If Cambodia hopes to meet its ambition of becoming an upper-middle-income country by 2030 and a high-income nation by 2050, it must act now to strengthen its industrial foundation. A recent report from the Ministry of Industry, Science, Technology, and Innovation sounds the alarm: despite a 10 percent increase in industrial investment in 2024, industrial output fell by 7 percent.

This alarming disconnect signals deeper problems — inefficient resource use and a workforce unprepared to deliver higher-value-added goods — that could derail Cambodia’s economic future. Investing in Technical and Vocational Education and Training (TVET) is no longer optional; it is essential to unleash the potential of Cambodia’s human capital, drive value-added manufacturing, and build a more inclusive, resilient economy.

Strategic Workforce Development and Industrial Transformation

Although the nation's industrial sector is poised for positive growth in the coming years, the Royal Government of Cambodia (RGC) should strengthen its efforts to fully leverage this sector. According to an ASEAN study on regional labour productivity of the manufacturing sector, Cambodia's ranking remains modest among the 10 nations, especially when compared to other regional players, like Thailand and Laos.

Meanwhile, as Cambodia approaches its graduation from the LDC status, it will face both opportunities and challenges, requiring the country to take responsibilities for accelerating growth, expanding its economic engine, and pursuing economic diversification.

Cambodia’s dependence on the European Union and the United States as key export markets means that it will face significant challenges, particularly with the suspension of preferential trade agreements like the EU's “Everything But Arms” (EBA) and the US Generalized System of Preferences (GSP). Therefore, to mitigate the impacts of this suspension, Cambodia should focus on upskilling its workforce to gain a more competitive edge and advance further up the value chain in both regional and global economies.

Additionally, it is essential to note that Cambodia's annual GDP growth rate averaged over 7 percent from 1995 to 2019. Much of the growth is driven by its tourism sector, real estate and construction, a booming labour-intensive industry, and strong export opportunities to the EU and the US.

In this regard, investing in human capital is crucial to a smooth transition. Cambodia must strategically prepare to shift from a labour-intensive to a more manufacturing-based economy, primarily driven by four key reasons.

First, harnessing the potential of TVET to upskill the workforce would meet labour demand in higher-value-added industries. Second, it would attract more foreign investors, particularly to Special Economic Zones (SEZs), moving beyond those drawn only by low labour costs. Third, it would stimulate other growth sectors by integrating SMEs into the manufacturing supply chain, such as the agro-processing of cashew nuts. Fourth, it would contribute to sustainable economic diversification, strengthening the economy and reducing its vulnerability to external shocks.

Addressing the Low Participation Rate in TVET

The RGC has recognized the challenges ahead in its Pentagonal Strategy Phase I, which aims to foster a favourable environment for economic diversification and growth through human capital development. As part of its efforts to graduate from the Least Developed Countries (LDC) status in 2029, the RGC launched the TVET Programme for 1.5 million youth, known as ‘TVET 1.5 M.’ This initiative seeks to transform Cambodia’s human resources into valuable human capital to realize the nation’s vision for 2030 and 2050.

While the TVET 1.5 initiative is a significant goal for the RGC, challenges within the TVET landscape remain. For example, as of December 2024, only 80,000 of the 1.5 million target had enrolled in TVET, accounting for 5.33 percent.

This low participation rate can be attributed to several factors, including limited exposure to TVET opportunities, the perception that TVET is for students with low grades who are unable to pursue the traditional academic pathway, and the lack of training institutions, especially in rural areas.

Furthermore, Cambodia’s Skill Development Fund (SDF) remains modest, although the RGC has made significant progress in utilizing it.

As of January 2025, over 35,000 trainees have received skills development organized through 465 private sector entities and 61 training institutions supported by the SDF’s matching fund of approximately $16 million. Overcoming these challenges requires a multi-stakeholder approach to raise awareness of the SDF’s role in supporting TVET as a pathway to success, expand access to quality training programs, and incentivize the labour force to participate in TVET.

This article humbly proposes four suggestions that the RGC can consider when incentivizing Cambodia’s labour force to participate in TVET.

First, increased investment in the SDF is essential. An ADB Brief on Cambodia’s TVET funding reveals that the private sector's participation in the SDF has been limited. From past experiences of TVET in other countries, at the outset, many industry leaders remain reluctant to invest in skills development due to a lack of confidence in the fund's mechanisms and outcomes. This hesitancy underscores the need for pilot programs in Cambodia to build credibility and demonstrate the benefits of such investments.

