American business leaders have warned that Cambodia must act quickly or risk falling behind regional competitors Vietnam and Indonesia in the race for manufacturing investment.
During an economic forum held in Phnom Penh today, July 31, Casey Barnett, president of the American Chamber of Commerce in Cambodia (AmCham), warned that US companies are increasingly drawn to neighbouring countries offering lower tariffs and clearer trade advantages.
“The factories tell us they’re not going to stay. If the rate is 36%, they’re not going to stay in Cambodia,” Barnett stated.
He said a number of factories could survival a rate of 25% and keep their production going.
“According to our survey, 33% would move production to Vietnam. And this survey was done after the announcement of Vietnam’s 20% tariffs,” he noted.
Barnett said the main competitor for Cambodia is Indonesia, because it has a large population of labour and a large existing capacity for the production of shoes, garments and travel goods.
He said the Philippines has a 19% rate but lacks the industrial base needed to fulfil orders quickly. Cambodia’s main competitors are Indonesia and Vietnam, while Bangladesh remains a potential rival, despite facing high tariff fatigue.
According to the AmCham president, Cambodia must build industrial ecosystems by attracting anchor factories, reducing energy costs and encouraging supply chain development to avoid falling behind.
Lucas Moro, vice-chair of AmCham’s Tax Committee, highlighted that Cambodia must compete not only on labour costs but also on infrastructure, energy and supply chain efficiency.
He said if Cambodia wants to compete with Vietnam and Indonesia, it needs to create industry ecosystems — not just offer cheap labour.
Anthony Galliano, AmCham vice-president, added that without reform, Cambodia risks becoming stuck at the bottom of the value chain.
“If it becomes business as usual and Cambodia doesn’t change, and it’s just handbags, apparel, and shoes — that’s not our future,” he warned.
