PHNOM PENH: Global economic uncertainty has affected crucial sectors that drive Cambodia’s economic growth, forcing the government to implement new policies and measures to respond effectively. One of the most promising options is to focus on becoming a top destination for automotive component manufacturing.

The country now sees the diversification of the production base and strengthens the competitiveness of the economy by fostering the attractiveness of the targeted and high-value-added industrial activities are increasingly urgent and imperative.

“Cambodia’s Automotive and Electronics Sectors Development Roadmap” published in late 2022 shows its ambition to become an automotive component manufacturing hub soon.

The Royal Government of Cambodia (RGC) is committed to implementing a comprehensive cross-ministerial action plan for the two sectors that will make it easier for investors to set up automotive manufacturing and other operation in Cambodia and increase the cost-competitiveness of their operations. The combined action plan comprises 20 initiatives across the following five areas:

• Cross-ministerial strategies and coordination:

Key initiatives include the identification of locations/SEZs for automotive and electronics sector clusters and strengthening cooperation with neighboring countries like Thailand and Vietnam.

• Human capital and innovation:

Key initiatives include the development of an automotive and electronics labor upskilling program with the private sector and expanding and enhancing job matching services through a public-private partnership.

• Infrastructure:

Key initiatives include reviewing electricity tariffs and reliability targets and harmonizing cross-border transport regulations to reduce logistics costs.

• Trade facilitation:

Key initiatives include implementing ratified Free Trade Agreements, adopting an automated system for public service provision, and simplification export-import procedures.

• Business and investor friendliness:

Key initiatives include implementing the Law on Investment of the Kingdom of Cambodia which provides additional investment incentives and building up the local supplier ecosystem through a supplier match-making platform and quality improvement program.

RGC recognizes that a close partnership with the private sector is key to the effective development of the two sectors. The country is to engage private sector partners to co-develop the sectors, from shaping the overall strategy to designing and implementing the action plan initiatives.