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A curated assessment and must-know facts of the business and investment climate in Cambodia
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State of the Tourism Industry in Cambodia in 2023: Opportunities and challenges

The tourism industry in Cambodia is one of the key drivers of its economy, accounting for approximately 12% of GDP and employing over 600,000 people pre-pandemic, of which 60 per cent were women (source). The country is home to a wealth of cultural and natural attractions, including the world-famous Angkor Wat temple complex, as well as stunning beaches, rainforests, and national parks.

Overall, the state of the tourism industry in Cambodia in 2023 is positive. The sector is recovering from the COVID-19 pandemic and is expected to continue to grow in the coming years. In recent analysis, we find Cambodia’s economic prospects to be quite promising, with a forecasted growth rate of 5.5% in 2023 and a further uptick to 6.0% in 2024. This growth trajectory is underpinned by several key factors, as highlighted in the report released by the Asian Development Bank (ADB). (source)

However, the tourism industry in Cambodia and its key stakeholders could do more to diversify the industry and attract higher-spending tourists. In this article, we discuss the state of the tourism industry in Cambodia, as well as the opportunities and challenges facing the sector in the post-pandemic era. For more in-market information, view our business and investment resources here or contact us today.

What is the state of the tourism industry in Cambodia in 2023?

Jyotsana Varma, ADB Country Director for Cambodia, said that despite prevailing global economic challenges, Cambodia’s economy demonstrated resilience in 2022, primarily attributed to the ongoing recovery in the tourism sector. Varma points out that Cambodia’s economic outlook is favorable, characterized by robust growth, a narrowing current account deficit, and a controlled inflation rate projected at 3.0% in 2023 and 4.0% in 2024. (source)

The Asian Development Outlook (ADO) for April 2023 underscores the pivotal role of the tourism sector, which is expected to grow by an impressive 7.3% in 2023, followed by a slightly moderated growth rate of 6.8% in 2024. To maintain this positive trajectory, the report emphasizes Cambodia’s commitment to increasing green investments, a strategic move aimed at unlocking long-term growth potential.

In reviewing Cambodia’s economic performance in 2022, the ADO report reveals an estimated growth rate of 5.2%. This growth was primarily driven by rising external demand for Cambodian products and tourism services. The revival of demand in sectors such as food, accommodation, local trade, transport, and communications contributed significantly to this growth. Notably, international visitor arrivals saw a remarkable rebound, surging from approximately 200,000 in 2021 to about 2.3 million in 2022 as travel confidence was restored. (source)

However, it’s essential to acknowledge certain challenges and considerations. The report anticipates a deceleration in the growth of exports, particularly in the garment, footwear, and travel goods sectors, due to subdued external demand in key markets like the United States and Europe. Nevertheless, Cambodia’s industrial sector remains on a positive trajectory, thanks to policy reforms and trade agreements. Industrial output is expected to grow by 5.8% in 2023, accelerating to 7.8% in 2024.

Meanwhile, the construction sector’s growth is expected to remain relatively sluggish, while agriculture is projected to grow by 1.1% in 2023 and 1.2% in 2024, with a particular boost from crop production for exports.

What will be the challenges for the tourism industry in Cambodia in 2023?

In terms of potential risks, factors such as weaker growth in the United States and Europe, high levels of private debt, fluctuations in tourist arrivals and foreign direct investment, elevated energy prices, and potential disruptions in agriculture due to extreme weather events will play a big role in the future of the tourism industry in Cambodia in 2023 and beyond.

How can the tourism industry in Cambodia diversify its offerings?

As Cambodia strives to diversify and expand its tourism industry beyond the iconic Angkor Wat and the constraints of a short peak season, it can draw valuable insights from the experiences of neighboring countries in Southeast Asia. Let’s explore how regional success stories, such as Indonesia, Malaysia, and Thailand, have diversified their tourism offerings and how Cambodia can apply similar strategies.

What lessons can the tourism industry in Cambodia learn from regional nations? 

Looking beyond just the ‘honeypot’ of Angkor Wat, there are a number of lessons Cambodia can learn from its neighbors in the ASEAN.

Indonesia:

With its vast archipelago, it has successfully diversified its tourism portfolio by promoting ecotourism and celebrating its rich cultural diversity. Cambodia can follow suit by highlighting and promoting its stunning natural landscapes, such as the Cardamom Mountains, Bokor National Park, and Ream National Park, as well as its diverse culture, museums, and traditional villages. Indonesia has also encouraged public-private partnerships to develop tourism infrastructure and services. Cambodia can collaborate with private enterprises to create new attractions, accommodations, and experiences. This collaboration can be incentivized through mechanisms like tax breaks.

Malaysia:

Malaysia first began expanding its market by targeting niche markets such as medical tourism and culinary tourism. Cambodia can identify and develop niche markets that align with its strengths, such as wellness and spa tourism, adventure tourism in the Cardamom Mountains, or culinary tours showcasing its unique cuisine. Malaysia then promoted cultural festivals, such as Thaipusam and Hari Raya Aidilfitri, to attract tourists worldwide. Cambodia can promote its own cultural festivals and events, like the Water Festival or Bon Om Touk, as cultural attractions that draw visitors outside of peak season.

