Economy Of Cambodia

Cambodia’s economy functions within an open market system, commonly referred to as a market economy, which has facilitated rapid economic growth over the past decade. This transition towards a more liberalized economic framework has allowed for increased private sector participation, foreign investment, and integration into global trade networks. By 2022, the country’s gross domestic product (GDP) was valued at approximately $28.54 billion, reflecting significant expansion from earlier decades. Despite this growth, Cambodia’s per capita income remains relatively low when compared to most of its neighboring countries in Southeast Asia, indicating ongoing challenges in achieving equitable wealth distribution and raising living standards across the population. The two largest and most influential industries within Cambodia’s economy are textiles and tourism. The garment sector, in particular, has become a cornerstone of industrial activity, employing a substantial portion of the workforce and serving as a major source of export revenues. Tourism, driven by Cambodia’s rich cultural heritage and historic sites such as Angkor Wat, has also emerged as a vital contributor to economic development, attracting millions of visitors annually and supporting related service industries. Nonetheless, agriculture continues to be the primary source of income for many rural Cambodians, sustaining livelihoods in the countryside where subsistence farming and small-scale cultivation predominate. This agricultural base remains crucial for food security and rural employment despite the gradual shift towards industrialization and services. Within the service sector, economic activity is heavily concentrated on trading and catering-related services. These activities encompass a broad range of commercial exchanges, retail operations, and hospitality services that cater to both domestic consumers and international tourists. The growth of urban centers and increased consumer demand have stimulated the expansion of these service industries, contributing to overall economic diversification. Additionally, recent discoveries of offshore oil and natural gas reserves have introduced new prospects for Cambodia’s economic future. These hydrocarbon resources hold the potential to significantly augment national revenues and stimulate further development, although their exploitation remains in nascent stages and subject to regulatory and environmental considerations. Despite the positive economic indicators, Cambodia faces challenges associated with illicit economic activities, which have become increasingly prominent within the national economy. Notably, cyber scam centers have proliferated, and by 2024, these illicit operations were estimated to account for as much as 40% of Cambodia’s official GDP. This alarming figure underscores the complexity of addressing illegal enterprises that undermine legitimate economic progress and pose risks to Cambodia’s international reputation and financial systems. Efforts to combat such activities involve regulatory reforms, law enforcement cooperation, and technological measures aimed at curbing cybercrime and related offenses. The evolution of Cambodia’s economy since the mid-1990s marks a period of significant transformation. In 1995, the country’s GDP stood at $2.92 billion, coinciding with a pivotal shift from a centrally planned economy to a market-driven system. This transition was characterized by structural reforms aimed at liberalizing trade, encouraging private enterprise, and attracting foreign investment. The immediate impact of these reforms was notable, with an estimated economic growth rate of 7% recorded following the policy changes. Concurrently, inflation rates experienced a dramatic decline, falling from 26% in 1994 to 6% in 1995, reflecting improved macroeconomic stability and confidence in the government’s economic management. Foreign aid played a crucial role during this period of reform, contributing to increased imports and exports, particularly within the garment industry. International assistance helped finance infrastructure projects, capacity building, and trade facilitation, thereby enhancing Cambodia’s integration into regional and global markets. The garment sector, benefiting from preferential trade agreements and low labor costs, became a key driver of export growth and employment. By 2016, Cambodia’s economic expansion contributed approximately 0.71% to the overall economy of the Association of Southeast Asian Nations (ASEAN), highlighting its growing importance within the regional economic landscape. However, the late 1990s presented significant setbacks for Cambodia’s economic trajectory. The Asian financial crisis of 1997–1998, compounded by internal civil unrest and political infighting, led to a slowdown in growth and a decline in foreign direct investment. These destabilizing factors disrupted economic activities and undermined investor confidence. Additionally, a severe drought in 1998 adversely affected agricultural production, further exacerbating economic difficulties. The combined impact of these events resulted in a contraction of economic output and heightened social challenges. Following this period of instability, economic reforms resumed in 1999, marking a return to more consistent growth. The government renewed its commitment to liberalization and structural adjustment, which helped the economy recover to a growth rate of approximately 4%. These reforms included efforts to strengthen institutional frameworks, improve governance, and enhance the business environment to attract investment and stimulate private sector development. Cambodia’s foreign policy has been strategically oriented towards fostering friendly relations with neighboring countries such as Thailand and Vietnam, recognizing the importance of regional stability and cooperation for economic development. The country has actively sought integration into regional organizations like ASEAN and global trading systems, including the World Trade Organization (WTO). These efforts aim to facilitate trade liberalization, attract foreign investment, and promote economic diversification by aligning Cambodia with international economic norms and standards. Despite these advances, Cambodia continues to face significant obstacles that hinder its economic potential. Key challenges include the need to improve the education system to develop a more skilled workforce capable of meeting the demands of a modern economy. Infrastructure deficits, particularly in impoverished rural areas, limit connectivity, market access, and the efficient movement of goods and services. Addressing these gaps is essential for sustaining long-term growth and reducing regional disparities. Nevertheless, Cambodia remains an attractive destination for investors due to several competitive advantages. These include low wage levels, which reduce production costs; an abundant labor force that supports labor-intensive industries; proximity to raw materials within Asia, facilitating supply chain efficiencies; and favorable tax policies designed to incentivize investment and business development. Together, these factors continue to underpin Cambodia’s economic expansion and integration into the broader regional and global economy.

Following Cambodia’s independence from France in 1953, the nation underwent five distinct periods characterized by significant political, social, and economic transformations. The first of these periods, known as the First Kingdom of Cambodia, spanned from 1953 to 1970. During this era, Cambodia sought to establish its sovereignty and develop its national identity while navigating the complex geopolitical tensions of the Cold War. The monarchy under King Norodom Sihanouk played a central role in the country’s governance, and efforts were made to modernize the economy, albeit within a largely agrarian framework. The second period, the Khmer Republic, lasted from 1970 to 1975. This era began with a coup d’état that deposed Prince Sihanouk and established a republican government under General Lon Nol. The Khmer Republic faced considerable challenges, including escalating civil conflict and economic instability, as it struggled to maintain control amid the broader Indochina wars. The economy during this time was marked by disruption and decline due to ongoing warfare and political turmoil. The third period, Democratic Kampuchea, extended from 1975 until 1982, although the regime was ousted in 1979. During this period, the country was ruled by the Khmer Rouge under Pol Pot, whose radical policies aimed at transforming Cambodia into a classless agrarian society led to widespread devastation, including the deaths of an estimated two million people. Despite the Khmer Rouge’s removal from power in 1979 by Vietnamese forces, the regime continued to exist in exile as the Coalition Government of Democratic Kampuchea from 1982 to 1993, maintaining a presence in international forums and prolonging political instability. The fourth period began with the establishment of the People’s Republic of Kampuchea from 1979 to 1989, a government installed by Vietnamese forces following the fall of the Khmer Rouge. This period was characterized by efforts to rebuild the country’s shattered infrastructure and economy under a socialist-oriented system. In 1989, the People’s Republic was renamed the State of Cambodia, reflecting a gradual shift towards political normalization and economic reform. The State of Cambodia initiated comprehensive policy changes aimed at transitioning from a command economy to a more open market system, signaling a significant departure from previous centrally planned economic models. In 1989, the State of Cambodia implemented wide-ranging reforms that fundamentally altered the structure of the economy. These reforms included the introduction of private property rights, which allowed individuals and businesses to own land and assets, thereby encouraging investment and entrepreneurship. Additionally, the government embarked on the privatization of state-owned enterprises, reducing the role of the state in economic activities and fostering the growth of the private sector. These measures were instrumental in laying the foundation for Cambodia’s integration into the global economy. Concurrently, Cambodia actively pursued membership and participation in regional and international economic organizations to facilitate trade and investment. The country sought integration into the Association of Southeast Asian Nations (ASEAN), which it joined in 1999, and the World Trade Organization (WTO), which it acceded to in 2004. These memberships provided Cambodia with greater access to regional markets and international trade networks, enhancing its economic prospects and encouraging foreign direct investment. The economic reforms initiated in the late 1980s and early 1990s yielded tangible growth results. Prior to the Asian financial crisis of 1997, Cambodia’s national gross domestic product (GDP) increased at an average annual rate of 6.1%. This period of growth was driven by expanding agricultural production, burgeoning garment exports, and increasing foreign investment. However, the 1997 Asian financial crisis, which originated in Thailand and spread across the region, precipitated domestic unrest and regional economic instability, temporarily slowing Cambodia’s economic momentum. Following the crisis, Cambodia’s economy demonstrated resilience, maintaining robust growth rates averaging approximately 6 to 8 percent annually from 1999 onward. This sustained expansion was supported by diversification into sectors such as tourism, construction, and manufacturing, alongside continued development of the garment industry, which became a major export earner. The government’s commitment to economic liberalization and integration with global markets further underpinned this positive trajectory. In 2007, Cambodia experienced a remarkable economic expansion, with its GDP growing by an estimated 18.6 percent, one of the highest growth rates in the region. This surge was largely driven by strong domestic consumption and investment, which offset a decline in export growth during the same year. The garment sector, a key component of the export economy, saw exports increase by nearly 8 percent, while tourist arrivals surged by approximately 35 percent, reflecting the country’s rising profile as a travel destination and the expansion of its service sector. Foreign direct investment (FDI) inflows in 2007 reached approximately US$600 million, accounting for about 7 percent of GDP. This level of investment slightly exceeded the volume of official development aid received by the country, highlighting the growing importance of private capital in Cambodia’s economic development. Domestic investment, predominantly from the private sector, also made a significant contribution, amounting to 23.4 percent of GDP in 2007. These investments were concentrated in sectors such as real estate, manufacturing, and services, which collectively supported the country’s rapid economic growth. Despite these positive developments, export growth began to slow in late 2007, particularly exports to the United States, Cambodia’s largest market for garments and textiles. This slowdown was attributed to several factors, including increased competition from Vietnam, which was expanding its manufacturing capabilities, a general slowdown in the US economy, and the lifting of export safeguards on China, which intensified competition in global markets. These challenges underscored the vulnerabilities of Cambodia’s export-dependent sectors to external economic shifts. Between 1997 and 2007, US companies invested over US$1.2 billion in Cambodia, making the United States the fifth-largest source of foreign investment in the country. This investment was concentrated primarily in the garment and textile industries, as well as in tourism and other service sectors. The presence of US investors contributed to the modernization of Cambodia’s industrial base and facilitated technology transfer and employment generation. The global financial crisis of 2008 had a pronounced impact on Cambodia’s economy, particularly affecting the garment sector, which is highly dependent on exports to the US and European markets. During this period, garment exports to these regions declined by approximately 23 percent, leading to the layoff of around 60,000 workers. The contraction in demand exposed the fragility of Cambodia’s export-oriented industries and highlighted the need for economic diversification and resilience-building measures. By late 2009 and early 2010, signs of economic recovery began to emerge, as global markets stabilized and demand for Cambodian exports gradually increased. The government’s continued focus on reforms and investment promotion helped to restore confidence among investors and consumers alike. This recovery phase marked a return to positive growth trends and reinforced Cambodia’s position as one of the faster-growing economies in Southeast Asia. In the first eleven months of 2012, Cambodia’s exports to the United States reached US$2.49 billion, reflecting a modest 1 percent increase compared to the same period in the previous year. Concurrently, US imports to Cambodia grew by 26 percent, totaling US$213 million. These figures indicated a strengthening of bilateral trade relations and underscored the importance of the US market for Cambodia’s export sector. A significant indicator of Cambodia’s improving economic potential has been the substantial reduction in poverty rates. The national poverty rate was halved to 20.5 percent, meaning that approximately 2.8 million people continued to live below the poverty line. This decline in poverty is attributed to sustained economic growth, increased employment opportunities, and government initiatives aimed at improving social welfare and access to basic services. Nonetheless, poverty remains a critical challenge, necessitating ongoing efforts to ensure inclusive and equitable development across the country.

