Market Info

The Kingdom of Cambodia has witnessed remarkable economic growth over the past two decades, driven primarily by its thriving garment industry. However, recent years have seen a growing recognition of the need to diversify the economy and reduce reliance on the garment sector, which is susceptible to global economic fluctuations and labor market pressures. In this context, the non-garment manufacturing sector in Cambodia has emerged as a promising avenue for the Kingdom’s economic growth and development.

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Growth Trajectory: Non-garment Manufacturing Sector in Cambodia on the Rise

The non-garment manufacturing sector in Cambodia has experienced significant growth in recent years. According to the General Department of Customs and Excise of Cambodia (GDCE), exports of non-garment products have increased at an average annual rate of 19% between 2010 and 2020, reaching a value of $4.5 billion in 2020. This growth has been fueled by a combination of factors, including:

1. Investment in Special Economic Zones (SEZs): The establishment of SEZs has attracted foreign direct investment (FDI) in non-garment manufacturing, particularly in sectors such as electronics, footwear, and furniture.
2. Government Support Policies: The Cambodian government has implemented various policies to promote the non-garment manufacturing sector, such as tax incentives and infrastructure development.
3. Rising Labor Costs in Neighboring Countries: Cambodia’s relatively lower labor costs compared to neighboring countries like Vietnam and Thailand have made it an attractive destination for non-garment manufacturers.

In 2023, Cambodia’s non-garment manufacturing exports increased significantly, reflecting the country’s success in diversifying its export portfolio away from textiles, according to senior government officials (source).

“The Kingdom exports a wide range of non-garment manufacturing products, including electronic components, bicycles, auto parts, furniture, leather, plastic, and other industrial products.”

“The country’s key exports fell in the first four months of this year due to an economic slowdown in its major markets.”

According to a report from (GDCE), exports from the non-garment manufacturing sector in Cambodia increased during the period, with electrical machinery and equipment and parts exports rising by 94 percent to $979 million. This accounted for about 14 percent of the total export of $7,234 million. 

Meanwhile, Cambodia’s garment exports decreased by 28 percent year-on-year to $1,394 million in four months. Travel goods exports also decreased by 23 percent to $515 million, while footwear exports fell by 23 percent to $436 million. (source)

Challenges and Opportunities: Navigating the Path Forward in the non-garment manufacturing sector in Cambodia

Despite its promising growth trajectory, the non-garment manufacturing sector in Cambodia faces several challenges:

• Skill Development: The shortage of skilled labor in specific industries poses a constraint for further expansion.
• Limited Manufacturing Technology: Access to advanced manufacturing technologies remains limited, hindering the sector’s ability to compete in high-value-added products.
• Infrastructure Gaps: Inadequate infrastructure, particularly in transportation and logistics, can increase production costs and hinder market access.

Despite these challenges, the non-garment manufacturing sector presents numerous opportunities for Cambodia’s economic growth:

• Diversification of Export Products: Expanding the range of non-garment exports can reduce reliance on a single sector and enhance resilience to global economic shocks.
• Higher Value-Added Products: Transitioning from low-value-added garment manufacturing to higher value-added non-garment products can boost export earnings and generate more skilled jobs.
• Integration into Global Supply Chains: Cambodia’s strategic location in Southeast Asia and its participation in initiatives like the ASEAN Economic Community (AEC) can facilitate its integration into global supply chains for non-garment products.
• Embracing Diversification: A Strategic Imperative spurred by the non-garment manufacturing sector in Cambodia.

Moving away from the garment sector and embracing the non-garment manufacturing sector in Cambodia has become a strategic imperative for the Kingdom’s economic diversification and long-term growth. By focusing on developing capabilities in high-value-added manufacturing, Cambodia will be able to  create more sustainable and resilient economic growth, generating higher-paying jobs and improving living standards for its citizens.

What does the government say about the non-garment manufacturing sector in Cambodia?

H.E. Dr. Heng Sokkung, Secretary of State at the Ministry of Industry, Science, Technology, and Innovation (MISTI), said that non-garment manufacturing exports have significantly increased in the last couple of years, outpacing the growth of garment manufacturing exports.

“The Cambodian Industrial Development Policy 2015-2025 has boosted investment in technology in the production chains, and we have seen an instant increase in the export of non-garment manufacturing products,” Sokkung told a local newspaper.

He said that there is good momentum to develop labour-intensive industries into skills- or technology-based industries.

“The Ukraine war slowed down world economic growth and adversely affected exporting countries like Cambodia in sectors such as garments, footwear, and travel goods,” he added.

H.E. Penn Sovicheat, Undersecretary of State and Spokesman at the Ministry of Commerce (MOC), said that the country continues to receive purchase orders, which gives hope that exports will increase in 2023.

“The war slowed down global economic growth and reduced consumer spending, leading to declining orders for Cambodia. However, purchase orders remain high, giving hope for an increase in exports by the end of the year,” Sovicheat added.

What are the examples of Non-Garment Manufacturing Success in Cambodia?

Some examples are as follows:

• Electronics: Cambodia has attracted significant investments in electronics manufacturing, with companies like Panasonic and Yamaha establishing production facilities in the country.
• Footwear: Footwear manufacturing has also grown steadily, with brands like Nike and Adidas sourcing products from Cambodia.
• Furniture: Cambodia’s furniture industry has gained recognition for its quality and craftsmanship, with exports increasing in recent years.

What are the key takeaways for potential businesses and investors in the non-garment manufacturing sector in Cambodia?

Cambodia’s non-garment manufacturing sector offers promising growth opportunities for businesses seeking to enter or expand in Southeast Asia.

Equally, the government’s supportive policies and the country’s strategic location make Cambodia an attractive destination for non-garment manufacturing investment and the sector’s potential for high-value-added product development and integration into global supply chains presents lucrative opportunities for investors.

As Cambodia’s non-garment manufacturing sector continues to expand, several key takeaways emerge for businesses and investors seeking to capitalize on this promising growth opportunity.

What are the key investor takeaways for the non-garment sector in Cambodia?

• Favorable Market Access and Trade Agreements: Cambodia enjoys preferential access to the vast European Union (EU) market under the Everything-But-Arms (EBA) initiative, which eliminates tariffs on most Cambodian exports, including non-garment products. This preferential access provides a significant advantage for businesses exporting from Cambodia to the EU.
• Strategic Location and Logistics Advantages: Cambodia’s strategic location in Southeast Asia, close to major markets and transportation hubs, offers logistical advantages for businesses operating in the non-garment manufacturing sector. The country’s proximity to established manufacturing powerhouses like Vietnam and Thailand also provides opportunities for collaboration and knowledge transfer.
• Government Support and Investment Incentives: The Cambodian government has demonstrated strong support for the non-garment manufacturing sector, implementing various policies to attract foreign investment and promote sector development. These policies include tax incentives, infrastructure development, and skills training initiatives.
• Growing Demand for High-Value-Added Products: The global demand for high-value-added non-garment products, such as electronics, footwear, and furniture, presents a significant opportunity for businesses in Cambodia. The country’s relatively lower labor costs and improving manufacturing capabilities make it an attractive destination for producing these higher-value goods.

What are the lessons to be learned from neighboring ASEAN countries regarding non-garment manufacturing sector diversification?

Cambodia can learn valuable lessons from its ASEAN neighbors, particularly Vietnam and Thailand, which have successfully diversified their non-garment manufacturing sectors. These strategies include:

• Targeted Industrial Policies: Implement targeted industrial policies to attract investments in specific sectors with high growth potential. Vietnam and Thailand have successfully utilized such policies to foster growth in electronics, automotive, and other non-garment industries.
• Skills Development and Training: Invest in skills development and training programs to ensure a skilled workforce capable of meeting the demands of the non-garment manufacturing sector. Vietnam and Thailand have made significant strides in this area, establishing vocational training centers and collaborating with industry partners to provide relevant skills training.
• Technology Adoption and Innovation: Encourage the adoption of advanced technologies and foster a culture of innovation within the non-garment manufacturing sector. Vietnam and Thailand have made significant investments in research and development, enabling their industries to compete in high-tech sectors.
• Clustering and Special Economic Zones (SEZs): Utilize clustering initiatives and SEZs to create specialized hubs for non-garment manufacturing, providing shared infrastructure, business support services, and access to skilled labor. Vietnam and Thailand have successfully established SEZs that have attracted significant FDI in non-garment manufacturing.
• Regional and Global Integration: Actively participate in regional and global economic initiatives, such as the ASEAN Economic Community (AEC) and the Regional Comprehensive Economic Partnership (RCEP), to enhance trade facilitation and market access for non-garment products. Vietnam and Thailand have actively engaged in these initiatives, reaping benefits from preferential tariffs and market access opportunities.
• By drawing inspiration from these successful strategies, Cambodia can further accelerate its non-garment manufacturing sector’s growth and establish itself as a competitive player in the global manufacturing landscape.

Ultimately, embracing diversification and expanding the non-garment manufacturing sector in Cambodia will create a more resilient and sustainable economic future, generating prosperity for its people and positioning itself as a future competitive player in the global manufacturing landscape.

Find out more about business insights here, or browse our page for the information relevant to entering the Cambodian business space here.

In this article we will discuss the state of the beverage industry in Cambodia, including its development, key players within the sector and the challenges faced.

We will also explore what will factor into the industry’s growth going forward and opportunities for investors. If you want more in-market information from the experts, view our dedicated cross-sector map of the business environment here, or get in touch with our expert team.

How has the beverage industry in Cambodia developed?

The Cambodian beverage industry began to develop rapidly in the early 2000s, driven by a number of factors including the country’s growing economy, increasing urbanization, and rising incomes.

One of the most significant developments in the Cambodian beverage industry was the launch of Angkor Beer in 2006. Angkor Beer quickly became the country’s most popular beer brand, and it is now exported to over 50 countries around the world.

Another important development was the entry of international beverage companies into the Cambodian market. In 2007, Coca-Cola opened a bottling plant in Cambodia, and PepsiCo followed suit in 2008.

The Cambodian beverage industry has continued to grow steadily over the past decade. The beer market in Cambodia was worth $1.03 billion in 2015 and is forecast to reach $2.20 billion by 2025, according to the data company Market Research. The report showed the average consumption per capita in value terms reached $67.42 in 2015.

Who are the main actors in the beverage industry in Cambodia?

The main actors in the Cambodian beverage industry include:

• Angkor Brewery
• Coca-Cola Cambodia
• PepsiCo Cambodia
• Cambodia Beverage Company (CBC)
• Khmer Beverage Company (KBC)
• Cambodiana Breweries Limited (CBL)

In just the last two years, Vattanac Brewery Ltd and Hanuman Beverages, joined a market already crowded with four major existing breweries: Cambrew, Khmer Beverages, Cambodia Brewery Ltd, and Ganzberg Brewery.

The two newcomers have collective investment worth more than $300 million (source)

What are the challenges faced by the beverage industry in Cambodia?

The Cambodian beverage industry faces a number of challenges, including:

• Competition from international beverage companies

International beverage companies have a significant presence in the Cambodian market, and they are able to offer a wide range of products at competitive prices.

• High taxes

The Cambodian government imposes high taxes on some beverages, which can make them less affordable for consumers (source). The current special tariffs on locally produced alcohol and tobacco products include a 30 per cent tax on all beers, 35 per cent on alcoholic beverages, and 20 per cent on various types of cigarettes.

• Limited infrastructure & production

The Cambodian beverage industry is hampered by limited infrastructure, such as poor roads and inadequate storage facilities, as well as a limited number of factories to produce goods needed in the beverage industry. However, this is changing as further investment and development enters the industry. (source)

How is the beverage industry in Cambodia expected to develop going forward?

The Cambodian beverage industry is expected to continue to grow in the coming years. This will be driven by a number of factors, including:

• Growing population

Cambodia’s population is expected to grow from 16.7 million in 2022 to 20 million by 2030. This increase in population will boost demand for beverages.

• Rising incomes

Cambodia’s incomes are expected to continue to rise in the coming years. This will give consumers more disposable income to spend on beverages. The Cambodia GDP per capita PPP is projected to trend around 5110.00 USD in 2024 and 5406.00 USD in 2025, according to Trading Economics.

• Increasing urbanization

Cambodia is becoming increasingly urbanized, with more and more people moving to cities. This will lead to increased demand for beverages, as city dwellers tend to consume more beverages than rural dwellers. The share of urban population in Cambodia increased from around 21% to over 25% between 2012 and 2022, with the share continuously increasing. (source)

What is the size of the Cambodian Beverages eCommerce market in 2023?

The Cambodian Beverages eCommerce market is predicted to reach US$44.8 million by 2023 and accounts for 36.8% of the Food & Beverages eCommerce market in Cambodia. It is expected to increase over the next few years. 

The expected compound annual growth rate for the next four years (CAGR 2023-2027) will be 8.9%, resulting in a projected market volume of US$63.1 million by 2027. The Beverages eCommerce market is a sub-market of the Food & Beverages market. 

In the Cambodian Beverages retail market, the online share is 2.1% and will increase by an average of 6.0% to 2.6% by 2027.

What are the opportunities for investors and businesses in the beverage industry in Cambodia?

There are a number of opportunities for investors and businesses in the Cambodian beverage industry. These include:

• Investing in existing beverage companies: There are a number of well-established beverage companies in Cambodia that are looking for investment to expand their operations.
• Launching new beverage brands: There is still room for new beverage brands to enter the Cambodian market. Investors and businesses can look to launch new brands that cater to the specific needs and preferences of Cambodian consumers.
• Investing in the beverage supply chain: The Cambodian beverage industry is hampered by limited infrastructure and a lack of skilled workers. Investors and businesses can look to invest in the beverage supply chain to help address these challenges.

What can be learnt from regional examples and applied to the beverage industry in Cambodia?

Thailand’s beverage industry is one of the most developed in Southeast Asia. The country is a major producer and exporter of beverages, including bottled water, beer, carbonated soft drinks, and fruit juices. Thai companies have been successful in exporting their products to international markets, including China, Vietnam, and the United States.

Lessons from Thailand’s Beverage Industry:

• Focus on innovation: Thai companies have been successful in innovating new products and packaging solutions. For example, they have developed new types of bottled water that are more convenient and portable.
• Emphasize quality control: Thai companies have a strong reputation for quality control. They have implemented strict quality control measures to ensure that their products meet international standards.
• Invest in brand development: Thai companies have invested heavily in brand development. They have created strong brand identities that resonate with consumers.

Indonesia’s Beverage Industry

Indonesia’s beverage industry is another example of a successful regional industry. The country is home to a number of large and well-established beverage companies, such as Coca-Cola Indonesia and PT Indofood Sukses Makmur Tbk. These companies have a strong presence in the domestic market and are also expanding into international markets.

Lessons from Indonesia’s Beverage Industry:

• Build strong distribution networks: Indonesian companies have strong distribution networks that reach all corners of the country. This has been essential for their success in the domestic market.
• Develop effective marketing campaigns: Indonesian companies are known for their effective marketing campaigns. They use a variety of marketing channels to reach their target markets.
• Adapt to local preferences: Indonesian companies have been successful in adapting their products to local preferences. For example, they have developed new flavors of beverages that are popular with Indonesian consumers.

What can we apply regional lessons to Cambodia?

Businesses and investors in Cambodia can learn valuable lessons from the success of Thailand’s and Indonesia’s beverage industries. By focusing on innovation, quality control, brand development, distribution networks, marketing, and local preferences, Cambodian businesses can increase their chances of success in the domestic and international markets.

In addition to these general lessons, there are also specific regional examples that can be relevant to Cambodian businesses. For example, Thai companies have been successful in exporting their products to neighboring countries like Laos and Myanmar. Cambodian businesses could follow a similar strategy and focus on exporting their products to neighboring countries like Vietnam and Thailand.

Indonesian companies have been successful in developing new products that cater to the needs of lower-income consumers. This could be a valuable strategy for Cambodian businesses, as a significant portion of the Cambodian population is still considered to be low-income.

What are the key takeaways for investors in the beverage industry in Cambodia?

The Cambodian beverage industry is a growing and dynamic industry with a number of opportunities for investors and businesses. The industry faces a number of challenges, such as competition from international beverage companies and high taxes. However, these challenges can be overcome by investors and businesses who are willing to invest in the industry and innovate to meet the needs of Cambodian consumers. 

For businesses and investors to move into this space, they should seek local experts within the market. Get in touch with Aquarii for more information about how we can help navigate entry and development within the beverage industry in Cambodia and beyond.

References

• Euromonitor International, “Cambodia: Food & Beverage Market Research Reports & Analysis
• Mordor Intelligence, “Cambodia: Carbonated Soft Drinks Market Analysis, Size, Trends, Consumption, Opportunities, Challenges and Forecast – WM Strategy”
• Mordor Intelligence, “Cambodia: Non-Carbonated Soft Drinks Market Analysis, Size, Trends, Consumption, Opportunities, Challenges and Forecast – WM Strategy”
• UK-ASEAN Business Council, “Webinar: Opportunities and Challenges in Cambodia’s Food & Beverage Industry”

In this article we discuss the new Fintech Policy in Cambodia, which will run between 2023-2028 and provide a pivotal framework shaping the trajectory of the nation’s fintech sector. 

This strategic policy is a significant component of the government’s commitment to realizing the “Cambodia Vision 2050” and fostering financial inclusion. For more information about the new policy and legal framework in Cambodia, view our library of laws designed to facilitate business and investment in the Kingdom. Alternatively, get in touch with one of our expert team.

What does the Fintech Policy in Cambodia outline in its vision?

The preamble of the Cambodia Fintech Policy 2023-2028 articulates a forward-looking vision: “To cultivate a dynamic digital economy and society by laying the groundwork for digital adoption and transformation across all societal elements, including government bodies, citizens, and enterprises. This initiative aims to expedite fresh economic growth and enhance societal well-being in the era of the ‘new normal’.”

The Cambodia Fintech Policy 2023-2028, developed in July 2023 by the Digital Economy and Business Committee, aims to drive technological advancements across Cambodia’s digital economy and society, spanning both banking and non-banking domains. The policy serves as a strategic roadmap for leveraging cutting-edge technologies within the local financial industry and the fintech realm.

How many points are outlined in the new Fintech Policy in Cambodia?

The comprehensive new fintech policy in Cambodia is structured around 52 distinct measures, grouped into three categories: adoption, adaptation, and further innovation. 

These measures are designed to be accomplished within a five-year timeframe, with 19 policy enablers, 12 digital enablers, 12 measures focusing on promoting the utilization and development of enabling technologies, and 9 measures aimed at encouraging the development and innovation of fintech activities.

Among the 12 measures outlined in the policy to promote the utilization and development of ‘Enabling Technologies’ are the incorporation of artificial intelligence (AI), machine learning (ML), big data, cloud computing, blockchain technology, smart contracts, natural language processing (NLP), virtual reality technology, and data analysis technology to instigate innovation in the financial sector.

What will be the advantages of the new Fintech Policy in Cambodia?

The Cambodia Fintech Policy 2023-2028 is anticipated to bring about numerous advantages for Cambodia’s economy, including:

• Enhanced Financial Inclusion: This policy aims to expand access to financial services for all Cambodians, encompassing those residing in rural areas and those who are unbanked or underbanked.
• Increased Operational Efficiency: The integration of digital technology in the financial sector is poised to heighten operational efficiency while reducing costs for both consumers and businesses.
• Promotion of Competition: The Fintech Development Policy will stimulate competition among financial service providers, fostering the development of superior products and services for consumers.
• Attracting Investment: It is expected to attract more investment in Cambodia’s fintech sector, potentially leading to job creation and economic growth.
• Improved Regulatory Framework: The policy endeavors to establish a regulatory environment that fosters innovation while maintaining the stability of the financial sector.

Who will oversee the new Fintech Policy in Cambodia?

The policy’s implementation will be overseen in collaboration with the National Bank of Cambodia, the Non-Bank Financial Services Authority, and relevant ministries and institutions. The Digital Economy and Business Committee will play a pivotal role in researching emerging fintech activities.

What does the government say about the new Fintech Policy in Cambodia?

Aun Pornmoniroth, the Minister of Economy and Finance and the chairman of the Digital Economy and Business Committee, expressed his confidence at the policy’s launch, stating, “I firmly believe that the implementation of the policy will help Cambodia harness the potential of digitalizing the financial sector, offering opportunities to all stakeholders to contribute to Cambodia’s digital economy and society.

The minister stated this evolution can be achieved by three primary activities: The deployment of digital systems as a cornerstone for economic growth; digital technology acting as a catalyst to bolster various economic sectors; and leveraging digital means to link local businesses and investors to international production chains to inspire innovation in product and service offerings.

Drawing an analogy to a fintech tree, he stated the policy encompasses four primary objectives: Environmental enhancement and supportive policies (symbolised by “soil”); fostering a digital foundation (depicted by “roots”); championing the adoption and evolution of auxiliary technologies (represented by “tree”); and advocating for the development and innovation of fintech operations (signified by “branches”).

What is the value of the Fintech Sector in Cambodia?

According to the National Bank of Cambodia (NBC), e-wallet accounts surged from 13.6 million in 2021 to 19.5 million by the end of 2022. Digital payment transactions reached an astounding one billion, totaling USD $272.8 billion, which is nine times Cambodia’s GDP, as reported in the NBC’s Banking Supervision Report 2022.

In 2023, digital payments are poised to experience remarkable growth, with total transactions projected to reach USD $4,374 million, and user numbers expected to reach 8.76 million by 2027. Recognizing the importance of regulations and policies in sustaining this growth, the Cambodia Fintech Policy 2023-2028 is primed to play a pivotal role.

The government has also taken proactive measures to boost fintech development, including the establishment of the FinTech Regulatory Sandbox to facilitate the testing of new products and services. Collaborative efforts with international organizations for technical assistance and support are underway.

The policy itself highlights that compared to other countries in the region, Cambodia’s fintech status is not trailing but rather holds potential for further growth. Ensuring Cambodia’s competitiveness in digital solutions and financial technologies is vital, particularly in the context of the Asia-Pacific region’s forecasted rise as the world’s leading fintech market by 2030, according to a report by Boston Consulting Group (BCG) and QED Investors in 2021. Investments in fintech firms within ASEAN countries exceeded USD $4 billion in 2022, with the region’s digital economy projected to reach USD $330 billion by 2025.

How do I get more information about the new Fintech Policy in Cambodia?

You can visit the relevant government website’s or you can feel free to get in touch with Aquarii to see how this new policy could affect your current business, or open up new opportunities within the market.

ESG in Cambodia: While the concept of ‘doing good’ is not new to businesses in Cambodia, there is a general lack of awareness of what Environmental, Social and Governance (ESG) actually means; it is a mistaken notion at worst or a conceptual ideal at best, but certainly not a priority concern or even an aspirational goal for most businesses here. In contrast, the adoption of ESG is fast becoming a global imperative for international businesses, especially in the aftermath of the COVID-19 pandemic. ESG in some sort becomes the new NTB (Non Tariff Barrier) for Western markets. 

According to a Deutsch Bank report, the pandemic has “reignited the societal debate about sustainability: harmful emissions have declined as a consequence of the global restrictions on movement and contact with other people, reduced economic activity and the slump in travel by air and other modes of transport, while water quality has improved”. Many now have a greater awareness of “how susceptible the world is to disasters caused by our way of life and doing business to date”.

Consequently, as more international investors and businesses increasingly demand that their suppliers and partners be ESG-compliant, and before the adoption of more stringent ESG requirements in business practices and contractual agreements become an immutable norm, particularly in regional and global legislation, there is pressing urgency for businesses in Cambodia to better prepare themselves to face this incontrovertible trend. Otherwise, they risk losing out to their ASEAN counterparts and competitors that are more ESG-aware and ready. 

In this article we will spell out what ESG means, conceptually and in tangible business practices, what the implications are if businesses remain non-compliant and what international players will be looking at when they look for ESG-ready or ESG-compliant businesses to collaborate with.

