Cambodia’s foreign direct investment story in 2025 points to one clear answer: investors are still confident in the Kingdom’s long term potential. According to the National Bank of Cambodia, total FDI inflows climbed to $5.2 billion, marking an 18.2% increase from the previous year. This growth extended Cambodia’s post pandemic recovery and highlighted its strengthening role in regional and global supply chains. Investors appear encouraged by the country’s expanding manufacturing base, improving infrastructure, and its position as a competitive production hub in Southeast Asia, all of which continue to support steady capital inflows.

How Is Manufacturing Driving Cambodia’s Non Financial Sector Growth?

The strongest answer lies in manufacturing. The NBC data shows that investment in the non financial sector rose by 24% year on year, with manufacturing standing out after recording a sharp 50% increase. This surge reflects continued expansion in export focused industries such as garments, footwear, travel goods, and other light manufacturing activities. These sectors remain attractive because they benefit from Cambodia’s labor force, trade preferences, and growing integration into global production networks, reinforcing the country’s reputation as a reliable manufacturing destination.

Which Other Sectors Attracted Investment and Where Did Capital Decline?

Beyond manufacturing, several other non financial sectors also saw gains, although at a slower pace. Real estate investment increased by 23.2%, energy by 15.2%, agriculture by 4.7%, and other sectors by nearly 30%. Construction investment edged up 7.7%, suggesting cautious but steady expansion. In contrast, hotel and entertainment investment dropped by 28.8%, signaling a more careful approach to tourism related developments after years of rapid growth. At the same time, investment in the financial sector declined by 12.8%, indicating that investors are prioritising productive and export linked industries over financial services.

Why Does China Continue to Dominate Cambodia’s FDI Inflows?

China remained the dominant source of foreign investment in 2025, accounting for 73% of total FDI inflows. This reinforces China’s position as Cambodia’s most significant economic partner and reflects the Kingdom’s role within China centered regional supply chains. Singapore followed at a distant second with 7%, while South Korea and Canada each contributed 4%, Malaysia 3%, and other countries collectively made up 9%. Although the investment profile remains heavily China focused, the presence of a wider mix of Asia Pacific and Western investors suggests gradual diversification. This momentum was also evident in project approvals, with more than 600 investment projects approved by the Council for the Development of Cambodia during the year.

What Policies and Structural Factors Are Supporting Investor Confidence?

Several underlying factors continue to support Cambodia’s FDI performance. Economists point to political stability, relatively open investment regulations, a growing skilled workforce, and ongoing improvements in transport and logistics infrastructure. Cambodia’s access to preferential trade schemes has further strengthened its appeal, especially for manufacturers serving export markets. At the same time, the manufacturing sector is increasingly aligning production with global consumer demand, helping investors reduce uncertainty and focus on long term, demand driven growth rather than short term capacity expansion.

How Do International Rankings Reflect Cambodia’s Investment Momentum?

Cambodia’s progress has not gone unnoticed internationally. For the second year in a row, the country topped the FDI Stand Out Watch List among emerging markets, according to FDI Intelligence. In 2025, Cambodia ranked first in the Asia Pacific region and ninth globally in the Greenfield FDI Performance Index. These rankings measure how effectively a country attracts greenfield investment relative to the size of its economy and underline Cambodia’s ability to translate policy frameworks and economic scale into real investment outcomes.

What Does the Sectoral Shift Mean for Cambodia’s Future Growth?

While overall FDI growth remains strong, the sectoral breakdown reveals a more selective investment environment. Manufacturing, energy, and export oriented industries continue to draw capital, while hospitality and financial services face softer inflows. This pattern aligns with Cambodia’s broader development goals, which focus on industrial upgrading, job creation, and deeper participation in global value chains. As the country moves toward graduation from least developed country status later this decade, policy consistency, skills development, and infrastructure upgrades will be critical to sustaining investor confidence.

Conclusion

Cambodia’s $5.2 billion FDI performance in 2025 sends a clear signal that foreign investors still view the Kingdom as a competitive and resilient destination in Southeast Asia. Strong manufacturing growth, continued dominance of Chinese investment, improving infrastructure, and positive international rankings all reinforce this outlook. While challenges remain and investment is becoming more selective, the overall trend suggests that Cambodia is well positioned to attract long term capital that supports sustainable economic development.

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Special Economic Zones (SEZs) have become pivotal in Cambodia’s economic landscape, serving as catalysts for industrial growth, foreign investment, and regional development. Among these, the UBE Snuol SEZ in Kratie province stands out for its strategic initiatives and substantial contributions to both the national and local economies.

Introduction to Special Economic Zones in Cambodia

SEZs are designated areas within a country that operate under distinct economic regulations, differing from the rest of the nation. These zones are established to attract foreign direct investment (FDI), boost exports, and stimulate economic development by offering incentives such as tax breaks, streamlined customs procedures, and superior infrastructure.

In Cambodia, the SEZ framework was officially adopted in 2005, with implementation commencing in 2006. The primary objective was to create an investment-friendly environment that could propel the country’s industrialization and economic diversification. Over the years, SEZs have become instrumental in transforming Cambodia’s economic landscape, shifting from an agrarian-based economy to a more industrial and export-oriented one.

