EU firms back Cambodia despite looming trade risks

Cambodia’s economic outlook is entering a more uncertain phase, with European businesses warning of rising costs and competitiveness challenges as the country prepares for the loss of preferential EU tariff access in 2029. Yet despite the headwinds, the EU‑ASEAN Business Council (EU‑ABC) has pledged continued support, underlining confidence in the Kingdom’s long‑term prospects.

National Bank of Cambodia Governor Chea Serey told visiting delegates this week that external pressures such as border tensions, tariffs and the crackdown on online scam operations could generate short‑term costs. However, she stressed that these measures would ultimately strengthen governance, improve Cambodia’s international reputation and attract more sustainable investment.

Commerce Minister Cham Nimul echoed that optimism, pointing to plans to apply for the EU’s Generalised Scheme of Preferences Plus (GSP+), which grants zero‑tariff access for most exports. European businesses welcomed the ambition but cautioned that eligibility requires significant reforms and consistent progress on governance, labour rights and environmental standards.

Chris Humphrey, Executive Director of the EU‑ABC, said: “When Cambodia succeeds, European businesses succeed too. This is why we’ve consistently urged the government to commit to implementing the reforms necessary for GSP+ qualification.”

The stakes are high. Cambodia exported about $5 billion worth of goods to the EU in 2025, a 13.5 per cent increase on the previous year, making Europe one of its most important markets. Imports from the bloc fell slightly to $863 million. Around 1,400 European firms operate in Cambodia, supported by more than €1 billion in foreign direct investment, with many relying on the Kingdom as a manufacturing hub.

Delegates from 20 European organisations attended high‑level meetings in Phnom Penh, discussing Cambodia’s medium‑term strategy, export diversification and moving up the value chain. Officials highlighted opportunities in agri‑food processing, sustainable manufacturing, renewable energy, electronics and the digital economy.

Despite looming challenges, optimism remains strong. Noel Clehane, EU‑ABC Vice‑Chair, described Cambodia as “incredibly dynamic with a young workforce and significant room for growth.”

The message from this week’s engagements is clear: while Cambodia must navigate reforms and rising global uncertainty, its partnership with European firms remains firm. For Phnom Penh, the challenge will be to turn that support into a platform for sustainable growth, ensuring the transition ahead is not only symbolic but genuinely competitive.

-2026-03-06