If you need further expert insights and in-market knowledge on ESG or the Cambodian market, contact us today.

What is ESG?

ESG stands for Environmental, Social, and Governance, encompassing a multifaceted approach to sustainable and responsible business practices. Environmental (E) focuses on a business’s impact on the environment, including energy consumption, waste generation, and climate change mitigation. Social (S) involves interactions with people and communities, emphasizing diversity, inclusivity, and responsible workplace policies. Governance (G) centers on internal governance, ethical decision-making, legal compliance, and responsiveness to stakeholders.

What is the difference between Corporate Social Responsibility (CSR) and ESG?

CSR is when a business involves their staff, and sometimes provides resources, for the betterment of the communities they operate in. For example, litter collections and other community and social volunteering. CSR is usually organized at a management level.

Importantly, ESG puts the ‘G’ – Governance – at the beginning and center of a company’s environmental and social strategies (perhaps it should be renamed GES!).

The board and leadership of a business commits to good governance practices and sets an example, as well as the strategies that the business will implement. This includes qualifications / certification of the board members, following compliance procedures and identifying key areas of business operations, such as climate change, human resources, sustainability, energy, waste and community impact.

Internationally, ESG has gained prominence as a critical aspect of business sustainability. Companies committed to ESG principles tend to enjoy lower capital costs, higher valuations, and improved access to finance. Moreover, the demand for ESG compliance from international investors and businesses is growing, making ESG readiness a competitive advantage.

What is the local interpretation of ESG adoption in Cambodia?

In Cambodia, ESG awareness is relatively low among businesses. While ethical business practices have been present, the systematic adoption of ESG remains limited. Sustainability reports in Cambodia have increased, particularly in the financial services sector, signalling a growing awareness of the importance of ESG. Historically, ESG efforts were often philanthropic or CSR initiatives, but as they are now transitioning into strategic, well-designed programs, Cambodian businesses need to step up their efforts in this imperative.

What are the challenges of ESG adoption in Cambodia?

Several challenges are apparent when it comes to ESG adoption in Cambodia, including:

• Lack of Awareness: Many Cambodian businesses are unfamiliar with ESG principles and their significance, and why the traditional CSR or simply adopting the use of solar panels on rooftops do not qualify them as ESG-ready.
• Complexity: ESG covers a wide range of issues, making it challenging for businesses to understand and implement.
• Cost: ESG implementation is often viewed as an additional expense and unimportant hassle, especially for small and medium-sized businesses.
• Data: Measuring and tracking ESG performance can be challenging in the absence of a standardized reporting framework.
• Risks of Non-Compliance: Businesses that do not embrace ESG risk losing out on international investment opportunities and collaboration opportunities. Non-compliance can also hinder access to financing and affect competitiveness.

What are the potential benefits of ESG adoption in Cambodia, or at least readiness to adopt?

Businesses that are ESG-ready could enjoy various advantages, including:

• Access to Finance: ESG-compliant businesses attract investments from both international and local sources, and are candidates for consideration by non-traditional sources such as impact investment, green financing, among others.
• Cost Reduction: ESG practices enhance efficiency, reduce waste, and manage risks, leading to longer-term cost savings.
• Enhanced Reputation: ESG-ready businesses are perceived as responsible and sustainable, boosting brand value and customer loyalty.
• Competitive Advantage: ESG readiness sets businesses apart in an increasingly ESG-conscious market.

How can you raise awareness and readiness of ESG in Cambodia?

To improve ESG awareness and readiness in Cambodia, businesses are advised to establish governance, meaning that they create transparent governance structures and leadership teams to look into ESG practices and tracking. They should also look to set realistic goals, by developing an ESG plan that is achievable.

Businesses should also look to engage stakeholders, secure buy-in from employees, customers, and suppliers, which are crucial to becoming ESG-ready. Companies can seek the right expertise by collaborating with external organizations and consultants for guidance.

Finally, Monitoring and Reporting is essential in order to regularly track and report on ESG performance and key learnings.

What are some examples of movements towards ESG principles in Cambodia? 

Case Study: Textile, Apparel, and Footwear Industry – ESG in Cambodia.

In Cambodia, the textile, apparel, and footwear industry has begun to embrace ESG principles. The Garment sector actually adopted Ethical Labor Standard way back in the early 1990s though it was not yet labeled ESG as such but it had all the flavor of it. Factories are installing solar panels to demonstrate environmental responsibility; this is an important first step, but is by no means the only requirement to becoming ESG-ready or ESG-compliant. Nevertheless, the industry recognizes the growing significance of ESG compliance and implications of non-compliance, particularly in response to international regulations like the German Due Diligence Law.

The Cambodian government acknowledges the importance of ESG adoption, especially in sectors like textiles, garments, footwear, and travel products, and has made moves to better recognize that adherence to ESG principles is vital to meet the demands of global buyers and remain competitive.

The significance of renewable energy (RE) policies is not lost on stakeholders in Cambodia’s industrial sector. EuroCham’s white paper, issued in September 2022, advocates for the adoption of effective RE policies and calls upon the government to eliminate capacity charges on solar energy while wholeheartedly embracing renewable sources. Recognizing the role of RE as pivotal for international manufacturers and investors seeking high-quality production, carbon neutrality, and sustainability, this directive underscores its paramount importance.

Moreover, Cambodia’s proactive stance in submitting the “Long-term Strategy for Carbon Neutrality (LTS4CN)” to the UN Framework Convention on Climate Change (UNFCCC) on December 31, 2021, deserves commendation. This strategic roadmap is expected to stimulate Gross Domestic Product (GDP) growth by approximately three percent and generate 449,000 jobs by 2050, thereby unlocking the economic benefits of sustainable practices.

Cambodia has also emerged as the first country in the ASEAN region to launch the Strategy for Carbon Neutrality 2050 in 2022. This ambition aligns with the Cambodian government’s pledge, articulated during the 2021 UN Climate Change Conference in Glasgow, to reduce greenhouse gas emissions by 40 percent by 2030.

What have Chambers of Commerce done regarding ESG in Cambodia?

With the support and cooperation of organizations such as GIZ FABRIC and TAFTAC, the European Chamber of Commerce in Cambodia (EuroCham) has forged a path forward with the creation of a Responsible Business Hub (RBH), underscoring the commitment to aiding Cambodian companies in understanding and complying with new mandatory standards. The first of its kind, Cambodia’s RBH, launched on 28 November last year, serves as a centralized resource to facilitate local exporters in their adherence to evolving social and environmental due diligence standards.

In essence, Cambodia’s embrace of ESG principles, renewable energy policies, and its resolute commitment to carbon neutrality is positioning the nation as a serious contender in the global business landscape. As more businesses and industry players recognize the significance of aligning with these sustainability imperatives, Cambodia can be better prepared for a transformative journey towards sustainable prosperity and responsible business practices. This compelling narrative underscores the country’s commitment to be a beacon of ESG adoption within the heart of Southeast Asia.

What are the key takeaways when talking about ESG adoption in Cambodia?

Given Cambodia’s penchant to leapfrog other emerging economies, more can be done and must be undertaken, so that ESG is not just a distant concept but an essential part of sustainable business practices in Cambodia. As businesses worldwide shift toward ESG compliance, Cambodia’s private sector should take active measures to embrace these principles. To that end, it is heartening that the textile industry has made progress in this endeavor. To succeed in the evolving global business landscape, greater awareness of ESG must be raised among Cambodian businesses, and more of them should be incentivised to adopt ESG practices, so that they can position themselves as responsible, sustainable contributors to the international marketplace.

Businesses keen on the steps to take to be more ESG-ready can check with Aquarii to find out which trusted consultancies will be able to help them on their ESG journey.

This has article has been created with the input of our valued partner Platform Impact.

In this article we give an overview of the banking system in Cambodia 2023, including structure, currencies in circulation, challenges and opportunities for businesses and investors. You can view more expert market information right here, on our dedicated platform, or get in touch with one of our team for more information.

What is the structure of the banking system in Cambodia in 2023?

The Cambodian banking system is a two-tier system comprising the public sector (represented by the National Bank of Cambodia, or NBC) and the private sector. The NBC is the central bank of Cambodia and is responsible for issuing currency, regulating the banking system, and promoting financial stability.

The NBC has the authority to inter alia license banks and issue permits for e-wallet providers, regulate money transfers and remittances, manage and conduct foreign exchange transactions, provide credit, and establish credit ceilings and interest rate guidelines. (source)

What does the banking system in Cambodia consist of?

The private sector of the banking system in Cambodia consists of commercial banks, specialized banks, microfinance institutions, and rural credit institutions.

Specialized banks focus on a specific sector of the economy, such as agriculture or development. They are allowed to collect deposits from the public, but they are not allowed to offer the full range of services that commercial banks offer.

Commercial banks are the largest and most important type of bank in Cambodia. They offer a wide range of services to individuals and businesses, including checking and savings accounts, loans, and credit cards.

Microfinance institutions (MFIs) provide small loans to low-income borrowers. They are a major source of financial services for people who are unable to get loans from commercial banks.

In addition to banks, the Cambodian banking system also includes rural credit operators, leasing companies, and payment service providers.

• Rural credit operator: Provides loans to farmers and other rural residents.
• Leasing company: Provides leasing services to businesses.
• Payment service provider: Provides payment services, such as money transfers and bill payments.

Commercial banks are the largest and most important players in the banking system, and they offer a wide range of financial products and services, such as savings accounts, loans, and credit cards. Specialized banks focus on specific sectors of the economy, such as agriculture or development. Microfinance institutions provide small loans to low-income borrowers, and rural credit institutions provide loans to farmers and other rural residents.

What is the state of the banking system in Cambodia?

According to an end of year report in 2022, the NBC confirmed their were 58 commercial and nine specialized banks managed total assets to 272.732 trillion riel ($68.183 billion), or 5.87 times as much as the 46.424 trillion for the more than 300 microfinance institutions (MFI) and rural credit institutions (RCI) formally operating in the Kingdom. The total 319.2 trillion riel marks a 12.6 percent increase from 2021. (source)

The report also said that the top seven lenders managed more than 50 per cent of that total, it indicated, which is broken down into the following:

• Advanced Bank of Asia Ltd, or ABA (13.6%), 
• ACLEDA Bank Plc (13.4%)
• Canadia Bank Plc (11.6%)
• Sathapana Bank Plc (4.1%)
• Hattha Bank Plc (3.6%)
• Cambodian Public Bank Plc, or Campu Bank (3.4%)
• and Foreign Trade Bank of Cambodia, or FTB (2.8%)

The next few on the list were Bank of China (Hong Kong) Ltd Phnom Penh Branch (2.7%), Woori Bank (Cambodia) Plc (2.2%), ICBC Bank Ltd Phnom Penh Branch (2.2%), and J Trust Royal Bank Plc (2.0%). The NBC has set the reserve requirement ratio (RRR) – the minimum amount of cash that financial institutions must hold in reserve – for foreign and domestic currency deposits at 12.5 per cent and eight per cent, respectively, according to the central bank’s website. 

The NBC also maintains minimum registered capital requirements for lenders as follows: commercial banks and foreign bank subsidiaries ($75 million), foreign investment bank branches ($50 million), specialized banks ($15 million), microfinance deposit-taking institutions – or MDI ($30 million), and non-deposit-taking MFIs ($1.5 million). This is a positive for the banking system in Cambodia. 

What are the currencies in use in the banking system in Cambodia?

The main currencies in Cambodia are the Cambodian riel (KHR) and the US dollar (USD). The KHR is the official currency of Cambodia, but the USD is also widely accepted. Most businesses and banks in Cambodia accept both currencies.

In recent years, NBC has proactively promoted the use of the Khmer Riel to mitigate the risks inherent in a highly dollarized economy; as Cambodia aspires towards middle-income status, high dollarization could leave the country vulnerable to external shocks and can threaten its hard-earned economic gains. (source)

This switch to Riel aims to bolster its role as the country’s central bank as a more effective monetary policy will be one of the policy instruments it needs to promote price stability and sustainable economic development for the Kingdom.  For example, all taxes and utilities are to be paid in the local currency, and the value of the Khmer Riel is maintained through a stable exchange rate.

What are the top banks in Cambodia?

Aquarii’s preferred banker of choice, Phillip Bank is one of the largest commercial banks in Cambodia in terms of branch network, with more than 70 branches throughout the country. Phillip Bank offers a wide range of financial services and products catering to Corporate, SME and Retail customers and remains the only Singaporean-owned commercial bank in the Kingdom.

Mr. Ong Teong Hoon, Director and Shareholder Representative of Phillip Bank, said, “Phillip Bank is striving towards being a high-tech and high-touch bank, and focus on staff development, with our corporate ethos emphasis on developing people to their fullest capacity.” “Our vision to delight customers, grow people and benefit communities reflects the Singapore way of doing business”.

“Phillip Bank has always been a close partner with the Singaporean community in Cambodia. In addition to supporting the activities of the Singaporean community, we also work closely with them to introduce products and services that help grow their business,” he added.

The bank also expressed that it is committed to continuously introducing products and services that help support and grow communities in Cambodia.

Find out more about Phillip Bank services here.

What are some of the top incentives in the banking system in Cambodia?

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), in the banking system in Cambodia.

Accordingly, local loans are not cheap and are typically for the short term; interest rates are in fact relatively high compared to those found in developed countries, and security or collateral is often a necessity. In spite of the higher cost of lending, lending activities have increased in the past decade, keeping pace with the Kingdom’s rapid rate of economic development, especially in the infrastructure, construction and tourism activities. 

What have been the major achievements in the banking sector in Cambodia?

In recent years, the Cambodian banking sector has undergone a significant transformation. The banking system in Cambodia has become more stable and efficient, and there has been a significant increase in financial inclusion. This has been driven by a number of factors, including the following:

• The strengthening of the regulatory framework by the NBC
• The entry of new foreign banks into the market
• The growth of microfinance institutions
• The increasing use of digital banking

The digitalization of the banking sector is one of the most important trends in Cambodia’s banking industry. The use of mobile banking and other digital banking services is growing rapidly, and this is making it easier for people to access financial services.

Cambodia has witnessed a significant rise in mobile payments as more people moved from cash-based transactions to digital options, the National Bank of Cambodia (NBC) said.

The number of registered e-wallet accounts increased to 20.2 million as of June this year, the report said. The total number of transactions jumped 333.7 million from 211.2 million in 2022 with a total amount of $58.2 billion, an increase of 98.3 percent, the report stated, regarding the banking system in Cambodia. (source)

What are the challenges and opportunities in the banking system in Cambodia?

For businesses and investors, the Cambodian banking system offers a number of opportunities. The banking system in Cambodia is well-regulated and stable, and there is a growing demand for financial services. However, there are also some challenges that businesses and investors should be aware of, such as the lack of a credit bureau and the high level of informality in the economy.

Multinational banks are increasingly encouraging wealthy Cambodians to invest in more liquid financial assets, such as stocks and bonds. This is in contrast to the traditional practice of investing in land. 

Cambodia’s securities market, while still in its infancy, holds great growth potential. While investors during initial public offerings (IPOs) hold great advantages over those on the secondary market, some stocks may of course see a decline after an IPO.

However, the majority of the listed companies on the Cambodia Securities Exchange (CSX) have seen gains, with some such as Phnom Penh Autonomous Port (PPAP), Sihanoukville Autonomous Port (PAS) and the newly listed JS Land Plc (JSL) having gone up to three time their IPO valuations. (source)

As the financial markets in Cambodia continue to grow, banks and financial consultants need to provide more education to help people understand the risks and rewards of investing. 

With the rise of ASEAN, more and more banks are offering regional services. This means that businesses can access banking tools and funds across a number of ASEAN countries. This trend is also helping to standardize banking codes of practice and ethics across the region, which is beneficial to the banking system in Cambodia.

In 2023, the banking system in Cambodia is a vibrant and growing sector that offers a number of opportunities for businesses and investors. If you are considering doing business in Cambodia, it is important to understand the banking system and the challenges and opportunities that it presents. Find out more about the banking system in Cambodia, or other key information, by contacting our team.

What are the key facts to know about the banking system in Cambodia?

For the banking system in Cambodia, these are as follows:

The National Bank of Cambodia (NBC) is the sole regulator of all banks in Cambodia, whether they are specialized, commercial, or microfinance institutions (MFIs). The NBC registers, licenses, and regulates all banks in Cambodia.

1. The Ministry of Economy and Finance (MEF) also plays a role in regulating banks and banking services in Cambodia. The MEF is responsible for setting the overall financial policy framework for Cambodia, and it works closely with the NBC to ensure that banks are operating in a safe and sound manner.
2. The Association of Banks in Cambodia (ABC) represents the banking sector to the Royal Government of Cambodia and the ASEAN Bankers Association. The ABC provides a forum for banks to discuss common issues and to work together to promote the development of the banking sector in Cambodia.
3. The International Monetary Fund (IMF) and the World Bank also operate in Cambodia. These organizations provide technical assistance and financial support to the Cambodian government, including in the area of banking regulation.
4. The Law on Banking and Financial Institutions (LBFI) is the primary legislation governing banking in Cambodia. The LBFI sets out the rules and regulations that banks must comply with, including requirements for capital adequacy, liquidity, and risk management.

If you are looking for a more nuanced insight or advice for the banking system in Cambodia, in terms of other indicators/observations not commonly found in publications for a better understanding of how a business or investor can navigate the local environment or seek out collaboration opportunities and trustworthy partners, get in touch with our team at Aquarii. 

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.

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.

2. 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.

3. 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.

4. 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.

5. 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.

In this document we will outline the tax incentive laws in Cambodia, including basic tax incentives, additional tax incentives and other tax incentive laws relevant to business and investment. This document is meant as a guide and is taken from an unofficial translation of the law. For expert advice contact the Aquarii team and we or one of our partners can answer any queries you may have on tax law in the Kingdom.

What are the basic tax Incentives in Cambodia for Qualified Investment Projects (QIPs)?

Basic tax incentives in Cambodia for QIPs in Cambodia are split into two options. These are listed as follows:

Option 1: Tax exemption period
Tax on income (TOI 0%)
(Source: Article 20 of the Law on Tax)

Terms and Conditions for tax incentives:

A QIP is exempted from TOI depending on the investment activities as follows:

• 9 years for group 1
• 6 years for group 2
• 3 years for group 3

Note: Group 1, 2 and 3 are set out in the list of investment activities in annex 2 of sub-decree. The exemption period start from the time of generating the first income. 


2. After the tax exemption period TOI: Partial exemption (Article 28 of the LoT)

Terms and Conditions for tax incentives:

A QIP is entitled to enjoy TOI exemption at a declining rate proportionate to the total tax payable as follows:

• 75% for the first 2 years
• 50% for the subsequent 2 years
• 25% for the last 2 years

3. Prepayment of tax on income exemption (Article 24 of the LoT)

Terms and conditions of tax incentive: During tax on income exemption period

4. Minimum tax exemption

Terms and conditions of tax incentive: Obtained an independent audit report

5. Export tax exemption

Terms and conditions of tax incentive: Jurisdiction of the General Department of Customs and Excise

Option 2: Tax Incentives

1. Deduction of capital expenditure through special depreciation (Article 13 of the LoT)

Terms and conditions: As stated in the tax regulations, special deduction is equal 40% of the capital cost of new or used tangible asset used in manufacturing and processing

2. Eligibility of deducting up to 200% of specific expenses
(Article 11 of the LoT)

Terms and conditions: Deduction period from 3 to 9 years depending on the investment activities in annex 2 of sub-decree. Specific expenses included the expenditure of:

• Specific skills training to Cambodian employees
• Accounting system (IT system)
• Scholarships to Cambodian employees
• Studies, Research and Development and the hiring of foreign experts

3. Prepayment of tax on income exemption (PTOI) (Article 28 of the LoT)

Terms and conditions: PTOI exemption period depending on the investment activities in annex 2 of sub-decree as follows:

• 9 years for group 1
• 6 years for group 2
• 3 years for group 3

4. Minimum tax exemption (Article 24 of the LoT)

Terms and conditions: Obtained an independent audit report

5. Export tax exemption

Terms and conditions: Jurisdiction of the General Department of Customs and Excise

What are the additional tax incentives in Cambodia?

In addition to the basic tax incentives, QIP is eligible for the following additional tax incentives:

1. VAT exemption (VAT 0%) (Article 75 of the LoT)

Terms and conditions; For the purchase of locally-produced production inputs for the implementation of the QIP

2. 150% expense deduction (Article 11 of the LoT)

Terms and conditions: Only applicable for the following activities:

• R&D and innovation costs
• HR development costs for vocational training to Cambodian workers
• Construction costs for accommodation, canteens, food courts, nurseries, and other facilities for workers
• Costs to modernize production line machinery
• Welfare promotion costs for Cambodian workers
• Investment in or construction of treatment infrastructure

What are the tax incentives in Cambodia for for expanded QIPs?

The QIP, requesting for expansion of its investment activities shall be incentivized with the period of tax on income exemption, if the expansion of the project is carried out in any of the following forms:

• Expansion of an existing production
• Expansion through production line diversification within the same lines
• Expansion through the use of new modern technologies which enhance productivity or protect the environment

Note: Approval from the Royal Government of Cambodia must be obtained in respect of any forms of expansion. Tax incentives for expanded QIP are as follows;

1. Tax exemption period (Tax on Income)

Terms and conditions: TOI exemption from 3 to 9 years, in accordance with the investment activity of the original project depending on the investment activities in annex 2 of sub-decree.

The proportion of exempted taxable income for the expanded QIP is equivalent to the total taxable income multiplied by the rate of the QIP’s expansion capital.

2. Prepayment of tax on income exemption (Article 28 of the LoT)

For expanded QIP, PTOI shall be exempted based on the proportion of the QIP’s expansion capital rate for the period of tax on income exemption.

3- Minimum tax exemption (Article 24 of the LoT)

Obtained an independent audit report

What are the other tax incentives in Cambodia for QIPs?

These are as follows:

Title: The implementation of Advanced tax on dividend distributions (ATDD)

Terms and conditions: According to Article 23 of LoT, Instruction no. 30408 GDT (dated 14 December 2022), ATDD are not applicable for QIPs during the TOI exemption period. This includes the accumulated retained earnings derived during tax exemption before 2020

What are the tax incentives in Cambodia for garment and textile sector?

Title: The extension of the prepayment of tax on income exemption for QIP in the garment and textile industry
(garment, textile, footwear, bag & handbag and hat)

Terms and conditions: According to Prakas 002 MEF-Prk, GDT (dated 06 January 2023), QIPs that are already expired tax on income exemption period still get the exemption for prepayment of tax on income until the end of 2025.

Title: The rule and procedure for implementation of income tax and other taxes related to the activity of CMT of QIPs
(garment, textile, footwear, bag & handbag and hat)

Terms and conditions: According to Prakas 741 MEF.Prk, (dated 03 August 2018), CMT activities receive the same incentive as a QIP:

TOI: record income & expense relating to CMT services
VAT output at 0%: supply of CMT services to support the export of processed goods

Title: The implementation of VAT on supporting industry or contractor that supplies goods or services for serving export activities of the garment, textile, footwear, bag & handbag and hat industry

Terms and conditions: According to Prakas 311 MEF.Prk (dated 19​ March 2014), VAT for supporting industry tax incentives are:

• 1: VAT on imports of production inputs and equipment for textiles and garment industry are state burden and VAT output is 0% on supplying goods or services for export
• 2: VAT for contractor:
  VAT input: 10% and VAT output: 0% on supplying goods or services for export

What are the tax incentives in Cambodia for the agricultural sector?

