Chaired by H.E. HEM Vanndy, Minister of MISTI, the event was attended by some 260 participants, including officials from relevant ministries-institutions, Oknha Te Tang Por, Vice President of the Cambodian Chamber of Commerce and Co-Chair of the Government-Private Sector Working Group on Manufacturing and Services (WG-C), business associations, private sector stakeholders, development partners, and UN agencies.

H.E. Minister re-iterated the government’s commitment to fostering a supportive environment for micro, small and medium enterprises (MSMEs), which play a vital role in driving economic growth and job creation in Cambodia. “The private sector is the backbone of our economy, and it is imperative that we work collaboratively to identify and resolve the challenges that hinder its growth,” he stated.

During the meeting, Oknha Te Tang Por provided an update on the progress of government’s solutions to private sector challenges since the 19th Government-Private Sector Forum last year. He noted that many challenges had been addressed, but there remain issues that require solutions and interventions from the government. Currently, there are 22 challenges, indicating that significant work still lies ahead, particularly given the difficulties faced by SMEs.

The meeting discussed 22 challenges, including compliance requirements such as product registration and taxation, heightened competition, access to financing, markets, and skilled workforce, and rising production costs, particularly due to high transportation and energy prices.

H.E. Vanndy emphasised the need for local businesses to prepare for Cambodia’s graduation from its Least Developed Country (LDC) status, urging them to strengthen their operations and competitiveness. “As we move forward, competition is unlikely to diminish. MSMEs must discover their distinctiveness in terms of quality, taste, local content, traceability and environmental safeguards,” he said.

According to a news release, MISTI has continued to move its public services online, eliminating cash transactions in most cases, and has transformed the Science, Technology & Innovation National Laboratory (STINL) into a public administration institution in order to improve service quality and expand its testing capability to better support the private sector.

MISTI will continue to engage with private sector stakeholders to ensure that their voices are heard and considered in government interventions and policy-making, said the source, pointing out that the outcomes of this meeting will be included in the agenda of the upcoming Government-Private Sector Forum.

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Manufacturing sector has experienced significant improvements, yet it remains heavily dependent on imported raw materials, highlighting the need for enhanced competitiveness, said MISTI in a news release, stressing that to tackle these challenges, MISTI is leveraging CAPRED’s expertise and its own insights to identify effective tools, policies, and programs essential for diversifying the manufacturing sector, bolstering local supply chains, and integrating small and medium-sized enterprises (SMEs) into the value chain.

“Cambodia’s manufacturing sector holds immense potential for fueling economic growth and job creation,” stated H.E. Hem Vanndy, Minister of Industry, Science, Technology & Innovation. “This workshop aims to transform knowledge and insights into actionable strategies that will elevate our manufacturing sector to the next level of development.”

Australian Chargé d’Affaires Mr. Andreas Zurbrugg said, “Australia is committed to supporting Cambodia’s economic growth and diversification. By strengthening the manufacturing sector, we are creating opportunities for businesses to thrive and for Cambodians to prosper.”

According to the news release, MISTI plays a central role in advancing Cambodia’s industrial development and diversification in line with the government’s Pentagonal Strategy.

The ministry aims to enhance the manufacturing sector competitiveness by fostering entrepreneurial ecosystem, developing national quality infrastructure to support local industries’ integration into global value chains as well as promoting initiatives such as SME clusters. Through these efforts, it seeks to reduce reliance on imports, stimulate job creation, and ultimately build a more sustainable, resilient and inclusive economy.

Australia’s CAPRED programme bolsters these initiatives by providing policy support and assistance in key areas, including micro, small, and medium-sized enterprise (MSME) development, the establishment of national quality infrastructure, and the promotion of gender equality.

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The Kingdom generated approximately US$270 million from the rubber export from January to July 2024, a year-on-year increase by 18.12 percent, it added. The country exports the commodity mainly to Malaysia, Vietnam, Singapore, and China.

According to the report, Cambodia has so far planted rubber trees on a total land area of 407,172 hectares, of which 320,184 hectares, or about 79 percent, are old enough to be tapped.

Samdech Moha Borvor Thipadei Hun Manet, Prime Minister of the Kingdom of Cambodia, has recently asked all tyre factories in the country to use domestic rubber as raw material, creating a market for rubber farmers.

The country’s tyre manufacturing sector has experienced massive growth in recent times, with three major players solidifying their presence, namely General Tires Technology (Cambodia) Co., Ltd., Sailun Group Co., Ltd., and Qingdao Doublestar Group.

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“There are 1,538 enterprises working in the textile, garment, footwear and travel products and bag manufacturing industries and a total of 913,017 workers with an annual salary of approximately 2.97 billion US dollars,” H.E. Secretary of State Katta Orn highlighted, emphasizing the garment sector’s continued importance.

