logistics center for ASEAN and complement its participation in regional trade agreements such as the Regional Comprehensive Economic Partnership (RCEP).

3. Impact on Cambodia’s Port Infrastructure Development

If the Kra Canal diverts significant traffic away from Singapore and the Malacca Strait, there will be an increasing demand for alternative port facilities. Cambodia’s Sihanoukville Autonomous Port (SAP) and the under-construction Kampot Port could benefit from:

• Increased maritime traffic, leading to expansion projects.
• More investments in port facilities, including deeper berths to accommodate larger vessels.
• Enhanced connectivity with inland transport systems such as railways and expressways.

A better-connected Cambodia could further integrate into global supply chains and improve trade efficiency.

4. Geopolitical Implications for Cambodia

The construction of the Kra Canal would undoubtedly shift regional power dynamics. China, which heavily supports the Belt and Road Initiative (BRI), has long shown interest in alternative maritime routes. If China plays a key role in funding and constructing the Kra Canal, Cambodia could benefit from increased Chinese investments in:

• Port development and shipping infrastructure.
• Road and rail connectivity to integrate Cambodia into the new trade route.
• Special economic zones (SEZs) near major Cambodian ports.

However, this could also put Cambodia in a difficult position geopolitically, as the U.S., India, and other ASEAN nations may push back against growing Chinese influence in regional maritime trade.

5. Boosting Cambodia’s Export Industries

A more efficient trade route through the Kra Canal would directly benefit Cambodia’s export-driven industries, including:

• Garments and textiles: Faster and cheaper shipping could improve Cambodia’s competitiveness in the apparel industry, which accounts for over 70% of exports.
• Agricultural products: Key exports like rice, rubber, and cassava could reach international markets more efficiently.
• Electronics and manufacturing: Lower logistics costs may attract more electronics and assembly operations to Cambodia’s industrial zones.

By reducing dependency on intermediary ports, Cambodian businesses could enjoy greater control over logistics costs and shipping schedules.

6. Challenges Cambodia Could Face

While the Kra Canal presents exciting opportunities, there are also challenges:

• Port modernization lagging behind: If Cambodia does not rapidly upgrade its ports, it could miss out on potential benefits from increased shipping activity.
• Geopolitical uncertainties: Cambodia may face diplomatic pressures from multiple global powers over its stance on the project.
• Competition from Thailand: Thailand’s Land Bridge project, an alternative to the Kra Canal involving highways and deep-sea ports, could reduce the canal’s impact on Cambodia’s trade routes.
• Environmental concerns: Any increase in maritime traffic around Cambodia’s coastline could raise environmental issues, including risks of oil spills and marine ecosystem disruptions.

7. Future Outlook: What Should Cambodia Do?

To maximize benefits from a potential Kra Canal, Cambodia should:

• Invest in port expansion: Accelerate modernization of Sihanoukville and Kampot ports to attract major shipping lines.
• Enhance road and rail connectivity: Improve inland transport networks to create a seamless logistics system.
• Strengthen diplomatic strategies: Balance relations with China, ASEAN neighbors, and global powers to avoid overdependence on any single nation.
• Promote Special Economic Zones (SEZs): Develop more industrial zones near ports to attract manufacturing and logistics investments.
• Adopt green logistics initiatives: Implement policies to mitigate environmental risks associated with increased maritime trade.

A Game Changer for Cambodia?

While the Kra Canal remains a speculative project, its potential impact on Cambodia’s logistics system and economy is undeniable. If built, it could transform Cambodia into a more competitive player in global trade, enhance its port infrastructure, and strengthen its role in regional supply chains.

However, Cambodia must prepare by modernizing its logistics network, managing geopolitical relationships wisely, and ensuring environmental sustainability. Whether the Kra Canal becomes a reality or not, Cambodia’s proactive steps toward improving its logistics sector will be crucial in securing its economic future.