Title: The implementation of VAT on importation and supplies of certain merchandises

Terms and conditions: According to Prakas 312 MEF.Prk, VAT state-burden on certain merchandises includes:

• All kinds of fertilizer
• All type of planting seeds
• Animal drug
• Animal feed
• All kind of animal breed
• All type of agricultural machinery and equipment

Title: Tax incentives for agricultural enterprises producing rice, corn, soybeans, pepper, cassava, cashew nuts and rubber for domestic supply and export

Terms and conditions: According to Prakas 252 MEF.Prk (dated 11 March 2019) and Prakas 100 MEF.Prk
(dated 29 January 2019), Agricultural enterprises are entitled to the following tax incentives:

• VAT input: local purchase of goods or services are state burden
• WHT exemption on services
• PTOI exemption
• Minimum tax exemption

​These tax incentives shall be implemented​ start from 2019 until the year ended 2023.

Title: Tax incentives for basic daily food items

Terms and conditions: According to Prakas 009 MEF.Prk (dated 11 January 2022), VAT on certain basic food for the daily living of the people shall be allowed as a State Burden from 2022 to 2023

What are the tax incentives in Cambodia for the educational sector?

The Royal Government of Cambodia has decided to provide the tax incentives for educational institutions in Notification Letter No. 252 (dated 27 February 2023). The letter outlined that Educational institutions are exempted from all types of taxes, except for the Patent Tax, Withholding Tax on Rental, Tax on Salary and Property Tax up to the end of 2028.

What is the benefit of tax compliance certificate and how useful is it for tax incentives in Cambodia?

The benefit of tax compliance certificate comes in three tiers, Gold, Silver and Bronze, according to the Circular 007 MEF on Benefits Gained from the Evaluation of Tax Compliance (dated 04 August 2017).

These are listed below:

1. Gold status:
Tax Compliance Certificate with the valid period up to 2 years
VAT Refund for KHR 500 millions or Less are allowed before cross-checking verification is done
Comprehensive Audit is to be done once in every two years; Limited or Desk Audits are not required, unless the taxpayer requests for them.

2. Silver status:
Tax Compliance Certificate is valid for 2 years
VAT Refund for KHR 200 millions or Less are allowed before cross-checking verification is done
Comprehensive Audit is to be done once in every 2 years and Limited Audit once in every year without desk audit, unless the taxpayer requests for it.

3. Bronze status:
Tax Compliance Certificate is valid for 2 years and Follow the Tax obligations in accordance with existing Tax laws and regulations.

Where can I get more information on tax incentives in Cambodia?

For more information view our library of laws here, or visit the General Department of Taxation website.

In this article we discuss key information regarding the land and property sector in Cambodia, including price variations, titles and tax, to help investors better understand the market. For more information, you can contact one of our expert team who can help connect you with our expert partners within the land and property sector in Cambodia.

What is the current state of the land and property sector in Cambodia?

When it comes to the land and property sector in Cambodia, there is a wide range of prices varying dramatically across the nation’s 25 provinces in accordance with location and purpose. 

For land, this spectrum spans from modest valuations, as low as a mere few dollars per square meter for distant agricultural expanses or rugged terrains acquired in bulk, to soaring heights that exceed USD 8000 per square meter, gracing the plots of downtown urban hotspots such as Beong Keng Kang 1 in the capital, Phnom Penh.

Within the dynamic evolution of development areas, the surge in land value remains unabated. Local elites and business entities have embraced the concept of land banking, recognising it as a potent avenue to invest surplus capital. The market for land sub-development teems with activity, mirroring the vivacity witnessed in the first-home landed-home / Borey sector, radiating both in urban cores and their suburban fringes.

Regarding condominiums, the pinnacle of condominium investment beckons in three prominent locales: the bustling heart of Phnom Penh, the cultural enclave of Siem Reap, and the coastal allure of Preah Sihanoukville, also known as Kom Pong Som province. This means there are a lot of investment opportunities in land and property in Cambodia.

What are the investment opportunities in land, property and real estate in Cambodia?

Cambodia’s condominium real estate sector landscape unfolds as a tapestry of diverse opportunities, underpinned by freehold ownership eligibility for foreigners. This extends from the accessibility of USD 50,000 per unit for more modest apartments and such, to the opulence of million-dollar luxury penthouse enclaves.

The net cost per square meter predominantly oscillates between the USD 1500-4500 range, enwrapping completed units within the vibrant confines of downtown settings in Phnom Penh, Siem Reap, or Sihanoukville.

In 2023, the leader in the land and property sector in Cambodia remains undisputed — land. A resounding consensus among correspondents attests to its unyielding popularity, surging from 22.74% in 2022 to a commanding 36.6% (source).

Meanwhile, condominiums and apartments, the perennial contenders, persist as the second most favored property type. A subtle elevation in interest is discernible, with the 2023 survey data reflecting a climb to 24% from the preceding year’s 22%. This testament reaffirms their steadfast allure and hints at their potential to ascend further on the ladder of preference in the Cambodian real estate panorama. (source).

What do experts from the land and property sector in Cambodia say about foreign investment interests in 2023?

Country Director for IPS, Adam Fitzpatrick, said that for foreign investors the key thing is to research the market, get a handle on accurate pricing and valuation, understand the legal framework for ownership and to retain reputable advisors.  

“The market is always changing, and the country continues to develop at pace, offering significant opportunities for reward. Investors need to be aware of the risks, but there remain multiple options for healthy and safe returns.”

He said that IPS – A partner of Aquarii – is currently working on a number of opportunities, throughout Cambodia and across all sectors that they believe will perform exceptionally well over the next few years.

“Quality and location will always prevail in real estate, and working with the right people, such as Aquarii and their team of partners, is a sure way to navigate the intricacies of the Cambodian market, and understand where the best opportunities are. We are always available to discuss the market and opportunities,” he added.

Ross Wheble, Country Head of Knight Frank Cambodia, said, “Whilst the market has remained subdued during 2023, largely attributable to the general election held in July, it is expected to rebound strongly in 2024, with GDP growth forecasts in the region 6% underpinned by Cambodia’s open-door policy on foreign investment, dynamic policy to attract FDI and significant investment in infrastructure, presenting new opportunities across the country.”

“The underlying fundamentals of Cambodia, including its young population and rapidly increasing disposable incomes, makes it an attractive investment destination over the medium and long-term,” he added.

How will the new trust law affect the land and property sector in Cambodia? 

Mr. Sopheap Proeung, General Manager of Phillip Trustee, saw that prior to the trust law being adopted; foreigners had to use a Nominee arrangement via Land Holding Company to manage their investments in fixed assets, notably land. 

He said that with the new Trust Law, Foreigners/Foreign entities can now register their fixed assets with a Trust Company. This New Trust arrangement protects them with the following benefits, including:

• Formal agreement via Trust Deed is entered between Trustor (foreign investor) and licenced Trustee
• Trust Deed is registered with the Trust Regulator
• Trust arrangement is legally recognised and is regulated by the competent authority (Trust Regulator) 
• Full legal protection for the Trustor 
• Property contributed to the Trust is secure and will be handled according to the terms of the trust deed which set out by the Trustor

Phillip Trustee (Cambodia) Co, Ltd, is an associated company of Phillip Bank which is part of Phillip Capital Group in Cambodia, and it has more than 10 years of financial management experience in Cambodia. It leverages on the Group’s resources and facilities, including those from its Singapore office. 

Mr. Sopheap Proeung said, “at Phillip Trustee, our clients will benefit from their tangible assets that provide them the flexibility and capacity to expand their businesses without concerns over its ownership. We provide seamless and personalized experience for all clients with our efficient operations, reduced expected turnaround time, while ensuring trustor (or its designated person(s) as the beneficial owners.”

“The established Trust will benefit not only the trustor(s)/contributor(s) of the fund, but also to their beneficiaries and their successor as well,” he added. Contact Phillip Trustee for more information on the land and property sector in Cambodia.

What are the average Phnom Penh House Prices in 2023 

To gauge an understanding of the land and property sector in Cambodia, we list below some of the average house prices in the capital in 2023 according to area:

• DAUN PENH $2,200/m2 -$13,300/m2
• CHAMKARMORN $1,600/m2 – $7,300/m2
• RUSSEY KEO $500/m2 – $3,900/m2
• CHBAR AMPOV $20/m2 – $3,700/m2
• PREK PNOV $20/m2 – $1,790/m2
• MAKARA $2,300/m2 – $8,000/m2
• TOUL KORK $1,900/m2 – $6,100/m2
• SEN SOK $400/m2 – $4,400/m2
• POR SEN CHEY $100/m2 – $3,600/m2
• KAMBOL $30/m2 – $1,890/m2
• BOEUNG KENG KANG $2,800/m2 – $10,000/m2
• MEANCHEY $600/m2 – $4,600/m2
• CHROY CHANGVAR $20/m2 – $,3,500/m2
• DANGKOR $50/m2 – $2,780/m2

(Source: Why Cambodia Guide, Introduction to Asia’s Emerging Real Estate Economy – Realestate.com.kh – A guide in the land and property sector in Cambodia.)

What is the average price of condominiums in Cambodia in 2023? 

Below we list the average price of condominiums in Cambodia in 2023. This is essential knowledge for those interested in following the land and property sector in Cambodia in 2023.

In Phnom Penh, the average sale price of condo units are as follows:

• Studio units cost an average of USD 80,000
• 1-bedroom condominium units cost an average of USD 110,000
• 2-bedroom counterparts units cost an average of USD 160,000
• 3-bedroom counterparts units cost an average of USD 290,000

In Siem Reap, the average sale price of condo units are as follows:

• 1-bedroom condominium units cost an average of USD 73,000
• 2-bedroom counterparts units cost an average of USD 108,000
• 2-bedroom counterparts units cost an average of USD 148,000

What is the difference between property titles in the Cambodian real estate sector?

Before discussing the different titles, it’s important to understand the definition of a title in the land and property sector in Cambodia. A title, or ‘deed’ represents an official document that formally validates the ownership of a property, providing information regarding its location and the associated rights by the property owner.

In Cambodia, there are currently four recognised forms of title that can establish secure property ownership: Hard title, Soft title, Private Ownership in Co-owned Buildings (commonly referred to as Strata Title), and the LMAP title. We break these down below:

What are HARD TITLES in the land and property sector in Cambodia?

Strongest form of Land Ownership in Cambodia. It is registered at the national level. These are only available to Cambodian Nationals in the land and property sector in Cambodia.

What are LMAP TITLES in the land and property sector in Cambodia?

Similar to hard title ownership and registered at the National level. GPS coordinates clearly the property boundaries. These are only available to Cambodian Nationals in the land and property sector in Cambodia.

What are SOFT TITLES in the land and property sector in Cambodia?

They are the most common form of ownership being registered at the council and district level only. Although not as secure as Hard Title, it is considered evidence of possession. It is not advised for foreigners to purchase on a soft title. These are only available to Cambodian Nationals in the land and property sector in Cambodia.

What does a STRATA TITLE/ CO-OWNERSHIP mean in the land and property sector in Cambodia?

Foreigners have access to a Strata title, similar to Hard Titles, which is also registered at the national level. Foreigners can fully own up to 70% of private units in co-owned buildings, with conditions, while the remaining 30% must be owned by Cambodian nationals. These are available to Cambodian Nationals and Foreign Nationals. This is the only title in the real estate sector in Cambodia available to Foreign Nationals in the land and property sector in Cambodia.

What is important to know when investing in land and property in Cambodia?

When you’re considering investing in real estate in Cambodia, it’s important to be aware of property taxes and other fees that come into play. These are the costs associated with owning or transferring property within the country. Let’s break down the key points in simpler terms:

• Property Taxes Overview:

Property taxes are charges imposed by the authorities for owning or possessing real estate in Cambodia. They’re an important factor to consider when you’re thinking about investing in property here.

• Property Tax Rates:

For properties valued over $25,000 (equivalent to 100 million KHR), a property tax rate of 0.1% applies.

Properties valued under $25,000 are exempt from property tax.

Agricultural, industrial, and state-owned lands are also exempt.

• How Property Tax is Calculated:

The formula to calculate property tax is: (80% of the property’s value – $25,000) * 0.1%.

Registration Tax (Transfer/Stamp Tax):

This is a 4% tax that you need to pay when you’re transferring property ownership or the right to occupy land without a building on it.

• Inheritance Exemption:

If you inherit a property from direct family members, you’re exempt from paying the registration tax.

• Stamp Duty Tax Exemption:

Properties valued under $70,000 are currently exempt from this tax until December 2023. This exemption was introduced as part of the government’s strategy to help with pandemic recovery.

• Property Tax on Rental Property:

If you own and rent out property in Cambodia, you need to pay rental or income tax annually. Foreign investors pay 14% of the gross rate, while locals pay 10%.

• Property Tax on Unused Land:

Unused land, meaning bare plots with no buildings or abandoned properties, is subject to a 2% tax known as the Unused Land Tax.

• Paying Property Taxes:

You can pay property taxes at local tax office branches or through local banks. If you’re a registered property owner, you’ll need the tax payment receipt from the previous year or your Property Tax Registration ID.

• Property Management Fees:

Property management fees are important when it comes to maintaining and overseeing properties. These can vary based on factors like location and services provided.

• Co-owners and Homeowners’ Association (HoA):

If you’re a co-owner of a property, you can form a homeowners’ association. This association can select a property management company to take care of shared spaces using fees paid by tenants or co-owners.

• Calculating Property Management Fees:

For residential properties, management fees usually range from $0.50 to $2 per square meter, and then this is multiplied by the gross area of your property. 

Understanding these property taxes and fees will help you make informed decisions when investing in land and property in Cambodia. It’s important to consider these costs alongside the potential returns on your investment.

For more information on this and any of the above, get in touch with Aquarii or our recommended partners for an expert take on the land and property sector in Cambodia.

In this article we discuss the development of airports in Cambodia, including current use and capacity, as well as projects for growth and planned expansions within the aviation sector. For more in-market information from Aquarii, check out our comprehensive sector overviews here or get in touch with our team today.

How developed are airports in Cambodia and the country’s aviation sector in general?

Airports in Cambodia are due to drastically increase their capacity over the coming years after receiving a record 11.6 million arrivals in 2019. During the COVID pandemic international arrivals dropped by 92 percent (136,680) in the first half of 2021 this quickly rebounded to 2.28 million in 2022. At least 4 million are expected in 2023, with pre-covid levels expected to be reached by 2024.

The expected overall increase is not just to pre-pandemic levels, but beyond, which is part of the reason why a number of new airports in Cambodia are in construction, as well as existing Cambodian airports also undergoing capacity increases.

What are the existing international airports in Cambodia?

There are currently three operational international airports in Cambodia, with at least 5 more planned for the immediate future, as well as a number of others slated to be added later. Find the list of current airports in Cambodia below, with some key statistics such as the Pre-COVID usage of these international airports, to give a better understanding of their capacity as pre-pandemic passenger numbers are expected to return.

Phnom Penh International Airport (Pochentong)

The biggest and busiest of the airports in Cambodia, it has not only had over $12 million in recent refurbishments, but has also had its runways widened to add additional capacity. Although the airport is set to be superseded by the new TIA international airport.

Phnom Penh International Airport data:

• 6 million passengers used Pochentong Airport.
• 36 destinations flown to.
• 35 airlines in operation to and from the airport.
• Airport code PNH

Siem Reap International Airport

The second most important airport in Cambodia and another which is to be replaced by a new, larger airport. Principally used to ferry people to the honey pot attractions of Angkor Wat and Siem Reap, the airport is predominantly used to service the Kingdom’s tourist industry.

• Siem Reap International Airport data:
• 3.9 million passengers used Siem Reap International Airport.
• 48 destinations flown to.
• 31 airlines in operation to and from the airport.
• Airport code REP

Sihanoukville International Airport

Renovated in 2018 to increase capacity, this airport is currently the third most important of the airports in Cambodia, with the nearby Koh Kong projects also being able to service the city. This airport is most popular among Chinese carriers. 

Sihanouk International Airport Data: 

• 1.6 million passengers used Sihanoukville International Airport.
• 11 destinations outbound destinations
• 10 airlines in operation to and from the airport.
• Airport code KOS

Which new airports in Cambodia are under construction or being expanded?

The Royal Government is developing a number of new airports in Cambodia, as well as expansion projects on existing sites.

• Techo International Airport (TIA): A greenfield international airport currently under development about 19km south of Phnom Penh in Kandal Province by the Cambodia Airport Investment Company (CAIC), a joint venture between the Royal Government of the Kingdom of Cambodia (RGC) represented by the State Secretariat of Civil Aviation (SSCA) and Overseas Cambodian Investment Corporation (OCIC). It is expected to be completed by 2025 and will be able to handle an initial capacity of 15 million per year, with ambition to increase it to 30 million by 2030. (source)
• Siem Reap-Angkor International Airport (SRAIA): A new international airport being developed by Angkor International Airport Investment (Cambodia) Co Ltd (AIAI) with a total capital investment of $ 1.1 billion. Part of AIAI is YACA (Yunnan Air Investment Cambodia Airport Management) which is expected to operate SRAIA. Located about 50 km east of Siem Reap town and 40 km from Angkor Wat, it is expected to commence operations in Oct 2023. It will be able to handle 7 million passengers per year initially, 10 million by 2030, and 20 million by 2050. Cargo capacity is projected to grow sixfold over the next 30 years, from 10,000 tonnes to 60,000 tonnes. As per the existing contractual arrangements, the current airport will cease functioning when SRAIA is operational and will undergo a transformation to serve a different purpose. (more information)
• Sihanoukville International Airport (ShIA): The existing international airport in Preah Sihanouk province is being expanded by the Cambodia Airports under the Vinci Group, the current 35-year concession owner and operator of the ShIA. Upon its expected completion by 2025, the airport’s capacity will be increased to 7 million passengers per year.
• Dara Sakor International Airport in Koh Kong: Located in Koh Kong province in the southwestern region of Cambodia, the airport is a huge Chinese investment and is part of the wider Dara Sakor development project.
• Koh Kong International Airport: This second international airport, a $40 million joint venture between Ly Yong Phat’s LYP Group and Bangkok Airways Pcl, is planned to replace the current domestic airport (KKZ) and will be able to handle international traffic.

What do developments regarding airports in Cambodia mean for business and investment?

The development of Cambodia’s aviation sector will vastly improve domestic connectivity and international connections, which presents exciting opportunities for businesses and investors interested in the country. These opportunities include:

• Increased tourism: The development of new airports and expansions on existing ones will make it easier for tourists to travel to Cambodia. This will lead to increased tourism revenue for the country.
• Increased trade: The development of Cambodia’s aviation sector will make it easier for businesses to trade with other countries. This will lead to increased trade revenue for the country.
• Increased investment: The development of Cambodia’s aviation sector will attract investment from businesses and investors interested in the country. This investment will help to boost Cambodia’s economy.

Overall, the development of Cambodia’s aviation sector is a positive development for the country. It will lead to increased tourism, trade, and investment, which will help to boost Cambodia’s economy, while helping further connect the Kingdom with international destinations. 

What opportunities are there for international aviation companies for airports in Cambodia?

The CAIC has yet to announce who will manage the new TIA in southern Phnom Penh, and the RGC has not yet made public its plans for what will happen to the existing Pochentong International Airport in Phnom Penh.

In May 2023, CAIC signed a joint venture agreement with SIA Engineering (SIAEC) to establish a line maintenance joint venture at TIA. As per the agreement, SIAEC will possess a 51% equity stake, while CAIC will acquire the remaining 49%. SIAEC also anticipates the joint venture to progressively “evolve into a regional aircraft Maintenance, Repair, and Overhaul (MRO) hub.” One notable value-add between CAIC’s JV partnership with one of the world’s leading industry service providers in aircraft maintenance is the transfer of technical competencies and the alignment of work practices with SIAEC, both of which are crucial for the long-term success of TIA’s operations and the creation of more high-value job opportunities for the Cambodian workforce. (Source: asianaviation.com)

Following this latest development, it could make immense commercial sense, as well as in the areas of human capital development and knowledge transfer, if TIA were to eventually be managed by an airport operator of international repute and track record whose longer-term goals are similar to that envisaged in the CAIC-SIAEC JV partnership – i.e. to train up and hand over airport operations to a local team within the next 10 years or so, instead of reliance on yet another long-term concession arrangement. 

This could open doors to numerous downstream opportunities for a competitive bidding process to bring in the best-in-class contractors, service providers and other experts in the aviation, engineering, construction and service sectors, among others, to provide fit-for-purpose solutions and ideas. This diversity could in turn elicit greater confidence and buy-in from international investors and funds in the national project and endeavor to develop TIA into a world-class aviation hub in the longer-term. 

Who administers Airports in Cambodia?

Airports in Cambodia fall under the remit of the State Secretariat of Civil Aviation (SSCA). 

The current Pochentong International Airport (PIA) in Phnom Penh, the Siem Reap International Airport (SRIA) and the Sihanoukville International Airport (ShIA) are currently owned and operated by Cambodia Airports (CA) under concession agreements of various long-term tenure. However, CA would exit from the concession agreements and operator role for PIA and SRIA when the new airports in Phnom Penh (Techo International Airport) and Siem Reap (Siem Reap-Angkor International Airport) are completed (see earlier section on new airports being constructed). It will retain ownership of ShIA and will continue to operate it under its current concession agreement with the RGC.

What are the domestic airports in Cambodia?

These domestic airports are also used by the quickly expanding private flight market, both as destinations and hangers:

• Battambang Airport (largest city without a commercial airport)
• Ratanakiri Airport
• Kampong Cham Airport
• Kampong Chhnang Airpot
• Kampot Airport
• Krakor Airport
• Kratié Airport
• Mondulkiri Airport (new $60 million commercial airport planned). 
• Stung Treng Airport
• Thbeng Meanchey Airport

While other ASEAN countries have made significant progress in digital transformation, Cambodia’s recent rapid development has allowed it to leapfrog traditional stages of technological evolution. By embracing innovation and digital solutions, Cambodia has rapidly digitalised key sectors such as finance, e-commerce, and e-governance. 

This accelerated digitalisation can be attributed to Cambodia’s young and tech-savvy population, their willingness to embrace new technologies, leading private sector actors such as leading telecommunications companies like Cellcard and finance pioneers such as Phillip Bank, not to mention the government’s proactive support for digital initiatives.

In this article, we discuss why Cambodia’s ability to bypass legacy systems and adopt cutting-edge technologies has positioned it as a future frontrunner in the region, creating a favourable environment for foreign investors looking to tap into a rapidly evolving digital economy. For more in-market news view our market information resources on our website or get in touch with our expert team.

When did Cambodia’s digitalisation begin?

Cambodia is a small country with a young population, which has seen it quickly become a regional pioneer in fintech adoption. In 2016, when more advanced countries were still grappling with the introduction of e-payments, food deliveries, and ride hailing apps, Cambodia had already embraced these technologies.

There are a number of factors that have contributed to Cambodia’s early adoption of fintech. First, the country has a young and tech-savvy population that is open to new technologies. Second, the government has been supportive of fintech adoption, providing financial incentives to businesses that implement these technologies. Third, the cost of implementing fintech solutions is relatively low in Cambodia, making it an affordable option for businesses of all sizes.

The adoption of fintech has had a number of benefits for Cambodia. For people, fintech has made it easier and more convenient to make payments, get food delivered, and hail a ride. For businesses, fintech has helped to reduce costs, improve efficiency, and reach new customers.

Here are some specific examples of how Cambodia has been ahead of the curve in fintech adoption:

• E-payments: Cambodia was one of the first countries in Southeast Asia to adopt e-payments. In 2016, there were already a number of e-payment providers operating in Cambodia, including Wing, ABA Pay, and Pi Pay. These providers offer a variety of e-payment services, such as mobile banking, online payments, and QR code payments.
• Food deliveries: Food delivery apps like Foodpanda and Nham24 were launched in Cambodia in 2015. These apps allow users to order food from a variety of restaurants and have it delivered to their homes or offices. Food delivery apps have been very popular in Cambodia, and they have helped to make it easier and more convenient for people to get food delivered. (source)
• Ride hailing apps: These apps allow users to book a ride with a driver who is nearby. Ride hailing apps have been very popular in Cambodia, and they have helped to make it easier and more convenient for people and the movement of goods around the country.