The economic data for Cambodia, spanning from 1986 to projections extending through 2026, provides a comprehensive overview of the country’s macroeconomic trajectory over more than three decades. This extensive dataset includes historical figures as well as International Monetary Fund (IMF) staff estimates for the period 2021 to 2026, illustrating trends in key indicators such as gross domestic product (GDP), inflation, unemployment, and government debt. Within the dataset, inflation rates below 5% are distinctly highlighted in green to facilitate quick identification of periods characterized by relative price stability. Although the annual unemployment rate figures are sourced from the World Bank, the IMF has expressed reservations regarding their reliability, suggesting caution in interpreting these particular statistics. In 1986, Cambodia’s nominal GDP was approximately US$0.2 billion, with a per capita GDP of US$25.71. Data on GDP measured in purchasing power parity (PPP) terms for this year is unavailable, reflecting the challenges in economic data collection during this period. The late 1980s were marked by significant volatility in Cambodia’s economy. Between 1987 and 1990, nominal GDP fluctuated considerably, starting at US$0.1 billion in 1987 and rising sharply to US$0.9 billion by 1990. Correspondingly, GDP per capita increased from US$17.1 in 1987 to US$99.8 in 1990, indicating a rapid, albeit uneven, economic expansion. The year 1988 was notable for a robust real GDP growth rate of 9.6%, signaling early signs of economic recovery following years of turmoil. However, this period was also characterized by high inflationary pressures; in 1989, inflation surged to 63.8%, and nominal GDP reached US$0.3 billion. Inflationary challenges intensified in 1990, with the rate peaking at 141.8%, even as GDP per capita approached the US$100 mark and nominal GDP reached US$0.9 billion. The early 1990s witnessed a gradual economic recovery amid persistent inflation. In 1991, real GDP growth was recorded at 7.6%, followed by 7.1% in 1992, reflecting a strengthening economic base and increased stability. Despite this growth, inflation remained elevated, with rates of 191.0% in 1991 and 75.0% in 1992, underscoring ongoing macroeconomic challenges. From 1993 onward, Cambodia’s economy demonstrated more consistent growth patterns. In 1993, GDP measured in PPP terms was estimated at US$7.0 billion, rising to US$9.6 billion by 1997. During this period, GDP per capita increased from US$242.5 in 1993 to US$302.2 in 1997, indicating improvements in average income levels and economic welfare. The late 1990s and early 2000s continued this trajectory of growth. GDP in PPP terms expanded from US$10.2 billion in 1998 to US$14.4 billion in 2001, while GDP per capita rose from US$267.9 to US$320.0 over the same period. This sustained expansion reflected Cambodia’s integration into regional and global markets, as well as structural reforms that enhanced economic productivity. The 2000s were marked by robust economic growth, with GDP in PPP terms reaching US$29.5 billion in 2007 and GDP per capita climbing to US$627.8. Inflation rates during this decade fluctuated between 6.7% and 25.0%, indicating periods of both relative price stability and inflationary spikes, influenced by global economic conditions and domestic factors. The global financial crisis of 2008 had a discernible impact on Cambodia’s economy, causing a slowdown in growth and increased inflation. Real GDP growth decelerated to 6.7% in 2008, while inflation surged to 25.0%, reflecting the combined effects of external shocks and internal vulnerabilities. Nominal GDP for that year was recorded at US$10.3 billion. Following this downturn, Cambodia’s economy demonstrated resilience and recovery. In 2010, GDP growth rebounded to 6.0%, accelerating to 7.1% in 2011 and 7.3% in 2012. Inflation during this recovery phase stabilized within a moderate range of approximately 2.9% to 5.5%, contributing to a more predictable economic environment conducive to investment and growth. From 2013 onward, Cambodia experienced steady increases in GDP measured in PPP terms, reflecting sustained economic development. GDP in PPP terms rose from US$45.8 billion in 2013 to US$62.8 billion in 2017, while GDP per capita increased from US$1,034.8 to US$1,446.9 during the same interval. These figures illustrate significant improvements in living standards and economic output, driven by expanding industries such as garment manufacturing, tourism, and construction. However, the onset of the COVID-19 pandemic in 2020 caused a sharp economic contraction. Real GDP shrank by 3.5%, with nominal GDP falling to US$26.0 billion and GDP per capita declining to US$1,655.4. This downturn was attributable to disruptions in global trade, tourism, and domestic economic activities resulting from public health measures and international economic slowdowns. The post-pandemic period from 2021 to 2026 is characterized by a projected economic recovery with consistent growth. GDP in PPP terms is expected to rise from US$78.1 billion in 2021 to an estimated US$118.5 billion by 2026, reflecting renewed economic dynamism and expansion across multiple sectors. Per capita GDP in nominal terms is forecasted to increase from US$1,720.2 in 2021 to approximately US$2,375.3 in 2026, indicating continued improvements in individual economic well-being. Real GDP growth rates during this period are projected to remain robust, hovering around 6.7% to 6.8% annually, which suggests sustained economic momentum. Inflation is anticipated to remain stable at approximately 3.0% throughout the 2021–2026 timeframe, supporting a predictable macroeconomic environment. Meanwhile, government debt as a percentage of GDP is expected to increase from 33.4% in 2021 to an estimated 46.7% by 2026, reflecting increased fiscal expenditures and borrowing, potentially related to pandemic recovery efforts and infrastructure investments. This trend highlights the evolving fiscal landscape and the challenges of balancing economic growth with debt sustainability.

The garment industry represents the largest segment of Cambodia’s manufacturing sector, playing a pivotal role in the country’s export economy by accounting for approximately 80% of total exports. This dominance underscores the industry’s critical contribution to Cambodia’s economic development and its integration into global trade networks. In 2012, the value of garment exports reached an impressive $4.61 billion, marking an 8% increase compared to the previous year, 2011, which highlights the sector’s robust growth trajectory during that period. Continuing this upward trend, the first half of 2013 saw garment exports valued at $1.56 billion, indicating sustained demand and production capacity within the industry. Employment in the garment sector is substantial, with approximately 335,400 workers engaged in various stages of garment production. Notably, women constitute the overwhelming majority of this workforce, comprising 91% of employees, which reflects the industry’s role as a significant source of employment for Cambodian women and its impact on gender dynamics within the labor market. The sector’s operations primarily focus on the final stages of garment manufacturing, involving the transformation of yarns and fabrics into finished garments ready for export. This specialization arises from Cambodia’s limited capacity in textile manufacturing, which necessitates reliance on imported textiles and concentrates domestic efforts on assembly and finishing processes. In 2005, apprehensions emerged regarding the potential adverse effects of the termination of the Multi Fibre Arrangement (MFA) on Cambodia’s garment industry. The MFA had previously imposed quotas that limited textile exports from countries like China, thereby providing preferential market access to smaller producers such as Cambodia. Its expiration raised concerns that Cambodia would face intense competition from China’s well-established and highly efficient manufacturing sector, potentially undermining the growth and stability of Cambodia’s garment exports. Contrary to these fears, the Cambodian garment industry continued to expand rapidly, buoyed by the country’s open economic policies that fostered a favorable environment for foreign investment. These policies included liberal trade regulations, investment incentives, and efforts to improve the business climate, all of which attracted substantial foreign direct investment (FDI) into the sector. By 2010, the ownership landscape of garment factories in Cambodia reflected a diverse international presence. Taiwanese investors held the largest share, owning 28% of factories, which equated to 66 establishments. Chinese investors followed with 19% ownership, representing 44 factories, while Hong Kong-based firms accounted for 17% with 39 factories. South Korean investors owned 13% of the factories, totaling 31, and Malaysian investors held 6% with 14 factories. Cambodian nationals owned a relatively small share of 5%, corresponding to 13 factories, indicative of limited domestic participation in factory ownership. Singaporean investors controlled 4% (10 factories), as did investors from the United States with 4% (9 factories). The remaining 4% (10 factories) were owned by other nationalities. This distribution underscores the significant role of foreign investors in shaping the garment industry’s structure and operations. In total, 2010 saw 236 garment export-oriented factories registered with the Garment Manufacturers Association in Cambodia (GMAC), with an overwhelming 93% of these factories being foreign direct investment ventures. This predominance of FDI highlights the industry’s reliance on international capital and management expertise. The relatively small proportion of locally owned factories reflects challenges faced by Cambodian entrepreneurs, including a shortage of skilled labor and limited capacity for strategic decision-making within the domestic business community. These factors have constrained the growth of indigenous ownership and management in the garment sector. Cambodia’s competitive advantage in the garment industry is partly derived from its rigorous monitoring and reporting systems for garment factories, which adhere to both national and international labor and production standards. This commitment to compliance and transparency distinguishes Cambodia from many other garment-producing countries and has helped maintain favorable trade relationships and market access. The country secured a significant share of export quotas to the United States through the US-Cambodia Trade Agreement on Textiles and Apparel, which was in effect from 1999 to 2004. This agreement linked preferential market access to adherence to labor standards, thereby incentivizing improvements in working conditions and factory oversight within Cambodia’s garment sector. Despite the sector’s growth and international integration, the Cambodian garment industry remains vulnerable due to several structural challenges. Inadequate infrastructure, including transportation and energy supply, hampers efficiency and increases production costs. Labor unrest has periodically disrupted operations, reflecting tensions related to wages, working conditions, and labor rights. The absence of a domestic textile industry forces near-total reliance on imported textiles, which exposes the sector to supply chain risks and limits value addition within the country. These vulnerabilities underscore the need for continued investment and policy support to sustain the industry’s competitiveness. To address the critical shortage of skilled labor, the Garment Manufacturers Association in Cambodia (GMAC) embarked on establishing a specialized training institute within the Phnom Penh Special Economic Zone. This initiative, expected to be completed by late 2016, aims to enhance the skill set of garment workers and improve the overall quality and productivity of the workforce. The training institute is designed to train 1,600 garment workers during its first three years of operation, equipping them with technical skills and industry knowledge. Additionally, a separate program within the institute plans to provide education and training to 240 university students annually, thereby fostering a pipeline of qualified professionals to support the garment industry’s long-term development. This strategic investment in human capital reflects the sector’s recognition of the importance of workforce development in maintaining competitiveness and meeting evolving market demands.

