Service Sector Overview

Q: How much of Cambodia’s GDP is accounted for by the service sector? What is the contribution of the Services sector to Cambodia’s GDP?

The services sector in Cambodia accounted for 38.9% of Cambodia’s GDP. Although the contribution of the services sector to the country’s GDP has remained around 40% since 2000, it has seen promising innovation in banking and finance, insurance, and professional services like architecture, real estate, education, healthcare among others as new products are paired with digital technology offering become increasingly commonplace.

Q: What drives promising growth for Service Sector in Cambodia?

Since 2000, it has seen promising innovation in banking and finance, insurance, and professional services like architecture, real estate, education, healthcare among others as new products are paired with digital technology offering become increasingly commonplace.

Q: Which subsector has Cambodia’s service sector diversified into?

There are four subsectors of Cambodia’s service sector such as hotel and restaurant, real estate, wholesale and retail and transportation and communication.

Q: What is the growth of the service sector as a percentage of FDI in Cambodia?

A recent OECD report noted that Cambodia and Singapore are both very open to foreign investment in the Services sector viz-a-viz other ASEAN and OECD member countries. In fact, it highlighted that between 2012 and 2016, the Services sector of Cambodia attracted more than 50% of its total FDI inflows, above that of Myanmar at 43% and even Malaysia (38%).

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Tourism and Hospitality

Q: What is the total gross revenue generated from the Tourism and Hospitality sector in Cambodia?

A: According to the Ministry of Tourism, this translated into a gross revenue of around USD 4.92 b, a 13% YOY increase.

Q: What is the contribution of Tourism and Hospitality to Cambodia’s GDP?

A: In 2020, just USD 1.023 billion in revenue from 1.3m international tourists were recorded, a 79.4% nosedive from USD 4.92 b and an 80.2% fall from 6.6m international visitors in 2019. This translated into just 3% of Cambodia’s GDP in 2020, a far cry from the 21% chalked up in 2019.

Q: How many international tourists travel to Cambodia?

A: In 2019, there are 6,610,592 international tourists visting Cambodia.

Q: Which country is the largest source of international visitors to Cambodia?

A: China was the largest source at 2.36m visitors, followed by Vietnam and Thailand.

Q: What is the current development/status of the eco-tourism sector in Cambodia?

A: The ecotourism sector, hitherto under-developed, has seen a surge in interest in recent years as Cambodia relied more on domestic tourism during the Covid pandemic, raising awareness of the many unspoiled areas of the Kingdom that could be suitable for glamping and small footprint development. 

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Q: What is Cambodia’s legal system?

A: Cambodia’s legal system is a hybrid of Civil Law (inherited from the French colonial era) and Common Law (introduced by international development partners as part of their assistance on legal and judicial reform).

Q: What are the taxes that businesses in Cambodia have to pay?

A: In Cambodia, both companies and individuals are subject to certain tax obligations under the host country’s self-assessment system, regardless of the type of business activity or the level of annual revenue.

Q: Who are the taxpayers in Cambodia?

A: There are three type of taxpayers in Cambodia

Q: What is Tax on Income (ToI) in Cambodia?

A: Tax on Income is depending on the industry

Q: What is Tax on Employment / Salary in Cambodia?

A: Tax resident employees must pay tax on salaries from both Cambodian and foreign sources – employer pays to withholding tax on the gross monthly salary of employee according to a progressive scale/rate;

The monthly salary of non-resident employees for salary derived from Cambodian sources are subject to a flat withholding tax rate of 20%;

Employers must withhold the tax due on an employee’s salary (and 20% of the total value of fringe benefits) and pay the withholding tax to GDT on or before the 25th day of the month following the salary payment

Q: What is Patent Tax in Cambodia?

A: Patent Tax is the quantum of which is dependent on the annual revenue viz small, medium or large taxpayers.

Q: What is Stamp Tax in Cambodia?

A: Stamp Tax is exempt for newly established companies) but applicable for mergers, dissolution, transfer of shares and immovable properties and assets.

