Cambodia is preparing a new 10-year Industrial Development Policy (IDP) for 2026 to 2035 aimed at transforming the country's manufacturing base from labour-intensive, low-skilled production toward more productive industries driven by technology, skills and higher-value activities.
The Supreme National Economic Council (SNEC) is leading the preparation of the draft policy, which is intended to guide Cambodia's industrial development over the next decade, diversify exports and strengthen connections between foreign investors and domestic enterprises.
The latest draft was reviewed during an inter-ministerial and institutional meeting chaired by Hean Sahib, Permanent Vice-President of SNEC and chairman of the IDP working group.
The policy preparation began in May 2025 and has involved consultations with government ministries and institutions, development partners and the private sector, as well as a review of international industrial-development experiences.
Key Facts
| Area | Details |
|---|---|
| Policy | Cambodia Industrial Development Policy 2026-2035 |
| Duration | 10 years |
| Preparation began | May 2025 |
| Lead institution | Supreme National Economic Council |
| Core objective | Shift toward higher-productivity, technology- and skills-intensive industries |
| Strategic focus | Investment, exports, industrial linkages, infrastructure, skills, technology and finance |
| Priority industry groups | Existing, emerging, long-term strategic and supporting industries |
| Supporting focus | Circular economy and environmental resilience |
| LDC graduation | Planned for 2029 |
| Long-term national vision | High-income economy by 2050 |
Cambodia targets a more technology-intensive industrial base
The draft IDP is designed to address structural challenges facing Cambodia's manufacturing sector as the country moves beyond a traditional model centred heavily on low-cost labour.
Hean Sahib described the policy as a “compass” for Cambodia's industrial development over the coming decade.
The proposed framework seeks to build a more competitive industrial base, diversify Cambodia's exports and strengthen connections between foreign-invested companies and domestic businesses.
The policy also aims to identify industries in which Cambodia has competitive advantages and develop those sectors in stages according to the country's capabilities and position in global markets.
Four objectives define the draft policy
According to the Economics and Finance Institute (EFI), the draft IDP establishes four main objectives.
1. Attract higher-quality investment
The policy seeks to attract investment that creates higher-skilled employment, promotes technology adoption and increases productivity and worker incomes.
This represents a shift in emphasis from investment primarily based on labour costs toward investment that can contribute to technological and industrial upgrading.
2. Strengthen Cambodia's industrial structure
The policy aims to maintain and further develop Cambodia's industrial base as a foundation for sustainable long-term economic growth.
This includes strengthening existing industries while creating conditions for emerging and strategic sectors to develop.
3. Develop supporting industries
The draft policy also seeks to build supporting industries and related sectors that can improve productivity and competitiveness across the broader industrial ecosystem.
Stronger domestic industrial linkages could allow Cambodian enterprises to participate more extensively in supply chains connected to manufacturing and foreign investment.
4. Prepare for future trends and environmental challenges
The proposed policy also focuses on future industrial trends, environmental resilience and the ability of industries to manage their environmental impacts.
This includes preparing Cambodia's industrial sector for technological change and the global transition toward greater environmental sustainability.
Four groups of priority industries
The draft IDP 2026-2035 identifies strategic industries across four broad groups:
- Existing industries
- Emerging industries
- Long-term strategic industries
- Supporting industries and the circular economy
The government plans to develop specific and practical measures for each area.
The approach is intended to allow Cambodia to strengthen industries that already have established capabilities while simultaneously preparing for newer sectors with greater technology and value-added potential.
Seven pillars underpin the strategy
The draft policy is structured around seven major pillars.
| Pillar | Focus |
|---|---|
| Investment | Promote and coordinate investment |
| Exports | Expand and diversify export markets |
| Industrial linkages | Strengthen localisation and connections between businesses |
| Business environment | Improve conditions for industrial activity |
| Infrastructure | Develop hard and soft infrastructure |
| Skills and technology | Strengthen skills, technology and labour-market development |
| Finance | Increase access to finance |
Together, the seven pillars are intended to address not only industrial production itself but also the broader ecosystem needed for competitive manufacturing.
Technology transfer and skills development become central
The latest policy discussions placed particular emphasis on technology transfer and skills development.
The government sees these areas as important links between research, innovation and new knowledge on one side and practical industrial applications and labour-market needs on the other.
For Cambodia, moving into more technology-intensive manufacturing will require workers with different technical capabilities from those needed for traditional labour-intensive production.
This makes vocational training, technical skills, technology adoption and cooperation between industry and education institutions important components of the proposed industrial transition.
Cambodia prepares for a changing global economy
The new policy is being developed as Cambodia faces several structural changes in the global economy.
Prime Minister Hun Manet, speaking at the inauguration of TH Automotive Manufacture in Kampong Chhnang province, said Cambodia will face greater uncertainty over geopolitics, the global economy and international trade during the coming decade.
He also pointed to rapid technological development, particularly artificial intelligence, the global movement toward carbon neutrality and Cambodia's planned graduation from Least Developed Country status in 2029.