The non-garment sector is also flourishing, with 42,879 enterprises and a workforce exceeding 879,000. These positive developments align with the Royal Government’s economic goals under Prime Minister Hun Manet’s leadership, aiming to transform Cambodia into a high-income nation by 2050.

This growth is mirrored in a recent World Bank report, indicating a clear correlation between rising exports and expanding manufacturing employment. After a brief period of softening in 2023, manufacturing jobs have rebounded significantly.

“The manufacturing sector added 50,578 new jobs, reaching 1.058 million (18.1 percent of nonfarm employment) in March 2024 or a 5.0 percent y/y increase, as goods exports accelerated,” the report states.

This trend is further solidified by Cambodia’s impressive export figures. According to the Ministry of Commerce, garment, footwear, and travel goods exports reached US$6.246 billion in the first half of 2024, a remarkable 16.5% increase compared to the same period last year. Garment exports alone witnessed an 18.4% surge, reaching US$4.569 billion.

Cambodia’s manufacturing sector is demonstrably thriving, creating jobs, and propelling economic growth. With continued government efforts and positive global market conditions, this sector is poised for even greater success in the years to come.

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The manufacturing sector added 50,578 new jobs, reaching 1.058 million (18.1 percent of nonfarm employment) in March 2024 or a 5.0 percent y/y increase, as goods exports accelerated. Employment gains were recorded in most manufacturing industries during the first quarter of 2024.

GTF manufacturing jobs, which account for 83.3 percent of total manufacturing jobs, rose to 0.88 million in March 2024 or a 4.0 percent y/y increase. Of the 0.88 million workers, garment workers accounted for 0.6 million, and travel goods and footwear workers 0.28 million.

However, jobs in the metal processing manufacturing industries, accounting for 6.0 percent of total manufacturing jobs, decreased to 0.06 million, or a 13.3 percent y/y decline. Jobs in the chemical and plastics manufacturing industries, accounting for 2.8 percent of total manufacturing jobs, rose to 0.03 million, or a 63.9 percent y/y increase.

Jobs in the food, beverage, and tobacco manufacturing industries, accounting for 2.7 percent of total manufacturing jobs, rose to 0.029 million, or a 7.9 percent y/y increase.

Indicating gradual productivity gains in Cambodia’s GTF manufacturing industry before and after the pandemic, jobs in the GTF industries declined by 2.8 percent, decreasing to 0.84 million in 2023, down from 0.87 million in 2019, while the value of GTF exports rose by 2.6 percent, increasing to US$11.1 billion during the same period.

Indicating some gains in industrial diversification, jobs in the non-GTF manufacturing industries rose to 0.2 million, or a 25.9 percent increase during the same period.

Most of the gains are reflected in the metal processing industry, with its employment share increasing to 7.0 percent of total manufacturing jobs, up from 5.5 percent, and in the food, beverage, and tobacco industries, with their job share rising to 2.7 percent, up from 1.8 percent during the same period.

Jobs in the manufacturing sector account for 50 percent of industrial employment, 18.1 percent of nonfarm employment, and 11.6 percent and of total employment.

Given that these industries receive the minimum wage of about US$200 a month, the economic effect created by the gains of 50,578 employed people could be estimated to reach between US$60 million to US$70 million in wages and allowances alone covering October 2023–March 2024.

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The positive outlook extends to international reserves, which are anticipated to climb further to approximately US$22.3 billion, representing around 8.0 months of imports.

The Strategic Budget Plan for 2025-2027 reinforces this optimistic view, predicting sustained FDI growth averaging 8.6% of GDP throughout the period. This confidence stems from Cambodia’s increasingly attractive investment environment, fostered by the “Investment Law of the Kingdom of Cambodia” and a series of supportive policies.

As a consequence, Cambodia is expected to attract high-value investments, particularly in non-garment manufacturing sectors, in the medium term. This will likely contribute to continued growth in international reserves, reaching an average equivalent to seven months of imports.

Prime Minister Hun Manet has consistently prioritized foreign investor engagement to propel the Kingdom’s development. During a recent meeting with the Cambodian community in South Korea, the Prime Minister reaffirmed his commitment to actively lobbying foreign investors to explore business opportunities in Cambodia.

“As of May, we have successfully secured a total of 147 investment projects, valued at US$2.7 billion, generating a significant 140,000 jobs,” he announced.

Furthermore, Prime Minister Hun Manet urged the 45,000 Cambodian migrant workers in South Korea to dedicate themselves to their work and contribute their expertise and skills upon returning home to fuel national development. The Premier also provided an update on his official visit to Seoul from May 15-18 and the Royal Government’s commitment to transforming Cambodia’s industrial sector from light industry towards advanced manufacturing.

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The Kingdom generated US$125 million from the dry rubber export from January to April 2024, up 7.4 percent from US$116.4 million recorded in the same period last year, it added.

