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A curated assessment and must-know facts of the business and investment climate in Cambodia

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 business registration certificates.
  • General Department of Taxation (GDT): The GDT is responsible for issuing tax identification numbers (TINs).
  • Ministry of Health: The Ministry of Health is responsible for issuing food safety permits.

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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