Thailand: 

Thailand has successfully rebranded itself as a year-round destination, showcasing different regions and activities throughout the year. Cambodia can follow this approach by shedding the traditional peak season label and promoting activities suited for each season, as mentioned earlier. Furthermore, investing in infrastructure, like Thailand’s extensive network of airports, can improve accessibility to different parts of Cambodia. Thailand invests heavily in marketing campaigns that highlight its diverse attractions. Cambodia can allocate resources to robust marketing efforts showcasing its year-round appeal and unique offerings, much like Thailand’s successful campaigns.

Incorporating these strategies, Cambodia can diversify its tourism industry and extend its appeal beyond Angkor Wat and the traditional peak season. By embracing its natural beauty, cultural richness, and vibrant F&B scene, Cambodia can position itself as an all-year-round travel destination, stimulate economic growth, and provide opportunities for its people. Specific initiatives, such as promoting festivals, niche markets, and infrastructure development, can be instrumental in achieving this transformation. The lessons from its regional counterparts offer valuable guidance on Cambodia’s path to unlocking its tourism potential.

How much has the tourism industry in Cambodia grown?

The sector is only second to the garment sector with the largest number of women employed. In terms of hotels and accommodation, as of 2020, a total of 1,028 hotels provide 44,428 rooms residing in 25 provinces across Cambodia.13 Another accommodation type is the guesthouse, in which 2,755 units are divided into 35,791 rooms are available for tourists.14 As the tourism industry grows and demand for accommodation spike over the year, the number of hotels and guesthouses also increase. In 1998, there were only 216 hotels and 147 guesthouses. It shows a growth rate of 386 percent and 1.740 percent for hotels and guesthouses, respectively. (source)

How has the tourism industry in Cambodia recovered following COVID-19?

The COVID-19 pandemic had a devastating impact on Cambodia’s tourism industry, with international visitor arrivals plummeting by over 90% in 2020. However, the sector has since begun to recover, with international arrivals reaching over 2.3 million in 2022, (source) an increase of over 1,000% from the previous year.

The recovery of Cambodia’s tourism industry is expected to continue in 2023, with the government forecasting international arrivals to reach 4.5 million. This growth is being driven by a number of factors, including the relaxation of travel restrictions, the increasing availability of flights to Cambodia, and the government’s ongoing promotion of the country as a tourist destination.

How has the government helped with the recovery of the tourism industry in Cambodia?

The government has taken proactive steps to initiate both short and long-term strategies aimed at revitalizing the tourism industry. These measures encompass a range of initiatives designed to support tourism-related businesses and bolster the sector’s overall resilience.

Among the measures implemented are tax and fee exemptions, along with financial support and loans extended to businesses operating in the tourism sector. Furthermore, there have been concerted efforts to facilitate vaccination campaigns for employees within the tourism industry and to enhance their capacity. Infrastructure development also forms a vital component of these recovery initiatives.

For example, a policy granting monthly tax exemptions to all hotels and guesthouses in Siem Reap was introduced in February 2020. This tax exemption policy, which specifically targets tourism-related accommodations, has been extended until March 2023, providing continued relief to the sector.

Additionally, in May 2022, the government launched the Tourism Recovery Co-financing Scheme (TRCS), amounting to $150 million. This financial support is derived from a $75 million contribution by the Royal Government of Cambodia (RGC), channeled through the Small and Medium Enterprise Bank of Cambodia (SME Bank), complemented by an equal $75 million contribution from Participating Financial Institutions (PFIs). Under this scheme, enterprises in the tourism sector impacted by the COVID-19 crisis have the opportunity to apply for loans from select financial institutions partnering with SME Bank. These loans come with concessional interest rates, further aiding the sector’s recovery.

The government is also investing in tourism infrastructure, such as roads, airports, and hotels. This investment is helping to make Cambodia more accessible and attractive to tourists. For example, the government is currently constructing a new international airport in Siem Reap, the gateway to Angkor Wat (read more)

To provide a structured framework for the revival of Cambodia’s tourism, the government has devised the Roadmap for Recovery of Cambodia Tourism during and post COVID-19. This roadmap serves as a comprehensive guide, with the overarching objectives of fortifying the tourism sector in the aftermath of the pandemic, mitigating adverse effects, and establishing Cambodia as a secure and appealing destination in the post-pandemic era.

The roadmap unfolds in three distinct phases:

  • Phase 1: Crisis Management in the New Normal Phase and Planning for Recovery (2020-2021): During this initial phase, the focus was on navigating the challenges posed by the pandemic and laying the groundwork for future recovery efforts.
  • Phase 2: Recovery of the Tourism Sector in Cambodia in the Post-COVID (2022-2023): This phase, currently underway, is dedicated to the active rejuvenation of Cambodia’s tourism sector, aiming for a robust and sustainable revival.
  • Phase 3: Preparation for the New Future of the Tourism Sector in Cambodia (2024-2025): In this final phase, the emphasis will be on future-proofing the tourism industry, ensuring its resilience, and positioning it for long-term growth and success.

These phases collectively form a strategic roadmap that guides Cambodia’s efforts to revitalize its tourism industry, adapting to the evolving landscape shaped by the challenges of the COVID-19 pandemic.

What is the government planning for the future of the tourism industry in Cambodia?

The Ministry of Tourism (MoT) has launched a new strategic initiative titled ‘Uniting for a Collective Vision,’ with the goal of elevating Cambodia’s global standing as a premier tourism destination.

