Economisation of foreign embassies in Cambodia

Khmer Times, Opinion, 25 September 2025 (Link)

There are two major trends that have spurred the economisation of foreign embassies in Cambodia. One is Cambodia’s planned graduation from Least Developed Country (LDC) status in 2029, and the other is Cambodia’s boycott of Thailand-made products.

Cambodia is scheduled to effectively graduate from LDC status in 2029 and partner countries are supporting Cambodia in the process to ensure smooth transition through market enlargement, trade facilitation and enhancement of production capacity, among others.

It is encouraging to note that the evolution of the partnership, once primarily focused on politics and aid, towards a multifaceted cooperation that includes more exchanges in terms of trade and economic activities has gained positive momentum.

Key partner countries have begun to create a trade, investment and economic portfolio within their embassy staff rosters, and those that already have this portfolio are finding themselves adding more economic staff to the team to meet the growing need for specialisation and dedicated resources.

There are multiple examples to look at.

For instance, the British Embassy is very proud that the British architectural firm Foster and Partners participated in the design of Techo International Airport, a modern and breathtaking airport, at least from the perspective of the Cambodian people, thus inscribing the name of the Cambodian airport on the list of world-class airports. A Cambodian delegation recently visited the United Kingdom to learn about the process of joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

Long before this, the Chinese embassy had already increased its economic staff, which is understandable since major Chinese companies, both private and state-owned, visit Cambodia almost every month. The most significant decision in recent memory was BYD’s decision to establish a factory in Cambodia and begin operations by the end of this year.

Cambodian swiftlet nests, fresh durians, and captive-bred crocodiles are among the new products recently gaining access to the Chinese market, following protocols signed in April. Other approved and expanding exports to China include rice, bananas, longans, peppercorns, coconuts, cashew nuts, and cassava. The expansion of agricultural products is supported by agreements to streamline direct exports and improve transportation methods, such as the first air shipment of durians in August.

In such a context of growth, the traditional size of the embassy’s economic staff would not be able to manage the increased workload.

American investments have also strengthened their presence, particularly in the automotive industry, which is expected to grow even more strongly, thanks to the zero tariffs offered by Cambodia. In August, Cambodia was chosen as the only ASEAN country to be granted exclusive rights by General Motors (GM) to assemble Chevrolet vehicles, marking a milestone in the Kingdom’s automotive industry. Ford has expanded its operations in the Kingdom, and it is evident that new Ford vehicles, especially those priced between US$40,000 and US$100,000, are gradually invading the once ubiquitous Toyota car market, mostly used cars. Cambodian consumers are now opting for affordable new cars and favouring brands with factories in Cambodia.

They seem happy with their conscientious consumption.

The Japanese Embassy also strengthened its economic team, incorporating representatives from various economy- and trade-related ministries to promote business co-creation through a strong partnership between the government and the private sector. The introduction of large-sized Cambodian cashew nuts into Japanese supermarket chains nationwide was a source of great pride for both Cambodia and Japan, as the Japanese market is extremely difficult to penetrate.

France is competing for share of infrastructure development and services. VINCI Airports is operating the new Techo International Airport (KTI) in Phnom Penh, having signed an agreement in July. In April 2024, the Phnom Penh Water Authority (PPWSA) and Vinci Construction Grands Projets (VCGP) finalised $103.3 million contract for the design and construction of the third drinking water treatment plant in Bakheng commune in Phnom Penh. In the pipeline, Vinci Construction and Sage Engineering have also announced a collaborative project to establish a cutting-edge waste recycling park in Phnom Penh.

The EU has been funding the CAPFish programme focusing on both aquaculture and capture fisheries, aiming to boost productivity, improve food safety standards, and ensure competitiveness in domestic and international markets. Through the CAPFish-Capture project, 63 enterprises have already benefitted from grants, technical support, and investment facilities designed to modernise equipment and improve production.

Last October, Cambodia and Canada agreed to open embassies in Phnom Penh and Ottawa, respectively. Such a decision makes a lot of economic sense, especially when ASEAN and Canada are trying to finalise their free trade agreement in the near future.

Recently, Cambodian rice entered the Australian market, notably with fragrant rice being sold in Coles supermarkets in August, following increased bilateral cooperation and Australian support for Cambodia’s agricultural exports.

A similar proud moment was when a container of Cambodian cashew nuts was able to enter the Italian market in early September.

In Khmer, we say “mean mouy, mean pi”, which means that when we have the first one, there will probably also be the second one in line.

The second major trend is Cambodia’s boycott of Thailand-made products.

The Cambodian government has banned the import of certain products from Thailand, such as petroleum. Other products, although not officially banned, have been voluntarily boycotted by Cambodian consumers.

The most visible is fresh milk. The Japanese brand Meiji, with its Thailand-made milk, used to dominate Cambodian supermarkets. The recent border closures led to speculation that there was a temporary disruption in supply, but this was not the case. In reality, even after Meiji was able to replenish its stock in Cambodia, its products remained untouched by Cambodian consumers.

Kirisu, Cambodian fresh milk, is overwhelmed by demand. Cambodian consumers did not buy Meiji, even when Kirisu was out of stock. They preferred to buy IndoMilk from Indonesia or products from countries other than Thailand.

Pathunam in Bangkok used to be the paradise for low-cost. fast-fashion garment traders from Cambodia. Now these traders are shifting to source substitutes from Vietnam, which is offering even more competitive prices and quality.

It is often perceived that the Cambodian consumer market is very small, and therefore many companies are treating Cambodia as secondary end-user market to be supplied by Thailand or Vietnam-based factories.

Now the perception is proven wrong when consumers become critical and nationalistic, trying to buy products made in Cambodia first. Previously, this perception was constructed due to the fact that the market for retail consumer products was overwhelmingly dominated by Thailand, and there was no market space for entry. Now that the consumers have become critical, it has opened up an avenue for a reconstruction or replacement of multi-billion dollar business for competition.

For instance, Cambodia used to buy more than a billion dollar’s worth of petroleum and gas from Thailand. Now some owners of Peace Petroleum Cambodia (PPC), the former franchise buyers of Thailand’s PTT using supply from Thailand, are negotiating to import quality petroleum from the US.

Another major consumption market is tourism and medical tourism.

Assuming that one million Cambodians used to go to Thailand for regular health check-ups and shopping, and that they spent $2,000 on average annually, then it was two billion dollars’ worth of spending from the Cambodian people.

Assuming that another half million Cambodians used to go to Thailand to receive treatment for critical diseases or high-end shopping, who had probably spent $5,000 on average annually, then their share of spending was $2.5 billion.

Thus, the humble estimate of the size of the market for Cambodian tourists and medical tourists to Thailand was at least $4.5 billion.

Now countries such as Malaysia and Vietnam are trying hard to compete for this market that used to be controlled by Thailand.

The above two major trends have reinvigorated economisation of foreign embassies in Cambodia in their bid to cultivate mutual markets for mutual benefit. They are trying to compete for the Cambodian consumer market and a growing demand for infrastructure development as an emerging economy, and they are also assisting Cambodia in cultivating its home market for locally produced Cambodian products.

It is a win-win situation when countries openly compete through market economy, and that is why open, diverse and inclusive trade is important for economic development, enhancement of production capacity, job creation, and shared prosperity.