Officials Warn of Export Risks as the Kingdom Accelerates Economic Diversification

PHNOM PENH, May 26, 2026 (KPT) — Officials are intensifying a drive to diversify the economy, warning that Cambodia’s heavy reliance on a narrow export base leaves it vulnerable to global trade tensions, protectionist measures and supply chain disruptions.

The Ministry of Economy and Finance, in its 2027–2029 fiscal framework, identified diversification as a national priority, citing structural weaknesses from concentrated exports, limited markets and underdeveloped upstream industries.

The plan calls for promoting higher value‑added sectors such as agro‑processing, electronics, automotive parts, furniture and green industries, alongside improved infrastructure, investment incentives and workforce training. Authorities say the measures are vital to meet the needs of emerging industries and support the ambition of becoming a high‑income economy by 2050.

Trade exposure has deepened. Exports to the United States surged nearly 40 percent in early 2026 to $2.26 billion, reinforcing Washington’s role as Cambodia’s largest market. Bilateral trade with China exceeded $19.7 billion in 2025, driven largely by imports, while exports to China remained limited at $1.68 billion.

Analysts caution the export structure is highly concentrated, leaving the country exposed to geopolitical frictions and stalled reforms at the World Trade Organization.

Senior Minister Sok Siphana urged strategic adjustments ahead of Cambodia’s graduation from Least Developed Country status, while Commerce Minister Cham Nimul highlighted ASEAN integration and supply chain upgrading.

EuroCham’s former president Arnaud Darc and Royal Academy economist Ky Sereyvath echoed calls for diversification, stressing the need to expand markets, strengthen industrial capacity and ensure compliance with international trade rules.