Agriculture has historically formed the backbone of Cambodia’s economy, deeply influencing its economic structure and development patterns. Throughout much of the country’s history, the agricultural sector has been the principal driver of economic activity, shaping both rural livelihoods and national economic policies. In 1985, the agricultural sector was particularly dominant, contributing approximately 90 percent to Cambodia’s Gross Domestic Product (GDP). This overwhelming share underscored the sector’s critical role in sustaining the country’s economy during a period marked by recovery and rebuilding following years of conflict and instability. The importance of agriculture extended beyond its contribution to GDP, as it also served as the primary source of employment for the majority of the Cambodian population. Around 80 percent of the workforce was engaged in agricultural activities, reflecting the sector’s role as the mainstay of rural employment and subsistence. This high level of labor involvement highlighted the dependence of Cambodian society on farming for both income and food security. The predominance of agriculture in employment also indicated limited industrialization and diversification within the economy during the mid-1980s, with most Cambodians relying on farming as their livelihood. Rice cultivation occupied a central position within Cambodia’s agricultural landscape, being the principal crop and economic staple. As the country’s main agricultural commodity, rice was not only essential for domestic consumption but also formed the foundation of rural economies and food supply chains. The importance of rice was deeply embedded in Cambodian culture and tradition, with vast areas of arable land dedicated to its production. The reliance on rice farming was supported by the country’s favorable climatic conditions and extensive river systems, particularly the Mekong and Tonle Sap, which provided the necessary water resources for paddy cultivation. In addition to rice, Cambodia cultivated a variety of secondary crops that contributed to the diversity of its agricultural output. Major secondary crops included maize, cassava, sweet potatoes, groundnuts, soybeans, sesame seeds, dry beans, and rubber. These crops served multiple purposes, ranging from food security and animal feed to cash crops for local and regional markets. Maize and cassava, for example, were important for both human consumption and as raw materials for agro-industries, while groundnuts and soybeans contributed to protein intake and soil fertility through nitrogen fixation. Sesame seeds and dry beans were grown primarily for export and domestic consumption, adding to the agricultural sector’s economic complexity. Among these secondary crops, rubber stood out as the principal commercial crop in Cambodia. The cultivation of rubber was strategically significant, as it represented one of the few agricultural products with substantial export potential and commercial value. Rubber plantations were established in various regions, benefiting from suitable climatic and soil conditions that allowed for the growth of Hevea brasiliensis, the rubber tree species. The development of rubber as a commercial crop was part of broader efforts to diversify Cambodia’s agricultural economy and generate foreign exchange earnings. During the 1980s, rubber held a particularly important position as a primary commodity for Cambodia, ranking second only to rice in terms of economic significance. This period saw rubber production and export become a key component of the country’s economic recovery strategies. The prominence of rubber was driven by both domestic demand for industrial materials and international markets seeking natural rubber for manufacturing purposes. The sector’s growth was supported by government policies aimed at revitalizing plantation agriculture and attracting investment in rubber production infrastructure. Rubber’s role extended beyond its economic value within Cambodia; it was one of the country’s few sources of foreign exchange during the 1980s. At a time when Cambodia faced significant challenges in rebuilding its economy and integrating into global trade networks, rubber exports provided vital foreign currency earnings. These earnings were crucial for financing imports of essential goods, machinery, and technology needed for broader economic development. The foreign exchange generated by rubber exports also helped stabilize the national economy and supported efforts to improve infrastructure and public services. The reliance on rubber as a foreign exchange earner highlighted the limited diversification of Cambodia’s export base during the 1980s. While rice remained the dominant agricultural product domestically, rubber’s commercial appeal made it indispensable for international trade. The sector’s contribution to foreign exchange earnings underscored the strategic importance of maintaining and expanding rubber production as part of Cambodia’s economic planning. This focus on rubber reflected broader regional trends, as neighboring countries also sought to capitalize on the global demand for natural rubber during this period. Overall, agriculture in Cambodia during the 1980s was characterized by its overwhelming dominance in the national economy, both in terms of GDP contribution and employment. Rice cultivation formed the core of agricultural activity, ensuring food security and sustaining rural livelihoods, while a diverse range of secondary crops, including maize, cassava, and groundnuts, provided additional economic and nutritional benefits. Rubber emerged as a crucial commercial crop, second only to rice in economic importance, and played a vital role as one of the few sources of foreign exchange for the country. This agricultural framework shaped Cambodia’s economic trajectory during a critical period of recovery and laid the foundation for future development efforts aimed at diversification and modernization.

During the 1960s, Cambodia emerged as a prominent tourist destination within Southeast Asia, drawing numerous visitors attracted by its rich cultural heritage and historical landmarks. The country’s appeal was largely centered on its ancient temples, traditional arts, and vibrant cultural traditions, which offered a unique glimpse into the region’s historical legacy. Among these attractions, the Angkor Wat temple complex stood out as a symbol of Cambodia’s architectural and religious history, captivating tourists with its grandeur and intricate carvings. The tourism industry during this period contributed significantly to the national economy, supported by a relatively stable political environment and increasing international interest in Southeast Asia as a travel destination. However, Cambodia’s tourism sector suffered a severe and prolonged decline due to decades of civil war, insurgencies, and the catastrophic rule of the Khmer Rouge regime. The political instability and widespread violence disrupted economic activities and led to the near-total collapse of tourism. Infrastructure such as hotels, roads, and airports fell into disrepair or were destroyed, while the general insecurity deterred both domestic and international travelers. The social fabric of the country was deeply affected, with many cultural sites neglected or damaged during the conflict. As a result, the once-thriving tourism industry was virtually non-existent during this turbulent period, and Cambodia’s global reputation as a travel destination was severely diminished. The Khmer Rouge regime, which governed Cambodia from 1975 to 1979, played a particularly devastating role in the decline of the tourism sector. This regime was responsible for the Khmer Rouge Genocide, a brutal campaign that led to the deaths of an estimated 1.7 to 2 million people and the destruction of much of Cambodia’s cultural heritage. The regime’s radical policies included the evacuation of cities, forced labor, and the suppression of religious and cultural expressions, which directly undermined the preservation and accessibility of historical sites. The Khmer Rouge’s isolationist stance and hostility toward foreign influence further eliminated any possibility of tourism during their rule. Consequently, the tourism industry was effectively dismantled, and recovery would require significant post-conflict reconstruction and reconciliation efforts. Following the end of the Khmer Rouge era and the subsequent political stabilization in the 1990s, Cambodia’s tourism industry began to experience rapid growth. This resurgence was driven by renewed international interest, improved security, and government initiatives aimed at rebuilding the country’s infrastructure and promoting its cultural assets. By the late 1990s, tourism had re-emerged as a key economic sector, eventually becoming the country’s second-largest industry after garment manufacturing. The revival of tourism contributed to broader economic development, attracting foreign investment and fostering the growth of related sectors such as hospitality, transportation, and retail. This period marked a significant turnaround from the devastation of previous decades, positioning tourism as a central pillar of Cambodia’s economic recovery. In 2006, Cambodia’s tourism sector demonstrated its substantial economic impact by generating approximately US$1.594 billion in revenue. This figure represented about 16% of the nation’s Gross Domestic Product (GDP), underscoring the sector’s importance to the overall economy. The influx of tourists not only brought direct financial benefits but also stimulated employment and infrastructure development. The government and private sector invested in marketing campaigns, improved tourist facilities, and enhanced service quality to capitalize on the growing demand. This period of expansion solidified tourism’s role as a major contributor to Cambodia’s economic growth and diversification. Cultural heritage tourism remained the most popular segment within Cambodia’s tourism industry, with many foreign visitors drawn to the ancient Hindu temple of Angkor Wat located in Siem Reap province. Angkor Wat, a UNESCO World Heritage Site, is renowned for its architectural grandeur, extensive bas-reliefs, and historical significance as a former capital of the Khmer Empire. The temple complex serves as a focal point for cultural tourism, attracting millions of visitors annually who come to explore its temples, learn about Khmer history, and experience traditional Cambodian culture. The preservation and promotion of Angkor Wat have been central to Cambodia’s tourism strategy, supported by international cooperation and conservation efforts aimed at maintaining the site’s integrity amid increasing tourist numbers. Beyond Angkor Wat, other major tourist attractions in Cambodia include the Royal Palace in Phnom Penh, which showcases the country’s royal heritage and architectural elegance. The palace complex, with its ornate buildings and ceremonial halls, offers insight into Cambodia’s monarchy and cultural traditions. Additionally, ecotourism sites such as Tonlé Sap Lake and the Mekong River have gained prominence for their natural beauty and biodiversity. Tonlé Sap Lake, Southeast Asia’s largest freshwater lake, supports a unique ecosystem and traditional floating villages, providing visitors with opportunities to experience rural Cambodian life and observe diverse wildlife. The Mekong River, one of the world’s great rivers, offers scenic cruises and exploration of riverine communities, further diversifying Cambodia’s tourism offerings beyond cultural heritage. The development of key transportation infrastructure has played a crucial role in facilitating the growth of Cambodia’s tourism industry. Notably, the establishment and expansion of the country’s two international airports in Phnom Penh and Siem Reap have significantly improved accessibility for international travelers. Phnom Penh International Airport serves the capital city and acts as a gateway for business and cultural tourism, while Siem Reap International Airport primarily caters to visitors heading to the Angkor temple complex. These airports have undergone modernization and capacity enhancements to accommodate increasing passenger volumes, enabling more direct flights from major regional and international hubs. Improved transportation infrastructure has also included road upgrades and the expansion of domestic flight routes, which have collectively reduced travel times and enhanced the overall tourist experience. Tourism serves as a vital source of foreign currency earnings and employment in Cambodia, contributing substantially to the country’s economic stability and development. In 2006, the industry was responsible for creating approximately 250,000 jobs across various sectors, including hospitality, transportation, tour operations, and handicraft production. These employment opportunities have provided livelihoods for many Cambodians, particularly in rural areas where alternative income sources may be limited. The inflow of foreign currency from tourism has helped to strengthen the national balance of payments and support foreign exchange reserves. Moreover, the sector’s growth has encouraged the development of small and medium-sized enterprises, fostering entrepreneurship and community participation in the tourism economy. Despite its successes, Cambodia’s tourism industry faces several significant challenges. One major issue is revenue leakage to foreign markets, which occurs due to the sector’s dependence on imported goods and foreign-owned businesses. This leakage reduces the net economic benefits that remain within the country, limiting the potential for local economic development. Additionally, Cambodia has grappled with the prevalence of child sex tourism, a serious social problem that has drawn international condemnation and necessitated concerted efforts by government authorities and non-governmental organizations to combat exploitation and protect vulnerable populations. Addressing these challenges requires comprehensive policy measures, enhanced law enforcement, and increased awareness among tourists and local communities to promote sustainable and ethical tourism practices. Efforts to improve the quality of tourism services, diversify attractions, and strengthen regulatory frameworks continue to be priorities for ensuring the long-term viability of Cambodia’s tourism sector.