Minister of Tourism Sok Soken articulated that this strategic endeavor aims to streamline and amplify efforts toward transforming Cambodia into a globally competitive, sustainable, and inclusive tourist destination. (source).

Soken emphasized that adopting a shared language and mindset to plan, execute, and monitor this initiative will yield five significant advantages. 

Firstly, it fosters ‘clarity of purpose,’ ensuring comprehensive comprehension of the strategy’s essence, objectives, and action plan across all ministries. Secondly, it promotes ‘unified decision-making’ by employing a common language, leading to more efficient and effective decision-making processes grounded in a unified analytical framework.

Thirdly, it encourages ‘strengthened collaboration’ by establishing a platform for open dialogue and robust feedback, harnessing collective expertise and diverse perspectives within the ministry. Fourthly, it focuses on ‘trust-building,’ as shared language and information cultivate a sense of trust and alignment, enabling the team to rely on one another and enhance overall work performance.

Lastly, it targets the ‘synchronization of projects and activities,’ optimizing resource allocation, minimizing redundancy, and ensuring that endeavors complement each other.

How is the tourism industry in Cambodia developing in 2023?

While Cambodia’s tourism industry is recovering, there is still room for improvement. One of the key challenges facing the tourism industry in Cambodia is the need to diversify its offerings. Currently, the majority of tourists to Cambodia visit Angkor Wat and other cultural attractions. However, the country has much more to offer, including beaches, rainforests, and national parks.

The Cambodian government is working to promote these new tourism destinations, but more needs to be done to make them more accessible and attractive to tourists. For example, the government could invest in developing new infrastructure and tourist facilities in these areas.

Another challenge facing Cambodia’s tourism industry is the need to attract higher-spending tourists. Currently, the majority of tourists to Cambodia are budget travelers. However, the country has the potential to attract more high-end tourists by developing luxury resorts and spas, as well as offering more unique and experiential activities.

How can the tourism industry in Cambodia better capitalize on new tourism trends?

There are a number of ways in which the tourism industry in Cambodia could better capitalize on opportunities. Some of these are: 

  • Focus on sustainable tourism. Sustainable tourism is a growing trend, with more and more travelers looking for ways to reduce their environmental impact. Cambodia can capitalize on this trend by developing sustainable tourism products and services, such as eco-lodges and community-based tourism programs.
  • Promote Cambodia’s unique culture and heritage. Cambodia has a rich and unique culture and heritage, which can be a major draw for tourists. The tourism industry in Cambodia could do more to center the tourism industry in Cambodia around this culture and heritage through marketing campaigns and international events.
  • Develop new and innovative tourism products and experiences. Cambodia needs to develop new and innovative tourism products and experiences to attract more visitors and keep them coming back for more. For example, there could be further development of new hiking trails in national parks, or create new cultural festivals.
  • Improve tourism infrastructure and services. Cambodia could improve its tourism infrastructure and services to make it easier and more enjoyable for tourists to visit the country. For example, more investment could be channeled into developing better roads and transportation networks, and improving the quality of hotels and restaurants.
  • Target specific tourist markets. Cambodia needs to target specific tourist markets with its marketing campaigns. For example, the tourism industry in Cambodia could target high-end tourists by developing luxury resorts and spas, or target eco-tourists by promoting sustainable tourism products and services.

 

Cost of living in Cambodia: 2023 guide

In this comprehensive guide, we explore the cost of living in Cambodia. As an in-market business advisory, we believe it is imperative to delve into the intricacies of the cost of living in Cambodia, a subject of profound significance for prospective investors and businesses contemplating establishment within this dynamic landscape. This guide is important for both living in Cambodia personally, as an investor, or for setting up a business and knowing associated costs for employees.

Find out everything you need to know about the cost of living in Cambodia in this guide, or get in touch with our expert team for any specific question you may have.

What is the state of the cost of living in Cambodia?

The cost of living in Cambodia has risen significantly over the past 5-10 years. This is due to a number of factors, including the country’s rapid economic growth, urbanization, and rising incomes.

According to the National Institute of Statistics, the consumer price index (CPI) in Cambodia increased by an average of 5.2% per year from 2013 to 2022. This means that the overall price of goods and services increased by more than half over this period.

Some specific examples of the rise in living costs in Cambodia include:

  • Food: The price of food has increased significantly in recent years. For example, the price of rice has increased by more than 50% over the past 10 years.
  • Housing: The price of housing has also increased significantly in recent years. For example, the price of a one-bedroom apartment in Phnom Penh has increased by more than 100% over the past 10 years.
  • Transportation: The cost of transportation has also increased in recent years. For example, the price of a bus ticket from Phnom Penh to Siem Reap has increased by more than 50% over the past 10 years.

The cost of living in Cambodia is expected to continue to rise in the coming years. This is due to the country’s continued economic growth and urbanization.

According to the World Bank, Cambodia’s economy is expected to grow at an average rate of 5.3% per year from 2023 to 2027. This economic growth is expected to lead to rising incomes and increased demand for goods and services.

Urbanization is also expected to drive up the cost of living in Cambodia. According to the United Nations, Cambodia’s urban population is expected to increase from 30% to 50% by 2030. This increase in urbanization is expected to lead to higher demand for housing, transportation, and other services.