What do you think? Could the Kra Canal help Cambodia’s economy thrive, or would it create more challenges? Share your thoughts in the comments below!

Source: Geopolitical Monitor

Cambodia has emerged as one of the most promising investment destinations in Southeast Asia, thanks to its rapid economic growth, strategic location, and government-friendly business policies. As the country continues to develop its infrastructure and attract foreign investment, several key locations stand out as prime opportunities for business expansion. From world-renowned tourist destinations to massive infrastructure projects, these seven main gems of Cambodia provide lucrative opportunities for investors, entrepreneurs, and business owners.

Siem Reap’s Angkor Wat remains a significant cultural and economic asset, drawing millions of tourists and generating substantial revenue. Meanwhile, the upcoming Techo International Airport in Phnom Penh is set to revolutionize Cambodia’s aviation industry, improving connectivity and making the country more accessible for trade and tourism. Additionally, Cambodia’s deep-sea ports in Sihanoukville and Koh Kong are enhancing the country’s trade capacity, providing essential gateways for international commerce.

Another ambitious infrastructure project, the Funan Techo Canal, will redefine Cambodia’s logistics landscape, facilitating smoother maritime trade routes. Beyond urban developments, provinces like Kampong Speu, Takeo, and Battambang are gaining attention for their vast agricultural potential and cost-effective investment opportunities. These regions offer abundant land, strategic locations, and a growing workforce, making them ideal for industrial expansion and agribusiness ventures. Furthermore, the Tonle Sap Lake, a crucial ecological and economic resource, provides opportunities in sustainable fishing, tourism, and environmental conservation.

This blog explores these seven major gems of Cambodia in detail, highlighting their economic significance, development projects, and potential investment benefits. Whether you’re a foreign investor looking for new opportunities or a business owner seeking expansion, understanding these key areas will provide valuable insights into Cambodia’s rapidly evolving business landscape.

1. Siem Reap – Angkor Wat

Siem Reap, home to the iconic Angkor Wat, is the heart of Cambodia’s tourism industry. Built in the early 12th century by King Suryavarman II, Angkor Wat is the largest religious monument in the world and a UNESCO World Heritage site. This historical marvel attracts millions of tourists annually, making it a hotspot for business opportunities in hospitality, retail, and tourism services.

The best spots to visit within the Angkor Archaeological Park include Bayon Temple, Ta Prohm, and Banteay Srei. The park receives over 2 million visitors per year, generating approximately $100 million annually in revenue. The influx of tourists creates significant investment opportunities in hotels, restaurants, transportation, and travel agencies, making Siem Reap a prime location for business expansion.

Siem Reap on Google Map

2. Techo International Airport

Located in Kandal Province, just 30 kilometers south of Phnom Penh, Techo International Airport is set to be Cambodia’s largest and most modern airport. The project, developed by the Cambodia Airport Investment Company (CAIC), costs around $1.5 billion and covers an area of 2,600 hectares. Construction began in 2019, with the official opening planned for 2025.

This airport aims to handle up to 50 million passengers annually upon full completion, making it a game-changer for Cambodia’s aviation industry. Its strategic location and world-class facilities will boost tourism, trade, and foreign direct investment. Business opportunities surrounding the airport include logistics, duty-free retail, aviation services, and real estate, as the area around the airport is expected to see rapid urban development.

3. Sihanoukville and Koh Kong Seaports

Sihanoukville, Cambodia’s premier deep-sea port, and the upcoming Koh Kong seaport are crucial hubs for trade and logistics. Sihanoukville Autonomous Port (SAP) is the largest in the country, handling over 700,000 TEUs (Twenty-foot Equivalent Units) annually. It has undergone multiple expansions, with the latest investment exceeding $200 million to modernize facilities.

Koh Kong’s deep-sea port, set to be operational by 2026, will further strengthen Cambodia’s trade capabilities. These ports are essential for investors in import/export businesses, manufacturing, and logistics. With improved infrastructure and increasing international shipping demands, both ports present immense business opportunities for local and foreign investors.

