In the first ten months of 2025, bilateral trade between Cambodia and Vietnam reached US$6.58 billion, a modest 2.61% year-on-year increase. While the number looks positive at first glance, analysts and businesses across the region consider it a slower-than-expected performance, especially given the momentum of previous years and ambitious cooperation frameworks under ASEAN, RCEP, and border-trade agreements.
For two neighboring economies with strong cultural ties, shared borders, and complementary markets, such slow growth raises important questions. Why didn’t Cambodia and Vietnam achieve stronger trade expansion in 2025? What bottlenecks—structural, logistical, regulatory, or economic—are holding the trade relationship back? And most importantly, what needs to change for the bilateral trade volume to realize its full potential?
This comprehensive analysis explores the core structural challenges that contributed to the slow trade growth in 2025, supported by real business examples, credible economic perspectives, and forward-looking recommendations.
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1. Overview of Cambodia–Vietnam Trade in 2025
To understand why the 2025 growth rate underperformed expectations, it is essential to start with a clear overview of the trade landscape.
Between January and October 2025:
- Trade volume: US$6.58 billion
- Growth rate: +2.61% YoY
- Cambodia’s trade deficit with Vietnam: Approximately US$302 million
- Top Cambodian exports to Vietnam:
- Cashew nuts, rubber, rice, cassava, fruits, wood
- Top Vietnamese exports to Cambodia:
- Steel, cement, fertilizers, textiles, petroleum, and consumer goods
These figures present both opportunity and challenge. While trade remains strong, the pace is no longer aligned with the historical double-digit growth recorded earlier in the decade.
Vietnam has also set an ambitious target of reaching US$20 billion in trade with Cambodia in the future. But to get there, both countries must address a series of systemic issues that currently limit growth potential.
2. Structural Challenges at the Border
One of the biggest factors holding back Cambodia–Vietnam trade is the physical and administrative congestion at border checkpoints. Despite multiple border gates, both major and auxiliary, the infrastructure has not kept pace with rising trade volumes.
Border Logistics Not Fully Developed
Vietnamese authorities and business associations frequently highlight recurring limitations at Cambodian border areas, including:
- Inadequate storage and warehousing facilities
- Limited cold-chain systems for perishable agricultural goods
- Few quality inspection and certification stations
- Poorly maintained feeder roads leading to border areas
- Overreliance on outdated customs processing methods
These issues create long queues, unpredictable processing times, and increased costs for exporters on both sides.
Overcrowded Border Gates
Cambodia and Vietnam share several important border crossings, such as:
- Bavet–Moc Bai
- Prey Vor–Tan Lap
- Chrey Thom–Long Binh
However, most border gates face similar problems:
- Limited parking space for cargo vehicles
- Slow cargo clearance
- Manual document verification
- Bottlenecks during peak harvest or import-export seasons
Even with auxiliary border gates designated to reduce congestion, many remain underdeveloped or lack the necessary staff and equipment to handle large-scale trade flows.
Informal Routes & Smuggling
In border provinces, informal trade routes remain widespread. While these channels may reduce short-term costs for individual traders, they:
- Create unfair competition for legitimate exporters
- Reduce taxable revenue
- Distort official trade statistics
- Complicate regulatory oversight
- Undermine product quality control
As long as informal trade persists, it will remain a structural drag on formal bilateral trade growth.
3. Raw Material Dependence & Value-Added Limitations
A long-standing challenge in Cambodia’s export structure—and a key reason for slow trade growth in 2025—is the country’s heavy reliance on raw material exports.
Cambodia Exports Raw, Vietnam Adds Value
A typical trade pattern between the two countries looks like this:
- Cambodia exports raw cashew nuts, unprocessed rubber, or fresh cassava.
- Vietnam processes these materials into higher-value goods.
- Vietnam re-exports finished products globally.
This model benefits Vietnam more than Cambodia—and caps the total value of Cambodian exports.
Example: Cashew Sector
- Cambodia produces over 1 million tons of raw cashew nuts annually.
- 95% is exported raw, mainly to Vietnam.
- Only a small fraction is processed locally.
