June 12, 2026
PHNOM PENH – Cambodia’s special economic zones (SEZs) and industrial parks must evolve beyond a development model built on low costs and preferential market access if the country is to remain competitive after graduating from Least Developed Country (LDC) status in 2029, government officials and industry leaders warned, during a major industry forum.
The June 9 Industrial Parks & Special Economic Zones Forum 2026, organised by EuroCham Cambodia’s Real Estate & Construction Committee, saw policymakers, investors, developers and logistics operators assess the strengths and vulnerabilities of Cambodia’s industrial real estate sector.
While many participants highlighted Cambodia’s strong export growth, competitive operating costs and expanding manufacturing base, discussions repeatedly returned to a looming challenge: how to sustain industrial growth once the country loses key trade preferences associated with its LDC status.
Speaking at the forum, Virak Ouproum, deputy director-general of the Directorate General of Industry at the Ministry of Industry, Science, Technology and Innovation, highlighted how the Kingdoms scheduled graduation from LDC status in 2029 would mark a significant turning point for the country’s industrial sector.
He noted that graduation would gradually reduce access to preferential trade arrangements, including the EU’s Everything But Arms (EBA) initiative and other market access benefits that have helped attract export-oriented manufacturers over the past two decades.
According to Virak, maintaining competitiveness will require Cambodia to accelerate its transition from labour-intensive industries toward higher-value manufacturing sectors such as electronics, automotive components, precision engineering and agro-processing.
“The next stage of industrial development will depend not only on investment incentives but also on infrastructure, energy supply, workforce skills and industrial productivity,” he said.
The challenge comes despite substantial growth in Cambodia’s manufacturing ecosystem.
As of April 2026, 3,266 factories were in operation. They employed more than 1.31 million workers, around 70 per cent of them women.
The Kingdom’s 33 operational SEZs host 642 factories employing more than 200,000 workers. Another 20 industrial parks accommodate approximately 150 factories and more than 90,000 workers.
The figures underscore the growing importance of industrial zones to Cambodia’s economy, exports and employment generation.
However, industry leaders cautioned that past advantages may not guarantee future success.
Kim Kinkesa, managing director of Advantage Property Services (APS Cambodia), noted that Cambodia continues to enjoy significant cost advantages compared to regional competitors.
Ready-built factory rental rates average approximately $3.05 per square metre per month, significantly below comparable rates in northern and southern Vietnam, while long-term industrial land lease costs remain relatively affordable.
Licensed SEZs have attracted a cumulative $13.8 billion in investment across more than 8,300 hectares of active industrial land, reflecting sustained investor confidence in the sector.
Yet Kinkesa argued that low costs alone are no longer sufficient in an increasingly competitive regional investment environment.
“From my perspective, Cambodia’s industrial market remains competitive, supported by affordable land and relatively low operating costs,” she said.
“However, the next phase of industrial development will require a much more coordinated ecosystem, from national zoning and reliable logistics networks to skilled labour, energy efficiency, sustainability, transparency and investor confidence.”
“In a world where uncertainty is becoming the norm, Cambodia must build not only a competitive industrial ecosystem, but a resilient one,” she added.
The forum highlighted growing recognition that investors are increasingly evaluating destinations based on factors beyond wages and rental costs.
Panellists pointed to infrastructure quality, supply chain connectivity, environmental standards, renewable energy availability and workforce capabilities as critical considerations for multinational manufacturers seeking long-term production bases.
Discussions also focused on the evolving role of eco-industrial parks, which integrate environmental management, resource efficiency and sustainability principles into industrial development.
Industry experts said such facilities are becoming increasingly important as international companies face mounting pressure from customers, regulators and investors to meet environmental, social and governance (ESG) standards throughout their supply chains.
Rey Sopheak, a national expert on eco-industrial parks, joined government and investment officials in discussing how environmentally sustainable industrial zones could help Cambodia attract higher-value manufacturers while strengthening long-term competitiveness.
International experience was also presented as a potential roadmap for Cambodia’s future development.
François Magnier, international director and design director of IDEC Group Asia, showcased examples from industrial projects across multiple countries, highlighting how international construction standards, modern logistics infrastructure and green building certifications can influence tenant attraction and investment decisions.
The discussion reflected broader efforts within Cambodia’s industrial sector to move up the value chain and attract more sophisticated manufacturing activities.
Participants noted that while Cambodia continues to benefit from favourable demographics, strategic geographic positioning and expanding regional trade links, competition from neighbouring countries is intensifying.
Vietnam, Thailand, Indonesia and Malaysia are all investing heavily in industrial infrastructure, logistics and workforce development to secure new manufacturing investments amid ongoing global supply chain diversification.
Ross Wheble, vice-chairperson of EuroCham Cambodia’s Real Estate & Construction Committee and country head of Knight Frank Cambodia, noted that Cambodia possesses many of the fundamental ingredients needed for industrial success.
“What came through clearly this afternoon is that the fundamentals are there: land availability at competitive rates, access to labour, conducive trade frameworks and the continued growth in exports and expansion of the manufacturing ecosystem — despite disruptive external factors,” he said.
However, Wheble argued that the gap between Cambodia’s potential and its ability to establish itself as a leading industrial destination lies in implementation.
“The question now is whether the sector can move from discussing the opportunity to delivering the product quality and infrastructure reliability that international occupiers actually require,” he said.
He added that closer coordination between developers, logistics providers, construction specialists and government agencies would be essential if Cambodia hopes to capture a larger share of higher-value industrial investment.
As the 2029 LDC graduation date approaches, participants agreed that the country’s next challenge is no longer attracting factories through low costs alone, but creating an industrial ecosystem capable of competing on quality, efficiency and resilience.
For Cambodia’s industrial parks and SEZs, the coming years may determine whether they remain cost-competitive manufacturing locations or evolve into the advanced production hubs needed to sustain growth in a post-LDC economy.