Gambling in Cambodia is officially prohibited under the 1996 Law on Suppression of Gambling, which categorically bans all unauthorized forms of gambling activities within the country. This legislation prescribes a range of penalties for violations, including monetary fines and short-term imprisonment. Despite the apparent severity of these legal provisions, the Cambodian government’s General Department of Prisons does not include gambling among the 28 offenses currently punishable by incarceration, indicating a nuanced enforcement approach or possible discrepancies between the letter of the law and its practical application. The law’s primary objective was to curb unregulated gambling practices that were perceived to contribute to social problems, yet the absence of imprisonment records for gambling offenses suggests a degree of leniency or selective enforcement in practice. The prohibition on gambling in Cambodia extends comprehensively to all forms of online gambling, reflecting the government’s intent to control this sector in the digital age. However, this ban applies exclusively to Cambodian citizens, creating a legal distinction between nationals and foreigners. Foreign tourists are legally permitted to engage in gambling activities within licensed casinos, a policy designed to attract international visitors and generate revenue without encouraging widespread gambling participation among the local population. This dual regulatory framework underscores the government’s balancing act between economic incentives derived from the gambling industry and social concerns related to gambling addiction and associated harms among its citizens. By October 2015, Cambodia had established a significant gambling infrastructure, hosting 75 casinos primarily catering to foreign tourists. These casinos collectively generated an estimated US$29 million in revenue for the national government during the first nine months of that year, highlighting the sector’s contribution to public finances. The total income produced by these casinos during the same period was approximately US$2 billion, underscoring the substantial economic scale of the industry despite the legal restrictions imposed on Cambodian nationals. The revenue figures reflect not only the popularity of gambling among tourists but also the strategic importance of the casino industry as a source of foreign exchange and employment within the country. Cambodian citizens are legally permitted to participate in certain government-sponsored gaming activities, which include five separate national lotteries operated by private entities under government authorization. These lotteries represent a controlled form of gambling accessible to the local population and serve as a state-sanctioned alternative to the prohibited casino gambling. The lotteries are designed to generate revenue for public projects while minimizing the social risks associated with more addictive forms of gambling. This controlled access to gambling activities indicates the government’s attempt to regulate and contain gambling within specific, manageable channels. Historically, Cambodian citizens were allowed to play slot machines located within casinos, a practice that was common until 2009. However, the government imposed a ban on slot machines following widespread complaints that linked these devices to incidents of violence related to gambling debts and an increase in problem gambling behaviors. The ban reflected growing concerns about the social costs of gambling addiction and the potential for slot machines to exacerbate financial distress among vulnerable populations. This policy shift demonstrated the government’s responsiveness to societal pressures and its willingness to restrict certain gambling modalities to protect public welfare. Gambling holds a deep cultural significance in Southeast Asia and Cambodia, where it is often intertwined with social identity and traditional practices. Within Cambodian society, gambling is frequently associated with masculinity, and men who abstain from gambling may be perceived as lacking in masculine traits. This cultural perception reinforces gambling as a normative social activity among men and contributes to its persistence despite legal restrictions. The association between gambling and masculinity reflects broader regional attitudes toward risk-taking and social bonding, where gambling serves as a means of establishing social status and camaraderie. Despite the official legal prohibitions, illegal gambling remains widespread throughout Cambodia, facilitated in large part by pervasive corruption within police forces. Law enforcement officials often overlook gambling activities, particularly within casinos, allowing local residents to gamble freely despite the legal restrictions. Moreover, many casinos provide private gaming rooms specifically for government and law enforcement officials, who frequently hold financial stakes in these establishments. This entanglement of public officials in the gambling industry illustrates the challenges of regulatory enforcement and the complicity of some authorities in sustaining the illegal gambling economy. Extralegal gambling activities extend beyond the confines of licensed casinos and encompass a variety of forms, including cockfighting, card rooms, sports betting—primarily focused on regional football matches and Kun Khmer, a traditional Cambodian martial art—and unauthorized lotteries. These activities are predominantly controlled by organized crime groups, which maintain their operations through systematic bribery and corruption of law enforcement officials. The widespread presence of these illicit gambling venues reflects the resilience of underground gambling networks and the difficulties faced by the government in curbing these activities. The involvement of criminal organizations in extralegal gambling also contributes to broader issues of public safety and governance. Gambling-related social issues in Cambodia are significant, with gambling addiction affecting various segments of the population and contributing to a range of social challenges. Problem gambling has been linked to financial hardship, family breakdowns, and increased incidences of violence, placing a strain on social services and community well-being. The prevalence of gambling addiction underscores the need for effective prevention and treatment programs, as well as regulatory measures that balance economic interests with public health concerns. These social consequences highlight the complex interplay between cultural acceptance of gambling, legal restrictions, and the realities of enforcement and social impact. Within the urban landscape of Phnom Penh, Russian Federation Boulevard is noted as a location of relevance to the gambling industry, although specific details regarding its role or significance are not explicitly provided. Given the boulevard’s status as a major thoroughfare in the capital city, it is plausible that it hosts or is proximate to gambling establishments, entertainment venues, or related commercial activities that contribute to the sector’s urban presence. The mention of this location suggests an intersection between the gambling industry and urban development in Cambodia’s capital, reflecting the spatial dimension of gambling’s integration into the country’s economic and social fabric.

The surge in tourist arrivals in Cambodia has significantly influenced the demand for accommodation facilities, particularly hotels and guesthouses situated near key tourist attractions. As Cambodia’s tourism sector expanded, driven by the country’s rich cultural heritage sites such as Angkor Wat and other historical landmarks, there was a corresponding need to develop infrastructure to support the influx of visitors. This growing demand prompted a wave of construction activity aimed at increasing the capacity and quality of lodging options, ensuring that the hospitality industry could accommodate the rising number of domestic and international tourists. The expansion of accommodation facilities not only catered to visitor needs but also stimulated local economies through job creation and increased commercial activity in tourism hotspots. Among the regions most affected by this construction surge was Siem Reap, which experienced a remarkable building boom in recent years. The city, serving as the gateway to the Angkor Archaeological Park, became a focal point for investment in hotels, resorts, and related tourism infrastructure. This boom was largely fueled by the steady growth in tourism, which transformed Siem Reap from a relatively quiet provincial town into a bustling urban center with a rapidly expanding hospitality sector. Developers and investors capitalized on the opportunity to meet the accommodation needs of tourists, leading to the construction of a wide range of lodging options, from budget guesthouses to luxury hotels. The construction boom also extended to ancillary services such as restaurants, retail outlets, and entertainment venues, contributing to the city’s overall economic development. Phnom Penh, the capital city of Cambodia, similarly witnessed notable growth in its construction and real estate sectors, reflecting broader trends of urban development and investment. The city’s expansion was characterized by the emergence of high-rise buildings, commercial complexes, and residential condominiums, signaling increasing urbanization and modernization. This growth was driven by a combination of factors including rising domestic demand for housing, greater foreign direct investment, and the government’s efforts to improve infrastructure and urban planning. Phnom Penh’s evolving skyline and real estate market underscored its role as the political, economic, and cultural heart of Cambodia, attracting both local and international investors seeking opportunities in the burgeoning property market. Despite these positive developments, several planned construction projects that had been under development for several years faced temporary suspension due to a decline in foreign investment. This downturn reflected broader economic and investment uncertainties that affected investor confidence and capital flows into the Cambodian construction sector. Factors contributing to the decline included regional economic slowdowns, shifts in global financial markets, and concerns about regulatory and political stability. The shelving of these projects highlighted the vulnerability of the construction industry to fluctuations in foreign investment, which plays a critical role in financing large-scale developments. Such interruptions also underscored the need for Cambodia to diversify its investment sources and strengthen its economic resilience to sustain long-term growth in construction and real estate. A significant policy shift occurred in 2009 when the Cambodian government permitted foreigners to own condominiums, a move aimed at attracting more foreign real estate investors and stimulating the property market. Prior to this change, foreign ownership of property was restricted, limiting the potential for international capital to flow into Cambodia’s real estate sector. The new policy allowed non-Cambodian nationals to purchase and own condominium units, provided that foreign ownership did not exceed 70% of the total units in a condominium building. This regulatory reform was designed to enhance the attractiveness of Cambodia’s property market to foreign buyers by providing legal clarity and security of ownership, thereby encouraging investment in residential developments and boosting the construction industry. The condominium ownership policy successfully attracted real estate investors from neighboring countries, including Thailand, Malaysia, and Singapore, among others. These investors were drawn by Cambodia’s relatively low property prices, rapid economic growth, and the potential for capital appreciation in a developing market. The influx of foreign buyers contributed to increased demand for high-quality residential properties, prompting developers to focus on constructing condominiums that catered to middle- and upper-income segments, as well as expatriates and retirees. The participation of regional investors also facilitated knowledge transfer and introduced new standards in property development, marketing, and management, which helped to elevate the overall quality and competitiveness of Cambodia’s real estate sector. Investment in Cambodia’s construction sector saw a marked increase in 2012, with total investment reaching $2.1 billion. This figure represented a substantial 72% increase compared to the investment levels recorded in 2011, indicating a period of robust growth and heightened investor confidence. The surge in investment was driven by both domestic and foreign sources, reflecting the sector’s expanding role in Cambodia’s economic development. Increased capital inflows supported a wide range of construction activities, including residential, commercial, and infrastructure projects. The growth in investment underscored the construction sector’s importance as a key driver of economic expansion, employment generation, and urban transformation within the country. In the same year, a total of 1,694 construction licenses were issued, marking a 20% decrease compared to the number of licenses granted in 2011. Despite the reduction in the quantity of licenses, the overall value of the projects approved was higher, suggesting that the developments were larger in scale or of greater financial magnitude. This trend indicated a shift in the construction industry towards more capital-intensive and potentially higher-quality projects, rather than numerous smaller-scale developments. The issuance of fewer but more valuable licenses reflected evolving market dynamics, where developers focused on substantial investments that could yield greater returns and contribute more significantly to urban development. This pattern also suggested a maturing construction sector that was beginning to attract more sophisticated and financially robust projects.

Oil seeps in Cambodia were initially identified in the 1950s through geological surveys conducted by Russian and Chinese experts. These early explorations revealed the presence of hydrocarbons, indicating potential oil reserves within the country’s territory. However, despite these promising findings, the development of Cambodia’s oil industry was substantially hindered by a series of protracted conflicts and political upheavals. The Vietnam War, which spilled over into Cambodian territory, followed by the Cambodian Civil War and the ensuing instability under the Khmer Rouge regime and subsequent governments, created an environment that was not conducive to large-scale industrial investment or infrastructure development. As a result, the exploitation of Cambodia’s hydrocarbon resources remained largely dormant for several decades. It was not until the early 2000s that renewed interest in Cambodia’s oil and natural gas potential emerged, driven by the discovery of additional offshore deposits. These findings sparked both domestic enthusiasm and international attention, as the country’s previously untapped offshore basins appeared to hold significant quantities of hydrocarbons. The discoveries prompted exploration activities by various foreign companies, signaling a new phase in Cambodia’s efforts to develop its energy sector. This period marked a turning point as Cambodia sought to integrate its natural resource wealth into broader economic growth strategies, leveraging partnerships with international oil firms to build capacity and infrastructure. By 2013, several multinational corporations had established production sites within Cambodia, both onshore and offshore, reflecting the growing maturity of the sector. Among these were US-based Chevron and Japan’s Japan Oil, Gas and Metals National Corporation (JOGMEC), which played key roles in advancing exploration and development projects. Chevron, in particular, had made substantial investments, committing over US$160 million to the Cambodian oil industry and drilling a total of 18 wells by that year. These efforts underscored the confidence of global energy companies in the commercial viability of Cambodia’s hydrocarbon resources, despite the challenges posed by regulatory frameworks and geopolitical complexities. Sok Khavan, who served as the acting director general of the Cambodian National Petroleum Authority, provided insights into the fiscal arrangements anticipated from oil and gas production. He estimated that once contractual agreements were finalized and outstanding legal issues resolved, the Cambodian government would secure approximately 70% of the revenues generated from these activities. This revenue-sharing framework was designed to ensure that the exploitation of natural resources would translate into substantial financial benefits for the state, supporting public expenditures and development initiatives. The anticipated inflows were expected to play a transformative role in Cambodia’s economic landscape, with projections suggesting that the country’s gross domestic product (GDP) could increase five-fold by 2030 as a direct consequence of hydrocarbon exploitation. The offshore reserves in the Gulf of Thailand represent a particularly significant asset, encompassing an area of approximately 10,000 square miles. Geological assessments have estimated that these offshore fields contain between 12 and 14 trillion cubic feet of natural gas, alongside an unspecified quantity of crude oil. This vast resource base positions Cambodia as a potentially important player in the regional energy market, with the capacity to meet domestic energy needs and generate export revenues. However, the development of these offshore reserves has been complicated by territorial disputes with neighboring Thailand. Both countries claim overlapping rights to portions of the Gulf of Thailand, leading to protracted negotiations and delays in exploration and production activities. Despite these challenges, progress toward resolving the maritime boundary dispute appeared to be advancing by early 2013. Reports indicated that Cambodia and Thailand were nearing an agreement that would allow for the joint production of the offshore hydrocarbon resources. Such a deal would facilitate cooperative management of the contested area, enabling both nations to benefit from the exploitation of the gas and oil fields while reducing the risk of conflict. The potential joint development arrangement was viewed as a pragmatic solution to a complex geopolitical issue, reflecting broader trends in international resource diplomacy where shared interests encourage collaborative approaches to disputed territories. This development held promise for accelerating Cambodia’s entry into the global energy market and realizing the economic benefits associated with its natural resource endowment.