Are the living costs in Cambodia still attractive for expats and businesses?

Despite the rise in living costs in recent years, Cambodia is still a good country for living costs in general. The cost of living in Cambodia is significantly lower than in many other countries, including developed countries and other Southeast Asian countries.

For example, the cost of living in Cambodia is about 50% lower than in Thailand and about 75% lower than in the United States.

The low cost of living in Cambodia is attractive to businesses, employers, and employees alike, because:

  • For businesses, the low cost of living means that they can operate with lower costs. This can make them more competitive and profitable.
  • For employers, the low cost of living means that they can pay their employees lower salaries. This can make them more competitive in the global marketplace.
  • For employees, the low cost of living means that they can live a good life without having to earn a high salary. This can make them more satisfied with their jobs and more likely to stay with their employers.

Overall, the low cost of living in Cambodia is a major attraction for businesses, employers, and employees alike.

What should businesses or investors take into account about the cost of living in Cambodia?

Overall, the cost of living in Cambodia is very affordable. Businesses expanding into the country can expect to save a significant amount of money on employee salaries and other costs.

Here are some additional tips for businesses expanding into Cambodia:

  • Negotiate salaries with employees. Salaries in Cambodia are relatively low, but it is important to negotiate salaries with employees to ensure that they are fair and competitive.
  • Offer benefits to employees. In addition to salaries, businesses should also offer benefits to employees, such as health insurance and paid time off. This will help to attract and retain the best employees.
  • Take advantage of government incentives. The Cambodian government offers a number of incentives to businesses expanding into the country. These incentives can include tax breaks and investment grants.
  • Work with a local consultant. Working with a local consultant can help businesses to navigate the Cambodian business landscape and to avoid costly mistakes.

Overall, Cambodia is a great place to expand a business. The cost of living is low, the government is supportive of foreign investment, and there is a growing pool of skilled workers.

How easy is it to open a bank account in Cambodia?

In Cambodia, like in many other countries, there is a diverse array of banking options available to meet your financial needs. Each bank offers unique advantages to its customers, making it essential to select one that aligns with your specific requirements. Before making your choice, consider the following factors:

  1. Local vs. International Bank:

Local Bank: Opting for a local bank is ideal for daily transactions within Cambodia, offering convenience and accessibility for residents or long-term visitors.

International Bank: Choosing an international bank provides the convenience of easy money transfers with individuals outside of Cambodia. However, it comes with associated fees, such as convenience fees, automatic currency conversion charges for foreign transactions, and potential taxes on funds sent or received.

  1. Accessibility of Bank and ATMs:

Verify whether your chosen bank has an extensive network of ATMs across Cambodia. This accessibility ensures you can access your funds conveniently while traveling within the country.

Ensure that the bank has branches and ATMs in major cities like Phnom Penh, Siem Reap, and Sihanoukville for seamless financial management.

  1. High Interest USD Savings Account:

To prevent your funds from remaining idle, consider opening a high-interest USD savings account with a bank in Cambodia.

Be mindful of tax withholdings by the bank, which might be deducted from your income. While residents may benefit from tax-exempt dividends, non-residents might incur a 14% advance tax on dividend distributions. Consult your employer or the official government tax agency in Cambodia if you are unsure about tax obligations.

  1. Withdrawal Using Foreign or Local Bank:

When withdrawing money from your bank account, you generally won’t face convenience fees. However, if you use an international card to withdraw from a local bank, expect transaction fees averaging between $4 to $5.

  1. Requirements for Opening an Account:

Opening a bank account in Cambodia as an expatriate is a straightforward process. You typically need to prepare the following documents:

  • 18 years old and above
  • Original and valid passport 
  • Valid Cambodian visa
  • Proof of residency or a copy of your lease agreement
  • Certificate of employment, employment contract, and valid employee ID with photo 
  • The required deposit amount for the chosen account
  • Business license/Certificate of Incorporation/Patent (only if you open for the corporate bank account)

Source: Phillip Bank

Aquarii recommends Phillip Bank, the only Singaporean-owned commercial bank in Cambodia, for both personal and business banking as they adhere to international banking standards. They have favorable rates, regular special offers and giveaways and a strong and trusted presence within the market. Find out more about how Phillip Bank can meet your needs here.

How much are phone contracts in Cambodia? 

Cambodia boasts a highly competitive mobile telecommunications landscape, featuring seven prominent service providers serving a population of approximately 16 million, down from nine carriers in previous years. 

This dynamic market, while intricate, presents a favorable scenario for consumers and businesses when it comes to managing the cost of living in Cambodia, as they can capitalize on an array of specialized promotions and offerings as these companies vie for a larger customer base.

The key players in the Cambodian mobile communication sector include Cellcard, Metfone and SMART.

It’s worth noting that each brand offers varying degrees of network coverage across the country, albeit functioning admirably in major urban centers like Phnom Penh and Siem Reap. Furthermore, each operator features distinct pricing packages. The intricacy deepens when considering the potential cost and complexity of cross-network calls, leading many Cambodians to carry multiple mobile devices.

For most expatriates, pre-paid plans from Cellcard are the preferred choice, primarily due to their English-speaking customer service and cost-effective data plans. Smart is also a viable option for international long-distance calls, boasting competitive rates as low as 7 cents per minute and promotional offerings for overseas calls starting at a mere 4 cents per minute.

