Leveraging foreign investment for decent and productive jobs: Enabling policies and strategies for linkage development in Cambodia

This report studies policies and practices that incentivize firms, including foreign direct investments (FDIs), to source more inputs locally while building supplier capacities and domestic value added, thereby translating into productive employment opportunities. While firms participating in global value chains (GVCs) have shown faster recovery following the COVID-19 shock, supply chains were found to be more resilient when they are better-integrated through robust linkages among firms.

Attracting FDI and mobilizing domestic private investment for industrial development is a key strategy formulated in Cambodia’s National Industrial Policy 2019-23. The National Strategic Development Plan 2019-23 further emphasizes the need to connect small and medium-sized enterprises (SMEs) with FDIs to strengthen domestic production and create stronger backward and forward linkages.

This study aims at strengthening constituents’ capacities for advocacy and strategy development towards realizing their industrial policy goals. It identifies FDI spillover potentials and recommends policies and strategies that contribute to greater local sourcing. Best practices are detailed.