Q: What is the purpose of the Double Tax Agreement (DTA) in Cambodia?

A: Cambodia has signed Double Taxation Agreements (DTA) with nine countries to avoid the international double taxation of income and properties.

Q: How many countries have signed the Double Tax Agreement (DTA) with Cambodia? Does Cambodia have a Double Tax Agreement (DTA) with other countries?

A: Cambodia has signed the Double Tax Agreements (DTA) with 9 countries.

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Accountancy and Auditing

Q: What are the legal/regulatory requirements for Accountancy and Auditing in Cambodia?

A: Some of the salient legal requirements stipulated for Accountancy and Auditing in Cambodia include but are not limited to the following:

  • Financial statements are the basis upon which tax obligations are premised
  • Full accounting records must be maintained for a period of 10 years, and all financial transactions must be filed with proper supporting documents
  • Accounting records and financial statements are to be in the Khmer language and denominated in Khmer Riel equivalent; a second set of records and statements may be prepared in the English (or foreign language) in which its activities are conducted in
  • The tax and accounting year generally coincides with the calendar year although any deviations are permissible so long as the appropriate approvals are properly documented
  • All business entities must submit their annual financial statements to be audited by an independent auditor who is registered with the Kampuchea Institute of Certified Public Accountants and Auditors (“KICPAA”)

Q: What are the types of Tax Audits in Cambodia?

A: There are 3 types of Tax Audit in Cambodia includes desk audit, limited audit and comprehensive audit.

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Banking and Finance

Q: What is the official monetary authority of Cambodia?

A: The National Bank of Cambodia is Cambodia’s central bank and monetary authority.

Q: What are the financial institutions under the supervision of the National Bank of Cambodia (NBC)?

A: Microfinance Institutions (MFIs), Microfinance Deposit-taking Institutions (MDIs), specialized banks and commercial banks, and operators of e-wallets, remittance services, insurance companies.

Q: What is Cambodia’s banking system?

A: Microfinance Institutions (MFIs), Microfinance Deposit-taking Institutions (MDIs), specialized banks and commercial banks, and operators of e-wallets, remittance services, insurance companies among others. 

Q: What is the minimum capital requirement for a commercial bank in Cambodia?

A: The minimum capital requirement for commercial banks is USD 75m, but this will be raised gradually to USD 200m over the next few years.

Q: Are there microfinance institutions in Cambodia?

A: According to the National bank of Cambodia report in December 2020, there are 73 MFI in the Kingdom

Q: What is the difference in capital requirements for banks and other financial institutions in Cambodia?

A: The minimum capital requirement for commercial banks is USD 75m, but this will be raised gradually to USD 200m over the next few years. Specialized banks must maintain at least USD 15m in registered capital whereas that for MFIs is USD 1.5m.

Q: What are the fixed deposit rates in Cambodia? Are there different fixed deposit rates (FDR) for Cambodian currency Khmer Riel (KHR) and the United States Dollar (USD) in Cambodia?

A: Fixed Deposit Rates in the Kingdom are one of the most attractive in the region at an average of 5.5% to 8% depending on the tenure and currency (in line with NBC’s efforts to encourage the use of the Khmer Riel, Fixed Deposits in Khmer Riel attract a higher FDR than USD). 

Q: What is the average exchange rate of Khmer Riel (KHR) to USD in Cambodia?

A: The exchange rate of Khmer Riel (KHR) to USD stays between 4000riels -4100 riels.

Q: What is the average inflation rate in Cambodia?

A: The average inflation rate in Cambodia is between 1.20% – 3.0%

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Insurance and Actuarial

Q. What are the insurance companies in Cambodia? Are there insurance companies in Cambodia?

A: Cambodia’s insurance market is still at an early stage of development but has become noticeably more active as more international players enter the market in each succeeding year. There are currently 17 general insurance companies, 12 life insurance companies, 6 micro-insurance companies and 1 re-insurance company in the market.