Cambodia’s early adoption of fintech has put the country in a strong position to capitalize on the growing global fintech market. The country has a young and tech-savvy population, a supportive government, and a low cost of doing business. These factors make Cambodia an attractive destination for fintech startups and investors.

Where has Cambodia’s digitalisation had such success?

Cambodia’s digitalisation has increased exceptionally in recent years such as in the following examples:

• Mobile banking: Mobile banking has become increasingly popular in Cambodia in recent years. In 2021, there were over 10 million mobile banking users in Cambodia, accounting for over 60% of the adult population. Mobile banking has made it easier for people to access financial services, even in rural areas. (source)
• E-commerce: E-commerce is also growing rapidly in Cambodia. In 2022, the e-commerce market in Cambodia was worth just under $1 billion, and is expected to grow to well over by 2025. E-commerce has made it easier for people to shop online, and it has also created new opportunities for businesses. (source)
• Online education: Online education has also become increasingly popular in Cambodia in recent years. Online education has made it possible for people to access quality education, even if they live in rural areas.
• Government services: The government of Cambodia is also making progress in digitizing government services. In 2021, the government launched an online platform that allows citizens to access a variety of government services, such as paying taxes and applying for passports.
• Bakong. The digital payments system is helping Cambodian people and businesses make international payments using the financial technology, creating more opportunities (source).

What is a successful example of Cambodia’s digitalisation?

QR-code payment systems have been a huge success in Cambodia and quickly adopted for personal and business needs. Today, QR-code payment has become ubiquitous so much that most hardly use cash except for tips and small miscellaneous payments or in less urbanized places. Also, QR-code payments linked to local banks and FIs which can also be used in Thailand, Vietnam, South Korea and soon China, delivering further benefit to Cambodian businesses. (source)

The rapid adoption of digital financial services and mobile banking is due to the growing demand for higher levels of service and better digital tools. From tuk tuk drivers to shopping malls, mobile payments by scanning QR codes or via in-app transfers are now the most common means of transacting throughout the country; closely followed by fully digital account opening and micro-loan applications. (source).

There are a number of factors that have contributed to the rapid adoption of QR code payments in Cambodia. First, the country has a young and tech-savvy population that is open to new payment methods. Second, the government has been supportive of the adoption of QR code payments, providing financial incentives to businesses that implement the technology. Third, the cost of implementing QR code payments is relatively low, making it an affordable option for businesses of all sizes.

The adoption of QR code payments has a number of benefits for both people and businesses. For people, QR code payments are a convenient and secure way to make payments. They can be used to pay for goods and services at a variety of merchants, including restaurants, shops, and even street vendors. QR code payments are also more secure than cash or credit cards, as they do not require the exchange of physical cards or cash.

For businesses, QR code payments offer a number of advantages. They can help to reduce transaction fees, improve customer satisfaction, and increase sales. QR code payments are also a more efficient way to process payments, as they do not require manual data entry.

The rapid adoption of QR code payments in Cambodia is a positive development for the country. It is a sign of the country’s growing acceptance of technology and its commitment to a cashless society. QR code payments are a convenient, secure, and efficient way to make payments, and they are becoming increasingly popular in Cambodia.

What are the reasons why Cambodia has so rapidly realised cross sector digitalisation?

Cambodia has been successful in leapfrogging digitalisation due to it being relatively late in its development. The World Bank has praised Cambodia’s digitalisation and the way it has leapfrogged traditional systems in embracing mobile payment platforms in banking. This has meant that Cambodians have had access to modern mobile financial services, providing them with convenient and secure options for conducting transactions, instilling trust from consumers and investors alike. (Source). 

How has the government helped support Cambodia’s digitalisation?

The Cambodian government has implemented various policies and initiatives to support the growth of the digital economy. Some of these are listed below:

• The National Digital Economy Policy: The National Digital Economy Policy was launched in 2016. The policy aims to make Cambodia a digital-friendly country by 2025. The policy includes a number of initiatives to promote digitalization, such as improving the country’s internet infrastructure and developing a digital workforce.
• The National e-Government Master Plan: The National e-Government Master Plan was launched in 2017. The plan aims to make government services more accessible and efficient through digitalization. The plan includes a number of initiatives to digitalise government services, such as creating an online platform for citizens to access government services and developing a mobile app for government services.
• The Digital Cambodia Initiative: The Digital Cambodia Initiative was launched in 2018. The initiative aims to promote digitalization in Cambodia by providing financial support to businesses and individuals. The initiative has provided funding for a number of projects, such as the development of an online education platform and the creation of a digital payment system.
• The establishment of the Cambodia ICT Federation (CICT) and the Cambodia IT Development Fund (CIDF) demonstrates the government’s commitment to fostering a favorable environment for the tech sector (Source)

How has Cambodia’s digitalisation been so rapidly adopted by its population?

E-commerce has experienced significant growth in Cambodia, driven by the increasing adoption of digital platforms. Reputable online marketplaces such as Nham24 and Jumia Cambodia have emerged as popular platforms for both local businesses and consumers, facilitating seamless online transactions and expanding market reach (Source).

Also, Cambodia’s young population has demonstrated a keen interest and proficiency in technology. The Global Skills Index by Coursera ranks Cambodia among the top countries with the highest proficiency in technology skills, reflecting the readiness of its workforce to embrace digital tools and contribute to the country’s digital economy (Source)

Which companies have been instrumental in Cambodia’s digitalisation?

Cellcard and Phillip Bank have been instrumental in helping digitalise Cambodia through their businesses in a number of ways. For instance, Cellcard is:

• The longest serving only Khmer owned mobile operator in Cambodia launched mobile banking services back in 2010 (source). These services have made it easier for people to access financial services, even in rural areas.
• Is a major player in the development of the e-commerce market in Cambodia. The company’s mobile payment platform, Wing, is one of the most popular payment methods for online transactions in the country (source)
• Has also invested in online education and multiple CSR programmes, which can be found on their website. Click here for more information.

Phillip Bank has also been a major player in the digitalization of Cambodia. The bank has invested in a number of digital initiatives, including:

• Online banking: Phillip Bank offers a comprehensive online banking platform that allows customers to manage their accounts, transfer funds, and pay bills online.
• Mobile banking: Phillip Bank also offers a mobile banking app that allows customers to access their accounts and make transactions on the go.
• Digital payments: Phillip Bank is a leading provider of digital payments in Cambodia. (source)

Phillip Bank said, “As for the banking sector, we can see a significant preference toward digital banking.  Digital banking allows customers to access banking products via online and electronic platforms, either internet banking or mobile banking. Digital banking products include mobile banking apps, KHQR, E-savings accounts, virtual debit and credit cards such as Mastercard, payment gateways, and loans.The value-added benefits to customers include convenience, an enhanced banking experience, faster service, security, and time-savings.”

“A good example of this is the emerging trend of QR code payment across the country. In this case, you only need a few seconds to utilize the Phillip Bank Mobile App to complete the QR code transaction that is built into the app. And you can use your Phillip Mobile App to scan any other bank’s KHQR code to pay! Money transferring is also easy where the transaction can also be done via the app with just a few taps of your fingertips.”

“If this is new information to you and you want to get started, you can download the Phillip Bank Mobile App and set up your bank account within 5 minutes. Once it is completed, you will have access to all the features mentioned above.”

The digital initiatives of Cellcard and Phillip Bank have helped to make Cambodia a more digitalised country. These companies have made it easier for people to access financial services, shop online, and interact with the government online. As a result, they have played a significant role in the country’s economic development.

In comparison to other regional countries, Cambodia’s digitalisation – given its relatively recent exponential growth in development – is quite impressive. Here are some factors to consider:

How does Cambodia’s digitalisation compare with regional countries?

• Cambodia has the highest mobile banking penetration rate in Southeast Asia, with over 60% of the adult population using mobile banking services. This is significantly higher than the rates in neighboring countries, such as Thailand (30%) and Vietnam (20%).
• E-commerce: The e-commerce market in Cambodia is also growing rapidly, with a value of just under $1 billion in 2022. This is still small compared to the e-commerce markets in neighboring countries, such as Thailand ($35 billion) and Vietnam ($15 billion). However, the Cambodian e-commerce market is growing at a faster rate than the markets in these countries.
• Government services: The government of Cambodia is also making progress in digitalising government services. In 2021, the government launched an online platform that allows citizens to access a variety of government services, such as paying taxes and applying for passports. 
• Bakong. The digital payments system is helping Cambodian people and businesses make international payments using financial technology, creating more opportunities (source).

What are some investment opportunities in terms of Cambodia’s digitalisation?

Cambodia’s digitalisation offers diverse investment opportunities across multiple sectors and has been progressing rapidly, opening up several investment opportunities in various sectors. Here are some examples:

• E-commerce Platforms: Cambodia’s e-commerce industry is growing steadily, presenting opportunities for investment in online marketplaces, logistics, payment systems, and last-mile delivery services. Examples of existing e-commerce platforms in Cambodia include Nham24, Little Fashion, and Joonaak Delivery.

• Fintech and Digital Payments: With the increasing adoption of digital payments and mobile banking, investing in fintech solutions, mobile wallets, and payment gateways can be lucrative. Examples of digital payment platforms in Cambodia include Pi Pay, Wing, and ABA Mobile. Cambodian-based Pi Pay is an example of a new system securing significant investments from international investors to expand their digital payment services (Source). 

• Digital Infrastructure: Investing in the development of digital infrastructure, such as internet connectivity, data centers, and cloud services, is crucial to support Cambodia’s digitalization. Companies like Ezecom and Telcotech provide internet and telecommunication services in the country.

• Online Education: The demand for online education platforms and e-learning solutions is growing in Cambodia. Investing in online tutoring platforms, educational apps, or content creation for digital learning can be a promising opportunity. Find out more here.

• Mobile Apps and Software Development: Investing in mobile app development, software solutions, and IT services can cater to the increasing demand for digital tools and services. Developing applications for sectors like healthcare, tourism, and transportation can be particularly beneficial.

• The development of smart city initiatives, such as the partnership between the Cambodian government and South Korea’s NXC Corporation, showcases the potential for foreign investors to contribute to Cambodia’s urban transformation (Source).

Cambodia’s digitalisation effort offers many benefits for potential investors, and the supportive environment created by the government.

What are the challenges facing Cambodia’s digitalisation?

Cambodia has made significant progress in digitalization in recent years. However, there are still a number of challenges that need to be addressed in order to fully realize the potential of digital technologies.

• Low financial and digital literacy

One of the biggest challenges to digitalization in Cambodia is the low level of financial and digital literacy. Many people in Cambodia, especially those in rural areas, do not have the knowledge or skills to use digital banking services. This can make it difficult for them to access financial services and participate in the digital economy.

• Cybersecurity threats

Another challenge to digitalization in Cambodia is the threat of cybersecurity. As more and more people use digital banking services, there is an increased risk of fraud and cyberattacks. This is a serious concern, as it could undermine public trust in digital banking and hinder the growth of the digital economy.

• Over-saturated market

The mobile banking market in Cambodia is becoming increasingly crowded. There are now dozens of different providers offering similar products and services. This can make it difficult for consumers to choose the right provider for their needs.

Further investment in Cambodia will help mitigate these challenges and further strengthen the effort towards digitalisation which the Kingdom is so hungry to achieve. To learn more about making smart investments in surrounding Cambodia’s digtalisation get in touch with the in-market experts Aquarii today.

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.

In this article we discuss Special Economic Zones in Cambodia (SEZs), including why they were built, the impact they have had in Cambodia and some examples of the business which has been brought in as a result. If you want more in-market information from the experts, view our library of law or market info sections, or get in touch with our international team here.

What are the Special Economic Zones in Cambodia?

Special Economic Zones in Cambodia were first launched in 2005 with the aim of attracting foreign investment, boosting economic growth and creating employment opportunities. 

The government saw the establishment of these Special Economic Zones in Cambodia as a way to promote economic development and attract investors to the country.

The purpose of the SEZ in Cambodia is to provide a favorable environment for businesses to operate in. The zones are designed to offer a range of benefits to investors, including tax incentives, streamlined regulations, and access to infrastructure and services. The government has also made efforts to improve the business climate in the country by reducing bureaucratic hurdles and improving the overall ease of doing business (source)

What are the main benefits of the Special Economic Zone in Cambodia?

One of the main benefits of investing in the Special Economic Zone in Cambodia is the tax incentives that are offered to businesses. 

Companies that operate within the SEZ are exempt from import duties, VAT on imported goods, and other taxes for a period of up to nine years. This reduces the cost of doing business and makes it more attractive for foreign investors to set up operations in Cambodia.

Another key benefit of the SEZ is the access to infrastructure and services. The zones are designed to provide businesses with access to reliable power, water, and other essential services. In addition, the government has invested heavily in improving the transportation infrastructure in the country, making it easier for businesses to move goods and people around.

For an overview, here is the main benefits of the Special Economic Zone in Cambodia:

• Tax incentives: Businesses operating in SEZs are exempt from corporate income tax for the first nine years of operation, and they also receive a 50% reduction in corporate income tax for the next five years.
• Customs duty exemptions: Businesses operating in SEZs are exempt from customs duties on imported equipment and materials.
• One-stop shop for business registration and licensing: The Council for the Development of Cambodia (CDC) provides a one-stop shop for business registration and licensing, which makes it easier and faster for businesses to start operating in SEZs.
• Access to skilled labor: Cambodia has a young and growing workforce, and the government is investing in education and training to ensure that workers have the skills that businesses need.
• Strategic location: Cambodia is located in a strategic location, with access to major markets in Southeast Asia, China, and India.

How has the Special Economic Zone in Cambodia helped develop the economy?

The SEZ has been instrumental in helping the development of Cambodia by incentivizing new business and investment in the country. The zones have attracted a wide range of businesses, including manufacturing companies, logistics firms, and service providers. 

These businesses have created new jobs and helped to drive economic growth, particularly in rural areas where employment opportunities are limited.

The presence of these and other businesses in SEZs has had a number of benefits for the Cambodian economy, including:

• Increased employment: The presence of businesses in SEZs has created jobs for Cambodian workers.
• Increased exports: The goods produced by businesses in SEZs are exported to markets around the world, which has increased Cambodia’s export earnings.
• Economic growth: The increased employment and exports have led to economic growth in Cambodia.

How many companies operate in the Special Economic Zone in Cambodia?

As of 2021, there were 25 SEZs operating in Cambodia, with a total of 320 registered companies operating within them. These zones have helped to drive economic growth and attract foreign investment, with the total investment in the zones reaching over $9 billion USD. This has created thousands of new jobs, particularly in the manufacturing sector, which has been a key driver of economic growth in the country.

In conclusion, the Special Economic Zone in Cambodia has been a key driver of economic growth and development in the country. 

These benefits have attracted a number of businesses to SEZs in Cambodia. Some examples of businesses that have come to enjoy the benefits of operating in this area include:

• Nike: Nike has a factory in the SEZ in Sihanoukville, which employs over 10,000 workers.
• Samsung: Samsung has a factory in the SEZ in Phnom Penh, which employs over 5,000 workers.
• Honda: Honda has a factory in the SEZ in Kandal province, which employs over 2,000 workers.

By offering tax incentives, streamlined regulations, and access to infrastructure and services, the SEZ has attracted a wide range of businesses and helped to create new jobs and drive economic growth. As Cambodia continues to develop and modernize, the SEZ is likely to play an increasingly important role in attracting foreign investment and driving economic growth in the country.

Has the Special Economic Zone been a success in Cambodia?

The SEZs have been a success story for Cambodia, and they have helped to make the country a more attractive destination for foreign investment. The government is planning to expand the number of SEZs in the country, and this is expected to further boost economic growth and create jobs.

Who made the decision to create the Special Economic Zone in Cambodia?

The decision to create special economic zones (SEZs) in Cambodia was made by the government in 2005 (source). The government’s decision was based on a number of factors, including the following:

• The need to attract foreign investment: The Cambodian government wanted to attract foreign investment to help the country’s economy grow. SEZs were seen as a way to attract foreign investment by offering businesses a number of benefits, such as tax breaks and exemptions from customs duties.
• The need to create jobs: The Cambodian government wanted to create jobs for Cambodian workers. SEZs were seen as a way to create jobs by attracting businesses that would employ Cambodian workers.
• The need to improve Cambodia’s infrastructure: The Cambodian government wanted to improve Cambodia’s infrastructure, such as roads, bridges, and airports. SEZs were seen as a way to improve Cambodia’s infrastructure by attracting businesses that would invest in infrastructure projects.

Which government ministries were involved in the decision to create Special Economic Zones in Cambodia?

The following ministries were involved in the decision to create SEZs in Cambodia:

• The Council for the Development of Cambodia (CDC): The CDC is the government agency responsible for promoting economic development in Cambodia. The CDC was responsible for drafting the legislation that created SEZs and for overseeing the development of SEZs.
• The Ministry of Economy and Finance: The Ministry of Economy and Finance was responsible for providing the financial support for the development of SEZs.
• The Ministry of Industry and Handicrafts: The Ministry of Industry and Handicrafts was responsible for providing technical assistance for the development of SEZs.

In this article, we discuss foreign trade agreements in Cambodia in 2023.

For more useful business and investment news, view our dedicated market information section here, or get in touch with our expert international team.

What should investors know about foreign trade agreements in Cambodia in 2023?

The Cambodian government is committed to foreign trade agreements in Cambodia, however, experts warn that Cambodia must prepare itself for the withdrawal of the EBA scheme as the Kingdom becomes more developed. In this article we discuss how the Kingdom must reduce production costs and increase its trade volume in order to remain competitive, and how that is being done through foreign trade partnerships in Cambodia.

How does signing foreign trade agreements in Cambodia help the country to open up new markets for Cambodian goods and services?

There has been a push towards signing foreign trade agreements in Cambodia in recent years, in an effort to open up new markets for its goods and services. These agreements have the potential to provide significant benefits to the Cambodian economy, by increasing exports, stimulating economic growth, and creating jobs.

One of the most important benefits of signing foreign trade agreements is that they can help to reduce or eliminate tariffs on goods traded between the countries involved. This makes Cambodian goods more competitive in foreign markets, as they are not subject to the same high tariffs as they would be otherwise. For example, the Cambodia-China Free Trade Agreement (CCFTA) has helped to increase exports of Cambodian agricultural products to China, by reducing or eliminating tariffs on these products.

Another benefit of signing foreign trade agreements is that they can help to establish rules of origin. This means that the products must be actually produced in Cambodia, and not simply imported from other countries and then re-exported. This helps to protect Cambodian businesses from unfair competition, and ensures that they are able to benefit from the preferential treatment offered under the agreement. For example, the Regional Comprehensive Economic Partnership (RCEP) has established rules of origin for garments and textiles, which means that Cambodian businesses must use Cambodian-made fabrics and components in order to qualify for preferential treatment under the agreement.

In addition to reducing tariffs and establishing rules of origin, foreign trade agreements can also provide for technical cooperation. This means that the countries involved can work together to help Cambodian businesses improve their production methods and meet the standards required to export their goods to foreign markets. For example, the Cambodia-Korea Free Trade Agreement (CKFTA) includes provisions for technical cooperation on footwear production. This has helped Cambodian businesses to improve their production methods and meet the standards required to export their footwear to Korea.

Overall, signing foreign trade agreements can help Cambodia to open up new markets for its goods and services, which can lead to increased exports, economic growth, and job creation. As Cambodia continues to sign more trade agreements, it is likely that even more opportunities will open up for Cambodian businesses.

What are some examples of successful foreign trade agreements?

Here are some additional examples of how signing foreign trade agreements in Cambodia have helped it to open up new markets for its goods and services:

The ASEAN-Japan Economic Partnership Agreement (CJEPA) has helped to increase exports of Cambodian rice to Japan. There has now be calls for a direct partnership between Cambodia and Japan (source)

The ASEAN-India Comprehensive Economic Partnership Agreement (CECA) has helped to increase exports of Cambodian rubber to India. (source)

The multiple Cambodia-Viet Nam Free Trade Agreement (CTFTA) have helped to increase exports of Cambodian garments and textiles to Vietnam. (source)

The Cambodia-South Korea Free Trade Agreement can help boost Cambodian exports of garments, textiles, and footwear to South Korea. (source)

As Cambodia continues to sign more trade agreements, it is likely that even more opportunities will open up for Cambodian businesses. 

What are the current foreign trade agreements in Cambodia?

Find some of the signed and/or active foreign trade agreements in Cambodia (source)

• ASEAN Free Trade Area (AFTA) – 1992-present
• Cambodia-China Free Trade Agreement (CCFTA) – 2009-present
• Cambodia-India Comprehensive Economic Partnership Agreement (CECA) – 2015-present
• Cambodia-Japan Economic Partnership Agreement (CJEPA) – 2016-present
• Cambodia-Korea Free Trade Agreement (CKFTA) – 2016-present
• Cambodia-Viet Nam Free Trade Agreement (CTFTA) – 2015-present
• Regional Comprehensive Economic Partnership (RCEP) – 2020-present
• Australia-Cambodia Free Trade Agreement (ACFTA) – 2008-present
• Hong Kong-Cambodia Free Trade Agreement (HKFTA) – 2014-present
• New Zealand-Cambodia Free Trade Agreement (NZCFTA) – 2021-present
• Singapore-Cambodia Free Trade Agreement (SCFTA) – 2016-present

To note: These have been compiled from multiple sources and some may no longer be active or ongoing.

As a prominent example of a foreign trade agreements in Cambodia, How will the RCEP benefit the country?

The Regional Comprehensive Economic Partnership (RCEP) is the largest free trade agreement in the world, and it offers a number of new opportunities for Cambodian businesses. The agreement will reduce or eliminate tariffs on goods traded between RCEP member countries, which will make Cambodian exports more competitive in these markets.

In addition, RCEP will also create new opportunities for Cambodian businesses to invest in and partner with businesses in other RCEP member countries. This could lead to the creation of new jobs and businesses in Cambodia, and it could also help to boost the country’s economy.

Here are some of the specific opportunities that RCEP offers for Cambodian businesses:

• Exports: The reduction or elimination of tariffs on goods traded between RCEP member countries will make Cambodian exports more competitive in these markets. This could lead to increased exports of Cambodian products, such as garments, textiles, agricultural products, and electronics.
• Investment: RCEP will create new opportunities for Cambodian businesses to invest in and partner with businesses in other RCEP member countries. This could lead to the creation of new jobs and businesses in Cambodia, and it could also help to boost the country’s economy.
• Services: RCEP will also liberalize trade in services, which could create new opportunities for Cambodian businesses to provide services to businesses in other RCEP member countries. 
• This could include services such as logistics, transportation, and IT.

What are the challenges for businesses when entering foreign trade agreements in Cambodia?

There are some challenges that businesses will need to address in order to take advantage of the opportunities offered by any foreign trade agreements in Cambodia. For example with the RCEP, challenges include:

• Competition: Increased competition from businesses in other RCEP member countries could put pressure on Cambodian businesses. In order to compete, Cambodian businesses will need to improve their productivity and efficiency.
• Compliance: RCEP includes a number of rules and regulations that businesses will need to comply with. In order to do so, businesses will need to invest in training and resources.

Overall, RCEP is a significant opportunity for the Cambodian economy. By taking advantage of the opportunities offered by the agreement, Cambodian businesses can position themselves to benefit from the growth of the RCEP market and contribute to the country’s economic development. 

What does the government and experts say about the current foreign trade agreements in Cambodia?

Free trade agreements (FTAs) and the Regional Comprehensive Economic Partnership (RCEP) have provided benefits to Cambodia since they came into force, according to Lim Heng, vice president of the Cambodia Chamber of Commerce. (source)

Heng said that establishing more FTAs with potential trade partners like China and Korea would give Cambodia access to wider markets for its products.

