A delegation of Japanese business leaders, representing around 40 companies, met with Cambodian officials on 5 March 2025 to discuss investment opportunities, marking another step in the deepening economic partnership between the two nations. Hosted by the Council for the Development of Cambodia (CDC), the meeting highlighted Cambodia’s ongoing efforts to position itself as a regional hub for foreign investment, underpinned by political stability, a young workforce, and strategic infrastructure projects like the Funan Techo Canal.
Led by Wakabayashi Kohei, head of the Japan External Trade Organization (JETRO) Phnom Penh office, the delegation expressed admiration for the Cambodian government’s investor-friendly policies. This visit, coupled with a business matching event on 4 March, underscores Japan’s growing role as a key economic partner for Cambodia, with trade and infrastructure cooperation at the forefront of bilateral relations.
A Strategic Destination for Investment
At the CDC headquarters in Phnom Penh, first vice-president Sun Chanthol outlined Cambodia’s ambitious Vision 2050, a long-term plan to transform the Kingdom into a high-income economy. Chanthol emphasized Cambodia’s appeal to international investors, citing a stable political environment, a macroeconomic framework conducive to business, and a youthful labour force eager to adapt through training programmes. He also pointed to the government’s commitment to public-private partnerships as a cornerstone of private sector growth. 
“Cambodia offers flexible and favourable investment laws, alongside well-developed transportation infrastructure,” Chanthol told the delegation. He highlighted the country’s strategic geographic position, nestled between major economies in South East Asia, as a gateway for regional economic integration. Among the flagship projects mentioned was the Funan Techo Canal, a major infrastructure initiative expected to revolutionize maritime shipping and logistics by connecting the Mekong River to the Gulf of Thailand.
Chanthol also drew attention to priority sectors for investment, including industrial manufacturing, infrastructure, agriculture, agro-industry, green energy, education, and special economic zones (SEZs). These areas align with Cambodia’s broader goals of diversifying its economy beyond traditional sectors like garment manufacturing and tourism.
Japan’s Enduring Partnership
Japan has long been a significant contributor to Cambodia’s socio-economic development, particularly through its Official Development Assistance (ODA) programme. Over the past four decades, Japanese aid has supported critical infrastructure projects, as well as initiatives in education, governance, law, and public health. This history of cooperation provides a strong foundation for the current wave of private sector engagement.
During the business matching event on 4 March, attended by high-ranking officials including Vongsey Vissoth, Minister in charge of the Office of the Council of Ministers, and Japanese ambassador Ueno Atsushi, the importance of trade ties was reiterated. Vissoth noted that Japan has become a “vital trading partner” for Cambodia, with events like these fostering direct connections between Cambodian and Japanese businesses.
The Japan Business Association in Cambodia (JBAC), chaired by Fukuhara Koji, and the Cambodia-Japan Business Cooperation Committee (CJBC), led by Mai Kalyan, also played key roles in facilitating discussions. Such platforms are crucial for identifying mutual interests and addressing potential challenges, ensuring that investments yield benefits for both sides.
Surging Investment Figures
Cambodia’s efforts to attract foreign capital appear to be paying off. According to the CDC, a record 414 investment projects were approved in 2024—the highest in three decades. The momentum has carried into 2025, with over 110 projects greenlit in the first two months alone. These numbers reflect the effectiveness of Cambodia’s investment laws and the government’s proactive stance in supporting private enterprise as a driver of national growth.
Japan’s footprint in this landscape is notable. A Ministry of Commerce report revealed that between January and November 2024, 88 Japanese companies registered in Cambodia, a 20.55% increase compared to the same period in 2023. This surge indicates growing confidence in Cambodia’s market potential, particularly in sectors like manufacturing and services, where Japanese expertise can complement local resources.
Infrastructure as a Game-Changer
One of the most ambitious projects shaping Cambodia’s investment narrative is the Funan Techo Canal. Spanning approximately 180 kilometres, the canal aims to provide a direct shipping route from the Mekong River to the coastal port of Kep, bypassing Vietnam’s Mekong Delta. If completed as planned, it could significantly reduce transportation costs and enhance Cambodia’s role as a logistics hub in the region.
While the project has drawn international attention, it has also sparked debate. Some analysts suggest it may alter regional trade dynamics, potentially affecting neighbouring countries like Vietnam, which currently handles a significant portion of Cambodia’s maritime trade. Others point to environmental concerns, including the potential impact on the Mekong’s ecosystem and local communities. Despite these discussions, Cambodian officials remain optimistic, framing the canal as a transformative step toward economic independence.
The Japanese delegation’s interest in infrastructure development aligns with Cambodia’s needs. Japan’s expertise in engineering and sustainable construction could play a pivotal role if partnerships in this area materialize. While no specific commitments were announced during the visit, the discussions signal potential for collaboration on large-scale projects that could further integrate Cambodia into regional and global supply chains.
Challenges and Opportunities
Despite the positive outlook, Cambodia faces challenges in sustaining investor confidence. Issues such as bureaucratic inefficiencies, land disputes, and the need for stronger legal protections for foreign businesses have been raised in past assessments by international organizations. Addressing these concerns will be critical to maintaining the current momentum.
Moreover, while Cambodia’s young workforce is an asset, upskilling remains a priority. Partnerships with countries like Japan, known for advanced training programmes and technology transfer, could help bridge gaps in technical expertise. The focus on education and training as a priority investment area suggests that Cambodian authorities recognize this need and are open to international collaboration.
For Japan, investing in Cambodia offers access to a growing market and a strategic base in South East Asia. The Kingdom’s proximity to major economies like China and Thailand, combined with its participation in regional trade agreements such as the Regional Comprehensive Economic Partnership (RCEP), enhances its appeal. Japanese firms, particularly in manufacturing and green energy, stand to benefit from Cambodia’s competitive labour costs and government incentives.
Broader Implications for South East Asia
The strengthening ties between Cambodia and Japan reflect a broader trend of economic integration in South East Asia. As countries in the region vie for foreign investment, Cambodia’s proactive approach—evident in its investment figures and high-level engagements—positions it as a contender among emerging markets. Japan’s involvement, given its reputation for quality and reliability, could set a benchmark for other nations seeking to engage with Cambodia.
Furthermore, projects like the Funan Techo Canal, if successful, may inspire similar infrastructure initiatives across the region, reshaping trade routes and economic corridors. However, the environmental and geopolitical implications of such projects warrant careful consideration, as they could influence regional stability and cooperation.
Looking Ahead
The Japanese delegation’s visit to Phnom Penh is a testament to Cambodia’s growing stature as an investment destination. With over 110 projects approved in early 2025 and a record-breaking year in 2024, the Kingdom is on a clear trajectory of economic expansion. Japan’s role, both as a historical partner through ODA and as a source of private capital, is poised to grow in significance.
As discussions from the 5 March meeting and the preceding business matching event translate into tangible outcomes, the focus will likely shift to specific sectors and projects. Whether through industrial partnerships, infrastructure development, or capacity building, the collaboration between Cambodia and Japan holds promise for mutual benefit.
For now, the Cambodian government’s message is clear: the Kingdom is open for business. If it can navigate the challenges of rapid development while maintaining investor-friendly policies, Cambodia could solidify its place as a key player in South East Asia’s economic landscape. The partnership with Japan, built on decades of trust, may well be a cornerstone of that future.
