Khmer Times, Opinion, 14 November 2025 (Link)
Around the world, supply chains are being reshaped by new technologies, shifting cost structures, diversification of supply chain and evolving trade frameworks and tension, which have accelerated relocation from traditional manufacturing hubs.
For many countries, this moment presents both a challenge and a clear opportunity to connect more deeply with regional value chains.
Cambodia is still in the conceptualisation stage of the free trade zone (FTZ), the development of which has gone through rigorous multistakeholder consultations, and of course international cooperation from partners such as the government of China and the United Nations Industrial Development Organization (UNIDO).
There should be three contexts to consider when discussing about Cambodia’s development of FTZ.
First, FTZ’s development is part and parcel of Cambodia’s coastal development master plan.
The plan runs from 2025 to 2040, covering four provinces with a total area of nearly 18,000 square kilometers. It consists of 141 sub-projects with a total estimated investment of $ 15–20 billion.
By embedding FTZ development within this broader plan, Cambodia aims to ensure that industrial growth is not a standalone project, but part of a durable, well-sequenced national strategy.
Second, factory relocation.
Since the start of trade tensions between the US and China in 2018, industrial relocation has become a global trend.
China is phasing out labour-intensive, low-tech and low-value added sectors due to significantly increasing labour costs and a strategic government-led economic transformation.
The question is not whether relocation will happen, but where it will go.
What we are seeing is that trade tensions and factory relocation have not de-accelerated trade and investment in Cambodia. On the contrary, Cambodia has witnessed significant surge in trade and investment volumes, and investment approvals both in 2024 and 2025 are record-breaking.
In 2024, the Council for the Development of Cambodia (CDC) approved a record 414 projects worth $6.8 billion.
In the first nine months of 2025, the CDC broke the record again by registering 546 projects, amounting to $7.8 billion in investment capital, including 516 projects in the industrial sector.
China is the top investor, leading with 53% of the total investment.
In terms of trade, in the first nine months of 2025, Cambodia generated more than $22.3 billion from exports, up 12.9% in the same period in 2024, with the US as the biggest market, accounting for more than $9.2 billion and a 22% rise.
Meanwhile, Cambodia imported $13.03 billion worth of Chinese goods, an increase of 32%.
These trade and investment dynamics derive from Cambodia’s being well-connected within many multilateral trade frameworks, from ASEAN FTAs to RCEP, to Cambodia’s own bilateral free trade frameworks such as those with China, Republic of Korea and the UAE.
Cambodia sits at the core intersection of ASEAN and RCEP, a market worth $39 trillion and home to 2.3 billion consumers. Combined with a young workforce, open capital environment, and strong GDP growth, Cambodia is destined to be one of the biggest beneficiaries of global supply chain restructuring.
Third, Cambodia’s ‘SEZ Plus’ policy.
Cambodia has one of the most liberal trade and investment frameworks in the region. It is worth noting that the concept of FTZs is being considered while SEZs are already thriving in Cambodia.
The question is: Are those SEZs not special enough, or not free enough? How much special or how much more liberal do we need to be? How do we ensure that we are not “racing to the bottom”?
When developing FTZs, it is necessary to balance this aspect and make precise adjustments to ensure that FTZs do not crowd out businesses in and do not harm the attractiveness of existing SEZ frameworks, while maintaining appropriate benefits for the country in terms of competitiveness as well as state revenues, and especially skills and technology transfers.
With these in mind, we are crafting FTZs in a way that is “country-specific”, which is China; “area-specific (coastal zones); and “sector-specific” (electronics components, automotive parts, and agro-processing which are the pillars of Cambodia’s next growth phase).
In doing so, we are also trying to ensure that suppliers, assembly, testing, logistics, and services co-locate to meet Rules of Origin and scale efficiently across RCEP, ASEAN, and Cambodia-China FTA markets. Beyond cost advantages, we are also focusing on modernising and digitalising the process to enhance effectiveness through “Fast-Track One-Stop Service” that is directly coordinated by the government to help resolve issues related to financing, procedures, and market access.
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