Penn Sovicheat, Under-Secretary of State and spokesman at the Ministry of Commerce, echoed Heng’s statement, saying that bilateral FTAs and RCEP have created wider markets for Cambodia’s products. He also said that having FTAs with many developing countries like China is a positive sign for Cambodia’s economy and products.

The benefits of FTAs and RCEP for Cambodia include:

• Increased market access: FTAs and RCEP have reduced or eliminated tariffs on goods traded between Cambodia and other countries, giving Cambodian businesses access to wider markets.
• Attracting foreign investment: FTAs and RCEP have made Cambodia a more attractive destination for foreign investment, as they provide investors with access to a large market with preferential tariff rates.
• Promoting economic growth: FTAs and RCEP have helped to promote economic growth in Cambodia, as they have led to increased trade and investment.

The Cambodian government is committed to expanding FTAs and RCEP, as they believe that these agreements will further benefit the country’s economy.

Aun Pornmoniroth, Deputy Prime Minister and Minister of Economy and Finance, said opening more markets, developing effective planning and negotiation strategies aims at making FTA negotiations with other Cambodia’s key partners.

“The Ministry has to conduct extensive consultations with stakeholders on the benefits of the bilateral trade agreements”, he added.

Ky Sereyvath, an economics researcher at the Royal Academy of Cambodia, said that Cambodia must prepare itself for the withdrawal of the Everything But Arms (EBA) scheme. The EBA is a preferential foreign trade agreement in Cambodia that allows Cambodia to export goods to the European Union (EU) without paying tariffs.

Sereyvath said that when Cambodia is lifted out of poverty, all preferential tax systems will come to an end. This means that Cambodian goods may become more expensive in the EU market. He added that the Kingdom must reduce production costs and increase its trade volume in order to remain competitive.

What are the latest and up-coming foreign trade agreements in Cambodia?

The Cambodian government is committed to expanding the Kingdom’s foreign trade partnerships. 

Minister of Commerce Pan Sorasak said that the government is pleased with recent trade agreements, such as the Regional Comprehensive Economic Partnership (RCEP), the Cambodia-China Free Trade Agreement (CCFTA), the Cambodia-Korea Free Trade Agreement (CKFTA), and the Cambodia-United Arab Emirates Comprehensive Economic Partnership Agreement (CAM-UAE CEPA). He added that further trade agreements are currently under negotiation and expected to be completed soon.

Sorasak said that the government’s goal is to open additional markets and help make Cambodia self-reliant. This will ensure the sustainability of a robust economy, expanded product markets, higher living standards, and more employment opportunities.

In this article we discuss the latest developments in the relationship between Cambodia & Singapore, including trade agreements, investments, challenges and opportunities. For more information on business and investment in Cambodia, view our useful market information or contact our expert team.

What is the current economic relationship between Cambodia and Singapore?

Cambodia and Singapore have enjoyed strong economic relations for many years. In 2021, bilateral trade between the two countries reached $5.2 billion, up from $4.7 billion in 2020 (source). This growth was driven by increased exports of Cambodian garments and footwear to Singapore, as well as increased imports of machinery and electronics from Singapore.

Foreign direct investment (FDI) from Singapore to Cambodia has also been on the rise. In 2021, Singapore was the largest source of FDI into Cambodia, with investments totalling $2.7 billion. That year, Singapore overtook China as the leading investing country in Cambodia in 2021, contributing some 40 percent of Cambodia’s inward FDI according to the Investment Monitor’s ‘2022 Inward FDI Performance Index’. (source) This investment was mainly in the garment and footwear sectors, as well as in the banking and finance sectors.

The strong economic ties between Cambodia and Singapore are expected to continue its upward trend in the years to come. The two countries are signatories to a number of free trade agreements, including the ASEAN Free Trade Area (AFTA) and the Regional Comprehensive Economic Partnership (RCEP). These agreements will reduce tariffs and other barriers to trade between the two countries, making it easier for businesses to operate in both markets.

What are the latest projects and investments from Singapore in Cambodia?

Singapore interests have seen a number of investments in Cambodia in recent years. These investments include:

• Logistics complex in Phnom Penh (source)

The $200 million project, called the Multi-Modal Phnom Penh Logistics Complex (PPLC), was announced during the 40th and 41st ASEAN Summit and is expected to transform Cambodia into a high-potential logistics hub and a connectivity point for serving regional trade. The PPLC was unveiled in a ceremony attended by senior government officials from Cambodia and Singapore, as well as representatives from the private sector. 

The PPLC is a joint venture between YCH Group, Singapore’s largest home-grown supply chain solutions company, and WorldBridge Group, a leading Cambodian conglomerate. The project is expected to create over 1,000 jobs during the construction phase and over 500 jobs.

Expected to be completed in 2026, it will be a major boost to Cambodia’s economy and will help to position the country as a leading logistics hub in the region.

• Investment in Electric Vehicle (EV) factory in Cambodia (source)

Singaporean venture capital firm Trive has invested in MVLLABS, the company behind South-east Asian ride-hailing service TADA. The investment is part of a US$15 million Series B funding round that will be used to build an electric vehicle (EV) model for launch in Cambodia.

Trive is a venture capital firm that invests in early-stage technology companies in Southeast Asia. The firm has a strong track record of investing in successful companies, such as Nium, a global payments platform, and Carro, an online car marketplace.

• The entry of SIA Engineering (source)

In a recent development, Singapore Airlines Engineering (SIA Engineering) has announced that it will set up a maintenance, repair, and overhaul (MRO) facility in Cambodia. The facility is expected to be completed in 2025 and will create up to 1,000 jobs.

The entry of SIA Engineering is a significant development for Cambodia’s aviation industry. It is the first MRO facility to be established in the country and is expected to attract more airlines to Cambodia. The facility is also expected to boost economic growth in the country as well as facilitate knowledge transfer and skills.

• Export of electricity to Singapore (source)

Cambodia’s Royal Group of Companies plans to export renewable energy to Singapore after the group signed an agreement with Keppel Energy Pte Ltd in 2023 for the latter to purchase electricity from the Kingdom.

During a signing ceremony attended by Suy Sem, Minister of Mines and Energy and representing Singapore, Tan See Leng, Second Minister for Trade and Industry, Tan said this agreement is a milestone in the expedition of developing the renewable energy resources and importing electricity into Singapore.

He further said the partnership between Keppel and RGP demonstrates the “strong commercial interest and viability” of renewable energy co-development projects for cross-border electricity trade.

• RCEP and the future of trade and investment (source)

The Regional Comprehensive Economic Partnership Agreement (RCEP)  is a free trade agreement between 15 countries in the Asia-Pacific region, including Cambodia and Singapore. The agreement came into effect in January 2022, and it is expected to boost trade and investment between the participating countries.

In particular, t​he RCEP is expected to provide a significant boost to foreign investors looking to establish production bases in Cambodia, leveraging the country’s low-cost environment and favorable investment incentives to export to a broader global market.

It will help reduce tariffs on goods traded between the participating countries, making it easier for businesses and production facilities in Cambodia to export their products to other RCEP markets.

• Singaporean forums, associations and delegations  (source)

Organizations like the Singapore Club Cambodia (SCC) and the Singapore Business & Investment Forum (SBIF) play an important role in fostering business ties between Singapore and Cambodia. 

They are useful conduits for networking, knowledge sharing, and collaboration, and help investors better understand in-market developments and opportunities in Cambodia.

As the voice of the Singaporean business community, they also deliver advocacy and representation, to help raise awareness of the challenges and opportunities in doing business in Cambodia. This allows local and foreign businesses in the Kingdom to foster meaningful interactions with their Singaporean and international counterparts, which can lead to new business collaboration possibilities.

What are the new growth areas in Cambodia that Singapore interests can take advantage of?

Singapore can look forward to leveraging Cambodia’s abundant agriculture resources to address its food security, and explore collaboration in the digital economy space given its youthful demography (70% of population are under 35YO) and the rapid rate of adoption of digitalisation in Cambodia (can refer to KT article on e-payments being USD300b in 2022, which is 10 times its GDP).

The economic ties between Cambodia and Singapore are robust and are expected to continue to grow in the years to come. In particular, the recent entry of SIA Engineering could open the doors for more Singapore solutions and service providers to seriously consider investing or establishing a presence in Cambodia.

For more information, reach out to our expert team here.

In this article we discuss the growing renewable energy sector in Cambodia, including rate of adoption, past and current project and investment opportunities in the field. For more in-market information, view our free to use platform, or get in touch with our expert team.

How developed is the renewable energy sector in Cambodia?

The renewable energy sector in Cambodia is growing rapidly. The country has a strong commitment to renewable energy, and the government has set ambitious targets for renewable energy deployment. In 2018, the government announced that it aims to achieve 25% renewable energy by 2030.

What is beneficial to the renewable energy sector in Cambodia?

There are a number of beneficial factors driving the growth of the renewable energy sector in Cambodia which make it an ideal country to adopt renewable energy. The country has a number of factors that make it well-suited for renewable energy development, including:

Abundant renewable energy resources: Cambodia has a large amount of solar and hydropower potential. The country receives an average of 5.5 kWh of solar energy per square meter per day, and it has a number of rivers that are suitable for hydropower development.

• Geographical location: Cambodia is located in the tropics, which means that it has a high solar irradiance. This makes it ideal for solar power development.
• Small population: Cambodia has a population of just over 16 million people. This means that it has a relatively small electricity demand, which makes it easier to meet with renewable energy.
• Government support: The Cambodian government is committed to renewable energy development. The government has also agreed to stop building coal-fired power plants in the country.

Finally, another huge factor boosting the argument for the switch to renewables is the falling cost of renewable energy technologies. The cost of solar and wind power has fallen significantly in recent years, making them more competitive than fossil fuels.

Which companies are leading the renewable energy sector in Cambodia?

The adoption of renewable energy in Cambodia is being led by a number of companies. Some prime examples are listed below:

• Electricité du Cambodge (EDC). EDC is the country’s largest electricity utility company. EDC has invested in a number of renewable energy projects, including solar and hydropower plants, in the renewable energy sector in Cambodia.
• Blue Circle Renewables is another leading company in the renewable energy sector in Cambodia. Blue Circle Renewables is a Cambodian company that develops and builds renewable energy projects. Blue Circle Renewables has developed a number of solar and wind power projects in the Kingdom.

The Cambodian government is also playing a role in promoting renewable energy. The government has provided financial support for renewable energy projects, and it has also created a number of policies to encourage renewable energy development.

What are the opportunities for investment in the renewable energy sector in Cambodia?

There are a number of investment opportunities in the renewable energy sector in Cambodia. Some of these opportunities include:

• Solar power: Cambodia has a high solar irradiance, making it ideal for solar power development. There are a number of solar power projects that are currently being developed in Cambodia, and there is still a lot of potential for growth in this sector.
• Hydropower: Cambodia has a number of rivers that are suitable for hydropower development. There are a number of hydropower projects that are currently being developed in Cambodia, and there is still a lot of potential for growth in this sector.
• Wind power: Cambodia has a small but growing wind power sector. There are a number of wind power projects that are currently being developed in Cambodia, and there is still a lot of potential for growth in this sector.
• Biomass: Cambodia has a large amount of biomass resources, such as wood, agricultural waste, and animal waste. These biomass resources can be used to generate electricity or heat. There are a number of biomass power projects that are currently being developed in Cambodia, and there is still a lot of potential for growth in this sector.

The renewable energy sector in Cambodia is still in its early stages of development, but it is growing rapidly. There are a number of investment opportunities available in this sector, and investors who are looking to get involved in the renewable energy market should consider Cambodia as a potential destination.

In addition to the investment opportunities mentioned above, there are a number of other factors that make Cambodia an attractive destination for renewable energy investment. These factors include:

• Government support: The Cambodian government is committed to renewable energy development. The government has set a target of 25% renewable energy by 2030, and it has put in place a number of policies to encourage renewable energy investment.
• Regulatory environment: The regulatory environment for renewable energy in Cambodia is relatively favorable. The government has put in place a number of policies to promote renewable energy, and the regulatory framework is generally seen as being supportive of investment.
• Local expertise: There is a growing pool of local expertise in the renewable energy sector in Cambodia. There are a number of local companies that are involved in renewable energy development, and there is a growing number of skilled workers who are available to work in this sector.

Overall, Cambodia is an attractive destination for renewable energy investment. The country has a number of factors that make it well-suited for renewable energy development, and the government is committed to promoting renewable energy. Investors who are looking to get involved in the renewable energy market should consider Cambodia as a potential destination.

Is the renewable energy sector in Cambodia adopting green technology?

There are a number of key examples of how Cambodia is adopting green technology. One example is the construction of the 100 megawatt (MW) solar power plant in Kandal province. This plant is the largest solar power plant in Cambodia, and it will generate enough electricity to power 100,000 homes.

Another example is the installation of solar panels on government buildings. The Cambodian government has installed solar panels on a number of government buildings, including the National Assembly building and the Ministry of Education building. These solar panels are generating electricity, which is helping to reduce the government’s reliance on fossil fuels.

Which events have demonstrated key actors’ commitment to clean energy within the renewable energy sector in Cambodia?

There have been a number of events that have highlighted Cambodia’s efforts to switch to cleaner, greener energy. Some of these events include:

The launch of the National Energy Policy in 2018: The National Energy Policy sets a target of 25% renewable energy by 2030. This target is a significant commitment to renewable energy, and it shows that the Cambodian government is serious about reducing its reliance on fossil fuels.

The construction of the 100 megawatt (MW) solar power plant in Kandal province: This plant is the largest solar power plant in Cambodia, and it will generate enough electricity to power 100,000 homes. The construction of this plant is a major step forward for Cambodia’s renewable energy sector.

The installation of solar panels on government buildings: The Cambodian government has installed solar panels on a number of government buildings, including the National Assembly building and the Ministry of Education building. These solar panels are generating electricity, which is helping to reduce the government’s reliance on fossil fuels.

The launch of the Clean Energy Week Cambodia in 2022: Clean Energy Week Cambodia is an annual event that brings together stakeholders from the renewable energy sector to discuss the latest trends and developments in renewable energy. The launch of this event shows that there is a growing interest in renewable energy in Cambodia.

These are just a few of the events that have highlighted Cambodia’s efforts to switch to cleaner, greener energy. The Cambodian government is committed to renewable energy, and the growth of the renewable energy sector is a positive development for the country.

How did the Cambodian Climate Change Summit 2022 promote the renewable energy sector in Cambodia?

The Cambodia Climate Change Summit 2022 was a major event that highlighted Cambodia’s efforts to switch to cleaner, greener energy. The summit was held in Siem Reap, Cambodia from October 17-19, 2022. The summit brought together government officials, business leaders, and civil society representatives from around the world to discuss the challenges and opportunities of climate change in Cambodia.

The summit was a success in raising awareness of the need for climate action in Cambodia. It also generated a number of commitments from governments, businesses, and civil society organizations to take action on climate change.

How has the government helped the renewable energy sector in Cambodia?

There are a number of ways in which the Cambodian government has committed to increasing the share of renewable energy in its electricity mix to 25% by 2030, alongside the World Bank committement to providing $1 billion in funding for climate change projects in Cambodia. Also helping the renewable energy sector in Cambodia is:

• The Asian Development Bank committed to providing $500 million in funding for climate change projects in Cambodia.
• A number of businesses committing to reducing their greenhouse gas emissions.
• A number of civil society organizations committed to working to raise awareness of climate change in Cambodia.

What represent major steps forward in incentivising the renewable energy sector in Cambodia?

The Cambodia Climate Change Summit 2022 was a major step forward for Cambodia’s efforts to address climate change. The summit generated a number of commitments from governments, businesses, and civil society organizations to take action on climate change. These commitments will help Cambodia to reduce its greenhouse gas emissions and build a more sustainable future.

One such niche, garnering interest in Cambodia is electric vehicles – whether for public use or even for the high end luxury – is customized luxury e-yachts. A luxury e-yacht to make a statement about an enduring commitment to an environmentally friendly lifestyle while inspiring others to follow suit has become the new, ultimate commitment to embracing sustainable practices.

According to Vivre, a Singapore-based market leader in customized luxury e-yachts, choosing an e-yacht makes a statement about an enduring commitment to an environmentally friendly lifestyle, inspiring others to follow suit and embrace sustainable practices.

While it remains to be seen whether e-yachts will gain popularity in Cambodia’s waters like land-based electric vehicles and eco-tourism, those who embrace sustainable yachting and become early adopters of this luxurious trend can revel in the satisfaction of owning a truly exclusive experience. 

By being among the first to explore Cambodia’s stunning waterways in eco-friendly luxury, they not only make a profound impact on their own lifestyle but also showcase their forward-thinking mindset and commitment to environmental responsibility. It’s an opportunity to be a trailblazer and enjoy the exclusive bragging rights that come with being at the forefront of this exciting new era in yachting.

In a special collaboration with Aquarii, Vivre is offering an exclusive promotion to new customers. Each luxury e-yacht placed with Vivre, citing the code “Aquarii,” will come with two free Seabobs worth USD 20,000 (for surface and underwater diving) and a one-year free subscription to the pre-installed Starlink entertainment system onboard. Interested individuals can submit an inquiry here. 

Is the growth of the renewable energy sector in Cambodia benefitting the country?

The adoption of renewable energy in Cambodia is a positive development. Renewable energy is a clean and sustainable source of energy, and it can help to reduce Cambodia’s reliance on fossil fuels. The growth of the renewable energy sector in Cambodia is also creating jobs and stimulating economic growth.

The future of the renewable energy sector in Cambodia is bright. The government is committed to renewable energy, and the cost of renewable energy technologies is falling. As a result, we can expect to see more renewable energy projects being developed in Cambodia in the coming years.

In a nutshell, the adoption of renewable energy in Cambodia brings the following benefits:

• Reduced reliance on fossil fuels: Cambodia is currently heavily reliant on imported fossil fuels for its electricity. The adoption of renewable energy can help to reduce this reliance and make the country more energy secure.
• Reduced greenhouse gas emissions: Renewable energy is a clean and sustainable source of energy. The adoption of renewable energy can help to reduce Cambodia’s greenhouse gas emissions and combat climate change.
• Economic development: The growth of the renewable energy sector can create jobs and stimulate economic growth.

For more in-market information, view our frequently updated Library of Law section – with all the latest laws – on our free to use platform, or get in touch with our expert team.

Cambodia is a hub for aquaculture, propelled by its rapidly growing population and increasing demand for seafood, significant strides in the development of its aquaculture sector in Cambodia have been reached. In this article, we will explore the key milestones, actors, and government support that have contributed to the growth of the aquaculture sector in Cambodia, as well as the opportunities available for investors looking to capitalise on this growing industry.

For more in-market information in Cambodia, view our business and investor resources here for free, or get in touch with our expert international team.

How developed is the Aquaculture sector in Cambodia?

The aquaculture sector in Cambodia has come a long way in the past few decades, with significant growth in production and revenue. With the government continuing to support the industry and investors showing increasing interest, there are a range of opportunities available for those looking to capitalize on this trend.

Whether through large-scale commercial operations, fish feed production, fish processing and value-added products, or technology and equipment, investors have a range of options to consider when looking to invest in the Cambodian aquaculture sector.

What are the key milestones which have been reached in the Aquaculture sector in Cambodia?

Aquaculture has a long history in Cambodia, dating back to the Angkor era when fish ponds were built to supplement local food sources. However, it wasn’t until the 1990s that the industry began to take off in earnest. In the early years, the majority of fish farming was done in small, backyard ponds, with farmers using traditional methods to raise fish.

In the early 2000s, the government began to take a more active role in the development of the industry, with the establishment of the Fisheries Administration and the implementation of policies aimed at promoting aquaculture. In 2007, the government launched the Aquaculture Development Strategy, which set a target of increasing aquaculture production to 200,000 tons by 2011. The strategy focused on improving the quality of fish seed, promoting the use of modern technologies, and expanding export markets.

By 2011, Cambodia had surpassed its target, with aquaculture production reaching 300,000 tons. In the years that followed, the industry continued to grow, with production reaching 600,000 tons in 2019. Today, aquaculture is a major source of income for many Cambodian farmers, with the industry generating an estimated $1 billion in revenue annually.

What are the latest developments from the Cambodia Aquarculture sector?

latest developments from the aquaculture sector in Cambodia:

The government has announced plans to invest $100 million in the aquaculture sector over the next five years. This investment will be used to improve infrastructure, promote research and development, and support the growth of the sector.

The aquaculture sector is expected to grow by 10% per year over the next five years. This growth will be driven by rising demand for fish, both domestically and internationally.

The aquaculture sector is expected to create 100,000 new jobs over the next five years. This will help to reduce poverty and improve livelihoods in rural areas.

The total economic value of the aquaculture sector in Cambodia was $200 million in 2022. This is expected to grow to $500 million by 2027.

Who are the key Actors in the Aquaculture Sector in Cambodia?

The aquaculture sector in Cambodia is made up of a diverse range of actors, including small-scale farmers, large-scale companies, and international investors. Small-scale farmers continue to play a significant role in the industry, with the majority of fish farming still done in small, backyard ponds. These farmers typically grow a mix of fish species, including tilapia, catfish, and carp, and sell their produce in local markets.

In recent years, however, there has been a growing trend towards larger-scale commercial aquaculture operations. These operations are typically run by companies or investors who have the resources to invest in modern technologies and equipment, and who are focused on exporting their products to international markets. Some of the key players in this space include companies like Green Island Fisheries and Mekong Seafood Connection, both of which operate large-scale fish farms in Cambodia.

International investors have also been playing an increasingly important role in the development of the industry. In 2019, for example, the Chinese firm Qingdao Haili Helin Trading Co. announced plans to invest $100 million in a large-scale aquaculture project in Cambodia, with the aim of exporting its products to China and other Asian markets.

How does the Government Support and develop the Aquaculture sector in Cambodia?

The Cambodian government has been a strong supporter of the aquaculture sector in Cambodia, recognizing its potential to drive economic growth and alleviate poverty in rural areas. In addition to the Aquaculture Development Strategy, the government has implemented a range of policies aimed at promoting the industry, such as tax incentives for aquaculture companies and subsidies for small-scale farmers to purchase fish seed and equipment.

The government has also taken steps to improve the regulatory environment for the industry, with the establishment of the Aquaculture Development and Management Sub-decree in 2018. This sub-decree sets out the licensing and registration requirements for aquaculture operations, as well as the standards and guidelines for the industry.

What opportunities are there for Investors in the Aquaculture Sector in Cambodia?

With the aquaculture sector in Cambodia continuing to grow, there are a range of opportunities available for investors looking to capitalise on this trend. Some of the key areas of focus for investors include:

• Large-scale commercial operations: As mentioned, there is a growing trend towards larger-scale commercial aquaculture operations in Cambodia. Investors with the resources to invest in modern technologies and equipment, and who are focused on exporting their products to international markets, could find significant opportunities in this space.
• Fish feed production: The production of fish feed is a critical component of the aquaculture industry, and there is currently a shortage of high-quality fish feed in Cambodia. Investors with experience in this area could find significant opportunities to supply the industry with the feed it needs.
• Fish processing and value-added products: With the demand for seafood continuing to grow globally, there is increasing interest in value-added products such as fillets, smoked fish, and seafood snacks. Investors with experience in fish processing and marketing could find opportunities to develop these types of products for export markets.
• Technology and equipment: The aquaculture industry in Cambodia is still largely dominated by traditional, small-scale farmers. Investors with experience in aquaculture technology and equipment could find opportunities to provide these farmers with the tools and resources they need to modernize their operations.

Why should you invest in the Aquaculture sector in Cambodia?

Here are some of the reasons for investing in the aquaculture sector in Cambodia:

• Growing demand: The demand for fish is growing both domestically and internationally. This provides an opportunity for the aquaculture sector to expand and grow.
• New markets: The government of Cambodia is working to open new markets for Cambodian fish. This includes markets in the European Union, the United States, and China.
• New technologies: New technologies are being developed that can help to improve the efficiency and productivity of the aquaculture

What are some of the challenges facing the Aquaculture sector in Cambodia?

