Cambodia Poised for Economic Windfall as U.S. Trade Policy Shifts from Vietnam

• 20 January 2025
• Local News
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Cambodia stands to emerge as a major beneficiary of potential U.S. trade policy shifts, with experts predicting significant manufacturing opportunities if Donald Trump returns to office, particularly as Vietnam faces possible trade tariffs similar to those previously imposed on China, according to 2025 Fearless Forecast shared at a Real Estate Forum in Novotel Phnom Penh by Marc Townsend, Chairman of CBRE Cambodia on 14 January 2025.

The anticipated policy shift could dramatically reshape Southeast Asian manufacturing dynamics. Vietnam, currently facing a substantial trade imbalance with the United States, may become vulnerable to the same aggressive tariff strategies previously directed at China. “Trump will decimate the Vietnamese manufacturing sector with tariffs in the same way he does China,” noted a senior economic analyst at the forum, adding, “Cambodia could be a big winner there.”

This potential realignment comes as Cambodia’s commercial real estate sector undergoes significant transformation, marked by the development of unprecedented 50-60 storey office towers, a substantial leap from traditional 18-20 story structures. While current market indicators show occupancy rates at 60% and declining rents, the prospect of manufacturing sector growth could revitalize the commercial property landscape.

The timing appears strategic for Cambodia’s industrial evolution. The nation is actively pursuing policies to secure long-term corporate commitments, focusing on increasing on-shore processing and value addition. This approach mirrors Vietnam’s successful transformation in sectors like coffee production, though Cambodia now positions itself to potentially leapfrog its neighbour amid changing global trade dynamics.

Vietnam’s current challenges extend beyond potential trade disputes. With airport delays reaching 2-3 hours and infrastructure strain showing, Cambodia sees an opportunity to position itself as a more efficient alternative. Despite Cambodia’s shorter coastline of 422 kilometres compared to Vietnam’s 3,500 kilometres, experts suggest this concentrated development area could become an advantage in focused industrial growth.

The banking sector is adapting to these potential shifts, with recommendations to redirect funding from office developments toward affordable housing and industrial infrastructure. Industry leaders advocate a “Build less, buy more” strategy, particularly as existing assets become available at significant discounts, some reaching 50% of their original value.

Regional transaction patterns are expected to evolve, with deals primarily occurring within Cambodia and Southeast Asia. While international institutional investors maintain a cautious stance, Chinese investors may return to the market, driven by challenges in other regions and Cambodia’s increasingly strategic position in regional manufacturing.

The retail sector shows promising growth, with new entrants, particularly from Asian markets establishinga  presence. Well-managed night markets and urban renewal projects, favouring renovation over redevelopment, indicate a maturing market infrastructure. As Cambodia integrates AI technologies into business operations and strengthens regulation of property agents and developers, the nation appears increasingly prepared to capitalise on potential shifts in global trade patterns.

Market experts emphasize that while Trump’s potential return could catalyse significant opportunities for Cambodia, the country’s success will depend on its ability to rapidly develop infrastructure and maintain competitive advantages in manufacturing and logistics. The convergence of these factors – from potential U.S. trade policy shifts to regional infrastructure challenges – positions Cambodia at a crucial juncture in its economic development trajectory.

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