Investment approvals ease, but quality of capital improves
Cambodia approved US$4.7 billion in fixed-asset investment in the first half of 2026, down from US$5.8 billion a year earlier. The Council for the Development of Cambodia licensed 276 projects between January and June. That marks an 18.9 percent decline from 373 projects in the same period of 2025. The pipeline is still sizeable, with the new projects expected to generate around 160,000 jobs.
The sector mix signals gradual reorientation. Approved investments span special economic zones, wind, solar and biomass power plants, an electric vehicle assembly plant, a motorcycle factory, a car tyre plant, a five-star hotel and an animal farm. This sits on top of a strong prior year: the CDC cleared more than US$10 billion of registered capital across over 630 projects in 2025, the highest annual total in its 30-year history.
For investors, the 26 percent year-on-year drop in approved capital looks less like a reversal and more like normalisation after a record year. Moreover, 2026 approvals still compare favourably with the pre-2025 period, when annual registered capital and project counts were significantly lower. Moderate volumes alongside a more diversified sector mix suggest that Cambodia FDI 2026 is tilting towards projects that embed the country more deeply into regional manufacturing and energy supply chains.
China remains the dominant source of capital, accounting for 35.7 percent of approved investment in the first half. Singapore is the second largest investor with 15.38 percent, ahead of Malaysia, the Netherlands and the British Virgin Islands. This pattern aligns with the National Bank of Cambodia‘s data for 2025, which show strong inflows from Asian and European investors and total FDI of US$5.1 billion that year.
Reform agenda and regional integration underpin investor interest
The government is using this period to push institutional reforms rather than chase headline volumes. Deputy Prime Minister Sun Chanthol, who serves as the CDC’s First Vice-Chairman, says the reform drive aims to make the investment environment more transparent, efficient and business-friendly. The CDC has strengthened its one-stop service for approvals, while administrative procedures are being streamlined, unnecessary bureaucracy reduced and digital public services expanded.
Cambodia’s investment regime remains one of the most liberal in ASEAN. Investors can hold 100 percent foreign ownership, repatriate profits freely and access tax holidays of up to nine years under the Qualified Investment Project framework. These incentives helped lift approved capital by 45 percent in 2025 and continue to anchor Cambodia FDI 2026, even as global rates stay high and trade policy uncertainty rises.
Regional trade architecture is another pillar. Officials highlight the Regional Comprehensive Economic Partnership, along with bilateral free trade agreements with China, South Korea and the United Arab Emirates, as key drivers of foreign capital. These agreements offer preferential access into large consumer markets and support the view of Cambodia as a production base within Asian supply chains.
However, macro conditions have turned less supportive. The IMF expects Cambodia’s real GDP growth to slow to 3 percent in 2026, from 5.3 percent in 2025, reflecting higher energy prices, weaker tourism and softer domestic demand. Even so, the Fund notes that FDI remains strong and that structural reforms to improve the business climate can reinforce the growth model.
For investors, the signal from Cambodia FDI 2026 is that the country is moving beyond low-cost, labour-intensive manufacturing towards renewables, automotive components, electronics and value-added agriculture, while preserving an open, incentive-rich regime. The next phase to watch will be execution: how fast approved projects in these sectors reach operation, how supply-chain linkages deepen with regional partners, and whether planned reforms translate into shorter lead times and lower operating friction for new capital.