Here are some of the challenges facing the aquaculture sector in Cambodia:

• Overfishing: Overfishing is a major problem in Cambodia. This is leading to a decline in fish stocks, which is threatening the sustainability of the aquaculture sector.
• Pollution: Pollution from agricultural runoff and industrial waste is a major problem in Cambodia. This is harming fish populations and making it difficult to produce high-quality fish.
• Disease: Disease is a major problem in the aquaculture sector. This is leading to high mortality rates and reducing productivity.

For more information, contact the Aquarii team today.

In this article we look at the key findings of the latest 2023 E-commerce sector in Cambodia report. If you want to find out more about market information in Cambodia, view our view to use the market information section on our website, or get in touch with our expert team. Whether it’s the e-commerce sector in Cambodia or anything else, we are the in-market experts.

How fast is the E-commerce sector in Cambodia growing?

The implementation of the E-commerce Law in 2019 has positioned Cambodia to become one of the region’s fastest-growing e-commerce markets. The sector is likely to experience sustainable growth in the future, thanks to strong government support, a growing urban population, high internet and social media penetration, rising consumer spending, and a robust technology start-up ecosystem. These factors have made Cambodia a destination for innovative e-commerce solutions across a variety of sectors.

What are the key trends in the E-commerce sector in Cambodia?

The key trends in the E-commerce sector in Cambodia are listed below:

• Fashion and apparel remain the most purchased items online, as in 2021.
• Most respondents allocate between $11 and $50 per month for online shopping.
• Promotions and discounts are the main reason why people prefer online shopping.
• A lack of trust, especially for consumable and wearable goods, is the main reason why some people prefer cash on delivery over online payments.
• However, the gap between payment preferences has narrowed significantly over the past two years. In 2022, there is almost an even split between online and cash payments.
• Convenience seems to be the biggest factor influencing the growing preference for digital payments.

Other key findings from the E-Commerce sector in Cambodia compared to other regions are below:

Across Asia, a majority of online shoppers still compare prices online, and prefer to touch and feel products before making a purchase.

Mobile device usage is boosting E-commerce (~70% of retail website visits worldwide came from mobile devices).

Majority of E-commerce users are a young population, and they are introducing E-commerce to their parents as well.

E-commerce will continue to be driven by tech-savvy consumers who prefer a quick and seamless shopping experience.

Majority of online websites cater to serve a small number of urban consumers.

Government initiation, strategies, and regulations come in to bring fairness to both consumers and sellers. (source)

What are the main areas of growth in the E-commcerce sector in Cambodia?

The E-commerce sector in Cambodia is set to see cross-sector growth in almost every area of the economy. The scale of growth in these sectors is listed below:

• Banking: Growing number of integrated digital payment systems have led to higher cashless payment adoption. Traditional banks and financial institutions launching mobile banking apps and opening online payment gateways for E-commerce activities.
• Food and Grocery Deliveries: Demand for food and grocery deliveries have not dropped to pre-COVID levels. Restaurants sign up with food delivery apps or offer self-delivery, while consumers are educated on the food and grocery delivery practices.
• Insurance: Lack of education on benefits of Insurance persists, individuals still prefer an in-person experience with agents. Insurance companies are focusing on digitalisation by expanding into bancassurance business, making online payment for insurance available via mobile banking app.
• Online Education: Lack of unique data in Cambodia, and still in a nascent stage with limited local choices for consumers. Online education is experienced by students at all levels during the pandemic. This opens market opportunities. Hence, there is demand but a lack of supply
• Logistics: E-logistics is growing rapidly. There is also a rising demand for quick commerce in Cambodia. Logistics companies partner with online marketplaces and social commerce sellers.
• Ride-hailing/Transportation: Usage declines outside of major cities. Growing trend for companies to expand into Super apps.
• Fashion: Remains the most purchased item online, dominated by sellers across social media platforms. Although the ride-hailing market is growing, most survey respondents prefer using their own transportation.
• Beauty and Cosmetics: Consumer base has shifted with a younger population. Growing online presence is driven by int’l. trends. The E-commerce segment in Fashion and Beauty & Cosmetics take place mainly on social media provided by traditional shops and online sellers.
• Healthcare: Growing demand for all-in-one digital health platforms. Industry is still in a nascent stage. eHealth is still in a very early stage and all-in-one platforms for healthcare are needed
• Media and Entertainment: Lower growth rate today as opposed to pre-pandemic. Willingness to use premium subscription models are still limited. Global companies in the gaming, video and music streaming sector capture a much higher market share compared to local companies.

(source)

Who are the most popular players in the E-commerce sector in Cambodia?

Cambodians have their own favourite online platforms to use when it comes to each industry. In the E-commerce sector in Cambodia, these are:

• Food Panda is preferred for food or grocery delivery, while Facebook dominates cosmetics, medicine and fashion areas.
• Prudential is most trusted for insurance.
• Vireak Bunntham dominates logistics
• Passapp dominates ride-hailing/ transportation although almost 70% of respondents do not book transportation online mainly because they have their own transportation

(source)

What does the Royal Government think about the E-commerce sector in Cambodia?

According to LCT. TEKRETH Kamrang, Secretary of State, Ministry of Commerce, In the context of 4th Industrial Revolution (IR 4.0), digital technology is a key driving force of industrial competitiveness and business operation, significantly contributing to high productivity, increased export, job creation and economic growth. 

For the Ministry of Commerce, the 2022 E-commerce sector in Cambodia Report, produced by PROFITENCE, led to several initiatives to ensure that legal and policy frameworks for e-commerce are established and implemented. The Ministry had led to adopt the Law on E-commerce which was promulgated on 02 November 2019 to serve as an important legal foundation for e-commerce sector development, especially for protecting and building trust among e-commerce users as well as attracting foreign investors in the e-commerce sector in Cambodia.

In addition, the e-commerce sector in Cambodia is also one of the major topics in trade negotiations at regional and global levels. For instance, Cambodia has signed and endorsed the ASEAN Agreement on Electronic commerce which is an integral part of the legal and regulation framework accelerating e-commerce growth in ASEAN. E-commerce is also included in the Regional Comprehensive Economic Partnership (RCEP) and other on-going negotiations. In the parallel vein, the Ministry has joined with other international organisations such as WTO, UNCTAD, UN ESCAP and others to ensure that Cambodia is in line with international legal frameworks and initiatives.

To find out more information about the E-commerce sector in Cambodia, get in contact with the Aquarii team today.

In this article we discuss the long history of why Singaporean businesses invest in Cambodia, including the strong historical ties as well as the many success stories which keep investors coming to the Kingdom. To learn more about opportunities for investment and expansion into Cambodia from Singapore, you can find out all about the variety of opportunities available in our in-depth market info section on our website.

You can also find out about tax breaks and incentives from the Singaporean government which are designed to incentivise business expansion and investment in Cambodia via the Market Readiness Assistance (MRA) scheme here. AquariiBD is listed by the Enterprise Singapore (ESG) to help companies expand into Cambodia

What makes businesses from Singaporean businesses invest in Cambodia?

Cambodia is a small country in Southeast Asia with a population of just over 16 million people. However, it is also a country with a rapidly growing economy and a young, skilled workforce. This has made it an attractive destination for foreign investment, and Singaporean businesses invest in Cambodia because have they have been particularly successful in expanding into the Cambodian market.

There are a number of reasons for the success of Singaporean businesses who invest in Cambodia. First, the two countries have strong historical and cultural ties. Cambodia was once a part of the Khmer Empire, which ruled over much of Southeast Asia from the 9th to the 15th centuries. Singapore was founded by Chinese immigrants who fled the turmoil in Cambodia in the 19th century. These shared historical and cultural ties have helped to create a strong bond between the two countries.

Second, the Cambodian government has made a concerted effort to attract foreign investment. The government has implemented a number of policies to make it easier for foreign companies to do business in Cambodia, including a simplified tax system and a visa-on-arrival program for business travellers. These policies have made it much easier for those Singaporean businesses invest in Cambodia to set up and operate here.

What are some other reasons why Singaporean businesses invest in Cambodia?

The Cambodian economy is growing rapidly. The country’s GDP has grown at an average rate of 7% per year over the past decade, and it is expected to continue growing at a similar pace in the coming years. This growth is being driven by a number of factors, including a young and growing population, an expanding middle class, and a rising investment rate. This growth has created a large and growing market for goods and services, which has benefited Singaporean businesses.

Another reason why Singaporean businesses invest in Cambodia is because the Cambodian workforce is young and skilled. The average age in Cambodia is just 24 years old, and the country has a literacy rate of 73%. This means that there is a large pool of young and educated workers available to businesses. In addition, the Cambodian government has made a concerted effort to improve the quality of education in the country, which has helped to produce a more skilled workforce.

Finallt, the cost of doing business in Cambodia is relatively low, which is why Singaporean businesses invest in Cambodia. The country has a low corporate tax rate of 20%, and the cost of labor is also relatively low. This makes Cambodia an attractive destination for businesses that are looking to reduce their costs

What are some examples of businesses from Singapore who have successfully investment in Cambodia?

Singaporean businesses invest in Cambodia because of the successes seen when expanding into the country. A number of well-known Singaporean companies, such as UOL Group, Keppel Corporation, and Singtel, have established operations in Cambodia. These companies have helped to create jobs, boost the economy, and improve the quality of life for Cambodians.

Some of the biggest Singaporean businesses invest in Cambodia are:

• UOL Group is a Singaporean property developer that has established a number of projects in Cambodia, including the $1 billion Aeon Mall in Phnom Penh.
• Keppel Corporation is a Singaporean conglomerate that has invested in a number of infrastructure projects in Cambodia, including the $1 billion Siem Reap International Airport.
• Singtel is a Singaporean telecommunications company that has established a mobile phone network in Cambodia.
• These are just a few examples of the many Singaporean businesses that have been successful in Cambodia. The country’s young and growing population, rapidly expanding economy, and skilled workforce make it an attractive destination for foreign investment.

Cambodia remains an exciting prospect for Singaporean business and investors. The country has a young and growing population, a rapidly expanding economy, and a skilled workforce. These factors make Cambodia an attractive destination for businesses that are looking to expand into Southeast Asia.

What are some incentives from the Singaporean government to invest or do business in Cambodia?

The MRA grant is administered by Enterprise Singapore (ESG). It is available to Singaporean businesses and investors that are looking to expand their operations in Cambodia. The grant can be used to cover a variety of expenses, including market research, market entry, and business development.

The MRA grant is capped at S$100,000 per company. The grant is also subject to a number of eligibility criteria. Businesses and investors must meet the following criteria to be eligible for the MRA grant:

• The business must be registered or incorporated in Singapore.
• The business must not have started work on the project for which it is applying for the grant.
• The business must own at least 30% local equity.
• The business’s group sales turnover must be less than or equal to S$100 million.
• The business’s group employment size must be less than or equal to 200.
• The business must not have made any payment to any supplier, vendor, or third party prior to applying for the grant.
• The business must not have signed any contractual agreement with any supplier, vendor, or third party prior to applying for the grant.
• Cambodia must be a new market for the business. This means that the business’s revenue in Cambodia must not have exceeded $100,000 for any of the last three years.

To apply for the MRA grant, businesses and investors must submit an application through the Business Grants Portal (BGP). The application must include the following information:

• The business’s name and contact information.
• The business’s registration number.
• The business’s description of its products or services.
• The business’s target market in Cambodia.
• The business’s marketing and sales strategy for Cambodia.
• The business’s financial projections for Cambodia.
• The business’s budget for the project for which it is applying for the grant.
• The application process for the MRA grant typically takes six to twelve weeks. The grant will be awarded to businesses and investors that meet the eligibility criteria and that submit the strongest applications.

The MRA grant can be a valuable resource for businesses and investors that are looking to expand their operations in Cambodia. The grant can help businesses and investors to cover the costs of market research, market entry, and business development. This can help businesses and investors to reduce the risk of their investments and to increase their chances of success in Cambodia.

Who are the Cambodian in-country service providers of the Singaporean MRA grant?

There are a number of in-country service providers that can help businesses and investors to expand their operations in Cambodia. These service providers can provide a variety of services, including market research, market entry, and business development.

One such service provider is Aquarii. Aquarii is a Cambodia-based company that specialises in helping businesses and investors to expand their operations in Cambodia. Aquarii has a team of experienced professionals who can provide a variety of services, including market research, market entry, and business development.

If you are a business or investor that is looking to expand your operations in Cambodia, I encourage you to contact Aquarii. Aquarii can help you to develop a successful business strategy for Cambodia and to navigate the complex regulatory environment.

What are the key industries which Singaporean businesses invest in Cambodia?

Here are some of the key industries that are ripe for investment in Cambodia:

• Tourism: Cambodia is a popular tourist destination, and the tourism industry is expected to grow in the coming years.
• Manufacturing: Cambodia has a low cost of labor and a skilled workforce, which makes it an attractive destination for manufacturing businesses.
• Agriculture: Cambodia is a major producer of agricultural products, such as rice, rubber, and timber. The agriculture sector is expected to grow in the coming years.
• Infrastructure: Cambodia is in need of investment in infrastructure, such as roads, bridges, and power plants. This provides an opportunity for businesses that are involved in infrastructure development.

If you are considering investing or expanding your business in Southeast Asia, Cambodia is a country that you should seriously consider. The country has a number of advantages that make it an attractive investment destination, and the future looks bright for the Cambodian economy.

Name some Singaporean businesses who have invested in Cambodia?

Below are some of the well-known examples of Singaporean businesses which have been successful in Cambodia:

• AquariiBD (Cambodia): Was set up by the former Singapore Ambassador to Cambodia, Michael Tan
• DBS Bank: DBS Bank is a Singaporean bank that has established a branch in Cambodia.
• OCBC Bank: OCBC Bank is a Singaporean bank that has established a branch in Cambodia.
• UOB Bank: UOB Bank is a Singaporean bank that has established a branch in Cambodia.
• Ascendas Reit: Ascendas Reit is a Singaporean real estate investment trust that has invested in a number of properties in Cambodia, including the $100 million ANZ Tower in Phnom Penh.
• Frasers Hospitality: Frasers Hospitality is a Singaporean hospitality company that has established a number of hotels and resorts in Cambodia, including the $50 million Raffles Grand Hotel d’Angkor in Siem Reap.
• Breadtalk: Breadtalk is a Singaporean bakery chain that has opened a number of stores in Cambodia.
• Koibito: Koibito is a Singaporean chocolate company that has opened a number of stores in Cambodia.

Where can I learn more about investment in Cambodia?

AquariiBD is an in-market expert on business advisory and consultancy services in Cambodia, who can help you enter the market both legally compliant and with the best backing in everything from marketing and management to personnel and policy. Get in touch with our expert team for more information.

In this article we discuss everything you need to know about the Cambodia Securities Exchange (CSX), including its formation, the socio-economic impact it has had, the top three successes from companies who listed and what the latest IPO – from leading telecommunications company Cellcard – means for the CSX and Cambodia.

For more information, check out our comprehensive market info section or contact us.

Does Cambodia have a stock exchange?

The Cambodia Securities Exchange (CSX) is the stock exchange of Cambodia, located in Phnom Penh. It was officially launched on July 11, 2011, marking a significant step forward for the country’s financial sector. The Cambodia Securities Exchange was established as a joint venture between the Cambodian government, which owns 55% of the exchange, and the Korea Exchange (KRX), which owns the remaining 45%.

When did the Cambodian Stock Exchange (CSX) first launch in Cambodia?

The idea of establishing a stock exchange in Cambodia was first proposed in the early 1990s, but it took several years for the necessary regulatory and legal framework to be put in place. The Securities and Exchange Commission of Cambodia (SECC) was established in 2007 to oversee the securities industry and to prepare for the launch of the Cambodian Securities Exchange.

What are the companies listed on the Cambodia Securities Exchange?

The following are listed on the Cambodia Securities Exchange:

• JSL JS LAND PLC
• DBDE DBD Engineering Plc.
• PEPC Pestech (Cambodia) Plc.
• ABC ACLEDA Bank Plc.
• PAS Sihanoukville Autonomous Port
• PPSP Phnom Penh SEZ Plc.
• PPAP Phnom Penh Autonomous Port
• GTI Grand Twins International (Cambodia) Plc.
• PWSA Phnom Penh Water Supply Authority

How successful has the Cambodian Securities Exchange (CSX) been in Cambodia?

The launch of the Cambodian Securities Exchange was seen as a major milestone for Cambodia’s economic development. It provided a new source of financing for local companies and allowed them to raise capital to fund their growth and expansion plans. It also gave Cambodian investors access to a new investment opportunity and helped to promote the development of a savings culture in the country.

In the years since its launch, the CSX has made steady progress in terms of market capitalisation and trading volumes. By 2021, there were five companies listed on the exchange, with a total market capitalisation of around $1.3 billion. The largest company on the exchange is Phnom Penh Water Supply Authority, with a market capitalisation of around $450 million.

The CSX has also played an important role in promoting transparency and good governance in Cambodia. Companies that are listed on the exchange are required to comply with strict disclosure and reporting requirements, which helps to improve corporate governance standards and increase investor confidence.

How will the Cambodia Securities Exchange (CSX) help Cambodia develop going forward?

Looking ahead, the Cambodia Securities Exchange is expected to continue to contribute to Cambodia’s socio-economic development through capital mobilisation. As the country’s economy continues to grow, there is likely to be increasing demand for financing from local companies, and the CSX can play an important role in meeting that demand.

The CSX also makes Cambodia more attractive for investors going forward. By providing a well-regulated and transparent platform for companies to raise capital, the Cambodia Securities Exchange helps to reduce the risks associated with investing in Cambodia. This, in turn, can help to attract more foreign investment to the country, which can further stimulate economic growth and development.

In conclusion, the Cambodia Securities Exchange has come a long way since its launch in 2011. It has played an important role in promoting economic development and good governance in Cambodia, and it is expected to continue to do so in the years ahead. As Cambodia’s economy continues to grow, the Cambodia Securities Exchange will be an important source of financing for local companies, and it will help to make Cambodia an even more attractive destination for investors.

How does the Cambodia Securities Exchange (CSX) help develop Cambodia?

There a 4 main reasons why the Cambodian Stock Exchange (CSX) has helped Cambodia’s social and economic development. These are listed below:

1. Capital Mobilization: One of the primary ways in which the CSX contributes to the Cambodian economy is by mobilizing capital. By providing a platform for companies to raise funds through the issuance of stocks and bonds, the CSX helps to channel savings into productive investments. This, in turn, can help to stimulate economic growth and development.
2. Improved Corporate Governance: In order to be listed on the CSX, companies must comply with strict disclosure and reporting requirements. This helps to improve corporate governance standards and increase investor confidence. Companies that are listed on the CSX are also subject to greater scrutiny from regulators and investors, which can help to deter fraudulent or unethical behavior.
3. Increased Foreign Investment: The presence of a well-regulated and transparent stock exchange can help to attract foreign investment to Cambodia. Foreign investors are more likely to invest in a country that has a transparent and well-regulated financial system, as this reduces the risks associated with investing. The CSX can help to increase foreign investment in Cambodia, which can further stimulate economic growth and development.
4. Job Creation: As companies raise capital through the CSX, they are able to expand their operations and create new jobs. This can help to reduce unemployment and poverty in Cambodia, and contribute to sustainable economic development.

In summary, the Cambodia Securities Exchange helps to boost the Cambodian economy by mobilizing capital, improving corporate governance, attracting foreign investment, and creating jobs.

Who is the most recent company to go public in Cambodia?

Cellcard, a leading mobile network operator in Cambodia owned by CAMGSM, is the most recent company to announce its plans to pursue an Initial Public Offering (IPO). This move is expected to have a significant impact on the Cambodia Securities Exchange. For more information about the move from the local media, click here.

CAMGSM’s IPO presents a unique investment opportunity with a guaranteed dividend of 7% per annum for five years and quarterly dividend distributions for Class A voting shares. This offering has been described as unparalleled by the stock’s underwriter, SBI Royal Securities.

The subscription period for the IPO began on April 5, 2023, and is open exclusively to CAMGSM customers with valid Cellcard SIM and ID registration. The opening share price is KHR 2,270 (approx. $0.57), with a minimum subscription amount of KHR 400,000 (approx. $100). The estimated market capitalization for CAMGSM is $1.14 billion.

Recent financial performance showcases strong growth for the company. Its 2022 unaudited management account revealed an 11.27% increase in revenue, reaching $189.95 million. EBIT, EBITDA, and net profit also saw strong growth over the last three years.

If fully subscribed, CAMGSM will trade at approximately 15 times its 2022 EBITDA of $78.11 million, considered on the higher side for the telco industry. The price-to-earnings ratio will be around 23 times its 2022 net profit of $49.99 million, deemed a “fair” valuation for a growing company.

What will be the impact of Cellcard’s initial public offering with the CSX?

The decision by Cellcard to pursue an IPO is expected to change this dynamic and propel an uptick in public investors entering the market. As one of the largest companies in Cambodia with over 4 million customers, Cellcard is expected to attract significant interest from both institutional and individual investors.

The IPO will provide an opportunity for investors to invest in a well-established company with a proven track record of success in the Cambodian market. This, in turn, is expected to increase the liquidity of the market and encourage more companies to consider going public in the future.

Moreover, the success of Cellcard’s IPO is likely to boost investor confidence in the Cambodian market and attract more foreign investors. This, in turn, will further increase the liquidity of the market and provide more opportunities for companies to raise capital.

In conclusion, Cellcard’s decision to pursue an IPO is a significant development for the Cambodian stock market. It is expected to increase the participation of public investors in the market, boost liquidity, and encourage more companies to consider going public. As the Cambodia Securities Exchange continues to mature and grow, it is likely to become an important source of financing for companies in Cambodia, providing them with the capital needed to expand their operations and drive economic growth.

What are the challenges surrounding the Cambodia Securities Exchange?

However, one of the major challenges facing the Cambodia Securities Exchange has been the lack of participation from public investors. Most of the trading activity on the exchange has been dominated by institutional investors and a handful of high net worth individuals. This has limited the liquidity of the market and has made it difficult for companies to raise capital through public offerings.

What are the top three success stories from the Cambodia Securities Exchange?

The top three Cambodia Securities Exchange success stories are as follows:

• Phnom Penh Water Supply Authority (PPWSA): PPWSA, a state-owned enterprise, was the first company to be listed on the CSX in 2012. Since going public, the company has seen its share price increase significantly, and its market capitalisation has grown to over $400 million. The company has used the funds raised through the CSX to invest in water infrastructure and expand its services, which has helped to improve access to clean water for the citizens of Phnom Penh.
• Grand Twins International (GTI): GTI, a garment manufacturer, went public on the CSX in 2014. Since then, the company has seen its share price increase by over 500%, and its market capitalisation has grown to over $200 million. The company has used the funds raised through the CSX to expand its production capacity and invest in new technology, which has helped it to remain competitive in the global garment industry.
• Acleda Bank: Acleda Bank, the largest commercial bank in Cambodia, went public on the CSX in 2020. The bank raised $15.2 million through its initial public offering, and its share price has since increased by over 40%. The funds raised through the Cambodia Securities Exchange will be used to expand the bank’s operations and improve its digital banking services, which will help to increase financial inclusion in Cambodia.

These success stories demonstrate the potential benefits of going public on the Cambodia Securities Exchange. By raising capital through the exchange, companies can fund their growth and expansion plans, increase their market visibility, and improve their corporate governance standards.

For more in-market information on Cambodia, check out our market info section comprehensive and informative articles on business and investment in the Kingdom.

In this article we discuss the new Official Fees for Issuance of Compliance Certificates for Commercial Advertisements. This new law concerns all commercial advertisements on Goods and/or Services in Cambodia. For more information get in touch with our team or find out more about business and investment law in Cambodia here.

