Cambodia’s Electrical and Electronics Equipment (EEE) sector has grown from a marginal contributor to one of the country’s most closely watched diversification stories. Electronic and electrical goods exports reached roughly USD 1.79 billion in 2024, and the Council for the Development of Cambodia has approved roughly USD 1.5 billion in electronics-sector investment projects between 2015 and 2024. Global names such as Minebea, SVI and Hana Micron have established production in the Kingdom, and the government has formally designated electronics among its priority investment sectors. Over the next five years, the central question for investors is no longer whether Cambodia can attract EEE investment — it clearly can — but whether the country’s comparative advantage is durable enough to justify deeper, higher-value commitments rather than the light assembly operations that have defined the sector so far.

1. The Current Position: A Fast-Growing but Still Shallow Sector

Cambodia’s EEE industry remains small in absolute terms relative to regional peers. Industry estimates put the sector at around 99 companies employing approximately 54,000 workers, compared with roughly 600,000 workers (1.57% of the workforce) in Thailand’s electronics industry and over a million workers (1.78% of the workforce) in Vietnam’s. The sector has attracted a cumulative USD 450 million in FDI since 2011, with exports rising from USD 434.2 million in 2016 to figures now approaching USD 1.8 billion. Most production remains concentrated in relatively low-value activity — cable and wire manufacturing, printed circuit board assembly, diodes, semiconductor components and electrical motors — rather than higher-value design, testing or finished-product engineering.

Most EEE companies operate inside Special Economic Zones such as the Royal Group Phnom Penh SEZ and industrial zones along the Thai and Vietnamese borders, positioned to serve as low-cost, labor-intensive nodes within broader regional supply chains rather than as standalone manufacturing bases. This structural pattern — rapid growth from a small base, concentrated in assembly-stage activity, and reliant on proximity to larger neighbouring economies — is the starting point for assessing where Cambodia’s comparative advantage over the next five years is likely to strengthen, and where it remains fragile.

2. Sources of Comparative Advantage

Labor cost and predictability

Cambodia’s 2026 minimum wage for the garment, footwear, travel-goods and related manufacturing sectors is USD 210 per month, with recent annual increases moderating to roughly 1%, giving manufacturers unusual multi-year cost predictability compared with earlier years of larger jumps. In regional terms, this wage level sits clearly below China, Thailand and Indonesia, and is now roughly on par with Vietnam’s Region I minimum wage following recent convergence. Cambodia’s genuine edge, however, lies less in the headline wage and more in its employer statutory social-security burden of only about 5.4%, far below Vietnam’s roughly 22.5% — a substantial hidden cost advantage that directly benefits labor-intensive EEE assembly.

Trade access and tariff position

Cambodia benefits from preferential access to major export markets, including duty-free access to the EU under Everything But Arms, and participation in RCEP and AANZFTA, which support both input sourcing and finished-goods export. On US reciprocal tariffs, Cambodia and Vietnam now differ by only one percentage point (19% versus 20% respectively), which has narrowed a historically important point of differentiation but still leaves Cambodia marginally favourable for tariff-sensitive supply-chain planning.

Currency stability and macro predictability

Cambodia’s US-dollar-pegged currency and comparatively stable inflation reduce a category of foreign-exchange risk that manufacturers in floating-currency markets must actively hedge, simplifying cost forecasting for multi-year investment decisions.

Investment incentives and policy prioritization

The Royal Government has identified 19 broad categories of investment activity eligible for incentives under its Qualified Investment Project framework, explicitly including electrical and electronic industries, high-technology manufacturing, and industries supplying regional and global production chains. This policy direction signals an intentional shift from relying purely on low-cost labour toward attracting investment that raises domestic productivity and value-added — with substantial tax and customs incentives, including extended tax holidays, remaining a core attraction for Qualified Investment Projects.

A young, expanding labor force

Cambodia’s manufacturing-eligible labour force is estimated at approximately 9.9 million people, a young and still-expanding pool relative to more mature regional manufacturing bases, offering room for the EEE sector to scale its workforce over the next five years without the demographic constraints some neighbouring economies face.

3. Cambodia and Vietnam: Complementary Nodes, Not Direct Competitors

A useful 2026 reframing of Cambodia’s regional position is that Vietnam and Cambodia should increasingly be viewed as complementary nodes within a shared supply chain rather than direct competitors for the same investment. Vietnam remains the larger, more mature manufacturing base, with substantially greater FDI scale, GDP growth around 8%, and deeper supply-chain density. Cambodia functions as a lower-cost, complementary production node adjacent to Vietnam’s ecosystem, attracting 2025 FDI of roughly USD 5.2 billion, up 18.2% year-on-year, with Chinese investors prominent among new entrants.

4. Segment-Level Opportunities for 2026–2031

Segment	Five-Year Opportunity
Cable and wire manufacturing	Established base with room to move into higher-spec industrial and automotive cabling as regional automotive supply chains diversify.
PCB assembly and electronic components	Core existing strength; opportunity to deepen into more complex multi-layer PCB assembly as skills and quality systems mature.
Renewable-energy-linked electrical equipment	Green-energy investment is an explicitly incentivized QIP category; solar-related electrical components and grid equipment offer a growing complementary niche.
Electronics testing, QA and light R&D services	As multinational assemblers scale up, demand grows for local testing and quality-assurance capacity rather than shipping components abroad for verification.
Automation and hospitality/industrial equipment	Rising regional automation investment (including in manufacturing and logistics) creates adjacent demand for locally assembled control systems and automation components.
SEZ-based supply-chain services	Logistics, customs brokerage, and compliance advisory services clustered around SEZs benefit directly from continued EEE-sector expansion.

7. Practical Tips for Investors

For investors and the professional-services firms supporting them, five priorities stand out for the next five years.

First, evaluate Cambodia on total landed cost — energy, logistics, compliance and social-security burden — rather than on headline wages alone, since the wage gap with Vietnam’s prime zones has substantially narrowed.

Second, structure investment to qualify fully for Qualified Investment Project incentives under the electrical and electronic industries category, since the tax and customs benefits can be decisive to project economics.

Third, plan Cambodia capacity as part of a combined regional footprint alongside Vietnam or other ASEAN bases, rather than as a standalone location decision, reflecting how supply chains are increasingly being restructured in 2026.

Fourth, budget explicitly for workforce development, since the sector’s ability to move beyond basic assembly depends on technical training that is not yet abundant locally.

Fifth, build compliance capacity early — covering customs, rules-of-origin documentation, and tax-incentive qualification — given the transshipment-scrutiny environment now affecting the wider region and the ongoing evolution of Cambodia’s own regulatory framework.

Conclusion

Cambodia’s comparative advantage in electronics and electrical manufacturing is genuine but transitional. The country offers a rare combination of low employer social-security costs, currency stability, preferential trade access, and an explicit government policy push toward higher-value investment categories — advantages that remain meaningful even as the historic wage gap with Vietnam narrows. The most likely trajectory for 2026–2031 is not a Cambodia that displaces Vietnam or Thailand as a primary electronics hub, but one that consolidates its role as an increasingly capable complementary node — provided that investment in workforce skills, upstream inputs, and compliance infrastructure keeps pace with the government’s own ambitions for the sector. For better decision investor shall engage compliance and tax advisory support early to navigate QIP qualification.

Cam Accounting & Tax Service Co., Ltd., a member firm of Kreston Global, holding a GDT tax agent license, Accounting, Auditing, and liquidator licenses from ACAR, and accredited by the National Bank of Cambodia (NBC) and Trust Regulator (TR).

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