The Growth of SEZs and Their Economic Impact

The proliferation of SEZs in Cambodia has been remarkable. As of the first semester of 2024, the country boasts 26 operational SEZs, housing 745 investment projects with a cumulative investment capital of approximately $8.9 billion. These zones collectively employ over 180,000 individuals, underscoring their significance in job creation and economic stimulation.

The largest among these is the Sihanoukville Special Economic Zone (SSEZ), strategically located in Sihanoukville province. The SSEZ has attracted a diverse range of industries, from manufacturing to logistics, and serves as a vital hub for trade and investment, significantly contributing to Cambodia’s GDP and export earnings.

Spotlight on UBE Snuol SEZ

The UBE Snuol SEZ, situated in Snuol district, Kratie province, is a testament to Cambodia’s strategic efforts to decentralize industrial development and promote regional growth. Established by Sub-decree No. 131, this SEZ encompasses an area of 817.80 hectares.

About UBE Snuol SEZ: A strategically located Special Economic Zone in Snuol district, Kratie province, aimed at boosting industrial growth, foreign investment, and regional development.

Developers: Developed by Zhongqi Holding Group, a major Chinese conglomerate, responsible for infrastructure and investment attraction.

Development timeline: The SEZ was established under Sub-decree No. 131, with development efforts accelerating in recent years, particularly with the launch of key industries like the Newbustar tire factory in May 2023.

Total investment: The SEZ has attracted investments worth $1.1 billion, with $120 million allocated for infrastructure development.

Total size: Spans an area of 817.80 hectares, making it one of the key industrial zones in Cambodia.

Location: Positioned just 1.5 km from Cambodia’s international land port with Vietnam and 160 km from Ho Chi Minh Port, providing significant logistical advantages.

Jobs created: Approximately 2,000 jobs, with 90% of the workforce being Cambodian nationals, contributing to local economic growth.

Development and Investment

The development of the UBE Snuol SEZ has been spearheaded by Zhongqi Holding Group, a prominent Chinese conglomerate. Since its inception, the zone has attracted 14 companies, collectively investing $1.1 billion. The infrastructure development within the SEZ has seen an investment of approximately $120 million, encompassing the construction of roads, a tap water supply system, a sewage treatment facility, and 230 building material stations.

A significant milestone for the UBE Snuol SEZ was the inauguration of Newbustar (Cambodia) Tire Co., Ltd., Cambodia’s first-ever tire manufacturing plant. With an investment of $140 million, this facility spans 40 hectares and boasts an annual production capacity of up to 8.5 million tires. The plant commenced operations in May 2023 and has been pivotal in enhancing the industrial profile of Kratie province.

Strategic Location

The UBE Snuol SEZ’s strategic location is a cornerstone of its success. Positioned just 1.5 kilometers from Cambodia’s international land port with Vietnam and approximately 160 kilometers from Ho Chi Minh Port, the SEZ offers unparalleled logistical advantages. This proximity facilitates seamless cross-border trade, reduces transportation costs, and enhances the competitiveness of businesses operating within the zone.

Economic Implications

National Economy: The UBE Snuol SEZ aligns with Cambodia’s broader economic objectives by attracting substantial FDI, diversifying industrial output, and boosting export revenues. The presence of manufacturing giants, such as Newbustar, not only elevates Cambodia’s industrial capabilities but also positions the country as a competitive player in the regional manufacturing sector.

Kratie Province Economy: Historically, Kratie province has been predominantly agrarian. The establishment of the UBE Snuol SEZ has been transformative, introducing industrial activities that have diversified the local economy. The influx of investment has spurred the growth of ancillary industries, improved infrastructure, and increased the province’s economic output.

Local Community: The SEZ has been a boon for the local populace, generating approximately 2,000 jobs, with 90% of the workforce comprising Cambodian nationals. Salaries within the SEZ range from $300 to over $1,000 per month, providing a significant uplift in living standards for many families. Moreover, the zone’s developers have collaborated with local authorities and educational institutions to offer specialized training programs, enhancing the skill sets of the local workforce and ensuring a steady supply of qualified personnel for the industries within the SEZ.

Conclusion

The UBE Snuol SEZ exemplifies the transformative potential of strategic economic planning and investment. By leveraging its strategic location, robust infrastructure, and supportive governmental policies, the SEZ has not only attracted significant foreign investment but has also catalyzed economic development in Kratie province and beyond.

As Cambodia continues its journey toward industrialization and economic diversification, the success of the UBE Snuol SEZ offers valuable insights. It underscores the importance of infrastructure development, strategic location selection, and the creation of an investment-friendly environment in driving economic growth.

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As 2024 draws to a close, Cambodia has demonstrated remarkable resilience and progress, positioning itself as a vibrant economic hub in Southeast Asia. For investors and businesses eyeing opportunities, understanding the country’s economic trajectory is crucial for strategic planning and expansion. This year-end review captures key economic trends and developments that define Cambodia’s growth story and its potential for the future.