While SIM cards are available at various phone retailers in Cambodia, it is advisable to obtain them directly from the mobile network operators. It is mandatory for carriers to maintain a record of your passport information, although many smaller retailers may not adhere to this requirement. Registering your passport with the mobile operator is crucial, as it facilitates the replacement of your SIM card in the event of loss or theft. Additionally, it’s important to note that phone shops often impose a substantial markup on SIM cards, with prices sometimes inflated to $10 for cards that cost only $2 at official carrier outlets.

To acquire a SIM card, simply visit a Cellcard store with a valid passport and visa. SIM cards are available at various price points. The higher-priced options offer no additional value but may include supposedly auspicious combinations of digits in the phone number. At Cellcard, for instance, SIM cards are priced at $2, and a minimum credit top-up of $1 is required for activation. In-network calls typically incur charges ranging from 5 to 7 cents per minute, while cross-network calls are priced at 8 cents per minute. International calls are billed at 20 cents per minute. (This may vary depending on current pricing and promotions, check with Cellcard for full details).

The leading telecommunications provider in Cambodia is Cellcard, which offers one-stop personal and business solutions and is the Kingdom’s only homegrown and Khmer owned company. Find out more about their businesses services here

What is the cost of living in Cambodia for lifestyle related events? 

The average cost of living in Cambodia spans a wide spectrum of lifestyle opportunities, ranging from local events that encapsulate the essence of community engagement to high-end business networking occasions that facilitate strategic alliances. This diversity of experiences caters to a range of preferences and financial considerations.

Local Events:

Engaging in local events in the city, often imbued with cultural richness and community spirit, offers an economical yet enriching aspect to the cost of living in Cambodia. These events, which include traditional festivals, street markets, and local gatherings, present an opportunity to immerse oneself in the local culture and connect with residents. The cost associated with participating in these events is relatively modest, with expenses primarily covering food, transportation, and minor entrance fees. On average, a day at a local event may require around $10 to $20, making it accessible to a broad demographic.

A popular relaxed social and networking event is InterNations, which is open for anyone to join and usually brings together a diverse range of people from the social and business community every month for drinks and free prizes gifted by local businesses. You can find more about this event here.

High-End Business Networking Events:

For individuals seeking to establish high-level connections within Cambodia’s business landscape, attending exclusive networking events offers a platform for strategic partnerships and professional growth. These events, often hosted in upscale venues and accompanied by refined culinary offerings, elevate the networking experience to a sophisticated level. Costs associated with attending such events, including entrance fees and socializing expenses, tend to be higher. On average, participation in high-end business networking events may incur expenditures ranging from $50 to $150 or more, depending on the event’s stature and exclusivity.

Aquarii has organized a number of high-profile events, the latest being the SBF delegation to Cambodia to introduce business and investors to the latest in-market opportunities. Read more here.

Note: Financial outlay for either category of lifestyle opportunity can be influenced by factors such as the frequency of attendance, personal preferences, and individual spending patterns. Cambodia’s cost of living ensures that individuals can tailor their experiences according to their financial capacities and aspirations, thus fostering a dynamic and inclusive lifestyle environment.

How much are sports facilities in Cambodia?

Fitness, such as gyms with aircon and swimming facilities are still fairly expensive in Cambodia. Although you can get cheaper roadside alternatives that boast a few fans and some dated equipment, the majority of gyms are high-end. There are also lots of sports facilities in Phnom Penh, from squash, tennis, and badminton courts, to volleyball and football. These can be expensive to hire individually but usually work out affordable for groups. We recommend joining some of the many sports groups in Cambodia to get a regular team together and make some new friends. The average prices for sports facilities in Cambodia are below.

  • Fitness Clubs: A typical monthly fee for a single adult will be between $40 and $120. The more facilities (and better the location) the higher the cost, so if you live in the city center and want the most equipment, be prepared to pay the price.
  • Tennis, Badminton, Squash Court Rental = $15 per hour
  • Football pitch prices vary. We would recommend group bookings.
  • Volleyball courts and be free, especially if you get involved in local matches. Otherwise, prices vary from $4 per person to $10 for an hour on the court (depending on the quality).

It is worth noting that before you go purchasing a gym membership, you might want to look into investing in accommodation that includes a gym or swimming pool. If you are a frequent goer this could save you cash and the journey, and reduce the cost of living in Cambodia for yourself or your employees.

How much is public transportation in Cambodia?

The cost of transport in Cambodia, comparative to other regional countries, is cheap. Tuk-tuks are commonly used and you can get across the city for around $1 to $2. Local buses are even cheaper, but only run specific routes. Thanks to Cambodia’s digitalisation, you can download Grab or PassApp applications on your Apple or Android device and you can order straight away, similarly to other apps such as Uber. 

Payments can be made in cash (we recommend carrying Riel as drivers will not have change for large USD notes) or you can link it to your Cambodian bank (depending on the bank). Most local bank cards can be linked. If you want to know more about setting up a bank account in Cambodia, find out more from our trusted banking partner Phillip Bank.

The same costs roughly apply to transportation across Cambodia, with the provinces being slightly cheaper, but not by a noticeable difference. Cross country buses range from around $10 to $20 for foreigners, and taxis from anywhere between $40 to $120 depending on the luxury level of the vehicle and the time it takes to reach the destination. Again, the cost of living in Cambodia depends on your personal and business budgets.

