Cambodia: State of Play of a Sustainable Development Still Under Construction

Cambodia, one of Asia’s most dynamic economies with an average growth of 7.7% over the past two decades, finds itself at a strategic turning point. As the kingdom approaches middle-income country status, its development model — historically focused on low-cost manufacturing and mass tourism — reveals its structural limitations.

On the banks of the Mekong, cranes shape a new skyline. A few kilometers away, in Kampong Speu province, workers assemble solar panels over hectares of land. These images symbolize Cambodia’s new face: a country in full metamorphosis, determined to catch up economically while dodging, more or less successfully, the pitfalls of growth at all costs.

The "Tiger of Southeast Asia" has displayed striking economic health over the past two decades. With annual GDP growth regularly surpassing 7% before the pandemic, the kingdom should be on track to meet its goal: to become an upper-middle-income country by 2030. But this race forward raises a crucial question: at what cost for sustainability and equity? Not to mention hoping for lasting peace with its Thai neighbor and a preserved — and improved — image following the recent scandal linked to Prince Group and its consequences.

Growth Driven by Textiles and Tourism, but Fragile

The engine of this expansion remains largely dependent on two sectors: the garment industry and tourism. According to the World Bank, the apparel, footwear, and travel goods sector (GFT) would represent about 16% of GDP and employ nearly one million people, mostly women.

However, this dependence is a double-edged sword. The COVID-19 crisis brutally reminded everyone of this.

"However, the Cambodian economy has shown remarkable resilience, but its structure makes it vulnerable to external shocks," analyzes a report by the Asian Development Bank (ADB).

Economic diversification is no longer an option but a necessity for sustainable growth.

Environment: Awareness Facing Increased Pressure

Deforestation: One of the most visible challenges remains deforestation. Cambodia has lost nearly 26% of its tree cover since 2001, according to Global Forest Watch data. While the loss rate of primary wet forest seems to have slowed in recent years, pressure on ecosystems, notably due to plantation agriculture and illegal logging, remains intense.

The government has made international commitments, such as the REDD+ program, and established protected areas. But on the ground, implementation and control remain a major challenge, as frequently highlighted by local environmental NGOs.

Energy: The energy sector is at the heart of the sustainable development issue. Long dependent on coal-fired power plants and electricity imports from Laos and Vietnam, Cambodia is making a notable shift towards renewable energies.

The rise of solar energy is spectacular. The installed solar capacity has gone from practically zero in 2017 to more than 430 megawatts (MW) by the end of 2023, according to Cambodia’s Electricity Authority (EDC). Flagship projects, like the 100 MW plant in Kampong Chhnang, now supply tens of thousands of households. The government’s goal is clear: to raise the share of renewable energies (excluding large hydropower) to 25% of the energy mix by 2030.

Yet, the shadow of coal has not completely disappeared. The 265 MW plant in Sihanoukville, financed by China and recently put into service, reminds that energy security and cost remain priorities. A debate exists about the balance to find. Some observers point out a glaring lack of independent international experts in the high spheres of energy planning.

"The country would benefit from more diversified international technical expertise to optimize its transition, model smart grids, and attract the most innovative investments," says a consultant who has worked with the Ministry of Mines and Energy.

This gap could, in the long term, limit the country’s capacity to design a fully optimized and resilient long-term energy strategy.

Waste Management: In Phnom Penh, solid waste production has exploded, reaching nearly 3,500 tons per day, according to a study by the Japan International Cooperation Agency (JICA).

The city, which largely depends on the massive Dangkor landfill, faces a management crisis. Sorting and recycling initiatives are emerging, driven by social startups and NGOs, but they struggle to scale up. The government plans to build waste-to-energy incinerators, a solution that raises both hopes and questions about its environmental impact....

Social: Lights and Shadows of Development

Poverty and Inequality: The record is mixed. The poverty rate fell below 10% according to the latest World Bank estimates, a spectacular progress since decades of conflict. However, inequalities persist. The gap between dynamic urban areas and the countryside, where nearly 80% of the population lives, is striking. Access to drinking water and sanitation, while clearly improving, is not yet universal, especially in remote provinces.

Education and Workforce: The education system is a weak link identified by many reports, including those from UNESCO. While primary school enrollment rates are high, the quality of education and dropout rates in secondary school pose problems.

This creates a gap between workforce skills and the needs of an economy aspiring to move upmarket. Training the next generation of engineers, technicians, and managers is essential for endogenous and sustainable development.

Strategic Framework: Ambitious Roadmap

Aware of these challenges, the Royal Government of Cambodia has equipped itself with strategic tools. The

Rectangular Strategy Phase IV and its National Strategic Development Plan 2019-2023 (currently being renewed) place environmental sustainability and social inclusion at the heart of priorities.

Cambodia also submitted its

Second Nationally Determined Contribution (NDC) to the UNFCCC in 2020. The country commits to reduce its greenhouse gas emissions by 41.7% by 2030 compared to a business-as-usual scenario, subject to international support. This quantified commitment, although ambitious, will need to be supported by concrete policies and substantial financing.

Decisive Turning Point

Cambodia finds itself at a pivotal moment in its modern history. The foundations for rapid growth are solid, but the current model shows its limits in the face of the ecological and social imperatives of the 21st century.

Progress in renewable energies, official recognition of challenges, and the vitality of its civil society are undeniable assets. But the challenges—deforestation, waste management, economic dependence, strengthening human capital—are immense. The kingdom’s ability to attract diverse expertise, strengthen governance, and balance economic development with the preservation of its natural and human heritage will determine whether the "Cambodian miracle" can last. The international community, meanwhile, is watching and will have to decide to what extent it wants to support this delicate transition through investments and know-how.

Sources

1. World Bank: Macro-economic data, reports on poverty and Cambodia’s economic evolution.Asian Development Bank (ADB): Sector analyses and reports on sustainable development in the region.Global Forest Watch: Satellite data and analyses on forest cover changes in Cambodia.Electricity Authority of Cambodia (EDC): Data on production capacity and national energy mix.Japan International Cooperation Agency (JICA): Studies on solid waste management in Phnom Penh.United Nations Framework Convention on Climate Change (UNFCCC): Cambodia’s Second Nationally Determined Contribution (NDC).UNESCO: Reports on the status of education and training in Cambodia.Royal Government of Cambodia: Official strategic documents, including Rectangular Strategy Phase IV and National Strategic Development Plan.