Rice milling has long held a position of considerable importance within the Cambodian economy, serving as a critical component of the country’s agricultural productivity and export potential. As rice constitutes the staple food and primary agricultural product of Cambodia, the processing of harvested paddy into milled rice represents a vital link in the value chain that supports rural livelihoods and national food security. The milling sector not only adds economic value by transforming raw agricultural output into market-ready products but also facilitates the integration of Cambodian rice into international markets, thereby contributing to export revenues and foreign exchange earnings. This sector’s efficiency and capacity directly influence the overall competitiveness of Cambodia’s rice exports, which remain a key driver of rural development and poverty alleviation. The emergence of Cambodia’s democratic system in the early 1990s attracted substantial international support aimed at fostering political stabilization and economic development. Following decades of conflict and upheaval, the international community recognized the necessity of assisting Cambodia in establishing a functioning democratic governance framework to ensure peace and encourage sustainable growth. This support was manifested through various forms of foreign aid, technical assistance, and capacity-building initiatives designed to strengthen democratic institutions, promote human rights, and facilitate the transition to a market-oriented economy. The international commitment to Cambodia’s democratic transition underscored the broader geopolitical interest in securing stability in Southeast Asia after years of civil war and Khmer Rouge rule. Under the auspices of the United Nations Transitional Authority in Cambodia (UNTAC), a comprehensive peacekeeping and nation-building mission was undertaken between 1992 and 1993. UNTAC’s mandate encompassed the establishment of basic security, the restoration of civil administration, and the organization of free and fair elections to legitimize Cambodia’s new government. To fulfill these objectives, approximately $1.72 billion was expended, representing one of the largest international peacekeeping budgets at the time. This substantial financial investment was critical in creating the conditions necessary for political stabilization, enabling the disarmament of factions, the repatriation of refugees, and the initiation of democratic governance structures. UNTAC’s efforts laid the foundation for Cambodia’s post-conflict reconstruction and subsequent development trajectory. Since the pivotal year of 1993, Cambodia has reportedly received around US$10 billion in total foreign aid, reflecting a sustained pattern of international assistance throughout the post-conflict reconstruction period and beyond. This extensive inflow of aid has been instrumental in supporting a wide array of development initiatives, including infrastructure rehabilitation, social service provision, institutional capacity building, and poverty reduction programs. The scale of aid underscores the continued engagement of donor countries and multilateral organizations in Cambodia’s development process, as well as the recognition of the country’s ongoing needs in overcoming the legacies of conflict and underdevelopment. The cumulative aid has played a significant role in shaping Cambodia’s economic policies and growth prospects over the past three decades. A key moment in the mobilization of international assistance for Cambodia occurred during the Ministerial Conference on the Rehabilitation of Cambodia (MCRRC), convened in Tokyo in June 1992. At this conference, official donors collectively pledged a total of $880 million in economic assistance aimed at supporting Cambodia’s rehabilitation and reconstruction efforts. The MCRRC served as a platform for coordinating donor commitments and aligning aid programs with Cambodia’s priorities, thereby enhancing the effectiveness and coherence of international support. The pledged funds were intended to address critical needs such as infrastructure rebuilding, institutional strengthening, and social development, providing a vital injection of resources at a crucial juncture in Cambodia’s recovery. Further financial commitments were made in September 1993 at the International Committee on the Reconstruction of Cambodia (ICORC) meeting held in Paris, where donors pledged an additional $119 million. This meeting reinforced the international community’s resolve to support Cambodia’s ongoing reconstruction and development, building upon the momentum generated by the earlier Tokyo conference. The Paris pledges were targeted at specific sectors and projects, reflecting a more detailed and programmatic approach to aid allocation. ICORC meetings functioned as regular forums for reviewing progress, addressing challenges, and renewing donor commitments, thereby sustaining the flow of resources necessary for Cambodia’s development. In March 1994, the ICORC convened again in Tokyo, resulting in further aid commitments totaling $643 million. This substantial pledge underscored the continued confidence of the international donor community in Cambodia’s development prospects and the effectiveness of coordinated aid efforts. The Tokyo meeting emphasized the importance of consolidating gains made in governance and economic reform, while also addressing emerging development priorities. The cumulative pledges from these conferences collectively formed the backbone of Cambodia’s early post-conflict reconstruction financing, facilitating investments in infrastructure, social services, and institutional reforms essential for long-term development. Despite these significant inflows of foreign aid throughout the 1990s and early 2000s, Cambodia experienced a notable shortfall in aid disbursement in 2005. This decline was largely attributed to the government’s failure to enact anti-corruption legislation, a critical requirement for maintaining donor confidence and ensuring the effective use of aid funds. Corruption concerns raised doubts about governance transparency and accountability, leading many donors to withhold or reduce aid commitments until satisfactory reforms were implemented. The aid shortfall highlighted the intrinsic link between governance quality and development assistance, illustrating how political and institutional factors can directly impact the availability of external resources. In addition to governance issues, the aid shortfall in 2005 was also linked to the government’s decision to implement a single import/export window. While intended to streamline trade procedures, this measure was perceived by some donors as potentially undermining transparency and efficiency in customs operations. The consolidation of import and export processes into a single window raised concerns about the potential for increased opportunities for rent-seeking and reduced oversight, thereby exacerbating donor apprehensions regarding corruption and administrative capacity. These factors collectively contributed to a temporary reduction in foreign aid flows, emphasizing the complex interplay between policy reforms and donor perceptions. Moreover, increased government spending on education during this period was identified as another factor influencing aid dynamics. While investment in education is generally viewed positively, the simultaneous challenges in complying with good governance policies complicated donor assessments of Cambodia’s overall reform trajectory. Donors sought assurances that increased expenditures would be accompanied by improved institutional management and accountability to maximize development impact. The interplay between fiscal priorities and governance standards thus played a significant role in shaping the patterns of aid allocation and utilization. In response to the aid shortfall and associated governance challenges, the Cambodian government adopted the National Strategic Development Plan for 2006–2010, commonly referred to as the “Third Five-Year Plan.” This comprehensive policy framework aimed to revitalize economic growth, enhance governance, and improve public service delivery. The plan articulated a clear vision for Cambodia’s development, emphasizing the need to address structural constraints and build institutional capacity to attract and effectively manage foreign aid and investment. It represented a concerted effort by the government to realign its policies with donor expectations and international best practices. The Third Five-Year Plan prioritized three major areas to achieve its objectives. First, it sought to accelerate economic growth to an annual rate of 6 to 7 percent, recognizing that sustained growth was essential for poverty reduction and improving living standards. Second, the plan placed a strong emphasis on eradicating corruption, aiming to improve governance and thereby restore donor confidence and attract further aid and investment. Anti-corruption measures were viewed as critical for creating a transparent and accountable public sector capable of supporting development goals. Third, the plan focused on developing public infrastructure and services with an emphasis on quality rather than merely increasing coverage. This included investments in education, training, and healthcare systems designed to enhance human capital and social welfare, reflecting a shift towards more inclusive and sustainable development strategies. Through these targeted priorities, the government intended to create a more conducive environment for economic and social progress in Cambodia.

By the end of 2013, Cambodia’s banking sector consisted of 35 commercial banks, reflecting a relatively open and accessible financial environment that encouraged competition and facilitated the expansion of banking services across the country. This number of institutions indicated that there were no significant regulatory or structural barriers impeding the entry of new banks into the market, allowing for a diverse range of banking options for consumers and businesses alike. The presence of numerous commercial banks contributed to increased financial intermediation, supporting economic growth by providing credit and deposit services to various sectors of the economy. This openness also fostered a competitive atmosphere, which helped improve the quality and accessibility of banking products and services throughout Cambodia. Since 2011, the Cambodian banking industry witnessed the entry of several new banks characterized by offshore funding sources, marking a notable shift in the sector’s financial landscape. These new entrants were often backed by international capital, signaling a growing integration of Cambodia’s banking system with global financial markets. The infusion of offshore funds not only diversified the sources of capital available within the sector but also introduced new banking practices and international standards, contributing to the modernization and strengthening of the domestic banking industry. This trend reflected Cambodia’s increasing attractiveness to foreign investors and financial institutions seeking to tap into the country’s emerging market potential. The presence of banks with offshore funding sources enhanced the sector’s resilience by broadening its capital base and reducing reliance on purely domestic financial resources. Together, these developments underscored Cambodia’s ongoing efforts to deepen financial inclusion and promote sustainable economic development through a more dynamic and internationally connected banking system.