How much is private transportation in Cambodia?

Motorbikes are the preferred and among the cheapest forms of powered transport and are considered by most as the best for cost of living in Cambodia.

You can buy motorbikes in Phnom Penh for $300 or less if you are willing to settle for older models and take the risk with them breaking down. However, the cost of buying a motorbike in Phnom Penh which will last you the distance is between $800 and $1,500 for lower range models. We recommend Honda and Suzuki bikes, such as the Honda Zoomer X or Honda PSX or the Suzuki click. These are good standard city bikes that are cheaper to fix and can handle the sometimes-bumpy roads and heavy traffic associated with city life.

The cost of petrol in Phnom Penh varies, but it is usually around $1 to $1.50 per liter (this figure is subject to change with geopolitical events). This means it will be relatively cheap for you to fill and ride your motorbike around the city center, but maybe less so for larger cars.

New cars are expensive in Cambodia because there is a high import tax involved. The cheap way to buy a car is to purchase one which is already in the country and had a previous owner. For example, a Volkswagen Golf 1.4 will cost around $50,000 USD or more, with a Toyota Corolla around $45,000.

E-transport is a hugely increasing market in Cambodia and a lot cheaper to run than petrol bikes. According to the government, the number of registered electric vehicles (EVs) in Cambodia increased by 1,000 percent last year, reflecting the growing awareness of their benefits.

“There are now more than 700 registered electric vehicles in the country,” said Sun Chanthol, the Minister of Public Works and Transport, adding that the year 2022 opened a new page in the use of electric vehicles. The government also supported the private sector in building charging stations. Read more here.

How much is rent in Cambodia property and apartments?

The cost of an apartment varies hugely depending on what part of the country or city you live in, rent or buy, and the size. Generally, the cost of an inner-city apartment in Cambodia’s major cities, such as Phnom Penh, Sihanoukville and Siem Reap is around $400 to $800 (USD), which will get you one bedroom, a kitchen and/or dining area, and possibly a balcony. Usually, these types of Phnom Penh apartments come with the appliances and furniture included, such as electric or gas hobs, fridge, washing machine, aircon, sofa, chairs, bed, fan, and so on. This can increase depending on added extras, including gym, rooftop swimming pools, saunas and other luxuries depending on budget and preference. 

The cost of living regarding rental of residential or commercial properties outside of the major cities is usually less. The cost of renting a one-bedroom apartment can be between $250 and $450, with the average price of a one-bedroom rental in the outskirts of major cities being $350+. This will usually come with the same basic home comforts.

Premium apartments with 2 bedrooms in Phnom Penh will cost anywhere from $700 up to $2,000 and more. On average, a 3-bedroom apartment in Phnom Penh will cost around $1,500+, however, this again depends on the features, size, and what’s included in the price.

Many people who choose to rent 2- or 3-bedroom apartments in Phnom Penh pick locations outside of the city. This is because not only is it cheaper, but some people prefer to live outside of the hustle and bustle of a busy city center.

If you want to find a rental or commercial property in Cambodia, Aquarii works with our very own in-country real estate partners to find the best value rental and commercial properties for you in your preferred location. If you don’t know which location would best suit you, we are on hand to help you decide.

For more information about properties in Cambodia, we recommend our expert partners – Knight Frank Cambodia and IPS – who can help guide you through residential and commercial property options. Get in touch with our team to find out more.

What will increase my rent when living in Cambodia?

Features that will increase your rent are if utilities and perks are included, such as free electricity or water, and free WIFI. Also, building features, such as an in-house gym or rooftop pool and restaurant will also increase your bills. Make sure that you ask about these features and decide for yourself how likely you are to get to use them, to make sure you don’t pay for something you don’t need!

How much does it cost to buy an apartment in Phnom Penh?

The average cost of apartments in Cambodia’s capital sits at around $2,400 per square meter, with the full price range between $1,650 to $3,000. Phnom Penh has some very premium property options including rooftop presidential suites which reach the millions. But there are also some more cost-effective options too. If you want to get more for your money, we recommend purchasing outside of the city center, where the cost of buying an apartment in Phnom Penh outside of the city center is around $1,500 per square meter, with the full range being $1,000 flat to $2,300 and above. Again, find out more at Knight Frank Cambodia and IPS – who can help guide you through residential and commercial property options.

How much does clothing cost in Cambodia?

Considering Cambodia produces a lot of the world’s fast fashion, particularly in Europe, prices for such pieces are not cheaper here and outlets are actually relatively expensive. However, the overspill of the sheer amount of clothing produced means that factory rejects, and fake goods are insanely cheap in some markets, with shorts and t-shirts costing as little as 50 cents. However, don’t expect these pieces to last very long despite the quality looking quite good on first inspection.

Assuming you are going to buy good quality, official brands, here are some clothing prices in Cambodia. 1 Pair of Jeans will be anywhere from $30 to $150, with some leather business shoes coming in at $50 upwards and office and polo shirts costing $40 upwards.

For ladies, summer dresses in chain stores range from $10 if one of the many sales is on, up to $35. Branded trainers are between $65 and $200 in the bigger stores, flip flops are $10, and sandals are around $25.

How much does grocery shopping cost in Cambodia?