These developments are increasing the need for Cambodia to strengthen the competitiveness and resilience of its domestic industrial base.
Cambodia has already begun diversifying manufacturing
According to Hun Manet, Cambodia has made progress in shifting its industrial structure toward higher skills and technology through policies including the Cambodia Industrial Development Policy 2015-2025 and the Cambodia Automotive and Electronics Development Roadmap.
The government has also highlighted increasing exports of non-garment manufactured products.
These include:
- Bicycles
- Vehicle tyres
- Electronic components
- Electrical wires
- Automotive parts
The diversification reflects Cambodia's effort to expand beyond its traditional manufacturing base and participate in a wider range of industrial supply chains.
Linking Cambodia to global value chains
A major objective of the proposed 2026-2035 policy is to strengthen Cambodia's participation in global and regional value chains.
The government intends to build stronger connections between foreign-invested manufacturers and domestic enterprises, potentially allowing local businesses to participate more deeply in industrial supply chains.
This approach could also support localisation by increasing demand for domestic suppliers of components, services, materials and other industrial inputs.
The effectiveness of such a strategy will depend on the ability of Cambodian businesses to meet international standards in areas such as quality, productivity, technology and reliability.
Preparing for LDC graduation
Cambodia's planned graduation from Least Developed Country status in 2029 is another factor shaping the new industrial policy.
As the country moves toward a different stage of development, policymakers are seeking to strengthen domestic productive capacity and improve industrial competitiveness.
The draft IDP therefore looks beyond short-term manufacturing growth and aims to establish a framework for the industry's contribution to Cambodia's longer-term economic transformation.
The stated ambition is to support the country's broader vision of becoming a high-income economy by 2050.
From policy drafting to implementation
The latest inter-ministerial meeting also focused on making the proposed measures more targeted, specific and immediately implementable.
Officials discussed institutional mechanisms based on a “single-actor system” approach.
This reflects an effort to ensure that the new policy does not remain a broad strategic document but can be translated into concrete programmes and responsibilities.
The draft will require continued coordination among government agencies, development partners and the private sector as Cambodia moves toward implementation.
Angkor Times Analysis
Cambodia's proposed IDP 2026-2035 represents a potential second-stage industrial strategy: moving from establishing a manufacturing base toward upgrading the quality, productivity and technological intensity of that base.
The seven policy pillars are significant because industrial competitiveness depends on more than attracting factories. Investment promotion must be connected to export development, domestic supplier networks, infrastructure, skilled labour, technology and access to finance.
The emphasis on industrial linkages is particularly important. Foreign investment can create employment and exports, but deeper economic benefits can emerge when domestic companies become suppliers, service providers and participants in international production networks.
The shift toward higher skills and technology also creates a substantial workforce-development requirement. Advanced manufacturing cannot expand sustainably without technicians, engineers, managers and workers equipped with the necessary technical capabilities.
The policy is still in draft form, so its eventual impact will depend on the final measures, implementation mechanisms, investment priorities and coordination among government institutions and the private sector.
The direction outlined so far, however, points toward a broader transformation of Cambodia's industrial model: from competing primarily through labour costs toward competing increasingly through productivity, skills, technology, supply-chain integration and value addition.
What the new industrial policy could mean for businesses?
If the proposed policy is implemented as outlined, businesses could see increased policy attention in areas including:
- Advanced manufacturing
- Automotive and automotive components
- Electronics
- Supporting industries
- Technology adoption
- Export diversification
- Domestic supply chains
- Skills development
- Industrial infrastructure
- Circular economy activities
- Green and environmentally resilient production
- SME participation in industrial value chains
The exact incentives, programmes and implementation mechanisms will depend on the final version of the IDP.
FAQs
What is Cambodia's Industrial Development Policy 2026-2035?
It is a proposed 10-year framework being prepared by SNEC to guide Cambodia's industrial transformation between 2026 and 2035.
What is the main goal of the new policy?
The central objective is to move Cambodia's industrial sector from predominantly labour-intensive and low-skilled production toward higher-productivity industries requiring greater skills and advanced technologies.
When did preparation of the policy begin?
The preparation process began in May 2025, followed by consultations with government institutions, development partners and the private sector.
What are the four priority industry groups?
They are existing industries, emerging industries, long-term strategic industries, and supporting industries and the circular economy.
What are the seven pillars of the draft IDP?
The seven pillars cover investment, export markets, industrial linkages and localisation, the business environment, infrastructure, skills and technology, and access to finance.
Why is technology important to the new policy?
The government sees technology transfer and skills development as important bridges between research and innovation and practical applications in industry and the labour market.
How does LDC graduation affect the policy?
Cambodia is scheduled to graduate from Least Developed Country status in 2029, and the government is incorporating this transition into its effort to strengthen industrial competitiveness and resilience.
What is Cambodia's long-term economic goal?
The draft policy is intended to contribute to Cambodia's broader vision of becoming a high-income economy by 2050.