What is the new Cambodian law on Commercial Advertisements in 2023?

The government has issued new regulations on the Official Fees for Issuance of Compliance Certificates for Commercial Advertisements on Goods and/or Services in Cambodia, also known as Prakas 167. This was done in a joint move by The Ministry of Economy and Finance (“MEF”), in cooperation with the Ministry of Commerce (“MOC”),

The new commercial advertisements law, Prakas 167, provides the official fees, timeline, and validity period for the compliance certificate under Sub-Decree 232 on the Management of Commercial Advertisements of Goods and Services (Sub-decree 232) dated 4 November 2022.

Pursuant to Sub-decree 232, in addition to the requirement to obtain a commercial advertising license/permit from the competent authority, any individual who wishes to advertise their goods and/or services may request the compliance certificate or renewal of the compliance certificate from the MOC. This serves as a written certification of the advertisements’ compliance with the Law on Consumer Protection or other applicable regulations.

What are the new timelines for Cambodian commercial advertising compliance certificates?

The official fees and timelines for the compliance certificates issued by the MOC are as follows:

• The issuance of compliance certificates with the validity period of 1 year will involve a fee of 600,000 Riel (approximately $150) and the timeline for issuance is 5 business days.
• The issuance of compliance certificates with the validity period of 6 months will involve a fee of 400,000 Riel (approximately $100) and the timeline for issuance is 5 business days.
• The issuance of compliance certificates with the validity period of 3 months will involve a fee of 200,000 Riel (approximately $50) and the timeline for issuance is 5 business days.

The official fees and timelines for the compliance certificates extended by the MOC are as follows:

• Extending validity compliance certificates with the validity period by 1 year will involve a fee of 400,000 Riel (approximately $100) and the timeline for issuance is 3 business days.
• Extending validity compliance certificates with the validity period by 6 months will involve a fee of 200,000 Riel (approximately $50) and the timeline for issuance is 3 business days.
• Extending validity compliance certificates with the validity period by 3 year will involve a fee of 100,000 Riel (approximately $25) and the timeline for issuance is 3 business days.

To note, if a person violates any provisions outlined in Prakas 167, that person will be penalised pursuant to Articles 19, 20, or 21 of the preceding Sub-Decree 232. Further, the imposition of any penalties under Sub-Decree 232 will not release an offender from any applicable criminal and civil liability.

How important is Commercial Advertising to Cambodia’s economy?

Commercial advertising has become an integral part of Cambodia’s economy in recent years. As the country continues to experience economic growth, businesses are increasingly relying on advertising to reach their target audience and promote their products and services and the government has been instrumental in helping to develop the sector.

The history of commercial advertising in Cambodia can be traced back to the early 1990s when the country began to open up to foreign investment. At that time, advertising was largely limited to print media such as newspapers and magazines. However, with the advent of new technology, advertising has evolved significantly over the years.

Today, commercial advertising in Cambodia is a thriving industry that encompasses a wide range of media, including television, radio, billboards, and social media. With a population of over 16 million people, Cambodia provides a large market for businesses looking to advertise their products and services.

The Cambodian government has played a crucial role in the development of the commercial advertising sector. In recent years, the government has implemented several measures to promote the growth of the advertising industry. One such measure is the establishment of the Cambodia Advertising Council (CAC), which is responsible for promoting ethical advertising practices and regulating the industry.

If you need any more information about this commercial advertisements in Cambodia, or any other laws concerning business or investment in Cambodia, contact our expert team, today!

In this article we cover the Law on Unfair Contract Term in Cambodia, which is relevant as of April 2023 in Cambodia. This law is just one of the many laws that we keep up to date on our business and investment platform’s Library of Laws section, which you can view here. For more information about business advisory in Cambodia and the wider region, contact us here.

What is the law on unfair contract term under the Cambodian law on consumer protection?

The law on unfair contract term in Cambodia comes under the consumer protection law, and was adopted on 1 March 2022 to protect the consumer rights against any excessive exploitation of profits and situations in relation to the contractual relationship.
The contractual relationship in this case is between consumers and business operators via standard contract for the provision of goods and/or services in the Kingdom of Cambodia.

What is the scope of application regarding the law on unfair contract term in Cambodia?

The law on unfair contract term in Cambodia applies to all types of standard form contract made for the provision of goods and/or services in the Kingdom of Cambodia to the consumers as defined under the Law on Consumer Protection.

What is the definition of the law on unfair contract term in Cambodia?

Under the Cambodian law on consumer protection 2023, there are two types of clause. One of which is the unfair contract clause. These are written below:

• Unfair Contract Clause refers to any clause of the standard form contract creating an excessive disadvantage to consumers.
• Standard Form Contract: refers to a contract or any material clause of a contract which is/are pre-formulated by the business operator for the provision of goods and/or services to the consumer without allowing the consumer to negotiate, to revise or to influence in whatever form.

To note: The Substantial Clause refers to any substantial clause or term of the standard form contract that are important for the consumers or the consumer deems important for the formation of the contract and the business operator should have been aware of the importance of such clause.

What is the Requirement for Standard Form Contract under the law on unfair contract term in Cambodia?

There are two mans points under the requirements for the law on unfair contract term in Cambodia, they are:

• Substantive Requirement: The contract shall be (1) made in written form, (2) in Khmer language (foreign language can be made upon the voluntary of the consumer) and (3) consisted of all minimum standard information as required under Law on Consumer Protection.
• Explanatory Requirement: The business operator is required to explain, indicate, and give a clear information to consumers.

What is the Unfair Contract Clause under the law on unfair contract term Cambodia?

Business operator’s are restricted from including any and all unfair clause as below:

• Any clause excluding or limiting the liabilities of the business operator on the guarantee of the services and/or goods as provided under the Civil Code;
• Any clause granting the right to the business operator to materially change or modify the type quantity, price and quality of goods and/or services without prior consent from the consumer
• Any clause granting the right to the business operator to change any Substantial Clause of the Standard Form Contract without prior consent from or notice to the consumer
• Any Clause granting the right to the business operator to unilaterally and arbitrarily interpret or to terminate the contract with his or her own discretion.

What are the Evaluation and Assessment of Excessive Benefits of the law on unfair contract in Cambodia?

The evaluation on the excessive benefit shall be assessed with the strictly consideration to the dominance of economic, social situation, ignorance, inexperience, other circumstances that deemed necessary for formation of contract; and other conditions as may be determined under the special laws and regulations.

What is the Requirement for Change of Contract and the preliminary review and complaint procedures for the law on unfair contract in Cambodia 2023?

The change of substantial clause shall require the written consent of the consumer. For any change of the contract terms other than the substantial clause, the business operator shall provide a written notification to the consumer.

The Competent Authorities for Preliminary Review are:

• (i) National Committee for Consumer Protection (“NCCP”), and (ii) any other sectoral competent regulator.
• Competent Authorities for the Receipt of Complaint: (i) the NCCP and (ii) any other sectoral competent regulator.

What are the rules on Rescission and Ratification under the law on unfair contract in Cambodia 2023?

The consumer may rescind or ratify any clause of excessive benefit and Unfair Contract Clause in accordance with the procedure and requirement as provided under Article 360, 362 and 363 of the Civil Code by signing or affixing his or her thumbprint on a written rescission or ratification form separate to the Standard Form Contract. Such rescission and ratification of all consumers of the business operator shall waive the liabilities of the business operator under this Prakas.

Do you need more help with the Law on Unfair Contract in Cambodia?

Get in touch with our team here for more information on doing business in Cambodia, or view more from our comprehensive Library of Laws and stay informed on business and investment law in Cambodia.

In this article we discuss the Cambodian law on consumer protection the Cooling-Off Period. For more information about law in Cambodia for businesses and investors, view our entire library of laws section here, or for more specific consultation and advisory information, get in touch with one of our team today.

What are the key terms of the Cooling-Off Period under the Cambodian law on consumer protection?

If you operate a business in Cambodia and engage in Distance Sales or Door-to-Door sales of Goods and/or Services, it’s important to be aware of the Cambodian law on consumer protection. The law applies to these types of sales and provides guidelines for the types of goods and services that can be sold, as well as the transaction process, including sales following trial in accordance with Article 520 of the Civil Code.

One of the key principles under the Cooling-Off Period is that consumers have the right to terminate the contract by providing a written notice to the business operator within 07 calendar days without any justification required. Consumers are responsible for any expenses or costs, except for expenses related to the return of goods or the use of services, or any damage caused by the consumer. Make sure to familiarise yourself with these guidelines to ensure compliance and protect your consumers’ rights.

What is the duration of the Cooling-off Period under the Cambodian law on consumer protection?

Under the Cambodian law on consumer protection, the sale of services under the Distance Sales, the duration of seven calendar days shall be counted from the execution date of the contract

For the sale of goods under the Distance Sales, the duration is counted from:

• The date when the Consumer was handed over the purchased goods;
• The date when the Consumer was handed over of the last goods to be
• delivered for the transaction that requires the deliveries to be made more than one time per purchase order; or
• The date when the Consumer was handed over of the Goods to be delivered under a purchase order, in case of recurring or frequent supply.

For the sale of goods/services under the Door-to-Door Sales, the duration of 07 calendar days shall be counted from the execution date of the contract.

What are the obligations of the Business Operator and consumers under the Cooling-off Period in Cambodia?

Under the Cambodian law on consumer protection, the Business Operator shall have the obligation to:

• Inform the consumer about the consumer’s right to Cooling-Off Period attached with the cancellation form including the identification and means of communication with the business operator
• The contract and condition of the quality of goods to be returned and other information for returning the goods and/or services.

Under the Cambodian law on consumer protection, the obligation of the Consumers is as follows:

• Notify to the Business Operator on the decision of terminating the contract during the Cooling-off Period
• Burden of proof with regards to sending notification to terminate the contract
• The return of goods at the time when the consumer gets refund
• Bear the cost of the return goods and/or used services
• Responsibility for the damage of the goods.

What are the exemption for the Cooling-Off Period under the Cambodian law on consumer protection?

The Prakas provides a list of goods and services sold through either Distance Sales or Door-to-Door sales based on the type and characteristic of such goods and services as well as the transaction including the sale following trial in accordance with Article 520 of the Civil Code. Please refer to Chapter IV of the Prakas for the detailed of the Exemption list of Cooling-off Period.

What are the terms of termination under Cooling- Off Period under the Cambodian law on consumer protection?

The consumers shall have right to terminate the contract through providing a prior written notice to the business operator within 07 calendar days without any required justification and responsible for any expenses or costs, excepting any expense related to return of goods or used of services or any grave damages.

When was the cooling-off period under the Cambodian law on consumer protection made?

On 11 April 2022, the Ministry of Commerce issued the Prakas No. 0113 on Cooling-off Period under the Law on Consumer Protection as to set forth a regulatory for the right of Consumers to Cooling-off Period for promoting trust in the market of Distance Sales and Door-to-Door Sales.

This Prakas is applicable for all the operation of Distance Sales and Door-to-Door sales of Goods and/or Services in the Kingdom of Cambodia, under the Cambodian law on consumer protection. The Prakas provides a list of goods and services sold through either Distance Sales or Door-to-Door sales based on the type and characteristic of such goods and services as well as the transaction including the sale following trial in accordance with Article 520 of the Civil Code.

In this article we cover several key parts of the Cambodian law on competition, including Formalities and Procedure of Negotiated Settlement and Formalities of Investigation and Inspection. For more information about Cambodian competition law, view our free-to-use library of laws section on our platform or get in contact with our team today.

What is the law on Formalities and Procedure of Negotiated Settlement under the Law on Competition?

The current law on competition prakas for negotiated settlement were initially passed on 4th November 2022 in order to set out the formalities and procedures of negotiated settlement for offenses under the Law on Competition. The law on competition was set out with the purpose of:

1. Encouraging a quick and appropriate settlement procedure
2. Ensuring flexibility with effective outcomes
3. Reducing the burden of expenses incurred in an investigation as below

What is the scope of the law on Formalities and Procedure of Negotiated Settlement under the Law on Competition and which competent authorities does it involve?

This Prakas applies to the negotiated settlement established by any person (“Person under Investigation”) suspected of violating the Law on Competition (the “Settlement Agreement”).

The competent authorities to conduct the Negotiated Settlement Procedure are:

Consumer Protection Competition and Fraud Repression Directorate-General (“CCF”); and  Cambodia Competition Commission (“CCC”).

What is the procedure for the Formalities of Negotiated Settlement under law on competition?

The Negotiated Settlement Procedure shall commence as follows:

• To request for a Negotiated Settlement Procedure
• To conduct of the Negotiated Settlement Procedure
• To finish the Negotiated Settlement Procedure; and
• To make a discretionary decision of CCC on Negotiated Settlement Procedure.

The Negotiated Settlement Procedure shall comply with the following requirements:

• During the preliminary examination, the investigating officer may inform the Person Under Investigation of the option to file a request for a Negotiated Settlement Procedure.
• If the Person under Investigation requests for a Negotiated Settlement Procedure, the Person under Investigation shall submit an application for a Negotiated Settlement Procedure.
• Upon receipt of such application, the investigating officer has full discretion to decide whether or not to permit a Negotiated Settlement Procedure.

What are the Key Steps of the Negotiated Settlement Procedure under Cambodian law on competition?

The key steps of the Negotiated Settlement Procedure are as follows:

• The investigating officer may discuss with the Person under Investigation about the acts of violation, the corrective actions, the compensation and the future actions.
• The investigating officer may share with the Person under Investigation about the facts, sanctions, responsibilities, evidences and case file and the estimated fines.
• The investigating officer shall serve a notice to all parties at least 7 working days prior to the commencement of the Negotiated Settlement Procedure.

At the end of the Negotiated Settlement Procedure, the Person under Investigation has 15 working days to submit a written document stipulating the obligations, warranty, undertakings, and commitments to the investigating officer (the “Undertaking”).

The investigating officer shall conduct a preliminary review on the Undertaking within 15 working days upon receipt and the Person under Investigation has 14 working days to amend and re-submit the Undertaking.

How do you know the Negotiated Settlement Procedure has been completed under Cambodian law on competition?

Completion of the Negotiated Settlement Procedure will be when a Negotiated Settlement Procedure is deemed to come to an end when it is deemed either a Successful Negotiated Settlement Procedure; or an Unsuccessful Negotiated Settlement Procedure.

In either case, the investigating officer shall make a report on the outcome of the Negotiation Settlement to the CCC. Please note, the CCC has full discretion to make a decision either to accept or to deny the report on the Negotiated Settlement Procedure submitted by the investigating officer or it may also require the investigating officer to reopen the Negotiated Settlement Procedure.
For execution, the CCF shall review and monitor the compliance for fulfillment of conditions as set forth in the decision of the CCC.

What is the law on Formalities of Investigation and Inspection under the Law on Competition

This was originally passed on the 4th November 2022 under the Cambodian law on competition, in order to set out the investigation procedures on the competition offenses (“Offenses”) that prevent, restrict, or distort competition. This comes in forms of

1. Horizontal Agreement, which is an agreement between the business operators at the same level in production and distribution chains
2. Vertical Agreement, which is made between the business operators at the different level in production and distribution chains
3. Abuses of dominant position refers to any person using its dominant market position to significantly prevent, restrict or distort competition in a Market
4. Business Combination that has the effect of significantly preventing, restricting or distorting competition.

What is the Investigation Process under the Cambodian law on competition?

The Process is as follows:

1. Filing of a written complaint: Any person may file a written complaint to the Cambodia Competition Commission (“CCC”) or the complaint may be initiated by the CCC
2. Preliminary Examination:
   a. Upon receipt of a complaint, the Consumer Protection, Competition and Fraud Repression Directorate-General (“CCF”) shall appoint the investigating officers to commence the preliminary examination to determine whether or not the reported agreement or activity has reasonable grounds of suspicious for any Offense.
   b. Upon completion of the preliminary examination, the investigating officers shall provide a written report for the CCC to issue a preliminary decision on the opening of the full investigation.
3. Commencement and completion of the investigation:
   a. After the issuance of the decision to conduct the full investigation, the CCC shall establish a committee to examine and investigate on the case through deliberating, interrogating, and hearing.
   b. Upon the completion of investigation, the investigating officers shall provide a written report to the responsible committee to formulate a final report with recommendations to the CCC for issuing the decision.
   Rights and Obligations of Investigating Officer
4. The investigating officer as the judicial police shall have the rights to request for information, to summon, to enter into the premise for search, to seal on exhibits, and to request for cooperation from any competent authority.
5. The investigating officer shall have the obligations to keep all confidential information, maintain seized exhibits, return the seized exhibits, disclose his or her identity and the purpose of the investigation.
   Rights of Person under Investigation

The person under investigation has rights to submit statement of defence and cooperate with the investigating officers for performing the investigation by not destroying any document or refusing to address the questions or avoiding of doing any actions. Otherwise, the person under investigation shall be responsible for any criminal liability.

If you want any more information, view our free-to-use library of laws section on our platform or get in contact with our team today.

The Law on Competition in Cambodia, known as “LOC”, was promulgated on 05 October 2021, to govern any activities that prevent, restrict or distort competition through establishing and determining the authority of Cambodia Competition Commission (“CCC”) aiming at encouraging fair and honest business relations, increasing economic efficiency, encouraging new businesses, and helping consumers to access to high-quality, low-cost, diverse and versatile products and services. In this article we cover the key main points that the law covers, what needs to be done to adhere to the law and what consequences will be faced if it is not adhered too.

The detail of the Law on Competition in Cambodia can be found below. Find out more about law in Cambodia in our full library here, or contact us for more specific enquiries.

What is the definition and scope of the law on competition in Cambodia?

Competition means any acts carried out by any person operating the business in the market to get a greater number of customers, who consume by purchasing their goods and services, market share and market dominance.

This law applies to all persons conducting business activities, or any supporting business activities, which significantly prevent, restrict or distort competition in the market in the Kingdom of Cambodia regardless of whether the activities take place inside or outside the territory of the Kingdom of Cambodia.

The penalties under the law on competition are as follows:

• Written warnings;
• Suspension,
• Revocation or withdrawal of business licenses;
• Monitories fines and
• Imprisonment
• and more, depending on the court ruling

What is a prohibited action under the law on competition in Cambodia?

Any action that are considered to restrict, restrain or distort competition shall be prohibited and it consists of the three types of activities as follows:

• Any type of agreement, either horizontal or vertical, on (i) fixing, controlling or maintaining the price of goods or services, (ii) preventing, restricting or limiting the quantity, type, developments of goods and services, (iii) allocating geographic areas between competitors and customers between competitors; and (iv) favoring one bidder in bids for a contract in private procurement (v) requiring a purchaser to resell purchased goods or services only within a defined geographic area, only to specified customers or specified categories of customers etc.;
• Any unlawful activities on dominant position in a market which includes (i) the requiring or inducing a supplier or customer not to deal with a competitor; (ii) refusing to supply goods or services to a competitor; (iii) selling goods or services on the condition that the purchaser purchases separate goods or services unrelated to the object of the contract; and (iv) selling goods or services below the cost of production etc.; and
• Any business combination which has or may have the effect of significantly preventing, restricting or distorting competition in a Market as may be determined by the CCC.

What are the exemptions under the law on competition in Cambodia?

The law on competition in Cambodia provides certain rules and conditions for the exemption by considering to the (i) significant identifiable technological, economic or social benefits; (ii) benefits significantly outweigh the effects caused by preventing, restricting, and distorting competitions; and (iii) non elimination of the competition on any important aspects of goods or services etc.

Who is in charge of the law on competition in Cambodia?

The CCC, led by the Minister of Commerce, with the involvement of other relevant ministries and the Directorate General in charge of competition (“Directorate”), shall be competent to initiate or to accept any complaint on any violation of the LOC, and to decide on the matter based on the investigation result produced by the investigating officer of the Directorate.

Find out more about law in Cambodia in our full library here, or try our trusted business consultancy partners RHTLaw.

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!

Here in part 2, we focus on the current law on business and investment in Cambodia, including applications, processes, legal requirements and more, courtesy of legal experts RHTLaw.

In the previous article, we covered information regarding business setup in Cambodia, which you can view here. This included information on types of companies which can be established, representatives offices, VAT & Patents, foreign ownerships, disputes and 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 is the current law on business and investment in Cambodia?

Cambodia has made a significant improvement in its regulatory environment in the area of investment. In late 2022, the new Law on Investment was promulgated bringing a more investor-friendly regulation into place. This new law reduces the complexity of investment project applications by reducing the period of issuance of a Certificate of Registration to 20 days, creating the online application, and so on.

Upon receiving the Certificate of Registration from CDC as a Qualified Investment Project (QIP), the investor may receive up to 9 years of tax holiday along with 6 more years gradual period, or the special depreciation. In addition to these incentives, the investor will also receive full import duties, export tax exceptions, and some other incentives such as the use of foreign labor, and so on. Moreover, investment projects in Special Economic Zones (SEZ) are also entitled to the same incentives as QIPs on customs duty and tax and other special benefits. The following are the questions that are commonly asked when it comes to investment in Cambodia.

What is a Qualified Investment Project in Cambodia?

Under new law on business and investment in Cambodia, a QIP is defined as an investment project which has received a registration certificate from the Council for the Development of Cambodia (CDC) or a Municipal-Provincial Investment Sub-Committee. QIP is issued to a project, not to an investor or investing enterprise. QIP is entitled to certain investment incentives, one of which is tax exemption or special depreciation.

What are the dispute settlement mechanisms for foreign investments?

The law on business and investment in Cambodia, which is handled by the royal government, has dispute settlement procedures for disputes between investors or investors related to the investment project except for land-related disputes. 30 (thirty) days upon the written request from the investors to CDC or Municipal-Provincial Investment Sub-committees, either authority shall arrange the reconciliation for the investors and the relevant stakeholders in order to find a suitable solution in accordance with the existing procedure. In the event that the reconciliation is not successful, the dispute shall be settled by national or international arbitration with the consents of the dispute parties, or the relevant courts of the Kingdom of Cambodia.

 Are there any taxes in Cambodia levied on profits?

Yes, there are tax incentives in Cambodia for qualifying businesses. A QIP (or Qualified Investment Project) is entitled to exemption from tax on profit imposed under the Law on Taxation by obtaining a profit tax exemption for a period of time. Tax holiday period may be varied depending on the size of the investment capital and is available for up to a maximum of 9 years.

After the expiration of the exception period, the QIPs are entitled to a gradual phase of the percentage of Tax on Income for the next 6 (six) years from 20%, 50%, and 75% increase every two years respectively in accordance with the new investment law. This tax exemption or tax holiday consists of a Trigger Period (commencing from when the company first gains its income or profit, which is sooner) plus a Priority Period (varies on the size of investment capital which is determined by the Law on Financial Management) and 3 years automatic exemption. These are the current law on business and investment in Cambodia.

Is profit tax exemption the only incentive option in law on business and investment in Cambodia?

Special depreciation is enshrined in law in Cambodia. Under Cambodian investment law, it provides a second option to investment incentive, which is the deduction of capital expenditure via special depreciation. It consists of the eligibility of deducting up to 200% of specific expenses incurred for up to 9 years. However, the detailed sector, specific expense, and the deduction period shall be determined by the Law on Financial Management and/or sub-degree.

Which agencies are involved in administering investment applications in Cambodia?

Council for the Development of Cambodia (CDC) Cambodian Law on Investment established the Council for the Development of Cambodia as an executive body acting as the “Etat-Major” and One Stop Service of the Royal Government of Cambodia to oversee and manage the private investment and special economic zone. Moreover, in order to enhance the effectiveness of public service rendered to the investor, the Law on investment also creates Municipal-Provincial Investment Sub-Committees which the power of the CDC is delegated to administer investment applications via the sub-degree.

Who has the authority to grant investment incentives in Cambodia?