Cambodia possesses significant potential for the development of renewable energy sources, with the capacity to operate its entire energy system on 100% renewable energy. The country’s geographic location, abundant natural resources, and climatic conditions provide a favorable environment for harnessing various forms of renewable energy, including solar, hydro, biomass, and wind power. Solar energy, in particular, benefits from Cambodia’s high solar irradiance, averaging around 5 kWh/m²/day, making it one of the most promising renewable resources in the country. Additionally, Cambodia’s river systems offer considerable hydropower potential, while its extensive agricultural sector generates substantial biomass residues that could be utilized for energy production. The combination of these resources presents a unique opportunity for Cambodia to transition towards a sustainable energy future by capitalizing on renewable energy technologies. Despite this considerable potential, Cambodia remains one of the few countries within the Association of Southeast Asian Nations (ASEAN) region that has not established official renewable energy targets. While neighboring ASEAN countries such as Thailand, Vietnam, and Indonesia have set ambitious goals to increase the share of renewables in their energy mix, Cambodia has yet to formalize similar commitments. This absence of clear targets has contributed to a slower pace of renewable energy development relative to regional peers. The lack of official renewable energy goals also limits the ability of policymakers and stakeholders to coordinate efforts effectively and measure progress toward sustainable energy objectives. Consequently, Cambodia’s renewable energy sector has not fully realized its potential, and the country continues to rely heavily on fossil fuels and imported electricity to meet growing energy demands. To attract increased investment in renewable energy, Cambodia could benefit from adopting clear renewable energy targets, which would serve as a strategic policy framework. Establishing such targets would provide certainty and direction for both domestic and international investors, signaling the government’s commitment to renewable energy development. Clear targets would also facilitate the alignment of national policies and regulatory measures, enabling a more coordinated approach to energy planning and infrastructure development. Moreover, renewable energy targets could stimulate competition and innovation within the sector, encouraging the deployment of cost-effective technologies and the expansion of renewable energy capacity. By setting measurable and time-bound goals, Cambodia would be better positioned to mobilize financial resources, technical expertise, and stakeholder engagement necessary for a successful energy transition. Improvements in renewable energy governance are necessary to support the growth of the sector, including the development of a comprehensive regulatory framework to facilitate renewable energy projects. Currently, Cambodia’s energy governance structures face challenges related to policy coherence, institutional coordination, and regulatory clarity. The absence of a robust legal and regulatory environment can create uncertainties and barriers for project developers, hindering the timely implementation of renewable energy initiatives. Developing a comprehensive regulatory framework would involve establishing clear procedures for project approval, grid connection, power purchase agreements, and tariff setting. It would also require strengthening the capacity of relevant institutions to enforce regulations, monitor compliance, and manage environmental and social impacts. Enhanced governance would contribute to creating a transparent and predictable investment climate, thereby encouraging the entry of new players and the scaling up of renewable energy deployment. Enhancing the bankability of renewable energy projects is crucial to attract both domestic and international investors. Bankability refers to the financial viability and risk profile of projects, which influences the willingness of lenders and investors to provide funding. In Cambodia, renewable energy projects often face challenges such as limited access to long-term financing, currency risk, and uncertainties related to policy and regulatory frameworks. Addressing these issues requires the development of standardized project documentation, credible off-take agreements, and risk mitigation mechanisms such as guarantees or insurance products. Capacity building for project developers and financial institutions is also essential to improve project preparation and due diligence processes. By increasing the bankability of renewable energy projects, Cambodia can unlock greater investment flows, reduce financing costs, and accelerate the deployment of clean energy technologies. Facilitating market entry for international investors is recommended to boost renewable energy development in Cambodia. International investors bring not only capital but also technical expertise, advanced technologies, and global best practices that can enhance the quality and efficiency of renewable energy projects. However, foreign investors often encounter barriers such as complex administrative procedures, unclear land acquisition processes, and restrictions on foreign ownership. Simplifying these procedures and creating an enabling environment for foreign direct investment would encourage greater participation from international companies. Additionally, establishing investment promotion agencies or one-stop service centers could assist investors in navigating regulatory requirements and accessing support services. By opening its renewable energy market to international investors, Cambodia can benefit from increased competition, innovation, and knowledge transfer, which are essential for the sector’s sustainable growth. Cambodia is highly vulnerable to the impacts of climate change, which underscores the importance of developing renewable energy sources as part of its climate change mitigation strategies. The country faces significant risks from rising temperatures, changing precipitation patterns, more frequent and intense floods and droughts, and sea-level rise, all of which threaten agriculture, water resources, infrastructure, and human health. Energy production and consumption contribute to greenhouse gas emissions, exacerbating climate change impacts. Transitioning to renewable energy can reduce Cambodia’s carbon footprint, enhance energy security, and promote resilience to climate-related hazards. Furthermore, renewable energy development aligns with Cambodia’s commitments under international climate agreements, such as the Paris Agreement, and supports national efforts to achieve sustainable development goals. Integrating renewable energy into the broader climate strategy provides a pathway to balance economic growth with environmental stewardship. It is recommended that Cambodia focus on expanding renewable energy capacity away from fossil fuels to reduce climate vulnerability and promote sustainable development. The country’s current energy mix relies heavily on coal, oil, and imported electricity, which not only contribute to greenhouse gas emissions but also expose Cambodia to price volatility and supply disruptions. By prioritizing renewable energy expansion, Cambodia can diversify its energy sources, enhance energy independence, and create new economic opportunities in green industries. Investments in solar, hydro, biomass, and wind power can stimulate job creation, improve rural electrification, and reduce environmental pollution. Moreover, shifting away from fossil fuels supports long-term energy affordability and aligns with global trends toward decarbonization. Strategic planning, capacity building, and stakeholder engagement are essential to ensure that renewable energy expansion is inclusive, equitable, and environmentally sustainable, thereby fostering a resilient energy system capable of meeting Cambodia’s development needs.

The emergence of cyber scam centers in Cambodia has profoundly transformed specific regions, notably Bokor Mountain, Sihanoukville, Ream City, and Dara Sakor, into notorious hubs for a severe and expansive online fraud industry. These locations, once known primarily for their natural beauty and tourism potential, have become synonymous with large-scale cybercrime operations that exploit the country’s regulatory gaps and strategic geographic position. The proliferation of these illicit activities has reshaped local economies and social landscapes, as scam centers have taken root within these areas, often operating under the guise of legitimate enterprises. The physical infrastructure in these regions, including office complexes, residential compounds, and recreational facilities, has been repurposed to support the extensive logistical needs of cyber fraud syndicates, facilitating a wide array of fraudulent schemes targeting victims worldwide. This illicit industry is predominantly controlled by Chinese billionaires who maintain significant influence over the operations, leveraging their financial resources and transnational networks to orchestrate large-scale scams. Their activities have been carried out with the complicity of high-ranking Cambodian political elites, who not only derive substantial profits from these ventures but have also played an instrumental role in facilitating the development of these operations through the provision of infrastructure projects and regulatory leniency. The collaboration between these wealthy Chinese investors and Cambodian officials has created an enabling environment where cybercrime can flourish with minimal interference from law enforcement agencies. This symbiotic relationship has raised serious concerns about governance, accountability, and the rule of law within Cambodia, as political elites benefit directly from the economic influx generated by these illicit industries while turning a blind eye to their criminal nature. The origins of Cambodia’s cyber scam industry can be traced back to the country’s participation in China’s Belt and Road Initiative (BRI) around 2013, which marked a significant turning point in the nation’s economic trajectory. The BRI spurred a surge of Chinese investment in Cambodia, particularly in infrastructure and real estate development, as part of broader efforts to integrate the country into regional trade and connectivity networks. This influx of capital facilitated the construction of roads, ports, and urban developments, which in turn attracted Chinese entrepreneurs and business interests seeking to capitalize on the new economic opportunities. However, alongside legitimate projects, this wave of investment also laid the groundwork for the establishment of special economic zones (SEZs) and mega-casinos, many of which would later be implicated in illicit activities. The rapid development driven by the BRI created a permissive environment where regulatory oversight was often weak or selectively enforced, allowing criminal elements to embed themselves within the expanding economic landscape. Among the investments made during this period were the creation of several SEZs and large-scale casino complexes, which were initially promoted as engines of economic growth and employment generation. However, investigations and reports have since revealed that many of these establishments served as fronts for criminal activities, including money laundering, human trafficking, and cyber fraud. Some of the developers and operators involved in these projects have been identified as fugitives or individuals with known criminal backgrounds, while others have faced international sanctions due to their involvement in illicit enterprises. These developments have cast a shadow over Cambodia’s economic progress, highlighting the extent to which organized crime has infiltrated sectors that were once considered pillars of national development. The dual-use nature of these facilities—serving both legitimate business functions and illicit operations—has complicated efforts to dismantle criminal networks and enforce legal accountability. The landscape of Cambodia’s cyber scam industry underwent a significant shift following China’s 2019 ban on online gambling, which was implemented as part of Beijing’s broader crackdown on illicit financial activities and social harms associated with gambling. This regulatory change, coupled with the global disruptions caused by the COVID-19 pandemic, led many of the previously operational casino and gambling facilities in Cambodia to pivot their focus toward online scamming activities. The decline in traditional gambling revenues forced operators to diversify their illicit business models, with cyber fraud emerging as a lucrative alternative. Scam centers intensified their efforts to recruit and exploit individuals, often employing sophisticated technological tools and social engineering tactics to deceive victims across the globe. The pandemic’s restrictions on movement and international travel further complicated law enforcement responses, allowing these operations to expand with relative impunity during this period. Concurrently, there was a disturbing surge in human trafficking associated with the growth of the cyber scam industry. By September 2023, estimates indicated that approximately 100,000 people, primarily foreign nationals, had been trafficked into Cambodia to work in these scam centers under exploitative conditions. Many victims were lured with false promises of legitimate employment, only to find themselves trapped in coercive environments where they were forced to participate in fraudulent schemes. The trafficking networks exploited Cambodia’s porous borders and weak regulatory frameworks, facilitating the movement and exploitation of vulnerable populations. This human rights crisis has drawn international condemnation and highlighted the urgent need for coordinated efforts to combat trafficking and protect victims within the country’s rapidly evolving cybercrime landscape. A 2024 study provided a stark quantification of the economic scale of the criminal syndicates operating within Cambodia, estimating that the funds stolen through their activities exceed $12.5 billion annually. This figure represents approximately half of Cambodia’s formal gross domestic product (GDP), underscoring the massive financial impact of these illicit operations on the national economy. The study’s conservative estimates reflect the challenges of obtaining accurate data due to the clandestine nature of cybercrime and the deliberate obfuscation of financial flows by criminal networks. Nevertheless, the magnitude of these losses highlights the extent to which Cambodia has become a global epicenter for online fraud, with significant implications for economic stability, governance, and international relations. The diversion of such vast sums into criminal hands also deprives legitimate sectors of investment and growth opportunities, further entrenching systemic corruption and inequality. Ownership of many scam compounds in Cambodia frequently lies with local elites who possess strong incentives to support and associate with criminal activities. These individuals often leverage their political connections and economic power to shield illicit operations from scrutiny and legal consequences. To mask the true nature of their enterprises, these elites commonly hide scam centers behind seemingly legitimate businesses such as casinos, resorts, and special economic zones. This strategy allows them to present a veneer of respectability and economic contribution while facilitating the day-to-day operations of cyber fraud syndicates. The intertwining of criminal and legitimate business interests creates complex challenges for law enforcement and regulatory agencies, as distinguishing between lawful and unlawful activities requires extensive resources and political will that are often lacking. Criminal groups operating within Cambodia have also developed sophisticated money-laundering schemes designed to integrate illicit proceeds into the formal economy. These operations involve multiple layers of financial transactions, often spanning international borders, to obscure the origin and destination of stolen funds. The laundering processes utilize a variety of mechanisms, including shell companies, real estate investments, and trade-based money laundering, which exploit weaknesses in Cambodia’s financial regulatory framework. This has raised significant concerns about the potential corruption of international financial institutions and the contamination of legitimate economic sectors within Cambodia. The infiltration of illicit funds into the formal economy undermines efforts to promote transparency, financial integrity, and sustainable development, posing a serious threat to both domestic governance and international financial systems. Addressing these challenges requires enhanced regulatory oversight, international cooperation, and robust anti-money laundering measures to disrupt the financial lifelines of these criminal enterprises.

Cambodia has been actively promoting investment in electric vehicle (EV) assembly plants as a key component of its broader strategic economic development initiatives. Recognizing the potential for the automotive sector to contribute to industrial diversification and sustainable growth, the government has sought to attract both domestic and foreign investors to establish manufacturing facilities focused on electric vehicles. These efforts align with Cambodia’s ambition to modernize its industrial base and reduce reliance on traditional fossil fuel-powered transportation, thereby fostering innovation and creating new employment opportunities within the country. The promotion of EV assembly plants also reflects a strategic move to position Cambodia as a regional hub for green technology and environmentally friendly manufacturing. Integral to this push towards electric mobility is Cambodia’s 2022 Long-Term Strategy for Carbon Neutrality, which outlines ambitious targets to transform the transportation sector by the year 2050. The strategy envisions a substantial shift from conventional internal combustion engine vehicles to electric alternatives, aiming for 40% of cars and buses and 70% of motorbikes to be electric by mid-century. This policy framework not only addresses environmental concerns by reducing greenhouse gas emissions but also supports the country’s commitments under international climate agreements. The focus on motorbikes is particularly significant given their prevalence in Cambodia’s urban and rural transport systems, making the transition to electric motorbikes a critical step in achieving nationwide carbon neutrality. To facilitate the growth of the EV sector and encourage widespread adoption, Cambodia has implemented substantial reductions in import duties on electric vehicles and related components. By lowering these tariffs, the government has made it more economically feasible for consumers and manufacturers to access electric vehicles, batteries, and essential parts. This policy measure reduces the initial cost barriers often associated with EVs, thus promoting market penetration and supporting the development of a local supply chain. The reduction of import duties also incentivizes the establishment of assembly plants within Cambodia, as lower costs of imported components can enhance the competitiveness of domestically assembled electric vehicles. Together, these fiscal incentives and strategic policies create a favorable environment for the expansion of Cambodia’s electric vehicle industry, aligning economic development with environmental sustainability goals.

