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.