Cambodia Trade and Foreign Investment

By | July 23, 2022


  • Business Relationships
  • Foreign direct investment
  • FTAs ​​and Treaties
  • Development Cooperation
  • Prospective fields of study (MOP)

Business relations

Trade relations with the EU

Trade relations with the EU The EU provides Cambodia, together with other least developed countries (the so-called LDC countries), with duty-free and quota-free access to the EU market (the so-called EBA regime – Everything but Arms). Although this regime was partially and temporarily suspended in 2020 for selected items, approximately 80% of Cambodia’s imports into the EU remain duty-free and quota-free. Overall, the EU was Cambodia’s fifth largest trading partner in 2021, after China, the US, Singapore and Vietnam (and the second largest export market). The most important commodities that the EU imports from Cambodia are clothing, footwear and bicycles.

  • Allcountrylist: Overview of major industries in Cambodia, including mining, construction, transportation, tourism, and foreign trade.
2017 2018 2019 2020 2021
Exports from the EU (million EUR) 807.6 712.3 931.8 653.6 970.8
Imports into the EU (million EUR) 4,012.70 4,430.10 4,637.90 3,647.40 3,497.60
Balance with the EU (million EUR) 3,205.2 3,717.8 3,706.2 2,993.8 2,526.8

Source: European Commission

Trade relations with the Czech Republic

Czech-Cambodian economic and trade relations are still at a low level. Although the volume of mutual trade has increased significantly in recent years, the bulk of it is made up of imports from Cambodia thanks to tariff-free access to EU markets for the least developed countries. Clothes, clothing accessories and footwear, rice, sugar and bicycles go from Cambodia to the Czech Republic. Among the main items of Czech exports to Cambodia are motor vehicles and their components, aluminum and aluminum products, mechanical devices, plastics and products made from them.

2017 2018 2019 2020 2021
Exports from the Czech Republic (billion CZK) 5.2 0.1 0.1 0.1 0.1
Imports to the Czech Republic (billion CZK) ON 5.2 5.8 6 5.5
Balance with the Czech Republic (billion CZK) -5 5.1 5.7 5.8 5.4

Source: CZSO

Trade relations with countries outside the EU

Cambodia’s most important trading partners outside the EU are China, the USA, Japan, Great Britain, Singapore and Vietnam.

2017 2018 2019 2020 2021
Exports from countries outside the EU (million EUR) 8,732.8 10,298.2 11,813.3 15,098.8 15,690.5
Imports to countries outside the EU (million EUR) 9,159.7 11,537.0 14,271.5 14,262.5 22,409.3
Balance with non-EU countries (million EUR) -426.9 -1,238.9 -2,458.2 836.2 -6,718.8

Source: EIU, Eurostat

Foreign direct investment

In terms of investments, entities from the so-called Greater China region – including the PRC, Hong Kong, Macao and Taiwan – are the most active in Cambodia. Their share in foreign direct investment by the end of 2021 reached 43.9%, i.e. approximately USD 18.0 billion. It is followed by South Korea (11.9%; USD billion), Vietnam (6.1%; USD billion), Singapore (6.5%; USD billion), Japan (5.9%; USD billion) and Malaysia (4.6%; USD billion). Broken down by sector, finance topped the FDI rankings with $9.4 billion invested in the area, followed by manufacturing ($8.5 billion), real estate ($billion), hotels and restaurants (billion), agriculture ($billion), electricity ($billion) and construction ($billion) with the remaining $billion going to other sectors.

According to the Cambodia Development Council (CDC), 107 investment projects were approved in 2021, of which 88 applications included investments in the industrial sector, while the most expensive were 5 energy projects worth over USD 500 million. However, the total investment value of USD billion decreased year-on-year, by 74 percent compared to 2020. At the end of 2021, a new investment law was approved in Cambodia. with the aim of stimulating further investment inflows. In the first three months of 2022, a total of 43 investment projects worth more than USD billion were approved.

Investors from the Czech Republic, but also from other EU countries, are not yet very active in Cambodia. Investments by European companies to date focus mainly on tourism, consumer goods and partially the clothing industry. A change in this direction could be brought about by the introduction of a new format of cluster production facilities of small and medium enterprises, whose goal is the development of modern technologies and knowledge-based industry.

FTAs and treaties

Treaties with the EU

The EU has long been providing Cambodia with unilateral duty-free and quota-free access to its market under the EBA (Everything But Arms) regime. In 2020, this regime was partially suspended, but only for some items. For details, see the website of the European Commission.

Contracts with the Czech Republic

Among the most important bilateral agreements are the following:

  • Agreement between the government of the Czech Republic and the government of the Kingdom of Cambodia on the support and mutual protection of investments (Phnom Penh 12 May 2008);
  • Agreement between the government of the Czech Republic and the government of the Kingdom of Cambodia on air services (Phnom Penh, 06/08/2018).

