Core Insights - Cambodia's industrial sector is projected to achieve a growth rate of 7.1% by 2025, despite external challenges, with the garment industry being a significant contributor [2] - The garment industry is expected to grow by 10.1%, although growth may weaken towards the end of the year due to new export tariffs imposed by the U.S. [2] - Non-garment manufacturing is anticipated to grow by 6.9%, falling short of initial expectations due to supply chain disruptions and tariff impacts [2] Industry Performance - The automotive assembly and food and beverage sectors are maintaining stable growth, while the construction industry is gradually recovering [2] - Significant growth in non-garment exports was observed in the first half of 2025, with electronic components up by 24.3%, furniture by 39.4%, automotive parts by 10.1%, bicycles by 41.6%, tires by 80.4%, and wires and cables by 194.9% [3] - Conversely, solar panel exports plummeted by 98.9% due to increased tariffs in the U.S. market [3] Market Diversification - Cambodia's ability to diversify its export markets is crucial for sustaining growth, particularly as it expands into the EU and China to mitigate the impact of declining U.S. market demand [3] - The Cambodian government emphasizes that the diversification of export markets is a key driver for economic stability and growth in the face of trade friction and tariff disputes [3]

Group 1 - The Cambodian Ministry of Economy and Finance forecasts a robust growth of 7.1% in the industrial sector by 2025, slightly lower than previous expectations due to a slowdown in the garment and non-garment manufacturing industries [1] - The garment industry, as the largest pillar of Cambodia's industrial sector, is expected to achieve a growth rate of 10.1%, although this growth may weaken towards the end of the year due to new export tariffs imposed by the US starting in August [1] - Non-garment manufacturing is projected to grow by 6.9%, falling short of initial expectations, impacted by tensions at the Cambodia-Thailand border affecting raw material flow and tariffs on various export categories to the US [1] Group 2 - Significant growth was observed in several non-garment export categories in the first half of 2025, including electronic components (24.3%), furniture (39.4%), auto parts (10.1%), bicycles (41.6%), tires (80.4%), and a remarkable 194.9% increase in wires and cables [2] - The export of solar panels plummeted by 98.9% due to increased tariffs in the US market [2] - The diversification of export markets, particularly in the EU and China, is seen as a key driver for growth in the second half of 2025, helping Cambodia mitigate external risks and ensure steady economic development [2]

Group 1 - The Vietnamese government is committed to increasing the localization rate of the supporting industry, which is considered the backbone of various industrial sectors [1][2] - The current localization rates in several fields are low, with textiles and footwear at approximately 45%-50%, mechanical manufacturing at 15%-20%, and automotive assembly at only 5%-20% [1] - The electronics sector has engaged in the global value chain but primarily provides low-tech products [1] Group 2 - The Ministry of Industry and Trade has reported significant progress in the localization of supporting industrial equipment, with Thaco demonstrating notable achievements in mastering complete design and simulation technologies for bus structures [1][2] - The Ministry of Industry and Trade's Industrial Development Support Center emphasizes the importance of standardizing processes, cost support, and bilateral cooperation to build a sustainable supply chain [2] - The Vietnamese government has issued Decree No. 205/2025/ND-CP, which revises and supplements Decree No. 111/2015/ND-CP to promote the development of the supporting industry, focusing on increased policy support for the research, application, and technology transfer of prioritized supporting products [2]

Economic Growth Outlook - Cambodia's economy is projected to grow by 5.2% in 2025, according to the Cambodian People's Party Chairman Hun Sen [1] - The World Bank has revised Cambodia's economic growth forecast for 2025 down to 4% from an earlier estimate of 5.5% [1] - The World Bank report highlights that while Cambodia's economy shows resilience, growth is uneven, particularly in labor-intensive manufacturing sectors like garments and footwear [1][3] Export Market Diversification - Cambodia is working on diversifying its export markets and products, despite the U.S. being its largest export market [1][3] - The Cambodian government is focusing on maintaining flexibility and resilience in the garment and footwear industries amid external pressures [3] Impact of U.S. Tariff Policies - The uncertainty surrounding U.S. tariff policies is significantly impacting Southeast Asia's economic growth, including Cambodia [2][3] - The Cambodian garment and footwear sectors are particularly vulnerable to potential U.S. tariffs, with many factories awaiting decisions from U.S. authorities [3] Agricultural Sector Development - Cambodia aims to enhance its agricultural value chain by focusing on the processing of products like cashews, bananas, and mangoes [4][5] - The country is pushing for local processing to add value to agricultural products, which is crucial for its economic foundation [4] RCEP and China-Cambodia Trade Relations - China remains Cambodia's largest trading partner, with ongoing benefits from the RCEP and China-Cambodia Free Trade Agreement [6] - Cambodia's trade deficit with China is expected to persist, as the country imports many intermediate goods for processing and re-export [6] Infrastructure and Belt and Road Initiative - The Belt and Road Initiative is crucial for Cambodia's infrastructure development, which is necessary for global competitiveness [8][9] - Future cooperation under the Belt and Road Initiative will focus on industrial development and enhancing quality and standards in various sectors [9] Financial Cooperation and Currency Settlement - The cross-border RMB business between China and Cambodia is projected to reach approximately 20 billion yuan in 2024, doubling year-on-year [10] - The establishment of a currency settlement system will facilitate easier transactions between Cambodian and Chinese businesses [10] Youth and Technological Collaboration - Cambodia's young population is seen as a potential asset for technological collaboration with regions like the Guangdong-Hong Kong-Macao Greater Bay Area [11] - There is a strong interest in fostering cooperation between young innovators from both regions to explore market opportunities [11]