4. Funan Techo Canal

The Funan Techo Canal is one of Cambodia’s most ambitious infrastructure projects. This 180-kilometer canal will connect Phnom Penh to the Gulf of Thailand, facilitating direct maritime trade. The $1.7 billion project, led by a Chinese-Cambodian joint venture, is expected to be completed by 2030.

This canal will significantly reduce transportation costs for goods, boosting Cambodia’s export potential. It is expected to transform the logistics and trade sectors by enhancing connectivity with regional markets. Investment opportunities include warehousing, shipping services, and inland port facilities.

Funan Techo Canal on Google Map

5. Kampong Speu and Takeo Province

Kampong Speu and Takeo are emerging as industrial and agricultural hubs in Cambodia. Kampong Speu, located west of Phnom Penh, has a population of around 900,000 and is known for its vast agricultural land and growing industrial zones. Takeo, with a population of approximately 1 million, is a key agricultural province producing rice, fish, and livestock.

These provinces offer lower land costs, government incentives for industrial investment, and a strategic location for manufacturing, especially in textile, garment, and food processing industries. Their proximity to Phnom Penh and Vietnam’s border makes them ideal for investors looking for cost-effective production and export opportunities.

Takeo Province on Google Map

6. Tonle Sap

Tonle Sap, Southeast Asia’s largest freshwater lake, is located in central Cambodia. It spans up to 16,000 square kilometers during the wet season, supporting over 1.5 million people who rely on fishing and agriculture.

The lake is renowned for its rich biodiversity, housing over 300 species of fish and numerous floating villages. Its unique water reversal phenomenon, where the flow changes direction seasonally, makes it an ecological wonder. Investors in ecotourism, fisheries, and sustainable agriculture will find Tonle Sap a promising area for growth, especially with increasing global interest in environmental conservation and responsible tourism.

Tonle Sap on Google Map

7. Battambang Province

Battambang, Cambodia’s second-largest city, is an emerging investment hub. With a population of over 1 million, it is known for its fertile land, strong agricultural sector, and well-preserved colonial architecture. The province is Cambodia’s leading producer of rice, fruit, and vegetables, making it an excellent location for agribusiness investments.

The province’s rich cultural heritage, combined with its growing tourism sector, offers opportunities in hospitality, food production, and retail. Additionally, Battambang’s strategic location near Thailand’s border provides access to export markets, making it a prime spot for businesses looking to expand regionally.

Battambang Province on Google Map

Cambodia’s rapid economic growth and infrastructure development make it an attractive destination for investors and business owners. From historical landmarks like Angkor Wat to modern infrastructure projects like Techo International Airport and the Funan Techo Canal, Cambodia presents vast opportunities across various industries. Whether in tourism, logistics, agriculture, or manufacturing, these seven gems offer unparalleled potential for those looking to invest in Cambodia’s future.

Cambodia and Phnom Penh’s Growing Economy

Cambodia has experienced rapid economic growth over the past two decades, positioning itself as one of the most promising investment destinations in Southeast Asia. The country’s GDP has been steadily increasing, fueled by sectors such as manufacturing, construction, real estate, and tourism. With a young workforce and investor-friendly policies, Cambodia continues to attract both domestic and foreign capital.

Phnom Penh, the capital city, serves as the country’s economic and political hub. It has undergone significant urbanization, with major infrastructure projects reshaping its landscape. Among these developments, the Techo International Airport stands out as a game-changer for real estate and business opportunities in the region. Located in Kandal province, about 30 kilometers from the city center, this new airport is set to become a major aviation hub in Southeast Asia, enhancing connectivity and economic activities. As a result, land and property values in the surrounding areas are expected to rise dramatically, making it a prime location for investment.

If you’re looking for lucrative real estate opportunities, here are the top five reasons why investing in land or property around Techo International Airport is a smart decision.