In 2005, Cambodia confirmed the succession of treaties with the former Czechoslovakia.

Developmental cooperation

Since 2018, Cambodia has been included among the 6 priority countries with a cooperation program. In the period 2018 – 2023, development cooperation between the Czech Republic and Cambodia is focused on the area of ​​inclusive social development: healthcare (with an emphasis on care for mothers and children), education (with a focus on secondary and secondary vocational education) and the area of ​​sustainable management of natural resources: ensuring access to water and sanitation.

In addition to bilateral and trilateral development projects and development-economic partnership projects (B2B in ZRS) managed by the Czech Development Agency (ČRA), small local projects at the embassy are also implemented in Cambodia, and government scholarships are offered to Cambodian students. Czech companies can participate in particular within the framework of the development-economic partnership (B2B) program. The program managed by the Czech Republic is aimed at supporting the private sector and the entry of Czech companies into the Cambodian market. Czech companies can apply for support for their own projects focused on development cooperation during tenders under the de minimis program. Possible ideas for how Czech companies can participate in the program are offered, for example, by the Map of Global Opportunities.

Prospective fields of study (MOP)

The government adopted a national recovery plan for the period 2021-2023. Under it, the sectors of agriculture, manufacturing industry and domestic tourism were identified as priorities for restarting the economy. An extraordinary fund of low-interest loans to small and medium-sized enterprises in the agricultural and food industry was established. A revision of the Investment Act is also being prepared, which should make it easier for foreign investors to access the market and reduce the bureaucratic burden. A greater emphasis on the digitization of state administration and administration is also being considered. The effects of the economic crisis motivate the government to take a more active approach in supporting exports and concluding new free trade agreements, where Cambodia has so far recorded lower production sales (e.g. China, South Korea, etc.).

As a result of the pandemic, it is necessary to continue to reckon with the risk of postponing larger projects and reducing investments by the state and private entities. On the other hand, opportunities can be found in smaller projects and investments. The pandemic has dampened government purchases, but it is putting pressure on improving the health system. The new investment law from 2021 should help to increase the confidence of foreign investors, who have so far focused on simpler production, especially in the textile industry. Ultimately, the pandemic may have a positive effect on starting the process of diversification of the Cambodian economy, which is desirable for its sustainable growth and as a prevention of future global crises. Promising possibilities are offered by the so far little-used fields of e-commerce and fintech services. In addition, it is possible to use the instruments of foreign development cooperation of the Czech Republic,

Agricultural and food industry

Agriculture is still one of Cambodia’s main economic sectors, but it suffers from insufficient technological infrastructure and low productivity in the further processing of agricultural production. There is a demand for agricultural machinery, fertilizers, equipment for sorting, drying, packing and vacuuming agricultural products. Depending on the recovery of tourism, demand for microbreweries is expected. Zero duty is applied to the import of agricultural machinery and technology.

Healthcare and pharmaceutical industry

Health care has long been struggling with low public trust due to the insufficient equipment of public hospitals and the low qualification of personnel for more complex procedures. Public hospitals lack the experience of staff to operate and regularly repair technologically demanding equipment. The pandemic confirmed the long-term need for essential investments in hospital equipment. In connection with its attenuation, a renewed interest in conventional medical fields can be expected. An important field is neonatology, where the Czech Republic has built a very good reputation within the ZRS as a prerequisite for commercial supplies.

Civil aviation industry

The construction of new backbone airports continues, and the modernization of regional airports is also planned. After the epidemic subsides, Cambodia wants to maintain the profile of an attractive tourist destination and attract tourists to peripheral regions that do not yet have any aviation infrastructure. Opportunities are mainly in subcontracting, especially for air traffic control, radar and telecommunication systems.

Water management and waste industry

A large part of Cambodia’s population, especially rural ones, still does not have access to drinking water, and basic infrastructure is often lacking. In this context, opportunities are offered mainly for smaller projects with the use of innovative and inexpensive solutions (mobile water treatment plants, root cleaners, etc.). Companies could also apply as suppliers for the local non-profit sector with access to their own financing.

Energy industry

Cambodia is turning its attention to previously neglected photovoltaics, while foreign firms are also exploring the potential of small hydro and wind power. According to estimates, the share of solar and wind energy in the country’s energy mix could increase from the current 5 to 15% by 2030. At the same time, smaller projects of renewable resources are the most interesting investment alternative in the energy sector. However, Cambodia continues to count on fossil resources as well, and in 2020 the construction of several coal-fired power plants was started in the form of a joint venture. Cooperation with the investors of these projects, which are usually Chinese companies, is necessary for possible subcontracting. Frequent power outages can be a prerequisite for the supply of backup generators and associated technologies that are commonly used throughout the country.

Link to Global Industry Opportunities Map.

Cambodia Trade