From Vision to Delivery: Why Cambodia’s Industrial Policy Implementation Needs a Practical Guide

From Vision to Delivery: Why Cambodia Needs an Implementation Guide for Industrial Policy

Against the backdrop of the ongoing restructuring of the global manufacturing supply chain, Southeast Asian countries are becoming important destinations for the new wave of industrial relocation. Cambodia, as one of the faster-growing economies in the region, has attracted substantial foreign investment in recent years, demonstrating its capacity to absorb labor-intensive manufacturing sectors such as garments, footwear, and electronic components. However, the gap between policy formulation and industrial implementation is emerging as a critical bottleneck restricting its manufacturing upgrade. Recently, industry observers have pointed out that Cambodia needs an implementation guide for industrial development policies to bridge the gap from strategic vision to actual delivery.

I. Cambodia's Opportunity in the Global Supply Chain Restructuring

Driven by trade frictions, geopolitical risks, and cost pressures that push multinational companies to adopt a "China+1" strategy, Cambodia has gradually entered the view of global buyers due to its labor cost advantages, preferential trade status (e.g., EBA, GSP), and steadily improving infrastructure. In 2025, Cambodia attracted $5.1 billion in foreign direct investment (FDI), with exports growing by 17.7%, and manufacturing as the main driver. However, compared with neighboring countries such as Vietnam and Thailand, Cambodia's industrial base remains relatively weak, industrial supporting capacity is insufficient, and the stability of policy implementation faces challenges.

II. Policy Implementation: Three Major Pain Points from Planning to Execution

#### 1. Disconnect between Policy Framework and Operational Details

Cambodia has issued multiple economic development strategies, such as the "Cambodia Industrial Development Policy 2015-2025," but the implementation pathways, timelines, and resource allocation for specific sectors often lack operability. Enterprises report uncertainty in policy interpretation and execution during investment approval, tax incentives, and land acquisition, which affects long-term investment decisions.

#### 2. Cross-Sector Coordination and Government Capacity Gaps

Industrial development involves multiple ministries, including Commerce, Industry, Customs, Taxation, and Environment. The absence of a unified policy coordination mechanism forces enterprises to deal with different procedures and standards. Moreover, the technical capacity and policy awareness of grassroots civil servants vary, making it difficult for central intentions to be fully transmitted to local levels.

#### 3. Lagging Supporting Infrastructure and Industrial Ecosystem

Although large projects such as the new Phnom Penh airport and the deep-water port in Sihanoukville are advancing, problems like high electricity costs, low logistics efficiency, and a shortage of skilled workers remain prominent. The lack of close alignment between policy intentions and infrastructure investment weakens the competitiveness of the manufacturing sector.

III. Implementation Guide: A Key Tool to Bridge the Gap

• An effective implementation guide for industrial development policy should include the following core elements:- Clear responsibility matrix: Decompose each policy objective into specific departments, set quantitative indicators and delivery deadlines.
• Standardized operating procedures: Provide investors with clear entry, operation, and exit process references to reduce institutional transaction costs.
• Resource guarantee mechanism: Coordinate budget allocation, human resource training, and technical assistance plans to ensure policies are not rendered ineffective.
• Monitoring and feedback loop: Establish a regular evaluation mechanism, use data to track policy effectiveness, and make timely adjustments and corrections.

International experience shows that Vietnam promotes local governments to improve the business environment through the Provincial Competitiveness Index (PCI), while Thailand establishes a cross-departmental executive committee through the Eastern Economic Corridor (EEC), both effectively enhancing policy implementation efficiency. Cambodia can draw on such models and develop differentiated guidelines based on local conditions.