1. Land Prices Will Increase Dramatically

The areas within 10 to 30 kilometers of Techo International Airport are expected to see significant increases in land prices. As the airport nears completion and commercial activities expand, demand for land will surge. Historically, major infrastructure projects such as airports, expressways, and special economic zones have led to a sharp appreciation in property values. Investors who acquire land now can expect substantial returns in the coming years.

Real estate experts predict that once the airport becomes operational, land prices could double or even triple within a decade. This is due to increased interest from developers, businesses, and homeowners who recognize the strategic value of the location. Early investors stand to gain the most as land remains relatively affordable compared to Phnom Penh’s central districts.

2. A New Living Destination with Busy Business Activities

The region around Techo International Airport is set to become a new residential and commercial hub. With urban expansion moving outward from Phnom Penh, new housing projects, commercial centers, and entertainment districts will emerge. The presence of the airport will attract expatriates, business travelers, and local professionals, leading to a thriving economic environment.

Real estate developers are already planning gated communities, shopping malls, and office complexes to cater to the growing demand. This transformation will create business opportunities in retail, hospitality, and services, making the area a vibrant commercial hub. Investing in property now means positioning yourself at the forefront of this economic boom.

3. High Demand for Warehouses and Factories

One of the biggest advantages of owning land near the airport is the potential for industrial development. With increased trade and logistics operations, the demand for warehouses and factories will rise significantly. Many businesses will seek storage and production facilities close to the airport to enhance efficiency and reduce transportation costs.

By investing in land, you can either develop warehouses or factories for rent or sale. Industrial properties in high-demand areas tend to yield strong rental income and appreciation in value over time. Additionally, Cambodia’s investor-friendly policies, such as tax incentives for manufacturing and logistics businesses, make it easier to attract tenants or buyers.

4. Opportunity to Run Your Own Business

Owning land or property near Techo International Airport gives you the flexibility to establish your own business. Whether you want to open a restaurant, a retail store, an office space, or a logistics company, the demand for commercial enterprises in this area will be high.

As more people move into the region for work and travel, businesses catering to their needs will thrive. This includes supermarkets, convenience stores, cafes, coworking spaces, and car rental services. If you invest in commercial land now, you can either develop your own business or lease the space to entrepreneurs looking to tap into the growing market.

5. Build Rental Properties Such as Houses, Guesthouses, or Hotels

With the expected influx of travelers, business professionals, and workers, rental properties will be in high demand. Investors can capitalize on this by building rental homes, guesthouses, or hotels. Short-term and long-term accommodation options will be needed to support the growing workforce and visitors in the area.

For those looking at long-term gains, residential developments such as apartment buildings or condominiums can yield steady rental income. Hotels and guesthouses catering to business travelers and tourists will also experience high occupancy rates. As the region continues to develop, rental prices will increase, providing investors with substantial returns.

Conclusion

The development of Techo International Airport is a transformational project that will reshape Phnom Penh’s real estate landscape. Investing in land or property within 10 to 30 kilometers of the airport presents a golden opportunity for investors seeking high returns. With land prices set to rise, increasing business activities, high demand for industrial spaces, opportunities for commercial enterprises, and rental property potential, this area is poised for significant growth.

Now is the time to take action and secure a prime piece of real estate before prices soar. Whether you’re looking to develop, rent, or resell, investing in this region will position you for long-term success.

What are your thoughts on investing near Techo International Airport? Share your opinions in the comments below!

As an agrarian nation, Cambodia has made remarkable progress in the last decade in propelling its agriculture industry with exports now representing 22 percent of the nation’s GDP. Rice and paddy remain among the most significant agricultural exports, with annual production exceeding 11 million tonnes. But there’s more than meets the eye. What’s actually bogging down is the high production costs, limited infrastructure and cutthroat competitiveness in the global market. Trade disruptions have also upset supply chain issues, further challenging farmers who are already grappling with high production costs and fluctuating incomes. This dire situation underscores the need for more stable and diverse export markets to shield farmers from external economic pressures. Is there a way out? According to an avid observer of the Kingdom’s progress, Cambodia can transform itself into an agricultural export powerhouse much like its neighbours with substantial upside in agricultural export value, but for that, the Royal Government should revamp some of its policies

Of Cambodia’s approximate 17 million population, 13 million reside in rural areas where agriculture is the predominant economic activity.