Q: How is the insurance market in Cambodia like?

A: CA estimated the insurance market size to be 1.2 million customers comprising 380,000 policyholders of life insurance, 510,000 in general insurance (health and individual accident insurance) and 280,000 in micro-insurance. Across the board, premium growth was about 7.3% in 2020 at about USD 271.5 m whereas claims paid out to policyholders in 2020 totalled USD 11.3 m.

Q: How many insurance operators are in Cambodia?

A: Currently, there are 17 general insurance companies, 12 life insurance companies, 6 micro-insurance companies and 1 re-insurance company in the market.

Q: What is the premium for General Insurance and Life Insurance in Cambodia?

A: According to local regulations, life insurance companies and general insurance companies are each separately licensed with a minimum registered capital requirement of USD 7 m and are required to maintain a 10% fixed-guarantee deposit with NBC.

Q. What is the percentage of insurance premium from General and Life Insurance products in Cambodia?

A: Total insurance premiums for the same period were $85 million, with general insurance increasing by almost 20% to USD 39.1 m and life insurance premiums increasing by 15.5% to USD 44.6 m, whereas microinsurance premiums contracted by 27% to USD 1.2m. 

Q. What is the insurance claim in General Insurance and Life Insurance in Cambodia?

A: Across the board, premium growth was about 7.3% in 2020 at about USD 271.5 m whereas claims paid out to policyholders in 2020 totalled USD 11.3 m.

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IT and Telecommunication

Q: How is Cambodia’s telecommunications sector?

A: Cambodia’s telecommunications sector is fast developing and its overall outlook is promising and likely to enjoy robust growth in the years to come. 

Q: How many Mobile Service Providers are there in Cambodia?

A: There are 5 mobile service providers – Smart Axiata, Cellcard, Viettel, Cootel and SEAtel

Q: How many Internet Service Providers (ISP) are there in Cambodia?

A: There are 47 ISP licenses that were issued in Cambodia

Q: What percentage of the population in Cambodia is internet service subscribers? How many internet users are there in Cambodia? What is the internet penetration in Cambodia?

A: Increasing internet access and penetration among the Cambodian population, especially among the youths (75% of the population under the age of 35). Compared to neighbouring countries, subscription rates are still very low. There are 17.48 m Mobile internet subscribers or 104% of the total population, a 7% YOY increase.

Q: How many social media users are there in Cambodia? Are there any social media users in Cambodia?

A: There are 12 m social media users or 71.3% of the total population, a 24% YOY increase or 2.3 m over the same period in 2020

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Human Resource, Recruitment and Training

Q: What is Cambodia’s Labor Law?

A: The 1997 Labor Law (“Labor Law”) is the primary legislation governing all employment activities in the Kingdom of Cambodia and is enforced by the Ministry of Labor and Vocational Training (MLVT).

Q: Which government body/ministry oversees employment activities?

A: Ministry of Labor and Vocational Training (MLVT) oversees employment activities.

Q: What is the foreign employee quota in Cambodia? Can companies hire foreigners in Cambodia?

A: Under the latter, the number of foreigners that a business can employ must not be more than 10% of the total number of company employees, of whom 3% can be office employees, 6% skilled labour, and 1% can be unskilled.

Q: What is Seniority Payment in Cambodia?

A:  All employers are reminded that the seniority payment described in the amendment to the Labor Law is applicable to employees that are employed under a UDC.

Q: What is the minimum wage in Cambodia? Is there a minimum wage in Cambodia?

A: No minimum wage has been established by law except for the garments, textiles, and footwear manufacturing industries, where the minimum wage for probationary employees (currently USD 194 per month WEF 1 Jan 2022).

Q: What are the mandatory employee benefits in Cambodia?

