Cambodia positions itself as alternative hub as Japanese firms eye shift from Vietnam

PHNOM PENH, Feb 24, 2026 (KPT) – Cambodia has signaled readiness to attract more Japanese investment as labor shortages in Vietnam prompt Japanese companies to consider expanding operations into the Kingdom, officials said Tuesday.

Wakabayashi Kohei, chief representative of the Japan External Trade Organization (JETRO) in Cambodia, said the country’s labor force was a key competitive advantage. “Cambodia’s strong point is labor. It’s not only about cost, but the quality of the labor is very good,” he told a recent seminar, noting that many Japanese firms in Vietnam face hiring difficulties.

With more than 2,000 Japanese companies currently operating in Vietnam, Kohei suggested Cambodia could benefit from relocation driven by workforce demand. He encouraged investors to visit Cambodia firsthand, saying outdated perceptions often change after seeing the country’s development.

Labour ministry spokesman Sun Mesa reaffirmed Cambodia’s openness to Japanese investment, citing incentives such as tax holidays, duty free machinery imports, investment protection laws, streamlined registration, and foreign ownership provisions. Special economic zones have been established to cater specifically to Japanese firms.

Mesa highlighted Cambodia’s vocational training policy targeting 1.5 million citizens, which has already equipped tens of thousands with technical and engineering skills. The government continues to prioritize productivity in electronics, automotive, and industrial sectors.

The renewed interest comes as nearly 960,000 Cambodian migrant workers have returned from Thailand, with about 630,000 reintegrated into domestic employment. Japan has pledged nearly $1 million to the International Labour Organization to support reintegration of 20,000 workers over two years.

Officials say the combination of skilled labor development, returning workforce availability, and ASEAN connectivity positions Cambodia as an emerging alternative destination for Japanese investment in Southeast Asia.