Economists and business leaders anticipate a dynamic 2024 for Cambodia’s industrial sector, with the government expecting it to outpace services and agriculture, driven by a wave of new investment projects.

According to the Ministry of Economy and Finance’s Budget in Brief for the fiscal year 2024, the country’s economy is on track to recover and is forecasted to grow by approximately 6.6%. 

The country’s projected gross domestic product (GDP) stands at around 14.296 trillion riel (about $35.17 billion) with GDP per capita expected to rise to $2,071, up from $1,917 in 2023. 

The exchange rate is predicted to remain at approximately 4,065 riel per US dollar. 

The forecast highlights the sector’s primary role in the growth, with an anticipated increase of 8.5%, compared to the service sector’s 6.9% and agriculture’s 1.1%.

“The industrial sector is projected to continue its upward trajectory at around 8.5% in 2024, up from about 5.0% in 2023. This is attributed to the expected recovery of the garment sub-sector, while non-garment manufacturing sustains strong growth and the construction sub-sector continues its gradual expansion,” said the ministry.

It predicts that the garment sector will rebound, driven by a resurgence in global demand, particularly from key trading partners like the US and EU. 

The “Cambodia Garment, Footwear and Travel Goods (GFT) Sector Development Strategy 2022-27” aims to enhance the investment climate and boost competition within the sector. 

However, the ministry warns of potential negative impacts from the prevailing global economic uncertainties, which could destabilise external demand, especially from critical markets including the US and EU.

It said that non-garment manufacturing is anticipated to remain robust, fuelled by a balanced mix of domestic demand and export-oriented growth. 

According to the ministry, positive trends in external demand and free trade agreements (FTAs) are expected to continue propelling the sub-sector’s growth, particularly in key products such as solar panels, car tyres and fur. 

“Meanwhile, the enactment of the Kingdom’s new investment law is set to make the investment climate more attractive and favourable,” it stated.

Hong Vanak, a researcher at the Royal Academy of Cambodia, expressed optimism about the country’s economic trajectory on January 2. 

He attributed the heightened prospects for investment and business expansion to a variety of factors including its strategic location, favourable investment laws and a preferential tax system for exports to important markets like the US, EU and Canada. 

“Barring unforeseen major events, Cambodia’s economic growth in 2024 will be undoubtedly robust, underpinned by rapid industrial growth and increased international exports,” he stated. 

Heng noted improvements in other sectors such as tourism and agriculture over 2023 and mentioned that infrastructure developments are further enhancing the country’s appeal to investors.

Lim Heng, vice-president of the Cambodia Chamber of Commerce, said that in 2024, the industrial sector is expected to witness further growth, particularly in the export of textile products and processing industries. 

He highlighted the country’s continued benefits from the implementation of bilateral FTAs such as those with China (CCFTA), South Korea (CKFTA) and the Regional Comprehensive Economic Partnership (RCEP). 

He noted that the country has received preferential tariffs on exports to major countries including the US, EU and UK.

“Political and geopolitical factors, investment laws, labour and preferential tariffs from many countries will assist in attracting more investors to Cambodia. The influx is expected to boost direct production to meet domestic demand and enhance export capabilities to the international market,” he added.

Sam Soknoeun, president of the Global Real Estate Association, said special economic zones (SEZs) are set to play a crucial role in attracting more investments into high-tech industries and factories. 

He noted that the association is exploring partnerships with Japanese investors for the proposed Cambodia-Japan SEZ project. 

He indicated that the zones are instrumental in encouraging large international companies to establish factories for production and export. 

According to Soknoeun, numerous multinational investors are currently engaged in various sectors within the country, contributing to an increase in exports and national economic growth.

“I am deeply engaged in discussions with Japanese investors to identify companies capable of encouraging other Japanese firms to establish factories and enterprises in the Cambodia-Japan SEZ. The initiative may soon become a reality,” he said. 

“Should renowned Japanese companies establish direct factories in Cambodia, it would not only enhance the quality of consumer products within the nation but also significantly improve the capacity to export Cambodian goods to international markets,” he added.