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IN BRIEF
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From industrial fireworks to sudden extinction, the solar At Cambodia offers a revealing spectacle of the weaknesses of an export model based on temporary gains. Fueled by foreign investments and the temporary suspension of customs duties In the United States, the sector grew from almost nothing in 2017 to over $2 billion in 2023, before collapsing after the revision of the rules of origin in August 2023 — and falling to less than 10 million in 2025. While Cambodian exports have nevertheless increased by 17% in 2025 Thanks to clothing, shoes and agricultural products, the solar episode highlights the urgency of clarifying the certificates of originto improve theaccompaniement businesses and to strengthen the competitiveness before exiting least developed country status in 2029.
In a nutshell: Cambodia has experienced a veritable industrial boom — going from almost nothing in 2017 to more than $2 billion solar panel exports in 2023 — before falling sharply to less than $10 million in 2025. This situation reveals structural flaws in the export model: vague rules of origin, dependence on temporary benefits, lack of sufficient public/private support, and insufficient productivity gains. The lessons learned must serve as a compass to transform fleeting success into sustainable growth, as the country aims for the status of high income countries by 2050.
A spectacular boom, then a sudden halt
The rise of Cambodia’s solar sector has been meteoric. Between 2017 and 2023, the industry went from virtually nonexistent to massive exports of photovoltaic modules—a success story fueled by foreign investmentsAttractive production costs and easy access to the American market during a favorable regulatory window. Several field analyses recount this industrial frenzy and its twists and turns (CambodiaMag, Vietnam Today).
But the negative turning point came in August 2023, when US authorities determined that the operations in Southeast Asia were essentially a assembly and did not meet the criteria of rules of originAs a result, the panels were associated with the origin of the countries producing the key components and were subjected to high customs dutiescausing a collapse in exports to the United States. The shock was documented by several media outlets (The Last Hour, World News).
Why was the rise so rapid?
Three ingredients made the magic potion: low wage and industrial costs, foreign direct investment ready to take advantage of a trade window and, above all, a temporary suspension of US tariffs on certain Asian importers. This combination created a dynamic of export-led industrialization, but also a high vulnerability to changes in external rules — a point highlighted by several regional surveys (Southeast Asia).
The American reversal and the rules of origin
The heart of the problem is legal and procedural: the definition oforigin of a product. Cambodia, despite legislative efforts, found itself powerless in the face of a reversal by the American administration. In response, Phnom Penh adopted a law in July 2023 and then a regulation in May 2025 that impose a certificate of origin for certain products exported to the United States. But the framework remains incomplete: it does not cover all products and lacks precise sectoral criteria, making the system ineffective for key sectors such as textiles, bicycles or leather goods.
Clarifying the rules of origin: an urgent matter
Without a quick and practical clarification of the rules of originCambodia faces an increased risk of trade investigations, particularly in a context where the procedure of the Section 301 American standards can be used. Trade specialists and economists have warned about this, pointing out that the lack of precise criteria leaves the door open to trade sanctions (Justice for Cambodia, Southeast Asia).
To make the rules effective, we need not only texts but also operational procedures, clear access points, and verification tools. Several voices are calling for improvements to the component traceability and to specify the thresholds of economic transformation accepted for recognizing Cambodian origin. Field reports and analytical dossiers offer practical avenues for achieving this (CambodiaMag file, Vietnam Today).
Supporting businesses and building on solid foundations
Beyond the rules, it’s theaccompaniement which is often lacking. According to recent findings, nearly 75% of businesses are calling for better coordination with public institutions, and almost half believe that customs procedures related to free trade agreements are complex and slowWithout a trained administration and support services for exporters, businesses remain vulnerable to external risks (Southeast Asia).
The prospect of exiting least developed country status in two thousand twenty-nine This increases the urgency: trade preferences will gradually erode and the need for competitiveness will become paramount. Therefore, investment in infrastructureTechnical training, quality management and an attractive business environment — all these conditions will make it possible to convert one-off advantages into lasting assets (The Last Hour, World News).