Because Cambodia lacks large-scale:
- Processing factories
- Drying facilities
- Sorting and grading centers
- Packaging standards
… it cannot capture value or diversify its export portfolio.
High Post-Harvest Losses
Cambodia suffers post-harvest losses between 20%–50% across many agricultural products due to:
- Poor storage conditions
- Lack of cold-chain systems
- Weak quality control
- Limited access to modern equipment
These inefficiencies lower export volume, quality, and competitiveness—directly impacting trade numbers with Vietnam.
Weak Domestic Manufacturing Base
Cambodia’s industrial sector is still heavily concentrated in:
- Garments
- Footwear
- Basic agro-processing
With limited diversification into:
- Processed food
- Rubber-based products
- Electronics
- Chemical goods
- Wood manufacturing
As a result, export capacity to Vietnam grows slowly because Cambodia has yet to move up the value chain.
4. High Trade Costs & Supply Chain Inefficiencies
Even as trade corridors improve gradually, overall trade costs remain high for Cambodia due to structural factors.
Energy Costs Among the Highest in ASEAN
Industries in Cambodia frequently pay more for electricity compared to neighboring Vietnam or Thailand. High energy costs:
- Discourage foreign investors in manufacturing
- Increase production costs
- Reduce competitiveness of Cambodian goods
- Prevent upgrading of factories and processing plants
Without affordable energy, building a modern industrial base becomes difficult.
Fragmented Logistics Network
Cambodia’s internal transport network still faces issues such as:
- Unpaved secondary roads
- Narrow provincial roads leading to border districts
- High trucking costs
- Delays caused by overland congestion
Similarly, cross-border freight transportation systems are not always synchronized between the two countries, causing longer delivery times.
Inefficient Transport & Customs Procedures
Many exporters note:
- Lengthy customs documentation
- Non-digital inspection processes
- Paper-based approvals
- Inconsistent procedures across different border checkpoints
These inefficiencies increase time and cost—reducing the incentive for businesses to expand cross-border trade.
5. Regulatory Barriers & Institutional Challenges
Beyond physical infrastructure, regulatory and institutional gaps significantly contributed to the slow trade growth in 2025.
Differences in Quality Standards
Cambodia and Vietnam still operate with:
- Different food safety requirements
- Different pesticide and chemical residue standards
- Different labeling rules
- Different packaging requirements
This mismatch can lead to shipment rejections or delays, discouraging exporters.
Regulatory Uncertainty
Cambodian SMEs frequently report:
- Sudden changes in customs procedures
- Unclear guidelines when exporting to Vietnam
- High administrative burden
- Inconsistent interpretation of rules at provincial levels
Vietnamese companies operating in Cambodia also face challenges:
- Difficulties in securing land for factories
- Language barriers
- Complex local business registration processes
Limited Digital Integration
A major gap is the lack of fully integrated digital customs systems between the two countries. With modern trade requiring speed, paper-based systems contribute to delays and errors.
6. Informal Trade, Smuggling & Market Distortions
Informal trade remains a systemic issue along the Cambodia–Vietnam border.
Why Informal Trade Happens
- Lower taxes
- Faster movement
- Less documentation
- Avoidance of quality inspection
Impact on 2025 Trade Performance
- It prevents the formal trade figures from reflecting real economic activity.
- Smuggled goods often do not meet quality standards, damaging the reputation of Cambodian products.
- Informal traders undercut formal exporters, discouraging compliance and investment.
- Governments lose tax revenue that could be used for infrastructure upgrades.
Until authorities significantly reduce informal trade and smuggling, improvements in bilateral trade data will remain limited.
7. Economic Constraints Inside Cambodia
Another critical factor behind the slow trade growth in 2025 is Cambodia’s internal economic challenges.
Slower GDP Growth
Global uncertainties, slower industrial output, and reduced tourism recovery all contributed to weaker economic performance, which indirectly affected export capacity.
Limited Investment in Modern Industry
Foreign and domestic investors hesitate due to:
- High production costs
- Skills shortages
- Limited access to affordable financing
- Underdeveloped supporting industries
Industrial diversification is necessary for Cambodia to create new export channels that can boost trade with Vietnam.