Understanding the cost of living in Cambodia is pivotal for businesses and investors considering entry into this vibrant market. The prices of essential goods, such as groceries and daily commodities, play a significant role in assessing the economic landscape. Here’s a comprehensive overview of the cost of living in Cambodia and its importance for prospective stakeholders:

The cost of living in Cambodia can be very cheap when it comes to food, with the cheapest option being shopping in the many Cambodian markets dotted around cities and provinces alike (if you are able to source goods at the right places). 

Below is an average between the bigger chain supermarkets, such as Lucky supermarket, Aeon Mall, Makro and Home Top to smaller shops like Circle K and C mart, E mart and 711.

Grocery Shopping Costs: The cost of groceries in Cambodia can be notably economical, particularly when shopping at local markets. Bargaining skills and familiarity with meat and vegetable prices can lead to substantial savings. However, larger chain supermarkets, including Lucky Supermarket, Aeon Mall, and Hometop, offer a benchmark for assessing living costs.

  • 1 Liter of milk typically costs around $2, often with promotions available.
  • A 500g loaf of bread ranges from $1 to $3, with premium bread options at the higher end.
  • 1kg of white/standard rice varies from 70 cents to $2, with options to support local rice producers.
  • A dozen regular-sized eggs range from $1.40 to $2.30.
  • 1kg of locally made cheese can span from less than $10 to $50.

Meat Prices: The cost of meat varies depending on the location and the source. Here are some price ranges for meat in Phnom Penh:

  • Chicken fillet: Approximately $4 to $5 per 1kg.
  • Red meat (e.g., beef): Ranges from $7 to $10 per 1kg.

Fruit and Vegetables: The prices of fruits and vegetables in Phnom Penh are as follows:

  • 1kg of apples: Around $4.
  • 1kg of bananas: Approximately $1.50.
  • 1kg of oranges: About $3.50.
  • 1kg of tomatoes, potatoes, and onions: Each around $1.50.
  • A head of lettuce: Priced between $1 and $1.20.

Beverages:

  • A 1.5-liter bottle of water starts at 80 cents.
  • A 0.33-liter bottle of water is about 40 cents.
  • A bottle of Coca-Cola or Pepsi costs 85 cents.

Alcohol: Supermarket prices for alcohol are notably low due to the absence of import taxes. However, quality assurance is essential when purchasing imported spirits.

Wine: Mid-range wine is priced around $12. Boxed wine containing 3 to 5 bottles ranges from $20 to $50, with a variety of selections available.

Beer:

  • Domestic beer: As low as 50 cents per can/bottle, up to $2.
  • Imported beer: Approximately $1.50 to $3.50, with higher prices in upscale establishments.

Coffee: Cambodia offers diverse coffee options, from street-side stalls to upscale cafes. A regular cappuccino at higher-end cafes costs approximately $2.70.

Cigarettes: Cigarettes in Cambodia are notably inexpensive, with some packs costing less than $1.80. Quality assurance can be a concern, so spending a bit more is advisable for better quality.

Understanding the cost of living, particularly in terms of essential commodities, is critical for businesses and investors. It provides valuable insights into the local market’s purchasing power, consumer preferences, and potential opportunities for various industries. Monitoring these costs allows for better financial planning and a deeper understanding of the economic environment, which is essential for successful market entry and business growth in Cambodia. Find out more about the cost of living and any other queries with our expert in-market team here.

 

Registering a business in Cambodia: Process, incentives and opportunities in 2023

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.

RHTLaw: Cambodian law on business and investment in Cambodia Part 3

Here in Part 3, we will cover Cambodian law on business and investment with a focus on incentives, advantages and promoted business sectors in Cambodia. It will also touch on how these can be beneficial for investors and businesses operating in the Kingdom.

In the previous article from legal experts RHTLaw, we covered information regarding investment law in Cambodia, which you can view here. This included information on different types of investment, applications for investment, requirements, regulations, the latest laws and much more.

For more information on the latest laws and regulations for businesses, you can contact RHTLaw directly here. Alternatively, for further advisory information regarding anything involving business within Cambodia, you can contact the in-market experts Aquarii here.

What are the promoted sectors of investment in Cambodia?

There are multiple promoted sectors regarding Investment in Cambodia, which are sometimes known as areas of interest for investment in the Kingdom.

These include the various sectors that have been designated by the Royal Government of Cambodia as the priorities sector through the grant of investment incentives.

These incentives are an attempt to attract foreign direct investment to the Kingdom. However, even though Cambodia has committed to a liberal investment regime, some sectors are prohibited from investing in Cambodia due to its impact to society and environmental well-being. Read below to find out more about the promoted investment sectors in Cambodia.

What are the priority sectors for FDI?

The sectors that receive investment incentives under the Investment Law can be considered as the prioritized sector. However, in general terms, Cambodia Industrial Development Policy 2015-2025 pointed out some main sectors as the following:

  • New industries with the capability of breaking into new markets, with high value-added products, creative and highly competitive such as machinery assembly, mechanic/electronic equipment assembly, means of transport assembly, and natural resource processing.
  • SMEs in all sectors especially those involved in drugs and medical equipment production, construction materials, packaging equipment for export, furniture manufacturing, industrial equipment, etc.
  • Agro-industrial production for export and domestic markets.
  • Various types of supporting industries for the agriculture, tourism, and textile sectors as well as for industries serving regional production chains with either global markets or global value chains.
  • Industrials serving regional production lines and that future strategic importance such as ICT, energy, heavy industries, cultural/historical/traditional handicraft, and green technology.

