Cambodia Investment Review
The recent upgrade of the ASEAN-Australia-New Zealand Free Trade Area (AANZFTA), which came into effect on April 21, 2025, is poised to enhance Cambodia’s role in regional trade and investment. Spanning over 703 million people with a combined GDP of more than US$5.6 trillion, the upgraded pact strengthens economic integration through new trade facilitation measures, digital standards, and sustainability provisions.
For Cambodia, the agreement provides an opportunity to diversify export markets, streamline supply chains, and position itself as a regional player in both manufacturing and agri-tech.
Enhanced Market Access for Cambodian Exporters
Since the AANZFTA’s initial implementation in 2010, Cambodia’s trade ties with Australia and New Zealand have steadily grown. In 2023, ASEAN’s total goods trade with the two countries reached US$138.4 billion. Now, with simplified rules of origin and preferential tariffs, Cambodia’s export-reliant industries—especially garments, agriculture, and light manufacturing—stand to gain.
“The AANZFTA upgrade is a strategic win for Cambodia,” said Clint O’Connell, Partner and Managing Director at DFDL Cambodia. “It creates a platform for Cambodian businesses—particularly in textiles and agribusiness—to expand into high-value markets like Australia and New Zealand while reducing compliance barriers.”
Cambodia’s garment sector, which contributes around 80% of national export earnings, is expected to benefit from faster customs clearance and improved tariff treatment under the revised agreement.
MSME Support and Supply Chain Stability
A dedicated chapter on micro, small, and medium-sized enterprises (MSMEs)—which account for 58% of Cambodia’s GDP and over 70% of its workforce—offers support through regulatory streamlining and digital trade facilitation. These provisions will make it easier for local businesses, such as artisans and food processors, to engage in cross-border trade.
The agreement also introduces mechanisms to maintain the flow of essential goods during crises. This comes as a response to challenges witnessed during the COVID-19 pandemic, where Cambodian rice and agricultural exports were disrupted by border slowdowns and global freight delays.
“By building in flexibility for times of disruption, Cambodia can better protect its farmers and exporters from future shocks,” added O’Connell.
Advancing Digital and Green Economic Priorities
The AANZFTA upgrade also prioritizes digital trade, supporting Cambodia’s long-term goals under the “Digital Economy and Society Policy Framework 2021–2035.” Enhanced cooperation on e-invoicing, data flows, and digital infrastructure opens new opportunities for Cambodian tech startups and e-commerce platforms to access Australia and New Zealand’s markets.
On the sustainability front, the pact promotes environmental cooperation and access to climate-smart technologies. Cambodian rice farmers could soon collaborate with Australian experts to adopt precision agriculture tools, including GPS-guided equipment and drought-resistant crop varieties.
Furthermore, New Zealand’s experience in post-harvest logistics and supply chain optimization could support Cambodia’s efforts to reduce food waste and improve market connectivity for its agri-products.
Strengthening Cambodia’s Global Trade Position
The timing of the AANZFTA upgrade is notable, as protectionist policies rise elsewhere. The agreement allows Cambodia to double down on open, inclusive trade, while reinforcing investor confidence in the Kingdom’s economic outlook.
With updated dispute resolution mechanisms, sourcing flexibility, and enhanced consumer protections, the revised agreement helps position Cambodia as a stable and attractive trade partner in a volatile global environment.
“As other markets turn inward, Cambodia is taking a bold step forward with the AANZFTA. It’s a sign of commitment to open trade and regional growth,” O’Connell concluded.
For more information or legal support, contact DFDL Cambodia:
📧 clint.oconnell@dfdl.com
📞 +855 23 210 400
🌐 www.dfdl.com
