Cambodia's Economic Growth Accelerates Through the Manufacturing Industry

1. Cambodia's Economic Growth Accelerates Through the Manufacturing Industry Cambodia has emerged as one of Southeast Asia’s fastest-growing economies. The key drivers of this growth have been the manufacturing industry and tourism. Over the past decade, the country has seen significant development in its manufacturing sector, which has led to an increase in employment, improved infrastructure, and growth in foreign investment. In this article, we will explore how Cambodia's manufacturing industry is accelerating the economic growth of the country, examining the factors contributing to its success, and the challenges it faces. For more visit Apac Business Times The Rise of Cambodia’s Manufacturing Industry Cambodia’s manufacturing sector started gaining importance in the early 2000s and the following years of political instability and economic hardship. Post-Conflict Reconstruction - After a few years of conflict, Cambodia focused on rebuilding its economy, by making the manufacturing industry its strategic move. Along with this government also implemented reforms to attract foreign investment and stimulate industrial growth, hence paving the way for the growth of the manufacturing sector. Key Drivers of Growth Several factors have contributed to the rapid expansion of Cambodia’s manufacturing industry, some of them are low labor costs, strategic location, investment incentives, improved infrastructure, and many more. Cambodia offers competitive labor costs compared to other neighboring countries, which makes it an attractive destination for manufacturing. The country also has proximity to major markets like Thailand, China, and Vietnam. When it comes to incentives the Cambodian government provides various incentives to foreign investors, including tax breaks, duty exemptions, and investment protection guarantees. Apart from all these, there are significant investments in infrastructure, such as roads, ports, and industrial zones, have facilitated the growth of the manufacturing sector. Major Manufacturing Sectors Garment and Textile Industry The garment and textile industry is the cornerstone of Cambodia’s manufacturing sector. This industry employs over 700,000 workers, making it the largest employer

2. in the manufacturing sector. Garments and textiles have high export revenue which accounts for more than 70% of Cambodia’s total exports, primarily to markets in the United States, Europe, and Japan. Some other growth factors of the industry include favorable trade agreements, such as the Everything But Arms (EBA) agreement with the European Union, which have boosted exports and attracted foreign investment. Footwear Manufacturing Another significant contributor to Cambodia’s manufacturing growth is Footwear manufacturing. The sector has also seen substantial growth, with many international brands establishing production facilities in Cambodia. The footwear industry has an economic impact as it generates substantial export revenues and provides numerous employment opportunities. Electronics and Electrical Products The electronics and electrical products sector is emerging as a promising area for diversification in Cambodia’s manufacturing industry. Increased foreign direct investment (FDI) in electronics manufacturing has led to the establishment of new factories and production lines. The sector also benefits from technological advancement and training programs which enhance the skill levels of the workforce. Economic contribution The key contributor to Cambodia's economy is the manufacturing industry which accounted for around 31% of the country’s economy in 2016. This industry produced an output of $15.8 billion in the year 2022 and it was incurred by 83% than the previous year. The ADO report estimates that the industry will continue its economic expansion from 2024 to 2025 with stronger export support. Conclusion To conclude, Cambodia's manufacturing industry is a key driver of its rapid economic growth, providing employment, boosting exports, and attracting foreign investment. With increasing foreign investments, improved infrastructure, and a skilled workforce, the country is emerging as a significant player in the global manufacturing landscape. The future plans for sustained growth, Cambodia’s manufacturing sector focuses on diversification and innovation along with prioritizing sustainability for long-term success.