The transport system in Cambodia has historically been regarded as rudimentary, particularly throughout the latter half of the 20th century, a period marked by significant turmoil and upheaval within the country. During this era, Cambodia endured prolonged conflict and political instability, which severely undermined the development and maintenance of its transportation infrastructure. The cumulative effects of war, neglect, and limited resources resulted in a network that was often inadequate to meet the needs of the population or the demands of economic activity. This underdeveloped state of transport facilities reflected the broader challenges faced by the nation as it struggled to rebuild and modernize in the aftermath of decades of disruption. The country’s transport infrastructure suffered extensive damage during this tumultuous period, with roads, bridges, and rail lines frequently destroyed or left in disrepair. The widespread devastation was not only a consequence of direct physical damage caused by military operations and sabotage but also stemmed from years of neglect and insufficient investment. As a result, many critical transport routes became impassable or severely degraded, limiting connectivity between urban centers and rural areas. This deterioration had far-reaching impacts on Cambodia’s economic and social fabric, as the movement of goods, services, and people was significantly constrained by the poor condition of the transport network. The weakened state of Cambodia’s transport infrastructure posed substantial challenges to emergency relief efforts, complicating disaster response operations across the country. In times of natural disasters or humanitarian crises, the limited accessibility of affected regions due to damaged or inadequate roads hindered the timely delivery of aid and essential supplies. Relief agencies and government responders often faced logistical obstacles in reaching vulnerable populations, which exacerbated the human toll of emergencies. The lack of reliable transport routes not only delayed critical interventions but also increased operational costs and reduced the overall effectiveness of assistance programs, highlighting the vital role that infrastructure plays in national resilience. Moreover, the poor condition of transport infrastructure intensified logistical difficulties related to the procurement and distribution of supplies throughout Cambodia. The movement of agricultural products, manufactured goods, and basic commodities was frequently disrupted by impassable or poorly maintained routes, leading to inefficiencies and increased costs. These obstacles affected both domestic trade and international commerce, as the country’s ability to connect production centers with markets was compromised. The resulting supply chain challenges contributed to economic stagnation and limited growth opportunities, underscoring the interdependence between transport infrastructure and broader development objectives. In response to these pressing challenges, Cambodia received technical assistance and equipment from the Soviet Union aimed at supporting the maintenance and reconstruction of its transportation network. This aid was part of broader bilateral cooperation during the Cold War era, reflecting geopolitical alignments and mutual interests in regional stability. The Soviet support included the provision of machinery, spare parts, and expertise necessary to rehabilitate roads, bridges, and railways that had fallen into disrepair. Such assistance played a crucial role in enabling Cambodia to undertake essential infrastructure projects, helping to restore critical transport links and improve overall connectivity within the country. The collaboration also facilitated the transfer of technical knowledge, which was instrumental in building local capacity for ongoing maintenance and development efforts. Cambodia’s national transport map features several key routes that serve as vital arteries for the movement of people and goods. Among these, National Highway 1 stands out as a principal corridor, connecting the capital city Phnom Penh with Kien Svay in Kandal Province. This highway forms an essential segment of the country’s road network, facilitating travel and commerce between the central region and other parts of Cambodia. The route’s strategic importance is underscored by its role in linking urban centers with agricultural zones, thereby supporting economic activities such as trade and distribution. National Highway 1 also acts as a conduit for cross-border traffic, enhancing Cambodia’s integration with neighboring countries and regional markets. Visual documentation of Cambodia’s transport infrastructure often includes images depicting rural roads and national highways, which together illustrate the varied conditions of the country’s transportation system. Photographs of rural roads typically reveal unpaved or minimally maintained pathways, reflecting the challenges faced in connecting remote communities to larger towns and cities. These images highlight the reliance on basic roadways for local mobility, often characterized by limited accessibility during adverse weather conditions. In contrast, pictures of national highways showcase more developed routes, sometimes paved and equipped to handle higher traffic volumes, symbolizing the ongoing efforts to modernize and expand Cambodia’s transport network. Together, these visual references provide a tangible representation of the infrastructural disparities within the country and the progress achieved over time.

Child labour is characterized by the full-time employment of children below a legally established minimum age, a threshold that varies according to international conventions and national legislation. This definition encompasses work that deprives children of their childhood, potential, and dignity, and is harmful to their physical and mental development. In Cambodia, the issue of child labour has been a persistent concern, with various forms of employment involving children across different sectors. A survey conducted by the International Labour Organization (ILO) in 2003 revealed that approximately 10% of children aged seven and above in Phnom Penh, the capital city, were engaged in domestic labour. This statistic highlighted the prevalence of child labour even in urban settings, where children were often employed in households performing tasks such as cleaning, cooking, and caregiving under conditions that compromised their welfare and education. In rural areas, children who were too young to participate in agricultural work frequently resorted to scavenging activities, spending their days searching through dumpsites for recyclable materials, scrap metal, or other items that could be sold for income. This form of child labour exposed them to hazardous environments, including unsanitary conditions and physical dangers from sharp objects or toxic substances. Beyond domestic work and scavenging, child labour in Cambodia extended into several other sectors, including the garment and textile industry, which has been a significant component of the country’s economy. Children were also involved in prostitution, a grave violation of their rights, and some were forcibly recruited or voluntarily participated in military activities, further exacerbating their vulnerability and exploitation. Cambodia took formal steps to address child labour by ratifying key International Labour Organization conventions. In 1999, the country ratified the Minimum Age Convention (C138), which sets standards for the minimum age at which children can legally be employed. Subsequently, in 2006, Cambodia ratified the Worst Forms of Child Labour Convention (C182), which targets the elimination of the most hazardous and exploitative types of child labour. In accordance with the Minimum Age Convention, Cambodia established the minimum legal age for employment at 14 years old, aiming to align national laws with international standards and protect younger children from premature entry into the workforce. Despite these legal frameworks, significant challenges remained in enforcing these standards, and high levels of child labour persisted across the country. Historical data underscored the extent of the problem. In 1998, the ILO estimated that 24.1% of children aged 10 to 14 in Cambodia were economically active, reflecting a substantial proportion of young children engaged in work that often interfered with their education and development. This prevalence of child labour was further corroborated by findings from the Cambodia Human Development Report 2000, which indicated that approximately 65,000 children between the ages of 5 and 13 worked at least 25 hours per week and did not attend school. This statistic highlighted the direct impact of child labour on educational attainment, as children who worked long hours were unable to participate in formal schooling, thereby limiting their opportunities for future advancement. In response to these challenges, a range of initiatives and policies were implemented to reduce child labour and improve working conditions for children. One such measure was the United States Generalized System of Preferences (GSP), which provided trade benefits to countries that demonstrated efforts to eliminate child labour and improve labour standards. Additionally, the U.S.-Cambodia Textile Agreement sought to regulate the garment sector, a major employer of young workers, by promoting better labour practices and compliance with international labour standards. The ILO also launched the Garment Sector Working Conditions Improvement Project, which aimed to enhance workplace conditions and reduce child labour within the industry through collaboration with employers, workers, and government authorities. Furthermore, ChildWise Tourism emerged as an initiative designed to raise awareness among tourists and local communities about the negative impacts of child labour and to promote responsible tourism practices that protect children from exploitation. UNICEF has consistently emphasized the critical need to eliminate child labour, underscoring that children engaged in labour often miss out on essential education, which is vital for their personal development and the broader progress of the nation. Education equips children with knowledge and skills necessary to improve their lives and contribute meaningfully to society. Conversely, children who do not attend school are deprived of these opportunities and become more susceptible to abuse and exploitation. The absence of education perpetuates a cycle of poverty, as uneducated children grow into adults lacking the qualifications and capabilities to secure stable employment or improve their economic circumstances. This cycle not only affects individual families but also hampers Cambodia’s overall economic growth and development by limiting the productivity and potential of a significant portion of its population. The persistence of child labour and its detrimental effects on education and productivity remain significant barriers to Cambodia’s development goals. The inability of many children to access education due to labour commitments reduces the country’s human capital and undermines efforts to build a skilled and competitive workforce. As a result, the economic hardship faced by families is often perpetuated across generations, with children forced to abandon schooling to contribute to household income. Addressing child labour thus requires comprehensive strategies that combine legal enforcement, social protection, educational opportunities, and economic support to vulnerable families. Only through sustained and coordinated efforts can Cambodia hope to break the cycle of child labour and foster an environment where all children can enjoy their rights and realize their full potential.

On February 12, 2020, the European Union officially announced the suspension of Cambodia’s participation in the “Everything But Arms” (EBA) trade preferences program. This decision marked a significant shift in the EU’s trade relations with Cambodia, as the country had long been one of the principal beneficiaries of the EBA scheme. The EBA initiative, established by the EU to support the economic development of least developed countries (LDCs), provides duty-free and quota-free access to the European market for all products except arms and ammunition. Cambodia’s status as the second-largest beneficiary of the EBA program underscored the importance of these trade preferences to its export economy, particularly in sectors such as textiles and garments, which heavily rely on access to the EU market. The EU’s preliminary conclusion to suspend Cambodia’s EBA privileges was communicated to the Cambodian government on November 12, 2019, nearly three months prior to the formal announcement. This initial notification was part of a broader review process conducted by the EU to assess Cambodia’s compliance with the eligibility criteria for the EBA scheme, which include respect for human rights, core labor standards, and good governance. The review was prompted by mounting concerns over Cambodia’s political and human rights environment, which had deteriorated significantly in the years leading up to the suspension. The EU’s decision-making process involved extensive consultations and analysis of reports from various human rights organizations and international observers. Central to the EU’s decision to suspend the EBA preferences were serious allegations regarding Cambodia’s failure to address fundamental human rights and labor rights concerns. Human Rights Watch, among other organizations, had documented a pattern of government actions that undermined political freedoms and suppressed dissent. These reports highlighted systematic violations, including crackdowns on opposition parties, restrictions on freedom of expression, and the erosion of democratic institutions. The EU’s assessment concluded that these issues constituted a breach of the commitments Cambodia had made under the EBA program, thereby justifying the suspension of trade benefits as a means to uphold the integrity of the scheme. A key factor cited in the suspension was the Cambodian government’s treatment of the Cambodia National Rescue Party (CNRP), the main opposition party, which faced a series of repressive measures. The government’s actions included the dissolution of the CNRP by the Supreme Court in November 2017, effectively removing the party from the political landscape and consolidating power under the ruling Cambodian People’s Party (CPP). Additionally, the charges against Kem Sokha, the CNRP’s leader, were dropped in a manner that raised concerns about the impartiality and fairness of the judicial process. These developments were widely interpreted as deliberate efforts to stifle political competition and silence dissenting voices, thereby undermining the principles of pluralism and democratic governance. The EU and human rights advocates viewed these government actions as clear violations of the right to freedom of expression, a fundamental human right protected under international law and a core criterion for eligibility under the EBA scheme. The suppression of opposition parties and the curtailment of independent media and civil society organizations were seen as indicative of a broader trend toward authoritarianism in Cambodia. This erosion of democratic space not only contravened the EU’s expectations for beneficiary countries but also raised serious questions about the legitimacy of Cambodia’s political system and its commitment to upholding human rights standards. The suspension of Cambodia’s EBA trade preferences thus reflected the EU’s growing concerns over the country’s human rights record and democratic practices. By withdrawing these trade benefits, the EU aimed to send a clear message that respect for fundamental rights and democratic governance are non-negotiable conditions for preferential trade access. The decision was also intended to exert pressure on the Cambodian government to undertake meaningful reforms and restore political freedoms. However, the suspension carried significant economic implications for Cambodia, given the country’s heavy reliance on exports to the EU market under the EBA scheme, particularly in the garment sector, which employs a large portion of the workforce and contributes substantially to national income. The move underscored the complex interplay between trade policy and human rights considerations in international relations and highlighted the EU’s willingness to leverage economic instruments to promote adherence to democratic norms and labor standards.