There are several reasons for the RGC to invest in SDF.

To begin with, the long-term benefits from an enhanced labour force would override the short-term losses. Subsequently, by enhancing financial support for the SDF, Cambodia would create more opportunities to incentivize its labour force to fully engage in TVET.

Providing financial support to those who participate in TVET would help ease the burden on the trainees, especially as they typically face financial challenges during the training period. As TVET trainees do not earn an income while undergoing training, additional financial support would ensure that they do not worry about short-term earnings for their families.

This approach would also help address the issue of low participation rates, particularly among individuals who struggle to balance short-term income generation with the need for skills development. By enhancing the SDF, Cambodia can help these individuals gain valuable skills while ensuring their economic stability, ultimately benefiting both the workforce and the broader community.

Second, TVET Centers should be decentralized with a strategic focus. Given that some provinces in Cambodia host more manufacturing industries than others, the RGC should consider concentrating TVET training institutions in areas with a higher density of manufacturing companies, rather than dispersing them across the country.

This helps address the problem of trainees having to travel long distances for training, which is both financially and time-consuming. For example, the RGC should conduct a comprehensive feasibility study to establish a concentrated TVET zone in Banteay Meanchey, Oddar Meanchey, Battambang, and Pailin.

Banteay Meanchey is an ideal location, with five SEZs and an industrial park focused on jewellery, textiles, and agriculture processing, providing job opportunities for over 20000 workers. Similarly, a concentrated TVET center in Kampong Cham could serve residents of Kampong Thom, Kampong Chhnang, and Tbong Khmum, offering access to quality training with less time and financial burden due to its proximity to industrial areas and workforce needs.

Third, reshaping the narrative surrounding Technical and Vocational Education and Training (TVET) in Cambodia will require constant and lasting efforts by all the stakeholders.

Initially, it is important to initiate compelling public awareness campaigns in partnership with local influencers, influential industry leaders, and accomplished alumni. In the case of Germany, the Federal Ministry of Education and Research (BMBF) launched an information campaign called “Du + Deine Ausbildung = Praktisch unschlagbar!” which means that (You + Your Apprenticeship = Practically Unbeatable).

Moreover, German media regularly feature TVET success stories, and companies proudly showcase apprenticeships as elite programs, where it could also be a pathway towards a more advanced degree by obtaining the Industriemeister (industrial master) and Handwerksmeister (master craftsman) qualifications, which are based solely on working experience. For Cambodia, these awareness campaigns should rigorously highlight the inspiring success stories of TVET graduates who have secured thriving, well-paying careers.

Lastly, Cambodia’s TVET should be further developed with a focus on equipping them with viable incentives to attract both industry leaders and trainees to commit to these vocational programs.

Meaningful lessons can be drawn from Switzerland, where TVET is a cornerstone of their education system. The Swiss government has invested substantially in implementing elaborate schemes in TVET to make them attractive for industry leaders to lend their support. Moreover, Switzerland’s TVET is designed with a dual-track apprenticeship system, where trainees are involved with theoretical lessons for 1-2 days per week, while the rest goes to practical knowledge grasping and income-earning at the on-the-job training company.

The dual-track model offers a high degree of flexibility, providing room for trainees to move back and forth between academic and vocational studies and earn income.

Cambodia could study this Swiss model and explore possibilities for adapting elements relevant to the country’s context. That way, Cambodia would reduce the entrenched misconception that TVET is merely a fallback option for those who find traditional academic routes challenging, but an actual career development track with a viable incentive system.

In short, Cambodia has intensified efforts both at the policy and implementation levels to promote TVET. The national endeavours have borne some successes, although there is still room for improvement, particularly to foster a higher participation rate in these skill development schemes.

Making vocational training programs attractive to Cambodians workforces requires that substantial undertakings are injected to enhance quality of TVET including increasing investments in Skill Development Fund (SDF), promoting decentralizations of TVET Centers, raising awareness of relevant narratives of TVET, and working to put in place a viable incentive system to make TVET a credible option for career developments for Cambodians. To enhance Cambodia’s industrial development towards a more advanced economy, boosting human capital through a more refined TVET is important.  

Moeung Cheery is currently a fellow of the Adenauer Young Scholars for Excellence (AYSE), a public policy training program co-organised by Konrad Adenauer Stiftung (KAS) Cambodia and Institute for International Studies and Public Policy (IISPP) of the Royal University of Phnom Penh (RUPP).