Economic Growth Trends

Cambodia’s economy has sustained robust growth, with a GDP increase of 5.6% in 2023 and a projected rise to 5.8% in 2024, driven primarily by exports in garments, footwear, and tourism. The International Monetary Fund (IMF) and World Bank both highlighted the recovery in services and goods exports, even amid subdued domestic demand. Notably, Cambodia’s growth is expected to strengthen to 6.1% by 2025 and reach 6.4% in 2026.

Key drivers of growth include:

1. Revival in Tourism: International tourist arrivals reached 84% of pre-pandemic levels in the first quarter of 2024.
2. Export Performance: Garments, footwear, and travel goods continue to perform well, with ASEAN becoming the second-largest market after the US.
3. Foreign Investment: Increased investments in manufacturing and agriculture sectors have bolstered economic recovery.

Export Highlights: January–September 2024

Cambodia’s export sector has seen a significant uptick, signaling strong international demand and efficient supply chain management.

• Textile and Apparel Exports: The sector generated $8.758 billion in the first nine months, a 24.51% increase from the same period in 2023.
  • Knitted articles (HS Code 61): $5.034 billion, up 21.5%.
  • Non-knitted articles (Code 62): $2.353 billion, up 31.9%.
  • Other textiles (Code 63): $155.69 million, up 37.7%.
  • Footwear and gaiters (Code 64): $1.214 billion, up 22.4%.

Canada emerged as a key market, ranking fourth globally, with exports totaling $452.916 million in the first half of 2024.

Fostering Sustainability in the Garment Industry

The EU-Switch Garment Project, a four-year initiative funded by the European Union, concluded in May 2024. This project promoted sustainable energy practices in Cambodia’s garment sector. Key achievements include:

• Development of the Model Green Factory Program, recognized by Cambodia’s Ministry of Environment (MoE) and Ministry of Industry, Science, Technology & Innovation (MISTI).
• Introduction of technical guidelines, capacity building, and financing access for energy audits.
• Encouragement of circular economy practices, focusing on reducing single-use plastics and aligning with the UNFCCC Fashion Charter principles.

These initiatives position Cambodia as a forward-looking player in global apparel manufacturing, attractive to buyers seeking sustainable sourcing.

Rising Minimum Wages and Worker Benefits

Cambodia revised its minimum wages for textile, garment, footwear, and travel product industries, effective January 2025.

• Regular workers: $208 per month (up from $204).
• Probationary workers: $206 per month (up from $202).
  Additional benefits include:
• Attendance bonus: $10/month
• Travel and accommodation allowance: $7/month
• Meal allowance: $0.50/day
• Seniority bonus: $2–$11/month for long-term employees.

These changes underscore Cambodia’s commitment to improving worker welfare, enhancing productivity, and maintaining competitiveness.

Green Economic Transition

Cambodia has taken bold steps toward a green economic transition, with a focus on:

1. Integrated Fiscal Policy: Enhancing government capacity in economic foresight and sustainable budgeting.
2. Circular Economy: Reducing carbon emissions, fabric waste, and single-use plastics in the garment industry.

The Partnership for Action on Green Economy (PAGE) also outlined five priorities for fostering sustainable economic practices, ensuring long-term alignment with global environmental standards.

Key Insights for Investors

1. Strategic Trade Location: Cambodia’s stable political climate and favorable trade policies within ASEAN and the Regional Comprehensive Economic Partnership (RCEP) enhance its attractiveness for investors.
2. Growing Infrastructure: Upgraded transportation and logistical networks support efficient trade.
3. Sector Diversification: Opportunities are expanding in agriculture, green energy, and manufacturing beyond traditional textile industries.
4. Rising Demand: Rebounding global tourism and increased consumer spending offer new market potential.
5. Sustainability Initiatives: Investments aligned with sustainability trends are likely to receive both domestic and international support.

Challenges and Recommendations

While Cambodia’s economic outlook is promising, challenges remain:

• Diversifying Growth Drivers: The IMF has emphasized the need for structural reforms to reduce reliance on garments and tourism.
• Boosting Productivity: Enhancing workforce skills and technological adoption is essential.
• Tackling Inflation: Although inflation moderated to 1.6% y-o-y in the first half of 2024, long-term convergence to a 3% trend will require careful fiscal management.

Looking Ahead: Opportunities for 2025 and Beyond

With projected growth of 5.8% in 2024 and strengthening momentum in subsequent years, Cambodia presents a compelling case for business expansion and investment. Its commitment to sustainability, strategic trade alliances, and workforce development are key pillars of its economic strategy.

Investors seeking to capitalize on Cambodia’s growth story should consider opportunities in:

• Export-oriented manufacturing.
• Green technology and renewable energy sectors.
• Infrastructure and logistics development.
• Tourism and hospitality industries.

Conclusion

Cambodia’s year-end performance in 2024 highlights its resilience and adaptability in an evolving global economy. For businesses and investors, understanding these trends and aligning strategies with Cambodia’s growth trajectory can unlock significant potential in the coming years.

What are your thoughts on Cambodia’s economic trends and investment opportunities? Share your insights in the comments below!

Source: Fibre2Fashion News Desk (SB – WE)

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