Cambodia is a developing market economy that grew at an average rate of over seven percent over the last two decades prior to the COVID-19 pandemic, driven largely by an expansion in the garment, construction, agriculture, and tourism sectors. The World Bank forecasts Cambodia’s economy to grow 5.2 percent in 2023. Cambodia’s GDP per capita was estimated to record at $1,759 in 2022.
Since Cambodia became the first least-developed country (LDC) to join the World Trade Organization (WTO) in 2004, trade has steadily increased. The United States is Cambodia’s largest export market and one of Cambodia’s largest overall trading partners. Approximately 40 percent of Cambodia’s total exports went to the United States in 2022 – primarily garments, textiles, footwear, and travel goods. According to figures from the U.S. Census Bureau, Cambodia’s exports to the United States were valued at $12.2 billion in 2022, an increase of 40 percent year-on-year; and United States’ exports to Cambodia were valued at $449 million.
Cambodia’s tourism is centered around the spectacular cultural attraction of Angkor Wat, a UNESCO World Heritage site. Due to the global pandemic, tourism dropped by more than 80 percent in 2020, and the impact of this decline rippled throughout Cambodia’s economy. After fully re-opening in November 2021, Cambodia welcomed 2.3 million international tourists in 2022, and it expects to receive over 4 million international visitors in 2023.
Foreign assistance has been a driving force behind Cambodia’s development. The United States is one of Cambodia’s largest donors, and U.S. foreign assistance programs in health, education, governance, economic growth, and the clearance of unexploded ordinances and landmines totaled approximately $1.8 billion from 1992 to 2022.
Foreign investment in Cambodia has been led by investors from the People’s Republic of China, Japan, the United Kingdom, the Republic of Korea, Malaysia, Thailand, Singapore, and Vietnam. According to the Council for the Development of Cambodia, total foreign direct investment (FDI) in Cambodia from 1994 to 2022 was valued at $47 billion in terms of fixed assets, and U.S. FDI amounted to approximately $1.4 billion.
The Cambodian government offers a generous package of incentives to foreign investors and imposes few restrictions on imports from abroad. Examples of investment incentives available to qualified foreign investors include 100 percent foreign ownership of companies, corporate tax holidays of up to eight years, 20 percent corporate tax rate after the incentive period ends, duty-free import of capital goods, special depreciation on capital expenditure, and no restrictions on capital repatriation.
Trade Agreements
Cambodia has signed bilateral free trade agreements (FTAs) with the People’s Republic of China and the Republic of Korea and is also a member of the Regional Comprehensive Economic Partnership (RCEP). As an ASEAN Member, Cambodia has ratified the ASEAN Framework Agreement on Mutual Recognition Arrangements. Cambodia and the United States signed the U.S.-Cambodia Trade and Investment Framework Agreement (TIFA) in 2006, which facilitates and promotes greater trade and investment between the two countries and provides a forum to address bilateral trade and investment issues. The two countries continue to meet to advance the TIFA agenda.
Market Opportunities
Cambodia offers potential investment opportunities in various sectors including tourism; education; construction; agriculture/agribusiness; automotive; energy; manufacturing, and health care. U.S. products are highly regarded in Cambodia for their good quality and reliability. U.S. franchises are very popular in Cambodia, the majority of which are in the food and beverage, retail, and hospitality sectors. The Cambodian government has made technology a priority sector for development.
Top Industry Prospects
- Tourism infrastructure and resorts
- Education services
- Architecture, construction, and engineering services
- Household goods and appliances
- Agribusiness and food processing
- Automobiles
- Power generation equipment
- Food and beverage franchises
- Pharmaceuticals, medical supplies, and medical equipment
- Health care services
- Technology services
Cambodia at a Glance
Location: Mainland Southeast Asia between Thailand to the west and north, and Vietnam to the east and southeast. It shares a land border with Laos in the northeast.
Land Area: 181,035 sq. km. (69,900 sq. mi.); about the size of Missouri.
Climate: Tropical monsoon with a rainy season from June to October, and dry season from November to May.
Population: 17.2 million (2022, World Bank)
Languages: Khmer (official); some French still spoken in urban areas; English is the major second language.
Religion: Buddhist
Real GDP Growth Rate: 5.2 percent (2023, World Bank)
GDP Per Capita: $1,759 (2022, World Bank)
GDP Growth by Sector: Agricultural: 1.5 percent; Industry: 9.1 percent; Services: 2.6 percent (2023, World Bank)
Main Drivers of Exports: Garments, Footwear, Travel goods, Bicycles, and Agriculture products.
Main Economic Drivers: Tourism, Agriculture, Construction, Manufacturing exports (garments, footwear, travel goods, bicycles, etc.)
Technology Readiness: Mobile phone subscription: 19.5 million (by Nov. 2022); Internet subscription: 17.2 million (by Nov. 2022)
Government Type: Multi-party democracy under a constitutional monarchy.