The agricultural sector is critically important, far beyond what the percentage of farmers in the population might suggest contributing about 22 percent of the Kingdom’s gross domestic product (GDP).

Agriculture is a lifeline for food security, supplying over 90 percent of domestic rice needs, and albeit fewer people farm today than decades ago, its role in keeping Cambodia fed, employed and connected to its roots remains vitally important.

Rice, paddy prices

Early this month, the Ministry of Water Resources and Meteorology (MoWRAM) reported that while the official farmland for dry rice cultivation was around 535,000 hectares, actual implementation has expanded to over 900,000 hectares.

According to the Ministry of Agricultural, Forestry and Fisheries (MAFF), rice and paddy remain among Cambodia’s most significant agricultural exports, with annual production exceeding 11 million tonnes in recent years, of which only 10 percent is exported.

Despite its vital role as an economic backbone, supporting downstream industries such as food processing and trade, rice exports face numerous challenges.

High production costs, limited infrastructure and inconsistent quality standards hinder competitiveness in the global market. Additionally, trade barriers and fluctuating international demand further complicate export efforts.

While urbanisation and industrial growth have reduced agriculture’s share of employment and Gross Domestic Product (GDP), enhancing the efficiency and quality of rice exports remains essential to securing its long-term economic impact.

Sidet (30), a farmer in Banteay Meanchey province, shared the challenges he and his fellow farmers face in rice cultivation due to high costs and inconsistent market demand.

Talking to Khmer Times, Sidet said water supply expenses during dry rice cultivation amount to around 40,000 riels (approximately $10) per hectare for the entire four-month cultivation period.

However, because many farmers struggle financially, the payment is typically collected by the village chief only after the harvest season.

Sidet explained that rice prices have been fluctuating, particularly for the OM5154 variety, a type from Vietnam, which has dropped to around six baht or roughly 700 riels per kilogram.

Meanwhile, Cambodian fragrant rice sells for as much as 7.7 baht or approximately 900 riels per kilogram.

He noted that rice and paddy exports to Vietnam and Thailand have recently slowed, partly due to reduced demand and market access challenges. Instead, domestic rice mill factories are buying larger quantities to supply the local market. However, the shift in demand has not significantly improved farmers’ incomes.

Sidet emphasised that despite the importance of rice cultivation, farmers continue to face significant financial burdens.

“They spend between $30-$40 per sack of fertiliser, which is used around three times during each cultivation period, further reducing their profitability,” he said.

These expenses combined with fluctuating rice prices restrict the farmers’ profit margins. As a result, many farmers struggle to make a sustainable income, facing financial strain each season.

Climate & global challenges

On the other hand, cultivation of crops faces distinct challenges during the dry season and harvest season, shaped by the climate, limited infrastructure and reliance on traditional farming methods.

These challenges impact productivity, income and food security, particularly for smallholder farmers who dominate the agricultural sector.

The dry season from November to April is marked by a sharp drop in rainfall, testing farmers’ ability to sustain crops and livestock in the predominantly rain-fed agricultural system where about 80 percent of farmland depends on rainfall rather than irrigation.

Meanwhile, the harvest season coincides with the end of the wet season, when rice and other crops ripen. While it’s a critical time for income; it’s fraught with risks tied to weather, logistics and market dynamics.

In short, during the dry season the focus is on survival keeping crops alive with scarce water while during the harvest season, it’s about securing the yield and income against nature and market forces.

