Cambodia identifies path to improved connectivity
Cambodia is laying the groundwork to become a regional trade hub in Southeast Asia, through strategic infrastructure investments and policy reforms.
Statistics from the General Department of Customs and Excise (GDCE) published on October 10 show that from January to September, the total trade volume between Cambodia and its trading partners reached $40.94 billion.
The trade volumes are expected to double to about $100 billion in the next six years, according to a new World Bank report,” Cambodia’s Regional Connectivity: Unlocking the Full Potential of Transport Corridors”.
With trade volumes projected to double by 2030, the Royal Government and the World Bank have outlined an ambitious plan to tackle existing logistical and connectivity bottlenecks.
“Regional connectivity and logistics development are Cambodia’s top priorities; strengthening our capacities will be key,” said Peng Ponea, Minister of Public Works and Transport.
Ponea was quoted by the World Bank, saying that “they can help position Cambodia as one of the key players in regional connectivity and boosting trade along global supply chains.”
Accelerating growth amid challenges
From 2010 to 2022, Cambodia's containerised import and export movements increased by over 400%, driven by strong demand from North America, Europe, and Asia, according to the report.
However, logistics costs remain high, accounting for 26% of GDP, compared to just 14% in Thailand and 20% in Vietnam.
“Cambodia ranks 115th out of 138 countries in the World Bank’s 2023 Logistics Performance Index, reflecting inefficiencies in customs clearance, infrastructure and logistics quality,” warned the report.
The Comprehensive Intermodal Transport and Logistics System (CITLS) Master Plan 2023–2033 outlines $30 billion in priority investments for roads, railways, inland waterways, and logistics hubs.
The projects aim to strengthen Cambodia’s competitiveness in export-oriented sectors such as textiles, agriculture, and light manufacturing.
Unlocking the potential of trade corridors
The World Bank has highlighted three critical trade corridors essential for Cambodia’s economic growth and regional integration.
These corridors are pivotal in addressing logistical challenges and reducing transport costs, which currently hinder the country’s trade competitiveness.
1. East-West Road Corridor
The East-West Road Corridor connects Cambodia with Thailand, Vietnam and Laos, serving as a vital trade route for the Greater Mekong Subregion (GMS).
A key section of this corridor, the 400-kilometre Siem Reap-Oyadav Road, requires significant upgrades to facilitate smoother trade flow between the three nations.
This corridor is crucial for enhancing connectivity with major regional markets and unlocking economic potential in Cambodia’s northeastern provinces, it explained.
The report identified the route as part of the Asian Highway Network and a priority under the Master Plan on ASEAN Connectivity (MPAC) 2025.
Upgrading this corridor would not only improve regional trade but also provide economic opportunities for underdeveloped areas in Cambodia.
“Road connectivity is the backbone of trade for Cambodia, particularly along international corridors,” said the report.
“Improving the Siem Reap-Oyadav Road can significantly reduce transport costs and foster regional economic integration,” it added.
2. Inland Waterway Corridor
Cambodia's Inland Waterway Corridor leverages the Mekong River to connect Phnom Penh to Cai Mep port in Vietnam, a gateway to international markets like North America and East Asia.
Inland waterways are recognised for their cost-efficiency, particularly for bulk and containerised goods.
The report said currently, waterways account for 26% of Cambodia's containerised trade, but the potential for expansion is immense.
The Phnom Penh Autonomous Port (PPAP) plans to double its container-handling capacity by 2029 through infrastructure investments such as the LM17 container terminal expansion.
“Additional improvements include modernising feeder ports in provinces like Kampong Cham and PrekKdam, dredging navigation channels to accommodate larger vessels and enhancing safety measures,” according to the report.
Administrative barriers, such as customs clearance delays, remain a challenge. Streamlining cross-border waterway transit procedures with Vietnam is essential for unlocking the full benefits of this corridor.
3. Rail Corridor
Cambodia’s Rail Corridor, spanning Poipet, Phnom Penh and Sihanoukville Port, is underutilised, carrying less than 1% of domestic freight, noted the report.
However, it holds significant potential to enhance trade with Thailand and facilitate connections to international markets through Sihanoukville.
The government has outlined plans to renovate the existing metre-gauge railway infrastructure, acquire modern rolling stock and upgrade digital signalling systems.
These investments aim to make rail transport more efficient and cost-effective. The World Bank also suggests exploring the feasibility of extending rail links to Phnom Penh’s river ports to support multimodal transport.
“Railways are an untapped resource in Cambodia’s logistics system,” the report warned. “Strategic investments in rail infrastructure can shift freight from roads, reducing costs and congestion.”
The corridor is also seen as a key to decarbonisation. Rail transport produces significantly lower greenhouse gas emissions compared to road freight, aligning with Cambodia’s sustainability goals.
Each corridor plays a complementary role in Cambodia's logistics ecosystem. Roads facilitate rapid transit for perishable goods, inland waterways offer low-cost bulk transport, and rail provides a sustainable alternative for heavy freight.
Together, these corridors form the backbone of Cambodia’s strategy to become a regional trade leader.
“The report brought together key stakeholders from the government, the private sector and development partners to explore options to enhance Cambodia's transport sector and regional connectivity,” explained Tania Meyer, World Bank country manager for Cambodia.
“A comprehensive approach to transport network development will help improve Cambodia’s competitiveness, unlock its export potential, and promote trade in the region,” she added.
Addressing infrastructure inefficiencies
Cambodia’s logistics network faces significant challenges that hinder its growth and trade efficiency. Key issues include an ageing fleet, a lack of paved roads and underused railway lines.
With an average age of 20 years, most trucks are outdated, resulting in higher fuel consumption, increased maintenance costs and elevated greenhouse gas emissions.
“This ageing fleet also contributes to slower transit times, reducing the competitiveness of Cambodian exports,” said the report.
While 85% of national roads are paved, only 10% of rural roads are sealed. This lack of infrastructure affects last-mile connectivity, limiting access to agricultural and industrial areas and increasing transport costs for rural communities.
Despite their potential, railways currently handle less than 1% of domestic freight. Waterways, which are cost-effective for bulk goods, face capacity constraints and inefficient cross-border procedures.
“These issues limit the full utilisation of these sustainable transport modes,” according to the report.
Efforts to streamline customs processes at major borders such as Poipet and Bavet have shown progress, reducing clearance times.
However, inefficiencies in coordination and technology adoption continue to delay trade flows, underscoring the need for further improvements.
Hong Raksmey
The Phnom Penh Post
Asia News Network
