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Cambodia’s Manufacturing Boom: A Closer Look at Opportunities and Trends

Over the last decade, Cambodia has quietly transformed into one of Southeast Asia’s most promising manufacturing destinations. Once dominated almost exclusively by garment exports, Cambodia’s manufacturing landscape is now diversifying rapidly. With foreign investment pouring in, government incentives gaining traction, and infrastructure steadily improving, Cambodia is carving out a larger space in the global supply chain.

In this blog, we take a deep dive into the factors fueling Cambodia’s manufacturing boom, the key industries emerging across the country, and what it means for investors, buyers, and sourcing professionals.

1. The Evolution of Cambodia’s Manufacturing Sector

Cambodia’s manufacturing journey began with the rise of its garment and footwear industry in the 1990s, buoyed by access to low-cost labor and preferential trade agreements. Today, garments still account for over 50% of Cambodia’s total exports. But the picture is changing.

New industries—including electronics, bicycle production, furniture, agro-processing, and light machinery—are growing fast, thanks to government support, foreign direct investment (FDI), and a strategic location.

Key Facts:

Manufacturing contributes over 30% to GDP
Accounts for approximately 80% of total exports
Employs over 1 million workers, mostly in industrial zones

Discover how you can set up manufacturing in Cambodia with our full-service assistance: Manufacturing Setup in Cambodia

2. Strategic Geographic Position

Cambodia’s geography offers significant advantages for global trade. It borders two regional powerhouses—Thailand and Vietnam—and offers access to both the Gulf of Thailand and the Mekong Delta.

With access to:

Sihanoukville Autonomous Port (deep-sea)
Phnom Penh Autonomous Port (riverine)
Cross-border road links to ASEAN transport corridors

…it’s easy for manufacturers to import raw materials and export finished goods across Asia and beyond.

Learn more about logistics support for Cambodian manufacturers: Logistics Solutions

3. Government Policies Fueling Growth

The Cambodian government has prioritized industrial development as a pillar of economic growth. A series of policy frameworks and incentives are in place to attract investors and simplify operations.

Highlights of the Government’s Manufacturing Support:

9-year corporate income tax holidays for qualified investment projects
Duty-free import of machinery, equipment, and raw materials
100% foreign ownership allowed in most sectors
Streamlined registration via the CDC (Council for the Development of Cambodia)

Additionally, the Industrial Development Policy 2015–2025 aims to move the country from low-cost labor-intensive manufacturing to high-value production.

4. Rise of Special Economic Zones (SEZs)

To support industrial expansion, Cambodia has developed over 20 Special Economic Zones (SEZs) in key areas like Phnom Penh, Sihanoukville, Poipet, and Bavet.

SEZ Benefits Include:

Ready-to-use factory spaces
Simplified licensing and customs processes
On-site utilities and worker housing
Co-location with logistics, banking, and admin services

Phnom Penh SEZ and Sihanoukville SEZ are among the most developed and attract companies from Japan, China, Korea, and Europe.

Want to establish your operations in a Cambodian SEZ? We can help you get started

5. Key Manufacturing Industries on the Rise

While garments and footwear remain dominant, Cambodia is now expanding into:

a. Electronics & Electrical Assembly

Major Japanese and Korean electronics brands are subcontracting work to Cambodia for:

Wire harnesses
Circuit boards
Battery parts
Mobile accessories

b. Bicycles and E-Bikes

Cambodia is one of the top 5 bicycle exporters to the EU. Brands from Europe and Asia are increasingly setting up assembly lines here.

c. Furniture and Home Goods

Wooden furniture, rattan goods, and interior décor are gaining popularity as global buyers seek eco-friendly, handmade alternatives.

d. Agro-processing

Given Cambodia’s strong agricultural base, agro-processing is growing for:

Rice milling
Cashew processing
Palm sugar and coconut products

Looking to source from these industries? Our sourcing team can help you find the right suppliers

6. Labor Force: Affordable and Trainable

Cambodia offers one of the lowest manufacturing wage rates in the region. As of 2025, the minimum monthly wage for garment workers is around $204, significantly lower than in Vietnam or Thailand.

While labor productivity and skill levels are still developing, several workforce training programs—often led by foreign companies and NGOs—are closing the skills gap.

The labor force is:

Young (median age of 25)
Trainable
Motivated, especially in tech-enabled sectors

Need help training or recruiting for your factory? We offer HR and staffing support in Cambodia

7. Infrastructure Improvements on the Horizon

Despite historical weaknesses in transport and power infrastructure, Cambodia is making fast improvements:

New highways connecting Phnom Penh to Sihanoukville and Bavet
Expansion of deep-sea port capacity in Sihanoukville
Upgrades to electricity grid, with renewable energy playing a growing role
Industrial rail services for freight transport being reactivated

These improvements are reducing logistics costs and improving reliability for manufacturers.

8. The Role of Technology and Digital Transformation

Cambodia is embracing digital manufacturing tools, albeit gradually. Larger investors are bringing:

ERP and supply chain software
Factory automation and IoT sensors
E-commerce integration for direct-to-consumer exports

The Cambodian government is also rolling out the National Single Window System for digital customs clearance and trade documentation.

Learn how we support digital integration for Cambodian manufacturers: Digital Trade Services

9. Challenges and Risks

Of course, like any emerging market, Cambodia presents challenges:

Electricity costs remain higher than in neighboring countries
Limited domestic supply chains, especially for electronics and metal parts
Customs delays and variable enforcement of regulations
English and technical skills among mid-level managers are still developing

That said, these risks can be mitigated through partnerships with experienced local agents and investment in employee training and supply chain planning.

10. The Future: What’s Next for Cambodian Manufacturing?

With ASEAN integration deepening and more companies adopting a “China + 1” or “China + 2” sourcing strategy, Cambodia is poised to attract more light manufacturing and assembly operations.

Future trends to watch:

Expansion of green manufacturing and eco-certifications
Shift from cut-and-sew to automated production lines
Growth of consumer goods production for regional markets
Government push for value-added exports like electronics, machinery, and chemicals

Conclusion: Why Cambodia is an Ideal Manufacturing Destination

Cambodia’s manufacturing boom is not a fleeting trend—it’s a structural transformation. With competitive costs, strategic location, pro-business policies, and growing industrial capabilities, the country is a compelling destination for manufacturers, investors, and global buyers alike.

Whether you’re a brand looking to diversify your sourcing strategy or an entrepreneur planning to set up a new factory, Cambodia offers both opportunity and access.

Ready to explore manufacturing opportunities in Cambodia? Contact Cambodia Agent today to get started with sourcing, factory setup, or trade support.