The Cambodian market has increasingly become an attractive destination for foreign businesses and investors, thanks to its straightforward business registration process, favourable laws, and government incentives.
In this article, we will discuss the ease of business registration, the process of registering a business in Cambodia, and some of the reasons what sectors and opportunities entrepreneurs and investors should consider when looking at doing business in Cambodia.
For more information, check out our in-market advisory services here or get in touch with our expert team.
How do I go about registering a business in Cambodia?
Registering a business in Cambodia is straight forward. You will need to follow a number of steps, which will require input and decisions from you and/or your investors. The basic steps are listed below:
Step 1: Choose a business structure
The first step is to choose a business structure. There are four main types of business structures in Cambodia:
- Sole proprietorship
- Partnership
- Limited Liability Company (LLC)
- Public Limited Company (PLC)
The most common type of business structure for foreigners is the LLC. This is because it offers limited liability protection for the owners of the business.
Step 2: Obtain a business registration certificate
The next step is to obtain a business registration certificate from the Ministry of Commerce (MOC). This can be done either online or through a local agent.
Step 3: Obtain other permits and licenses
Depending on the type of business you are setting up, you may need to obtain other permits and licenses from the government. For example, if you are setting up a restaurant, you will need to obtain a food safety permit from the Ministry of Health.
Step 4: Open a bank account
Once you have obtained your business registration certificate and other necessary permits and licenses, you will need to open a bank account for your business. This can be done at any commercial bank in Cambodia.
Step 5: Obtain a tax identification number (TIN)
The final step is to obtain a tax identification number (TIN) from the General Department of Taxation (GDT). This is required for all businesses in Cambodia.
What are the options for registering a business in Cambodia?
There are three main options for registering a business in Cambodia:
Direct: You can register your business directly with the MOC. This is the most straightforward option, but it can be time-consuming and complicated.
Through an agent: You can hire a local agent to register your business for you. This is a more expensive option, but it is also faster and easier.
If you are considering registering a business in Cambodia, I recommend that you consult with a local lawyer or accountant to get specific advice on the best option for your situation.
Aquarii BD can aid in the registration of a business, while giving expert advice on how best to go about registration. Navigating Cambodian business registration can be difficult so anyone who is considering registering a business in Cambodia should contact an expert, which you can do here.
Here are the relevant ministries and government bodies involved in the process of registering a business in Cambodia:
- Ministry of Commerce (MOC): The MOC is responsible for issuing (1) MOC Certificate, (2) Articles of Incorporation in Khmer and English Languages, and (3) Company Extract in Khmer and English Languages.
- General Department of Taxation (GDT) of the Ministry of Economy and Finance: The GDT is responsible for issuing (1) Notification Letter on Tax Declaration, (2) VAT Certificate, (3) Patent Tax, and (4) Digital Card to be used for tax duties.
- Ministry of Labour and Vocational Training (MLVT): The Ministry of Health is responsible for issuing (1) the Declaration of Opening the Enterprise, (2) Enterprise Ledger, and (3) Passbook of Payment Permit.
Has the process of registering a business in Cambodia become easier?
Cambodia has made significant improvements to the process of registering a business in Cambodia in recent years. In 2019, the World Bank ranked Cambodia 150th out of 190 countries in its Doing Business report, up from 175th in 2018. This improvement was driven by a number of factors, including:
- The introduction of a one-stop shop for business registration: This has made it much easier for businesses to register with the government, as they can now do everything they need to do in one place.
- The reduction of the number of required permits and licenses: The government has reduced the number of permits and licenses that businesses need to obtain, making it a more streamlined process.
- The introduction of electronic filing: Businesses can now file their documents electronically, which saves time and money.
- The improvement of the investment climate: The government has taken steps to improve the investment climate in Cambodia, making it more attractive to foreign investors.
These improvements have made Cambodia a more attractive destination for foreign businesses. In 2021, the country received a record $3.8 billion in foreign direct investment (FDI). This FDI is expected to continue to grow in the years to come, as Cambodia continues to improve its business environment.
How has the Cambodian government made registering a business in Cambodia easier?
The government has taken a number of steps to improve the process of registering a business in Cambodia, such as:
- In 2018, the government launched the “One-Stop Shop for Business Registration” (OSSBR), which provides a single point of contact for businesses to register with the government. This has significantly reduced the time and cost of registering a business in Cambodia.
- The government has also reduced the number of required permits and licenses for businesses. For example, the number of permits required to open a restaurant has been reduced from 12 to 4.
- The government has also introduced electronic filing for business documents. This allows businesses to file their documents online, which saves time and money.
These improvements have made it much easier and more attractive for businesses to set up in Cambodia. As a result, the country has seen a significant increase in FDI in recent years.
Is registering a business in Cambodia a good idea?
The government has not only improved the process for registering a business in Cambodia, but it’s ongoing development has also resulted in many more favourable outcomes, including:
- Investing in infrastructure, such as roads, bridges, and airports.
- Improving the legal framework for businesses.
- Reducing corruption.
- Providing training and support for businesses.
These efforts have helped to make Cambodia a more attractive destination for foreign businesses. As a result, the country is well-positioned to continue to grow its economy in the years to come.
What are favorable Laws and incentives for foreign interests looking to register a business in Cambodia?
Cambodia’s legal framework and investment incentives create a conducive environment for foreign businesses. Key benefits include:
- Foreign Ownership: Cambodia’s liberal foreign ownership laws permit 100% foreign ownership of businesses, with the exception of land ownership. This is a significant advantage compared to other countries in the region, which often impose restrictions on foreign ownership.
- Tax Incentives: The government offers tax incentives to encourage foreign investment, such as tax holidays, reduced import duties, and exemptions from Value Added Tax (VAT) on specific goods and services.
- Bilateral Investment Treaties: Cambodia is party to numerous bilateral investment treaties and double taxation agreements, providing additional protection and benefits to foreign investors.
- Low Labor Costs: Cambodia’s relatively low labor costs make it an attractive destination for businesses looking to establish a presence in the region.
If I register a business in Cambodia, what sectors or opportunities should I look at?
Cambodia’s economy has experienced robust growth in recent years, with numerous sectors presenting attractive opportunities for foreign businesses and investors. Some of these sectors include:
- Textiles and Garments: As one of Cambodia’s primary export industries, the textiles and garments sector provides ample opportunities for investment in manufacturing, supply chain infrastructure, and skills development.
- Agriculture and Agribusiness: Cambodia’s agricultural sector holds significant potential, with opportunities for investors in areas such as crop production, agro-processing, and agricultural technology.
- Infrastructure Development: The increasing demand for modern infrastructure offers numerous opportunities for investors in areas such as transportation, energy, and telecommunications.
- Tourism and Hospitality: Cambodia’s rich cultural heritage and natural attractions have fueled a growing tourism industry, offering potential for investment in hotels, resorts, and other tourism-related services.
- Renewable Energy: The Cambodian government has set ambitious renewable energy targets, creating opportunities for investment in clean energy projects, such as solar and wind power.
What other opportunities are available when registering a business in Cambodia?
Make sure you keep up to date with the latest information from important local news outlets such as Cambodia Investment Review in order to keep on top of investment opportunities, especially when registering a business in Cambodia, as well as keeping up to date with the latest market developments on the Aquarii BD website.