A: The mandatory employee benefits in Cambodia:

  • Maximum working hours are normally 8 hrs/day or 48 hrs/week
  • Hourly overtime is compensated at 1.5 to 2 times the normal hourly wage
    • Annual leave entitlement is 1.5 days for each month of employment or 18 days per year, with an additional day every three years of employment
  • Maternity leave of at least 90 days at half salary if she has worked one continuous year or more for the company
  • Special leave (eg: funerals, weddings) at a maximum of 7 days per year and can be deducted from the employee’s annual leave (if such is available) or compensated for through overtime work (calculated at the normal rate for this purpose) by the employee

Q: What is work insurance in Cambodia? Do most companies buy insurance for employees?

A: According to local regulations, life insurance companies and general insurance companies are each separately licensed with a minimum registered capital requirement of USD 7 m and are required to maintain a 10% fixed guarantee deposit with NBC.

Q: What are the areas of insurance coverage of the National Social Security Fund (NSSF) in Cambodia? What is NSSF?

A: The National Social Security Fund (NSSF) covers three pillars: (a) occupational risk (work-related accident and occupational disease) insurance; (b) health insurance; and (c) retirement pension.

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Fintech and E-Commerce

Q: Is there online banking in Cambodia?

A: Cambodia is primarily a cash-based economy but in recent years have seen a greater prevalence in the use of cashless payments through credit cards, digital payments, and transfers through online or mobile banking apps, e-wallets, etc. 

Q: What is the acceptance rate of digital payment in Cambodia? Does Cambodia have digital payments?

A: The digital payment system enables Cambodians to use a free mobile app to make payments and transfer money through any bank on the platform, even if they don’t have a traditional account with the bank.

Q: What is the Fintech market in Cambodia?

A: The fintech ecosystem in Cambodia, particularly in digital payments and transfers, has greatly expanded in recent years. 

Q: What / do commercial banks have digital payment services in Cambodia?

A: Commerical banks in Cambodia provides digital payment services.

Q: What is the number of E-wallet accounts in Cambodia? Are there e-wallet players in Cambodia?

A: The number of registered e-wallet accounts increased more than 20 times to 9.6 m in 2020, accounting for more than 80% of the adult population, higher than deposit accounts with commercial banks or MDIs

Q: When is Bakong? Does Cambodia have/use blockchain? Does Cambodia have an integrated payment system?

A: In October 2020, it formally launched Cambodia’s first and only blockchain-based integrated payment system, called the Bakong, where e-wallets, mobile payments, online banking, and financial applications can all be used through one system interface. 

Q: Which are the top 3 commercial banks with Mobile Payment Gateway in Cambodia? Does Cambodia have a mobile payment gateway?

Q: What is the growth rate of mobile e-transactions in Cambodia?

A: The number and value of mobile e-transactions also expanded rapidly to 266.5 m in 2020, with a total value of 168.6% of Cambodia’s GDP

Q: What is the Cambodian payments system like?

A: National Bank of Cambodia (NBC) has been at the forefront of this transition by encouraging and supporting innovation, improving interoperability between the various banks and financial institutions, as well as the provision of digital financial services to reduce costs and promote financial inclusion.

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Real Estate, Property Management and Maintenance

Q: How is Cambodia’s real estate industry?

A: Cambodia experienced a boom in the construction and real estate industry since 2000, but construction activities and real estate prices defied reality particularly from 2016 to 2019.

Q: How many construction projects are there in Cambodia?

A: Between 2000 to 2018 alone, Cambodia’s Ministry of Land Management, Urban Planning, and Construction (MLMUPC) approved 43,136 construction projects with an estimated investment value of USD 43.3 b. 

Q: What is the total investment value of construction projects in Cambodia?

A: Cambodia’s Ministry of Land Management, Urban Planning, and Construction (MLMUPC) approved 43,136 construction projects with an estimated investment value of USD 43.3 b.

Q: What are the types of construction projects in Cambodia?

A: The residential, commercial, and industrial segments accounted for about 46-50%, 30-35%, and 14-15% share of new projects respectively.

Q: Are there many Condominiums in Cambodia? What is the condominium market in Cambodia like?

