EuroCham Cambodia Automotive Committee Flags Tax Disparity, Calls for Reform as Market Growth Continues

EuroCham Cambodia's Automotive Committee convened industry leaders, government officials, and investors at a breakfast talk on the Automotive Sector Outlook for 2026 and Beyond, presenting new data on Cambodia's vehicle market and tax structure and calling for reforms to support local assembly and market discipline.

The event, held at Novotel Phnom Penh BKK1 on June 30, 2026, was sponsored by RMA Cambodia with the Cambodia Automotive Industry Federation (CAIF) as media partner. It opened with remarks from Martin Brisson, Executive Director of EuroCham Cambodia, and Bryan Fonari, Head of Cooperation at the Delegation of the European Union to the Kingdom of Cambodia, before moving into sector presentations from leaders of the public and private sectors.

Market Growth, and a Tax Structure Working Against Local Assembly

Makara Chhoeurn, Chairperson of EuroCham's Automotive Committee and Project Manager at RMA Cambodia, reported that Cambodia's vehicle market reached roughly 82,000 units sold in 2025 across around 100 represented brands, with car sales increasing by 35 per cent year-on-year during the first five months of 2026. New vehicle sales are driving that growth, now accounting for 66 per cent of the market, up from 28 per cent in 2020 — a share Chhoeurn said could reach 80–90 per cent by 2028.

That growth sits alongside USD 217.7 million in local assembly investment across 13 plants since 2011, including recent entrants BYD and TH Automotive Cambodia.

However, his presentation highlighted a structural disincentive: under current tax rates, importing a fully-built electric vehicle carries a total tax burden of 21 per cent, while importing an equivalent combustion vehicle from the manufacturer can reach 130 per cent. Based on Chhoeurn's estimates, assembling a BEV in Cambodia costs approximately USD 4,000 more per vehicle than importing a fully built BEV (the actual cost difference varies depending on the car value).

“Cambodia's vehicle market continues to grow. However, the market remains undisciplined, with challenges including grey-market imports, low-priced vehicle imports, and online vehicle sales operating outside the authorised distributor network," said Chhoeurn. “Despite Cambodia's growing number of vehicle assembly plants and significant investment, no manufacturer is assembling Battery Electric Vehicles (BEVs) locally because importing BEVs remains significantly more cost-competitive under the current tax structure.”

He added:

To ensure a sustainable automotive manufacturing industry, the government needs to review and rebalance the current vehicle tax and policy framework. Without policy adjustments, local assembly plants may struggle to compete with imported BEVs, putting future manufacturing investment and existing operations at risk.

EuroCham's Automotive Committee called for greater tax policy predictability, a clear licensing framework for assembly plants, and stronger protection for exclusive distribution rights — alongside tighter market discipline to address grey-market imports, unlicensed dealers, and weak consumer protection on warranties and after-sales service.

Skills Development Fund Highlights Automotive Training Push

Chantheara Lay, Engagement Team Leader at the Skills Development Fund (SDF), presented the Fund's automotive-sector track record: USD 2.19 million in training costs for 2,799 trainees since 2018, with SDF covering roughly half training investment and female participation reaching 23 per cent. SDF also highlighted it's Training the Trainer initiatives, with Cambodian trainers who completed EV-skills training in China, and outlined five priority training clusters — EV readiness, diagnostics, maintenance, productivity, and trainer development — that eligible companies can pursue alongside tax deductions of up to 200 per cent for training expenditure.

"Cambodia cannot compete only on low labour cost. The sector needs a pipeline of technicians, supervisors, and trainers who can meet industry standards. Skills development is not a social activity. It is a competitiveness strategy for Cambodia's automotive sector," the SDF presentation stated.

The morning closed with a panel moderated by Chhoeurn Makara, featuring H.E. Lim Visal, Deputy Secretary General of the Cambodia Investment Board (CDC); H.E. Ky Sokkim, CEO of the Skills Development Fund; Kensuke Tsuchiya, President of Toyota Cambodia and Toyota Tsusho Manufacturing (Cambodia); and Ngorn Saing, Chairperson of CAIF and CEO of RMA Cambodia.

"At SDF, ‘Industry-driven’ is not a slogan. It is our operating model: ‘Co-design, Co-invest and Co-own' the results of workforce development together,” remarked H.E. Ky Sokkim.

“Cambodia’s automotive market is entering an important stage of growth, supported by rising incomes, a young population and increasing demand for personal mobility," said Kensuke Tsuchiya. “However, market growth alone will not create a sustainable automotive industry. A clear and balanced policy framework is essential to encourage local assembly, develop skilled people, attract parts manufacturers and ensure fair competition among all market participants.”

He added:

Our objective is not simply to sell more vehicles. We want to invest in Cambodia, develop local capabilities and grow together with the country. Through close cooperation between the government and the private sector, Cambodia has the potential to build a competitive automotive ecosystem that creates employment, supports technological development and delivers long-term value for customers and society.

Audience questions during the Q&A centred on curbing grey-market imports, strengthening vehicle safety standards, and the expected pace of EV market growth in Cambodia.

This press release was supplied.