SMEs Face Financial & Technical Barriers
Small and medium enterprises—which form the backbone of Cambodia’s export sector—often face:
- High loan interest rates
- Limited access to credit
- Lack of advanced technology
- Low levels of modern managerial skills
- Difficulty meeting export quality standards
Without government-backed support programs, SMEs cannot scale to meet Vietnam’s growing market demand.
8. Real Business Examples
To better understand these issues, let’s look at examples of how they affect real companies.
Example 1: Cambodian Cashew Farmers
Many Cambodian cashew farmers still rely on traditional drying, sorting, and packaging techniques. Without modern processing machinery:
- They cannot sell directly to premium buyers.
- They depend on Vietnamese middlemen offering low prices.
- Their product quality varies greatly from batch to batch.
As a result, Cambodia earns less from cashew exports than it could.
Example 2: Rice Exporters
Cambodian rice producers face difficulties due to:
- Lack of industrial drying facilities
- Limited access to modern milling equipment
- Insufficient transport links to border markets
Many exporters cannot meet Vietnamese quality specifications, limiting trade potential.
Example 3: Vietnamese Retail Companies in Cambodia
Vietnamese consumer goods companies attempting to expand into Cambodia often encounter:
- Language barriers
- Complex local registration procedures
- Challenges navigating different provincial regulations
These obstacles slow or discourage investment, impacting the trade ecosystem as a whole.
9. What Both Countries Are Doing to Fix It
Despite the structural challenges, Cambodia and Vietnam are actively working to improve trade relations.
Key Ongoing Initiatives
- Joint border infrastructure development including warehouse and inspection facilities
- Cross-border logistics cooperation conferences to streamline transport processes
- Efforts to harmonize customs procedures and reduce paperwork
- Bilateral agricultural cooperation to improve quality standards
- Vietnam’s commitment to boosting trade to US$20B in the coming years
Private Sector Efforts
- New agro-processing investments in cashew, pepper, and fruit production
- Increased interest from Vietnamese logistics companies in Cambodia
- Rising cross-border e-commerce opportunities
While progress is slow, the direction is positive and shows real potential for transformation.
10. What Needs to Change: Strategic Recommendations
To achieve sustainable and high-quality trade growth, both countries must take bold and coordinated action.
1. Upgrade Border Infrastructure
- Build modern warehouses and cold storage facilities
- Widen feeder roads and expand truck parking areas
- Implement faster, digital customs clearance
2. Harmonize Regulatory Standards
- Align food safety, labeling, and inspection rules
- Create bilateral standard-certification mechanisms
3. Support Domestic Value-Added Industries
Cambodia urgently needs:
- More processing factories
- Incentives for agro-industrial investors
- Subsidized electricity rates for manufacturers
4. Formalize Border Trade
- crackdown on smuggling
- enforce border regulations
- incentivize formal exporters
5. Expand SME Support
Governments and development partners should help SMEs upgrade via:
- Affordable loans
- Technology grants
- Training for export management
6. Digital Integration
- Fully integrated digital customs systems
- Simplified cross-border e-commerce processes
By implementing these changes, Cambodia and Vietnam can unlock far greater economic potential.
Conclusion: A Path Forward for Stronger Cambodia–Vietnam Trade
The slow 2.61% growth in 2025 does not reflect a lack of opportunity. Instead, it reveals long-standing structural, logistical, and institutional weaknesses that need to be addressed. Cambodia’s dependence on raw exports, high logistics and energy costs, informal border trade, and regulatory mismatches continue to limit the expansion of bilateral trade with Vietnam.
But the potential remains enormous. With strategic reforms, upgraded infrastructure, and deeper economic cooperation, Cambodia and Vietnam could not only meet but surpass their trade targets—creating stronger supply chains, attracting more investment, and driving economic growth for both nations.
If Cambodia accelerates its move toward value-added processing and modern border systems, and Vietnam continues supporting bilateral initiatives, the next phase of trade integration could be transformative.