 Are there any limitations on Foreign Investment in Cambodia?

Foreign investors are not discriminated against in any way, except in the case of investment activities on the Negative List and in respect of ownership of land. However, Foreign Investors are permitted to hold land through a long-term lease including land concessions. Under the Cambodian law on business and investment, pursuant to relevant Laws and Sub-Decrees, prohibitions on investment activities include:

  • Production/processing of psychotropic substances and narcotic substances
  • Production of poisonous chemicals, agriculture pesticides and other goods by using chemical substances
  • Processing and production of electric power by using any waste imported from a foreign country
  • Forestry exploitation business

 Which investment sectors enjoy incentives in Cambodia?

The following sectors are currently subject to incentive under Cambodian law on business and investment:

  • High-tech industries involving innovation or research anddevelopment;
  • Innovative or highly competitive new industries or manufacturing with high added value;
  • Industries supplying regional and global production chains;
  • Industries supporting agriculture, tourism, manufacturing, regional and global production chains and supply chains
  • Electrical and electronic industries;
  • Spare parts, assembly, and installation industries;
  • Mechanical and machinery industries;
  • Agriculture, agro-industry, agro-processing industry, and food processing industries serving the domestic market or export;
  • Small and medium-sized enterprises in priority sectors and small and medium-sized enterprise cluster development, industrial parks, and science, technology, and innovation parks;
  • Tourism and tourism-related activities;
  • Special economic zones;
  • Digital industries;
  • Education, vocational training, and productivity promotion;
  • Health;
  • Physical infrastructure;
  • Logistics;
  • Environmental management and protection, and biodiversity conservation and the circular economy;
  • Green energy, technology contributing to climate change adaptation and mitigation;
  • Other sectors and investment activities not listed by this Law deemed by the Royal Government of Cambodia to have the potential for socio-economic development.

Which investment sectors do not enjoy incentives under Cambodia law on business and investment?

The following sectors do not have incentives under the Cambodian law on business and investment

  • All types of Trading Activities,
  • All Forms of Transportation Service,
  • Duty-Free shops,
  • Restaurant, Karaoke, Bar and
  • Massage Parlors outside the premises of international standard hotels,
  • Shopping Mall,
  • News and Media-related Activities,
  • Retail and Wholesale, and
  • Service and business in currency and finance,
  • Professional Services

What are the other types of investment incentives in Cambodia?

In addition to the basic incentives under the Cambodian law on business and investment, such as tax exemption and/or special depreciation, new Laws on Investment also offers additional incentives to QIPs. Those additional incentives include the following:

(1)- Value-added tax exemption for the purchase of locally made Production Inputs for the implementation of the QIP, and

(2)- The deduction of 150 % from the tax base for the activities such as research, development, and innovation, human resource development, construction of accommodation, food courts or canteens that gives more benefits to the employees/workers, and the upgrade of machinery for the production line, and other provision of welfare for Cambodian workers/employees. Moreover, the potential sectors which are determined by the Law on Financial Management may be entitled to some other specific incentives.

What are the rights that investor pursuant to investment law receive?

An investor pursuant to the investment law is entitled to the rights as the following:

  • The right to hire foreign employees to manage or operate an Investment Project based on the scope provided by the investment law and other law and regulations.
  • The right to obtain a temporary long-term stay permit for oneself, spouse and children who are minors.
  • The right to request temporary long-term stay permits for foreign employees and their spouses and children who are minors.
  • The right to obtain a work permit and employment book for oneself and foreign employees.

This is the complete entitlement under Cambodia law on business and investment.

Is there any control enacted over Foreign Companies in Cambodia?

Foreign and local companies are subjected to the same provisions under Cambodian law in general, and investment law in particular except in the area of land ownership. Accordingly, the foreign company is not subjected to any specific law which has the intention to govern their activities. Cambodian law on investment has stated clearly the principle of non-discrimination between Cambodian and foreign investors.

 Are they any control on Foreign Exchange in Cambodia?

Cambodian law on investment provides a friendly provision concerning foreign exchange. Foreign currency purchasing and repatriation to settle their financial obligation in connection to their investment through the authorized intermediary banks are freely allowed in accordance with Cambodian law on business and investment.

When can an investment project be nullified?

Yes. Investment projects must be careful to follow guidelines and regulations in order to not be nullified. For more information on how best to meet all regulations, contact a member of the Aquarii team today. The basic information for reasons why an investment project could be nullified in Cambodia are as follows:

  • Inability to continue to implement the QIP,
  • Dissolution of the legal entity implementing the QIP,
  • Failure to implement the obligations set out in the law and regulation in force,
  • At the request of the relevant ministries/institutions for the Investment Project which adversely affects the environment or national security or public interests or people’s welfare or at the request of the Investor.

How do I find out more information on Cambodian law on business and investment?

You can find out more information. onCambodian law on business and investment in the previous two in-depth posts brought to you by AquariiBD in partnership with RHTLaw in our library of laws section. Alternatively, you can get in contact with us today for specific queries, we look forward to hearing from you!

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