By Mom Mit
Cambodia’s push to attract foreign investors is producing headlines, but beneath the glossy numbers lies a sobering reality: the Kingdom’s economic growth remains uneven, heavily dependent on Chinese capital, and constrained by structural weaknesses that threaten long-term prosperity.
Following last year, Prime Minister Hun Manet has made increasing Foreign Direct Investment (FDI) a central economic priority. Citizens have applauded his commitment, tireless work, and efforts to diversify partnerships. Yet these external outreach efforts risk faltering against the country’s persistent internal challenges, including weak institutions, entrenched corruption, and unequal access to investment opportunities.
Without addressing these internal weaknesses, Cambodia’s pursuit of more foreign capital may bring little lasting benefit.
$45 Billion In Foreign Investment Over 30 Years
FDI has been Cambodia’s primary engine of economic growth for decades. Over the past thirty years, the kingdom has drawn $45 billion in foreign investment, fueling rapid development and positioning itself as one of Asia’s standout economic performers.
In 2024, Cambodia’s GDP reached $46.3 billion, bolstered by investments across manufacturing, agriculture, tourism, and infrastructure. This influx of capital has transformed the country, modernizing cities, expanding roads, and creating employment opportunities—but the benefits have not been evenly distributed.
The Council for the Development of Cambodia (CDC) approved 546 new projects worth $7.8 billion in the first nine months of 2025, a 47 percent increase from the previous year. These initiatives are expected to generate roughly 376,000 jobs across manufacturing, infrastructure, agriculture, and tourism.
On paper, Cambodia appears to be excelling at attracting investors. Yet beneath these headline figures lies a more troubling reality: much of this investment remains low-quality, geographically concentrated, and heavily reliant on a single partner — namely China.
Of the $7.8 billion in approved projects, nearly 70 percent, or $5.3 billion, went to industry and manufacturing, while $1.9 billion targeted infrastructure. Agriculture and agro-industry received just $405 million, and tourism attracted only $175 million.
Meanwhile, Chinese investors accounted for 52 percent of all approved FDI in 2025, followed by domestic investors at 30 percent, Singapore at 6 percent, and Vietnam at 5 percent. Less than one percent came from other countries, including the US, UK, and Malaysia.
Investment is also unevenly distributed across provinces. Kampong Speu (125 projects) and Svay Rieng (122) received the largest shares, followed by Phnom Penh (65), Takeo (59), Koh Kong (46), Preah Sihanouk (43), and Kandal (41). In contrast, many northeastern and northwestern provinces recorded fewer than 17 projects, with four provinces receiving no investment at all.
This pattern underscores a persistent focus on special economic zones and provinces with existing infrastructure, leaving large swathes of the country behind. Regional disparities, if left unchecked, risk deepening social and economic divides that have long plagued the kingdom.
For the Cambodian government, these statistics are a source of pride. More projects, capital, and employment suggest a growing economy. Yet the quality of these investments paints a very different picture. Most newly created jobs offer low wages, minimal labor protections, and limited opportunities for skill development.
Workers are often confined to routine operational roles, while managerial, technical, and research positions remain dominated by foreign investors. Without substantial improvements in skills and technology transfer, Cambodia risks remaining locked in the lower tiers of the global value chain.
China’s investment in roads, bridges, and factories has undoubtedly improved infrastructure, but it has also constrained Cambodia’s ability to diversify partnerships and pursue a more balanced foreign policy. Efforts to attract investment from Japan, South Korea, the European Union, and the United States—investors who typically bring higher standards of governance, technology, and sustainability—have largely fallen short.
Embrace Diverse Foreign Investors & Joint Ventures
Cambodia could learn from China’s own history under Deng Xiaoping, which embraced diverse foreign investors and joint ventures to fuel industrial and technological development. Today, China’s experience shows how high-quality FDI can transform a country’s economy and elevate it into global leadership. Cambodia’s failure to replicate this approach highlights deeper structural weaknesses.
The inability to attract higher-value investment reflects persistent governance challenges. Investors from Japan, Korea, the US, and the EU often require strong rule of law, transparent regulations, and predictable enforcement of contracts—areas where Cambodia still lags. Corruption, opaque decision-making, and weak institutional capacity deter companies capable of bringing advanced technology and higher standards.
Cambodia’s heavy reliance on Chinese capital further limits its attractiveness to investors seeking neutrality, long-term stability, and predictable returns.
The risks of low-quality investment are already visible. Land and infrastructure concessions for foreign projects have contributed to deforestation and forced relocations, often without clear social or environmental assessments.
Provinces attracting investment, such as Phnom Penh, Preah Sihanouk, and Svay Rieng, have seen rapid expansion, while large areas of the northeast and northwest remain neglected. This uneven development risks exacerbating regional disparities, fueling economic inequality, and creating pockets of social tension that could undermine long-term stability.
FDI progress is often measured in numbers—billions of dollars, hundreds of projects, and thousands of jobs. But quantity alone does not equate to quality growth. Cambodia’s over-dependence on low-skilled industries and Chinese capital leaves it externally vulnerable and internally unequal.
True economic progress requires investment that builds local skills, transfers technology, strengthens institutions, and promotes regional inclusion. Without these reforms, Cambodia risks being trapped in a cycle of low-quality growth that benefits few and leaves many behind.
The challenge for Cambodia is not merely attracting more investors. It is ensuring that the capital flowing into the country delivers real, tangible, and inclusive benefits to its people. Only by addressing corruption, reinforcing institutions, creating transparent regulations, and diversifying partnerships can Cambodia transform headline FDI figures into meaningful, sustainable development.
Otherwise, the Kingdom may continue to grow on paper while leaving its people and regions behind.
Mom Mit is a Cambodian economist and writer focusing on Cambodia’s economic development, particularly FDI, agriculture, and inclusive growth. He holds a master’s degree in Strategic and Innovative Development from the Financial University under the Government of the Russian Federation. This article was first published in Cambodianess.