Despite the odds, Cambodia faces additional challenges due to the emerging global trade tension and economic uncertainty. Although farmers could survive the water shortage in the dry season and maintain their income against market forces, they are unlikely to benefit from the trade war.

The trade war especially following the tensions caused by the Trump administration has had a significant impact on Cambodian farmers. As export markets like Vietnam face uncertainty, the cashew farmers struggle with reduced demand and lower prices.

Trade disruptions have also led to supply chain issues, further challenging farmers who are already grappling with high production costs and fluctuating incomes. This situation underscores the need for more stable and diverse export markets to shield farmers from external economic pressures.

Anthony Galliano, Group CEO of Cambodian Investment Management Holdings (CIM) told Khmer Times that the Kingdom has made significant progress in the last decade in propelling its agriculture industry with exports now representing 22 percent of the nation’s GDP.

Galliano said, “While the contribution to the national economy has been critically important in the last three years, given the depressed real estate, construction sector and tourism sectors, growth remains stagnant. In 2022, Cambodia’s total agricultural export volume was approximately 8.6 million tonnes at a value of $4.3 billion in revenue.

In 2023 agricultural export volume rose to 8.82 million tonnes at a total export value of $4.8 billion. While volume increased to 11.66 million tonnes in 2024, marking a 3.21 percent rise compared to 2023, total agricultural export value slightly decreased to $4.792 billion,” he added.

He continued that neighbouring Thailand’s total agricultural export value in 2023 was $49 billion, and was $52 billion in 2024. Vietnam total agricultural export value in 2023 was $53 billion and was $62 billion in 2024, exponentially higher than Cambodia. Fresh, frozen and dried fruits and rice dominate Thailand’s agricultural exports followed by rubber, processed chicken and pet foods.

Vietnam’s main exports are fruits, vegetables, rice, cashew and presently Vietnam is now the second-largest coffee exporter, boasting an export value of $5.48 billion in 2024. Its main markets are China, US and EU.

Galliano pointed out that Cambodia can also transform itself into an agricultural export powerhouse and be as successful as its neighbours with substantial upside in agricultural export value. The country has an arable land area of approximately 4,110,000 hectares compared to Vietnam’s approximate 6,697,000 hectares.

While Vietnam has 61percent more arable land it has 13 times more agricultural export value and has a 100 million population to feed versus Cambodia’s 17 million. The upside for the Kingdom is enormous and the Royal Government is driving the opportunity by implementing several key agricultural policies to modernise and enhance the sector’s productivity, sustainability and resilience.

“Notably the National Agricultural Development Policy (NADP) 2022-2023, the Agricultural Extension Policy and the Pentagonal Strategy. The Kingdom is making strides in improving agricultural productivity and value-added processing, expanding market access and trade agreements and improving logistics and infrastructure,” he said.

The CIM CEO said that Cambodia can capitalise on the high quality and desirability of its premium and organic rice, cassava, cashew, fruits, rubber products, unique spices and the high potential of developing a coffee industry.

With the government focus and policies and the improvements achieved, the agricultural sector is now more than ever a critical part of the national economy and one of its greatest future opportunities with exponential growth potential, he added.

Rise and fall of cashew

The ‘Cashew Emperor’ initiative launched by former Prime Minister Hun Sen is vital for national economic growth as it aims to position the country as a global leader in cashew nut production.

The initiative seeks to boost farmers’ income and foster sustainable growth in the cashew sector by improving agricultural practices and processing capabilities as well as expanding export markets.

However, the initiative is currently facing challenges due to slow demand from key export markets, especially Vietnam. This decline in demand is partly linked to the trade war triggered by the Trump administration earlier this year which caused each country to focus on maximising its local productivity outputs.

As a result, prices for raw cashew nuts have dropped significantly affecting farmers’ profits. Many farmers are already struggling with high production costs and low incomes and the drop in prices has made it even more difficult for them to make a living.