Cambodia’s economy has historically relied heavily on a limited range of primary exports, predominantly garments, agricultural products, and fisheries. These sectors have formed the backbone of the country’s export earnings, reflecting Cambodia’s comparative advantages in labor-intensive manufacturing and natural resource-based industries. However, recognizing the vulnerabilities inherent in such a narrow export base, the Cambodian government and various stakeholders have pursued ongoing efforts to diversify the national economy. This diversification strategy aims to reduce dependency on traditional sectors and to foster more sustainable and resilient economic growth by encouraging the development of higher value-added industries and new export categories. Evidence of progress in this diversification is apparent in the gradual growth of value-added exports, which had initially started from a very low baseline. This growth has been primarily driven by foreign multinational companies that have established manufacturing operations within Cambodia. These firms have focused on producing electrical goods and telecommunications equipment, sectors that require more advanced technological capabilities and contribute greater value addition compared to traditional garment manufacturing or raw agricultural exports. The presence of these multinational enterprises has introduced new industrial activities and increased the complexity of Cambodia’s export portfolio, signaling a shift towards more sophisticated manufacturing processes. Between 2008 and 2013, the expansion of high-technology exports in Cambodia was particularly notable. During this period, the value of high-tech exports surged from a modest US$3.8 million to an impressive US$76.5 million. This substantial increase—amounting to more than a twentyfold rise—reflected a significant expansion in Cambodia’s capacity to produce and export technologically advanced products. The growth in this sector was largely attributable to the activities of foreign firms specializing in electrical machinery and telecommunications equipment, which capitalized on Cambodia’s relatively low labor costs and improving investment climate to establish export-oriented manufacturing facilities. Despite these positive developments, a major challenge confronting Cambodia’s industrial development lies in enhancing the technological capacity of the numerous small and medium-sized enterprises (SMEs) operating within the country. These SMEs are predominantly engaged in sectors such as agriculture, engineering, and natural sciences, but many lack the technological sophistication and innovation capabilities required to compete effectively in more advanced industrial segments. The limited access to technology, insufficient technical skills, and constrained financial resources have hindered these firms from upgrading their production processes or developing new products, thereby limiting their contribution to the overall industrial value chain and export diversification. Large foreign firms have emerged as the principal contributors to Cambodia’s value-added exports, with a particular concentration in electrical machinery and telecommunications manufacturing. These companies benefit from greater access to capital, advanced technology, and international markets, enabling them to produce higher-value goods for export. Their presence has been instrumental in introducing new technologies and production methods to the Cambodian industrial landscape, thereby creating opportunities for technology transfer and industrial upgrading. However, the dominance of foreign firms also underscores the need for policies that facilitate the diffusion of technological knowledge to domestic enterprises, especially SMEs, to foster broader-based industrial development. In response to this need, the key policy focus for science and technology in Cambodia has been to promote spillovers—the transfer of skills, knowledge, and innovation—from large foreign firms to smaller domestic firms and across different economic sectors. Encouraging such spillovers is seen as essential for building local technological capabilities and fostering a more dynamic and diversified industrial base. Policy measures have aimed to create linkages between multinational companies and local suppliers, support workforce training programs, and facilitate collaboration between research institutions and industry. These initiatives seek to enhance the absorptive capacity of domestic firms, enabling them to adopt and adapt advanced technologies introduced by foreign investors. The legal framework governing intellectual property rights (IPR) in Cambodia has also played a role in shaping the technological environment. The Law on Patents, Utility Model Certificates, and Industrial Designs, enacted in 2006, was designed to provide protection for inventions and industrial designs, thereby encouraging innovation and investment. However, the practical utility of this law has been limited, as it has primarily benefited larger foreign firms operating in Cambodia rather than local enterprises. The law’s implementation has faced challenges due to limited awareness, weak enforcement mechanisms, and the nascent stage of Cambodia’s innovation ecosystem, which has constrained its effectiveness in stimulating widespread domestic innovation. By 2012, the level of local engagement in patenting activities remained very low. Only 27 patent applications had been filed under the law, and all of these applications were submitted by foreign entities. This statistic highlights the minimal participation of Cambodian inventors and firms in the formal patent system, reflecting broader issues such as insufficient research and development capacity, lack of technical expertise, and limited incentives for innovation within the domestic private sector. The dominance of foreign applicants in patent filings underscores the asymmetry in technological capabilities between multinational corporations and local enterprises. Similarly, the filing of applications for industrial designs up to 2012 also revealed a strong foreign presence. A total of 42 applications had been received, with 40 of these submitted by foreigners. This pattern further illustrates the limited involvement of Cambodian entities in protecting industrial designs, which are critical for fostering creativity and competitiveness in manufacturing and product development. The predominance of foreign applicants suggests that while multinational firms actively seek to safeguard their innovations and designs within Cambodia, domestic firms have yet to fully utilize these intellectual property mechanisms to enhance their market position. Despite the limited direct impact of the intellectual property law on domestic innovation, it has likely contributed to encouraging foreign firms to implement technological improvements in their local production systems. The existence of a formal legal framework for patents and industrial designs provides multinational companies with greater confidence to invest in technology transfer and innovation activities within Cambodia, knowing that their intellectual property rights will be protected. This has been viewed as a positive development for the country’s technological advancement, as it helps to raise the overall level of industrial sophistication and creates potential opportunities for learning and technology diffusion to local firms. However, maximizing these benefits requires complementary policies and capacity-building efforts to enable domestic enterprises to participate more actively in innovation and intellectual property activities.

Investment in Cambodia, as measured by gross fixed capital formation, represented a modest proportion of the nation’s economic output in 2011, accounting for approximately 3% of the country’s Gross Domestic Product (GDP). Gross fixed capital formation reflects the net investment in physical assets such as infrastructure, machinery, and buildings, which are critical for long-term economic growth and development. This relatively low percentage indicated limited domestic and foreign investment activity during that period, which could be attributed to various factors including the country’s developing financial markets, regulatory environment, and infrastructural constraints. Despite this, the Cambodian government and international partners continued to prioritize investment as a means to stimulate economic expansion and improve productivity across key sectors. The distribution of household income or consumption in Cambodia in 2011 revealed significant disparities between different segments of the population. The lowest 10% of households accounted for only 2.6% of the total income or consumption share, illustrating the extent of poverty and limited economic resources available to the poorest demographic. In contrast, the highest 10% of households held a disproportionately large share of 23.7%, underscoring the concentration of wealth among the more affluent segments of society. This uneven distribution highlighted ongoing challenges related to income inequality and social stratification, which have implications for policy formulation aimed at poverty reduction, social welfare, and inclusive growth. The data reflected the broader socioeconomic context in Cambodia, where rapid economic growth had not yet translated into equitable wealth distribution. Agriculture remained a cornerstone of Cambodia’s economy, with several key products contributing substantially to both domestic consumption and export earnings. Rice was the predominant staple crop, fundamental to food security and rural livelihoods, with Cambodia ranking among the world’s significant rice producers. Alongside rice, rubber cultivation played a vital role, driven by increasing global demand and favorable climatic conditions. Other important agricultural commodities included corn, which served as both a food source and animal feed; various vegetables that supported local markets and nutrition; cashews, which were cultivated for export and processing industries; tapioca, derived from cassava roots and used in food products and starch production; and silk, a traditional craft that contributed to cultural heritage and niche market exports. The diversity of these agricultural products reflected the varied agro-ecological zones across Cambodia and the sector’s importance in employment and rural development. The industrial landscape of Cambodia was characterized by a range of sectors that contributed significantly to the national economy. Tourism emerged as a major industry, capitalizing on Cambodia’s rich cultural heritage, including the famed Angkor Wat temple complex, natural landscapes, and growing infrastructure to attract international visitors. The garment industry was another critical pillar, serving as the country’s largest export sector and a major source of employment, particularly for women in urban areas. Construction activities expanded in response to urbanization and infrastructure needs, encompassing residential, commercial, and public works projects. Rice milling represented an important agro-industrial process, adding value to the primary agricultural product and supporting both domestic consumption and export markets. Fishing, wood and wood products, and rubber industries contributed to both local livelihoods and export revenues, while cement production supported the burgeoning construction sector. Gem mining, though less dominant, provided valuable mineral resources and export potential, and the textile sector complemented the garment industry by producing raw materials and finished goods. Collectively, these industries underscored Cambodia’s transition from a primarily agrarian economy toward a more diversified industrial base. In 2011, Cambodia’s industrial production growth rate was estimated at 5.7%, indicating a period of steady expansion in manufacturing and related sectors. This growth rate reflected increased output in key industries such as garments, construction materials, and agro-processing, driven by domestic demand and export opportunities. The positive trajectory in industrial production was supported by improvements in infrastructure, foreign direct investment inflows, and government policies aimed at enhancing the business environment. However, challenges remained in terms of technological advancement, workforce skills, and supply chain development, which influenced the pace and sustainability of industrial growth. Electricity production and consumption data for Cambodia in 2010 and 2011 provided insights into the country’s energy sector dynamics during this period. In 2010, electricity production totaled approximately 1.273 billion kilowatt-hours (kWh), reflecting the generation capacity from domestic power plants, including hydropower, thermal, and other sources. The following year, electricity consumption was recorded at about 1.272 billion kWh, closely matching production levels and indicating a balance between supply and demand within the national grid. Notably, there were no electricity exports reported in either 2010 or 2011, suggesting that Cambodia’s power generation was primarily intended to meet domestic needs rather than regional trade. However, electricity imports in 2011 amounted to 274 million kWh, highlighting the country’s reliance on cross-border energy supplies to supplement domestic generation capacity. These imports were essential to address shortfalls, particularly during peak demand periods or seasonal fluctuations, and underscored the interconnectedness of Cambodia’s energy system with neighboring countries. Exchange rate trends between the Cambodian Riel (KHR) and the United States dollar (USD) over recent years illustrated the currency’s relative stability and the influence of the US dollar on Cambodia’s monetary system. In 2012, the exchange rate stood at approximately 4,097 Riels per USD, reflecting a slight appreciation compared to previous years. The rate was 4,395.62 Riels per USD in 2011, 4,145 Riels per USD in 2010, and 4,139.33 Riels per USD in 2009, indicating minor fluctuations within a relatively narrow band. Earlier years showed rates of 4,070.94 Riels per USD in 2008, 4,006 Riels per USD in 2007, and 4,103 Riels per USD in 2006. This pattern demonstrated the Riel’s managed exchange rate regime, heavily influenced by the widespread use of the US dollar in Cambodia’s economy, particularly in trade, banking, and everyday transactions. The stability of the exchange rate was crucial for maintaining investor confidence, controlling inflation, and supporting economic planning in a country where dual currency usage was prevalent.