Dry rubber costs averagely US$1,465 per tonne, US$51 higher than that during the first four months of 2023, stated the report.

The country exports the commodity mainly to Malaysia, Vietnam, Singapore, and China.

According to the report, Cambodia has so far planted rubber trees on a total area of 407,172 hectares, of which 320,184 hectares, or 79 percent, are old enough to be tapped.

Samdech Moha Borvor Thipadei Hun Manet, Prime Minister of Cambodia, has recently asked all tyre factories in the country to use domestic rubber as raw material inputs, creating a market for rubber farmers.

The country’s tyre manufacturing sector has experienced massive growth in recent times, with three major players solidifying their presence, namely General Tires Technology (Cambodia) Co., Ltd., Sailun Group Co., Ltd., and Qingdao Doublestar Group.

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“Cambodia’s economy is optimistically expected to continue to grow at around 6.4 percent in 2024, supported mainly by growth in tourism and manufacturing,” read the report.

Tourism is expected to recover due to the improvement of tourism situation in the region as well as the continued development and improvement of infrastructure that will support the sector, it said.

Through the implementation of the new investment law, the manufacturing sector is expected to achieve better growth than in 2023, especially non-garment manufacturing products, and the garment sector is expected to grow steadily.

Agriculture is projected to grow slightly over 2023, benefiting from continued market diversification to the members of the Regional Comprehensive Economic Partnership Agreement (RCEP) and bilateral free trade agreements, coupled with the Royal Government of Cambodia’s support policy to boost production and markets.

The construction and real estate sectors affected by the recent crisis are projected to continue to grow slowly, which will continue to be supported by public infrastructure development projects, coupled with a slow recovery in domestic demand focused on affordable housing, while demand for luxury construction serving non-residents is expected to remain weak.

Inflation in 2024 is projected to be 2.5 percent slightly higher than in 2023, mainly due to expectations that global crude oil prices may rise after oil exporters plan to cut supplies.

“In this context, continued prudent monetary policy will continue to stabilize the Riel exchange rate, as well as continue to contribute to stabilizing prices and protecting the purchasing power of the Riel,” the report underlined.

“The monetary policy framework will be strengthened, especially the development of monetary instruments and markets, in line with the launch of the NBC’s benchmark interest rate test to orient the Riel interest rate in the market to a reasonable level,” it added.

NBC also laid stress on possible external risks including a decline in flows of international trade, and investment as well as international financial market uncertainty, while internal risks can be a sluggish recovery in construction and real estate due to a low inflow of foreign investment, and climate change.

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Cambodia’s economic certainty was reaffirmed by the International Monetary Fund’s (IMF) projection that the country’s growth will reach 5.6 percent in 2023 and 6.6 percent in 2024.

Based on the Foreign Direct Investment (FDI) Standouts Watchlist 2024, Cambodia has earned an index score of 96.11 out of 100.

The government report continued that Cambodia is rich in a young workforce, which is a potential and important catalyst in the national economy as well as investment.

The manufacturing sector in the country has maintained reasonable labor costs, and it sits strategically for exports to other countries around the world.

It has also embarked on free trade agreements with ASEAN and other economies and offers an enabling environment for investments.

In addition, Cambodia has modernized its physical infrastructure, including international airports, deep-sea ports, and land and waterways to address logistics costs.

The Pentagonal Strategy of the government is also expanding and enhancing youth’s technical skills, including digital knowledge and necessary soft skills.

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According to the announcement from the Cambodian Chamber of Commerce (CCC), during the 43rd ASEAN Summit and Related Summits in the Republic of Indonesia, Duke Kith Meng, CCC President and Chairman of the ASEAN Business Advisory Council for Cambodia, to sign a Memorandum of Understanding (MOU) for the Cambodia-Philippines Agricultural and SME Development Partnership with Mr. Jose Ma. A Concepcion III, Chairman of the ASEAN Business Advisory Council for the Philippines.

The MOU will be signed during the summit in the presence of Hun Manet, Prime Minister of the Kingdom of Cambodia, and H.E. Ferdinand “Bongbong” Romualdez Marcos Jr., President of the Philippines.

The MOU promotes cooperation between Cambodia and the Philippines in agriculture, small and medium enterprises (SMEs), and rural development. The two countries will work together to exchange information and expertise, develop joint projects, and attract investment.

The signing of the MOU is a significant milestone in the relations between Cambodia and the Philippines. It reflects the strong commitment of the two countries to work together to promote economic development and improve the lives of their people.

Cambodia’s trade with the Philippines rebounded by nearly 28% in 2022, following a brief decline due to the COVID-19 pandemic.

This was according to Philippine Ambassador to Cambodia Maria Amelita C. Aquino, who also noted that the Philippine private sector is already active in Cambodia, particularly in the pharmaceuticals and agro-products manufacturing sectors. There are an estimated 5,000 to 7,000 Filipinos living in Cambodia at present.

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