To address these issues, there is a pressing need to diversify export markets and strengthen the value chain. These efforts are essential for stabilising the cashew industry and ensuring its long-term viability.

Speaking to Khmer Times, Uon Silot, President of the Cashew Nut Association in Cambodia (CAC), explained that March marks the peak harvesting season for cashew nuts a period that typically sees a decline in market prices. However, CAC is actively collaborating with partner companies to mobilise financial support aimed at stabilising prices during this crucial time.

“This year, the price has dropped from 6,000 riels to 4,400 riels per kilogram, which is approximately $1. Nevertheless, thanks to our collaboration with partners, we successfully pushed the price back up to 5,500 riels within just three days,” Silot noted.

He highlighted the lessons learned from the previous year, stating, “In 2024, prices plummeted to 3,200 riels per kilogram and remained at that low for nearly three weeks before we managed to restore them to 5,000 riels.

From that experience, we have refined our approach and can now resolve price issues much faster. Additionally, cashew nut production remains relatively small compared to rice and cassava, making it easier to manage.”

The CAC President emphasised that a fair price for raw cashew nuts stands at around 5,000 riels per kilogram, a rate considered acceptable for both farmers and processing factories. He cautioned, however, that if prices rise too high, only farmers benefit, as processing factories would struggle to maintain profitability.

Silot detailed several strategies aimed at effectively maintaining stable prices. “We must curb the outflow of cashew nuts from Kampong Thom, the largest cashew-producing province in Cambodia, with approximately 150,000 hectares yielding around 220,000 tonnes annually. This accounts for nearly 30 percent of the nation’s total productivity.”

He stressed that preventing the cashew nuts from Kampong Thom from being sold to other provinces helps elevate prices in those areas due to the limited supply. To effectively manage this, CAC has been working closely with four major processing factories in Kampong Thom, holding three significant meetings over the past year.

“Our discussions have focused on ensuring that prices never fall below 4,500 riels (about $1.1) per kilogram. We have established this threshold as the red mark which should not be crossed under any circumstances,” Silot explained.

He elaborated on the cost structure, indicating that when factoring in overall expenses such as fertilisers, farming supplies and irrigation, the baseline cost amounts to approximately 3,800 riels per kilogram.

Additionally, labour costs around 700 riels per kilogram for workers who gather the cashew seeds. As a result, CAC determined that 4,500 riels per kilogram is the lowest acceptable price that can still offer a fair profit to farmers.

Silot continued by noting that during the harvest season, buyers naturally seek the lowest prices. By limiting the flow of cashew nuts from Kampong Thom and Preah Vihear provinces, supply is reduced in the marketplace, thereby driving prices upward.

CAC’s efforts to maintain stable prices have proven successful over the past two years, according to Silot. He also acknowledged the financial backing from the Agricultural and Rural Development Bank (ARDB) and various microfinance institutions that work closely with CAC to support price stabilisation initiatives.

However, in cases where financial support is not forthcoming, CAC employs an alternative strategy that involves working with local farmers who possess large storage facilities and have the capacity to hold their cashew nuts for extended periods.

“This unified approach allows ordinary farmers to sell their products at favourable prices during the early stages of the harvest season. Once their supplies are exhausted, other farmers with storage capabilities can release their products to the market at higher prices,” he stated.

Silot further explained that farmers with larger storage facilities also benefit from the ability to dry their cashew nuts more effectively. Drier cashews command a higher market price compared to wet ones, enhancing overall profitability.

This strategy relies heavily on trust between CAC and local farmers. If CAC fails to secure buyers as promised, farmers will release their products simultaneously, triggering a sharp decline in prices. Such challenges were experienced last year, resulting in a price reduction of approximately 30 percent.

Despite these obstacles, Silot remains optimistic about the current strategies being employed to stabilise prices noting that the collaborative approach involving farmers, factories and financial institutions offers a resilient framework for the cashew nut industry’s growth and sustainability.

Firstly published on Khmer Times