A: Real estate companies estimated that the total number of condominiums in Phnom Penh alone jumped by 120% in 2019 and 300% in 2020, with foreigners on average accounting for 60-70% of condominium sales in Cambodia

Q: How has the global economic slowdown and Covid Pandemic impacted/affected the real estate/construction section in Cambodia?

A: Following the global economic slowdown in 2019, Cambodia’s ban on online gambling in Aug 2019 (effective 1 Jan 2020) had a chilling effect on the construction frenzy and frothy real estate prices. The total value of approved projects dropped to just USD 7.8 b in 2020, a YOY fall of 26.9%. 

Q: How does the ‘ban on online gambling’ policy affect/impacted the real estate/construction sector in Cambodia?

A:  following the global economic slowdown in 2019, Cambodia’s ban on online gambling in Aug 2019 (effective 1 Jan 2020) had a chilling effect on the construction frenzy and frothy real estate prices. The total value of approved projects dropped to just USD 7.8 b in 2020, a YOY fall of 26.9%.

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Transportation, Logistics and Supply

Q: How is the Transportation and Storage Market in Cambodia?

A: According to the OECD Competition Assessment Reviews: Logistics Sector in Cambodia in 2021 and updates/figures from the Asian Development Bank (ADB) and World Bank (WB), Cambodia’s transportation and storage market in 2019 was worth USD 2.1 billion, representing 7.8% of the country’s GDP. 

Q: What is the contribution of the transportation/logistics/supply chain industry to GDP?

A: Cambodia’s transportation and storage market in 2019 was worth USD 2.1 billion, representing 7.8% of the country’s GDP

Q: What is the cost of logistics in Cambodia compared to its neighbouring countries?

A: Logistics costs over sales in Cambodia were estimated at 20.5% in 2018, higher than some ASEAN countries such as Thailand and Viet Nam, and the global average of 10-12%, but lower than others such as the Philippines and Indonesia. According to the WB, the informal logistics charges levied by government agencies remain significant at an estimated 48% of logistics administration costs. Improving transport infrastructure in Cambodia is essential to reduce logistics costs.

Q: What is Cambodia’s Logistics performance compared with its ASEAN neighbours?

A: According to the WB, the informal logistics charges levied by government agencies remain significant at an estimated 48% of logistics administration costs. Improving transport infrastructure in Cambodia is essential to reduce logistics costs.

Q: How is Road Freight Transport in Cambodia?

A: Rail network covers 652 kilometres consisting of the Northern line (386km), which links Phnom Penh to the Thai border at Poi Pet, crossing Battambang and the Southern line (264 km), which links Phnom Penh to the port of Sihanoukville. There is also a 6.5 km branch line linking the Phnom Penh railway station with petroleum depot facilities along the Tonle Sap River.

Q: How many international ports are in Cambodia?

A: Two international ports – Phnom Penh Autonomous Port (PPAP) and Sihanoukville Autonomous Port (SAP) – as well as inland waterways for freight and passenger traffic.

Q: What are the differences between Phnom Penh Autonomous Port (PPAP) and Sihanoukville Autonomous Port (SAP)?

A: SAP is the only deep-water seaport in Cambodia and PPAP a river port, but the import-export volume through the latter in 2018 was higher than that of SAP. Both ports recorded solid growth in 2019 in terms of volume handled (SAP: 633 099 TEUs and PPAP: 275 000 TEUs).

Q: How many airports are in Cambodia?

A: Cambodia’s international airports are in Phnom Penh (new international airport being built in Takmao, Kandal Province), Sihanoukville and Siem Reap. Several smaller airports are being constructed or planned in other provinces.

Q: Is there a rail network in Cambodia?

A: Rail network covers 652 kilometres consisting of the Northern line (386km), which links Phnom Penh to the Thai border at Poi Pet, crossing Battambang and the Southern line (264 km), which links Phnom Penh to the port of Sihanoukville. There is also a 6.5 km branch line linking the Phnom Penh railway station with petroleum depot facilities along the Tonle Sap River.

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