Key takeaways
1) Do not rely solely on foreign regulatory windows: Cambodian solar energy demonstrates the fragility of temporary advantages. 2) Strengthen the public-private coordination and simplify customs procedures. 3) Build an export industry based on productivity gains, logistical infrastructure and local skills — long-term levers that are far more robust than dependence on FDI flows.
Regional lessons and perspectives
What happened in Cambodia resonates far beyond its borders. In the region, volatile energy and commodity prices fuel chain reactions: analyses in Thailand show how rising fuel prices highlight a expensive dependency (Southeast Asia — fuel), while local news reviews highlight shocks and opportunities at the sub-regional level (Thailand in brief — Oct, Thailand in brief — Dec).
The Cambodian case also invites us to rethink partnerships: the evolution of Vietnam-India relations or other strategic cooperation can offer ways to diversify markets and secure regional value chains (Southeast Asia — Vietnam/India).
For those who want to read the full account of the solar episode, several contributions explore the causes and consequences with details and local analyses (Justice for Cambodia, CambodiaMag, Vietnam Today).
FAQ — Solar power in Cambodia: lessons from a meteoric but short-lived boom
Q: What happened with the rise of solar panels? solar At Cambodia ?
A: In just a few years, Cambodia has gone from virtually no exports to a commercial boom: from almost nothing in 2017 to more than $2 billion in 2023. This meteoric rise primarily relied on foreign investment and temporary trade conditions facilitating access to the US market.
Q: Why did this growth stop so abruptly?
A: In August 2023, US authorities concluded that the majority of operations in Southeast Asia were merely…assembly and not substantial production. According to the rules of originAssembly alone is not sufficient to establish the origin of a product; the panels have been assimilated to the origin of key components and subjected to high customs dutiescausing a collapse in exports, which fell to less than $10 million in 2025.
Q: What exactly are the rules of origin And why do they matter?
A: THE rules of origin These rules determine which country is considered the producer of a good for the application of tariff preferences. They differentiate between simple packaging and substantial transformation. A strict interpretation can lead to the application of tariffs and block access to key markets.
Q: What measures has Cambodia taken in response?
A: The country enacted a law in July 2023 and a regulation in May 2025 requiring a certificate of origin for certain exports to the United States. It’s a step towards greater transparency, but the framework remains incomplete : it does not cover all products and lacks detailed sector-specific criteria.
Q: Is this new system sufficient to prevent further crises?
A: No, not on its own. The text provides a basis, but without sector-specific details and robust control mechanisms, the risk ofcommercial surveys persists. Experts also point to the possible activation of tools such as the Section 301 American in case of suspected circumvention.
Q: What can exporting companies do to protect themselves?
A: They must strengthen component traceability, improve document compliance, and diversify their markets and supply chains. Investing in productivityQuality and skills development will make it possible to transform temporary advantages into competitiveness sustainable.
Q: What role for government agencies and what are the current obstacles?
A: Government agencies must train themselves and support businesses: coordination, simplification of customs procedures, and clarity on origin criteria are essential. Today, nearly three-quarters of businesses are calling for better coordination public and many consider the procedures related to free trade agreements too complex.
Q: Why the horizon two thousand twenty-nine Is it important for Cambodia?
A: The planned exit from the status of least developed countries The end of preferential trade agreements in 2029 signifies the gradual phasing out of preferential trade. Businesses and governments must prepare for increased competition without a tariff safety net.
Q: What lessons can be learned from the solar episode for Cambodia’s export strategy?
A: Experience shows that the benefits of temporary trade policies are fragile. For growth sustainable, we need to invest in the infrastructure, THE SKILLS and the improvement of thebusiness environment, rather than relying solely on facilitated market access.
Q: Does this reversal in the solar sector call into question the overall performance of Cambodian exports?
A: Not entirely: in 2025, exports increased by approximately 17%supported by clothing, footwear, and agricultural products. But the lesson of solar power reminds us that diversification and a robust productive base are essential to achieving the goal of a Cambodia with high income by 2050.