Below is all of the regulatory authorities in Cambodia that grant or are involved with investment incentives under the law on business and investment in Cambodia.

• The Cambodian Investment Board and Cambodian Special Economic Zone Board

The Cambodian Investment Board (CIB) and the Cambodian Special Economic Zone Board (CSEZB) is the CDC’s operational arms for private sector investment. CIB deals with investment projects out of special economic zones (SEZs) and CSEZB takes charge of the investment projects in SEZs. They review investment applications and grant incentives to investment projects meeting the requirements set forth in the Investment Law and regulations, which streamlined the foreign investment regime and provided generous and competitive incentives for direct private sector investment.

What is the timetable for processing applications for Investment in Cambodia?

This depends on the timelines of Investment Application. Upon the receipt of the investment project applications either by hand or online, CDC shall review and make the decision on the application through the One Stop Service mechanism. The new Law on investment eliminated the a complicated procedure such as the issuance of Conditional Registration Certificate for example.

The new law requires CDC to decide on the application within 20 working days upon receipt of such an application. If the application satisfied the conditions, CDC shall issue the Registration Certificate (RC) within that period. However, even the investment project that receives RC can be implemented automatically, which does not exempt that project from receiving permits or approval from the relevant ministries or institutions as required by the law and regulations.

Are there any special services for expediting applications?

The CDC offers a “One-Stop-Service” for investment in Cambodia. Through its executive arm, the Cambodia Investment Board (CIB), CDC is responsible for the processing of applications for investment projects. As such, the government is fully committed to expediting applications for new investment projects.

What are the procedures for investment applications?

The procedure of investment applications under the new law is simplified as the following:

• The Investor must submit the investment project application directly to CDC or Provincial/Municipal Investment Sub-committee (PMIS) or via an online portal.
• The investment application shall be reviewed and decided via a One-Stop-Service mechanism which is conducted by the representatives of the ministries or institutions seconded to the CDC according to the appointment and assignment of authority from the head of relevant ministries and institutions under the coordination of the CDC.
• CDC shall issue the Certificate of Registration within 20 working days of the receipt of the application. The date of issuance of the CR shall be the commencement date of the QIP. However, CR does not exempt that project from receiving permits or approval from the relevant ministries or institutions as required by the law and regulations.

Who deals with the establishment of business in Cambodia?

The establishment of a business in Cambodia is governed by the Law on Commercial Enterprise, Law on Commercial Rules, and Register and regulated by the Ministry of Commerce. For more information on law on business and investment in Cambodia contact us today! Or find out more about RHTLaw here.

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We have teamed up with legal experts RHTLaw to deliver a three-part series discussing key Cambodian business and investment laws and regulations surrounding business and investment in Cambodia in 2023.

Here in Part 1, you will find everything you need to know about the current law on business in Cambodia, including application, set-up, tax incentives on investment and businesses, foreign ownership laws and regulations and more.

For further advisory information regarding anything involving business within Cambodia, you can contact the in-market experts AquariiBD here. This information is courtesy of the legal experts at RHTLaw.

Who deals with the establishment of business in Cambodia?

The establishment of a business in Cambodia is governed by the Law on Commercial Enterprise, Law on Commercial Rules, and Register and regulated by the Ministry of Commerce.

 What types of companies can be established under Cambodian law?

Cambodian Law on Commercial Enterprise allows for the establishment of the following types of companies: sole proprietorship, partnership, limited liability Companies, and foreign business entities. The partnership includes general partnership and limited partnership. The limited liability companies comprise private limited liability companies and public limited companies, whiles the foreign business entities include representative offices, branch offices, and subsidiaries. Cambodian Law on Investment also offers a type of company called Investment Project which includes qualified investment projects (QIP), expanded qualified investment projects, and guaranteed investment projects.

Are foreign companies interested in investing in Cambodia required to have company addresses in the preparation stage of establishing the business?

Yes, since foreign companies and local companies are subjected to the same provision of business registration, foreign companies shall specify a location of their business in Cambodia in the Memorandum and Articles of

Association. The requirement can be satisfied by entering into a lease or through shareholder contribution.

Can a foreign company open a Representative Office in Cambodia?

According to Cambodian business and investment law, foreign companies may open representative offices upon approval from the Commercial Registration Bureau at the Ministry of Commerce (MOC) except where a Commercial Registration Branch is available in their provinces.

What documents are required to establish a branch of a foreign company in Cambodia?

All foreign branches may request approval from the Business Registration Bureau at the Ministry of Commerce except where a Commercial Registration Branch is available in their provinces by submitting the following documents:

• Application Form E (3 sets include 2 originals and 1 copy),
• Certified true copy of the Articles of Incorporation of the holding company (1 set),
• Certified true copy of the certificate of incorporation of the holding company (2 sets),
• Photographs (4×6 cm) of the director or manager (3 photos),
• Letter of appointment by the holding company appointing its director or manager of the local branch (1 original),
• Copies of the passport or ID of the director or manager with his/her original signature (3 copies).

Does a registered company need to obtain VAT and a Patent?

It is only after receiving a stamped Memorandum of Articles of Association and Certificate of Incorporation that registered companies can proceed to the Tax Department for VAT and Patent (business) registration. Patents are registered following 15 days after the date of incorporation.

Does a registered company need to obtain VAT and a Patent?

It is possible to assign a license, but the owner must receive approval from the Ministry of Commerce and the Tax Department by filing a request. Specialized licenses may also need prior approval from the relevant ministries or government institutions.

What is the minimum price to purchase shares in a limited company?

According to Cambodian business and investment law, the new amendment of the Law on Commercial Enterprises removed the minimum price to purchase shares in a limited company. Accordingly, there is no minimum price requirement for the share value in Cambodia.

Can foreigners own 100% of the share, or are they required to have a Cambodian partner?

Foreigners can own 100% of the share in a Cambodian commercial company. However, it shall be considered a foreign company if less than 51% of the share of the company is held by a Cambodian. The nationality of the company is critical for land ownership in Cambodia since there are restrictions for foreigners to own land in the Kingdom.

Does a company have to file an annual declaration?

All companies are required to file an Annual Declaration of Commercial Enterprise (ADCE) to the Ministry of Commerce using its online system. In the annual declaration, each partnership or company is required to report changes to any of the items of information. The submission of an ADCE via on online system is compulsory and must be filed no later than three months from the anniversary of its business registration date. The failure to comply with such an obligation will be subjected to KHR 2 million (around USD 500), according to Cambodian business and investment law.

When can a company dissolute in Cambodia?

A company may be dissolved on its decision by submitting the articles of dissolution to the Ministry of Commerce’s office in charge of company administration in order to receive a certificate of dissolution However, the company that has applied for bankruptcy at the court does not apply under this condition. Currently, the commercial court is being established in Cambodia

Does Cambodian business and investment law accommodate foreign business ownership and investment?

Managing Partner at RHTLaw Mr. Houn Vannak said Cambodia has a business-friendly legal framework and regulations which allow both local and foreign investor to enjoy her market potential and investment opportunities in Cambodia.

“Cambodia’s new Law on Investment provides a roadmap for investor to acquire various investment incentives and enables Cambodia to become an open, transparent, and conducive investment destination for local and foreign investors.

“This is possible because of the shortening of the application period, as well as through making administrative and institutional mechanism more convenient for investors with the introduction of the online portal services where investment applications may be submitted through information technology platform.”

How does Cambodian business and investment law attract foreign investment?

Mr. Vannak said that Cambodia is on the path of investment diversification. It is an opportunity for investor to enter Cambodian market to enjoy the benefit of investment incentives and investment protection.

“The current regulatory frameworks concerning investment in Cambodia are expected to enhance the Kingdom’s competitiveness and attractiveness, modernization, economic diversification, private sector development, and improving the post-Covid-19 recovery.”

Part two of this three-part business and investment law series will be released next week on the AquariiBD platform.

A Business Law Conclave event was held at the start of 2023 by the American Chamber of Commerce in Cambodia to highlight and discuss the key developments for new legal legislation and regulation relevant to businesses operating in the Kingdom.

This article covers the key questions answered at the event. If you want to know more about laws relevant to business in Cambodia or more important insights into the Kingdom’s business sphere, you can view our services or contact us directly here to use our broad network of in-market contacts and expertise.

What do leading figures in Cambodia say about the importance of new law regulations?

H.E Chiv Songhak, Secretary of State at the Ministry of Justice, said Cambodia has taken the opportunity through the pandemic of turning a negative into a positive. In 2021, the government introduced a new investment law, providing more incentives for foreign investment.

“We have also promoted the implementation of key policy documents, in areas such as electronics, tourism, energy, and agriculture. We have also become involved in the RCEP and increased our trade with FTAs with China & Korea, among others. These have required important new laws and their implementation will be key to the further development of our country.”

“In the last two decades prior to COVID-19, Cambodia achieved an average growth rate of over 7 percent per year which has transformed the Kingdom. Following COVID, we aim to resume that growth rate in line with our ambitions to be a high-income country by 2050. New laws will help effectively facilitate that growth,” he added.

How has Cambodia taken advantage of its growth with new laws and regulations?

“The royal government has approved a total of over 100 investment projects, meaning over 1 billion in investment, across multiple sectors including infrastructure and tourism. The growth in foreign investment and the relationship between the US and Cambodia have also improved, 4.2 billion USD, an increase of over 50% compared to 2021.”

He said that however, as international trade and investment flow increases, disputes can also escalate, which requires a comprehensive, transparent and fair resolution process.

“We have established a court specifically for international affairs and a corporate committee, with me as chairman. This committee is responsible for preparing all legal documents for the lower and higher courts, organising trade procedures and our action plan and key concepts related to formulating the provision on the procedure.”

“We have raised several proposals for the establishment of a commercial court in PP which will extend across the country for international trade, intellectual property, and so on. There are lots of challenges, such as a lack of human resources, and a lack of current decision-making processes and procedures, which is why we are starting with a single commercial court, which will deal separately with lower and higher-level courts.”

“We aim to expand the commercial courts to be in other provinces, such as in Sihanoukville, where there is a demand for commercial resolutions. However, we will start with one court which will serve the whole country.”

What do foreign chambers of commerce say about laws in Cambodia?

AmCham president, Anthony Galliano, said that they have established a Legal Advocacy Committee because of strong demand from stakeholders to better understand the laws and regulations of the Kingdom of Cambodia.

He said, “Laws which promote economic and social prosperity are critical to a country’s growth, but they are also the foundation of civil, safe, and peaceful society and community.”

What do government advisors say about commercial law in Cambodia?

Speaking about the commercial court, H.E Ly Tayseng, Advisor at the Ministry of Justice, said, the law on commercial arbitration was promulgated in 2006 and a national commercial arbitration centre was established and is still operating.

“Cambodia recognises the regulatory challenges for business due to the lack of an effective dispute resolution mechanism for commercial disputes, and there is a need for establishing more effective dispute resolution systems including a commercial court.”

“Even though the commercial courts were established by the LOC in 2014, they have not yet commenced their operations. This is because, under the LOC, the operation of specialized courts must be made by a Prakas from the Ministry of Justice.”

“We have made progress with the creation of the Commercial Courts Committee (CCC), consisting of sitting judges, senior officials at the MoJ and experienced lawyers. They are currently preparing the legal frameworks necessary for the creation of the court.”

What is the progress on the development of commercial law in Cambodia?

H.E Ly Tayseng, Advisor at the Ministry of Justice, said he is now advising the Ministry of Justice to create an independent commercial court outside/separate from the current system, which will be independent, transparent, fair, efficient, user-friendly and free of corruption.

He said, “We will need to do lots of amendments within the commercial procedure current law, in order to create a separate and independent court. We need to decide what will be defined as a commercial matter, such as bankruptcy, in a common law approach or having a code model.”

Next was a number of presentations followed by a round-table discussion on various topics with key speakers.

What are the new 2023 E-commerce laws in Cambodia?

Mr. Jay Cohen, Partner & Director at Tilleke & Gibbins (Cambodia), started with a presentation on e-commerce and website law.

“All logally registered companies must use a .com.kh domain name and e-mail address, which should be provided to the Moc. However, you still have the right to use other domain names in their commercial operations.”

“Starting from January 2023, all companies must provide the MOC with the above when submitting their annual declaration of commercial enterprise. This can be obtained at www.domain.gov.kh, for automated registration.”

“In addition to creating the .com.kh, you can also get other variations such as org, and so on. The fees are around 100 USD, with annual renewal being 30 USD. This is a reasonable cost, and the validity is a year-long with a 60-day renewal allowance. Your local website can be in any language.”

“Another interesting development is whether your website needs a license or permit, which at the moment you do not need anything for. However, websites are now considered a form of advertisement, which means there is a prohibition on certain things, such as commercial websites affecting national security.”

Regarding e-commerce, he said there has been a big push to regulate e-commerce.

“The two things I want to highlight are the law on e-commerce, in 2021 an application was launched to facilitate applications for this license. This is regulated by two main partis. Firstly, intermediaries, such as telecom services, network services, the internet, online payment systems and so on. Secondly, e-commerce service providers, such as e-commerce platforms and so on.”

“The scope of the e-commerce law is managing e-commerce in Cambodia with other countries. If you’re an overseas company you also fall under these regulations above a certain threshold of business.”

“To license, as a company or brand you need to first go to the MPTC and get an online service provider certificate. Secondly go to the MOC and get and e-commerce license. If you’re a sole propritor, you just need to get a E-commerce authorisation with the mOC”

“Your turnover must be 62,500 USD per year to apply, however, you are obligated to notify the MoC,”

“Regarding tax obligations, important ones are Prakas No. 98, Sub-Decree No. 65, Prakas 542 and instruction No. 2520.”

“Locally incorporated companies just need to register with the GDT. However, if you’re a non-resident then Sub Decree 65 is an aggressive interpretation of e-commerce, so even sending emails can be under e-commerce. Therefore, off-shore companies to non-vat registered person in Cambodia (B2C) you need to pay VAT by the 20^th of each month. B2B would be the responsibility of businesses.

Ms. Sok Vanessa, Managing Partner at Sethalay Law Office, then delivered a presentation on the Prakas on Unfair Contract Clauses, including the types of contracts, procedures for raising a dispute, consumer protection and law on commercial competition.

How has Cambodia updated its laws on advertising in 2023?

The major changes to laws on advertising which came in affect In 2022 were Sub Decree No. 232, on the management of advertising on products and services and Prakas No. 249.”

Mr. Matthew Rendall, Managing Partner at Sok Siphana & Associates. said, “these new regulations/laws mean that every advertiser must get a license to advertise any commercial goods and/or services in Cambodia. You will need a specific license based on the product from the relevant authority, such as for those that advertise alcohol or pharma.”

“These laws are designed to confirm the accuracy and appropriateness of the articles or contents of an advertisement, to make sure they are in compliance with the law on consumer protection and other regulations.”

“There is then a detailed list of actors who can apply for a certificate, and the required documentation, which is a big update on the previous laws surrounding advertising in Cambodia.”

“There are also new obligations for advertisements with rewards, under Sub Decree 232. You will need further permission before you run your ad.”

What are the new laws for using Khmer language in advertising in Cambodia?

As per new laws in Cambodia, from 2023 advertisements must now be in Khmer language or dual language, and the Khmer has to be double the size of the foreign language and placed above any foreign script. Websites do not come under this rule.

“Sub-Decree 232, article 17, also delivered a list of new prohibited content for advertising, such as saying your product is the best or anything to that effect, anything that adversely affects the historical values of the country,” said Mr. Matthew Rendall, Managing Partner at Sok Siphana & Associates.

“Article 19 of the same sub-decree outlines penalties, which at worse could end up in the cancellation of your business. However, compliance certificates will offer protection against these circumstances.”

Do you need a license or certificate to advertise in Cambodia?

Companies that advertise products or services must obtain advertising licenses, and you may apply for a certificate of compliance from the Ministry of Commerce.

“You need to use the Khmer language at all times except for foreign literature that is unable to be replaced by Khmer. Additional regulations apply for adverts with added value, such as getting something for free with the advert.”

“One big issue for the ministry is the placement for the advert. If I am advertising an event on Facebook do I need to go to the MoC or is it Facebook’s responsibility? You need to be careful that your advertisement doesn’t break any of the new regulations. The current understanding is that you are not an advertiser by posting an online advert. This is not clear, especially regarding enforcement, but the law has been made to be followed,” he added.

What are the updates on contract law in Cambodia?

In Cambodia, there has recently been an Prakas on Unfair Contract Term. Speaking at a recent law conference in Cambodia, Managing partner at Sethalay Law Office Ms. Sok Vanseka said the law requires the business operators not to put any unfair contract clause in their standard form of contract based on the abuse of circumstances that the consumers cannot negotiate or request for making any change on such form of contract.

She said that the unfair contract clause consists of any clause that provides an excessive advantage to the business operators or provides an excessive disadvantage to the consumers.

“Furthermore, such standard form of contract shall be prepared in the Khmer language in a clear and precise manner as the consumers may demand further explanation on terms and any change on material terms shall be subject to prior consent from the consumers.”

What is the new cooling off period concerning contact law in Cambodia?

Ms. Sok Vanseka also highlighted new ‘Cooling Off Period’ regulations, which mandates the business operator to grant the right to the consumers to return any goods and services (except for certain goods and services as excluded by the Prakas) in 7 days upon receipt without any justification for any distance sales or door-to-door sales of goods and services.

Also mentioned were the enactment of the new law on food safety and the Prakas on Minimum Information Standard, which permits of the use of QR codes for complying with the labeling requirements. Finally, she highlighted the recent issuance of regulations on investigation and negotiated settlement under the Law on Competition on any horizontal agreement, vertical agreement, market dominance, and merger and acquisition that negatively impact competition in Cambodia.

How do I find out more about new laws in Cambodia?

You can stay up to date with new laws in the Kingdom with Aquarii, through our business resources section or on individual laws in our library of laws section, both right here on our website.
We also recommend using our trusted law partners, RHTLaw, for more detailed enquiries regarding all laws and regulations in the Kingdom, to make sure your business or investment is protected.
To find out more about Aquarii, get in touch with one of our team here, today!

This market insight piece is designed to give an up-to-date overview of Cambodia’s logistics and distributions sector, along with the opportunities and challenges for investors in Cambodia in 2023.

It also includes valuable contributions from leading distributions company Speedwind Distributions, which are provided by Chairman & Founder of multi-award-winning company, Mr. Dalton Wong.

To find out more about investing or doing business in Cambodia, you can view AquariiBD’s extensive services here, or contact one of our team who will be happy to discuss further.

How important is the logistics sector for the development of Cambodia?

According to the World Bank, well-developed logistics networks contribute significantly to GDP and affect most aspects of economic activity. Productivity and growth are fundamental to each other. As a result, the logistics sector has played and will continue to play a hugely important role in Cambodia’s development.

In order to strengthen ASEAN’s economy, ASEAN adopted a Master Plan on ASEAN Connectivity 2025, which emphasized connectivity and logistics, a more efficient supply chain and enhanced trade routes will enhance competitiveness. The freight transportation sector plays an important role in enhancing the economy as a major component of the logistics sector

Aiming to promote consumer welfare while promoting economic growth. Inter-country and cross-border freight movements improves the integration of national and international markets, fostering competition and specialisation. It can also aid development by connecting remote regions to centres of economic activity and by allowing consumers to benefit from a wider variety of products and services, while spreading technological advancements across the country and internationally.

Similar to other South East Asian countries, Cambodia is suffering from the socio-economic impact of the COVID-19 outbreak. The pandemic has resulted in the disruption of supply chains and limited the flows of trade and investments. Logistics companies have been affected by operational constraints and are facing financial distress. According to the Cambodia Freight Forwarders Association (CAMFFA), about 10 to 15% of logistics providers were heading for bankruptcy as of June 2020.

How does Cambodia’s logistics sector rank globally?

In terms of overall logistics performance, Cambodia ranked 98 out of 160 in the World Bank’s Global Logistics Performance Index.

Logistics costs over sales in Cambodia were estimated at 20.5% in 2018, higher than some ASEAN countries, such as Thailand and Vietnam, and the global average of 10-12%.

How developed is the logistics sector in Cambodia?

The most recent report has stated that the transportation and storage market in Cambodia was worth over USD 2.1 billion, representing some 7.8% of the country’s economy.

The report said that currently, the Cambodian logistics sector is largely dominated by road freight transport, with the number of registered trucks doubling between 2008 and 2016. However, despite significant investment and improvements in recent years, it is reported that Cambodia’s transport infrastructure still lacks operational capacity in terms of both quantity and quality.

How have companies evolved in the logistics and distribution sector in Cambodia over the years?

Speaking from his experience, Mr. Dalton Wong said, “we were involved in the distribution business for many years under different names prior to my company. SpeedWind was created to consolidate all of the knowledge we had learned and standardize high-efficiency processes across a nationwide distribution company and network capable of delivering inbound or outbound distribution competitively.”

Dalton Wong said investment in staff and supply chain structure has caused an evolution in the distribution sector.

“Over the past 10 years, we had seen the logistics/distribution sector evolve from a purely traditional pickup-and-drop system to that a very structured system involving many players in the market. In the past, because of a lack of exposure, talent, and availability of technology in the market, the availability of reliable delivery and distribution services in the Kingdom was very limited. As a result, the service standards were very low and the costs of distribution were relatively high, leading to all-around inefficiency.”

“However, throughout the years, many companies have taken steps to change this through investment and perseverance. At Speedwind, we began by inventing and investing in the technology the sector needed to reduce inefficiency and bring down the cost of delivering our services. We also brought in foreign talent and trained our local talent to optimize our operational capacity and with that pioneered the proper implementation of best practices in HR. As a result, we began to see standards in the supply chain get a lot better and today the sector is getting very close to what developed country consumers enjoy abroad.”

What do logistics companies in Cambodia need to do to improve?

Mr. Dalton Wong said while factors such as the emerging importance of the internet and unplanned pandemics like COVID-19 bring the need for innovation and introducing new ways of working, the core of a distribution company will always be its people and technology.

“Therefore, we recognize the need to invest in these as key pillars to ensure our success. A successful distribution company means all the employees work in a cohesive manner, doing the correct thing at the right time with the right system,” he added.

What are the key challenges in Cambodia for the distribution sector?

Distributions are part of supply chain management, which is essentially the flow of supplies from a starting point to the destination. A successful distribution company is able to distribute from a start point to a destination in the fastest and most cost-efficient way. This was made difficult as in the past there was a constant factor of uncertainties, such as unreliable payment methods, lack of suitable transportation, inaccurate delivery addresses, and the security of the cargo whilst on route.

Cambodia’s Government has been instrumental in helping improve the above challenges, such as by ensuring the availability of internet in all the provinces and introducing new roads and highways that connect major destinations and trade routes directly. The government, as well as the fast-moving banking system, have also helped by investing in technology and delivering services that allow payments and refunds to be made across provinces with just the push of a button. Now, together with investment from companies in their own operations, distribution services are offering better value and faster services than ever in the Kingdom.

The next major challenge will be merging more with e-commerce platforms, who should always consider the e-logistics and e-payment solutions required. While Cambodia is still in the process of developing its logistics sector, especially for the country’s rural areas and last-mile delivery service, online stores also need to ensure their digital payment services are properly integrated into the overall ecosystem.

What is the GDP from the logistics sector in Cambodia?

GDP from the transportation and storage sector amounted to KHR 8 618 billion in 2019.

This number has constantly been increasing which means that the transportation and storage sector will represent above 8% of the country’s economy in 2020, with many expecting it to reach 10% over the next few years.

A report by the World Bank said that the logistics costs over sales in Cambodia were estimated at 20.5 percent, transport at 9 percent, warehousing at just under 4 percent, inventory carrying at a flat 6 percent and logistics administration at just under 2 percent.

What are the relative cost of logistics in Cambodia compared to other ASEAN countries?

Compared to some countries in South East Asia, namely Thailand and Vietnam, costs are higher. That said, Cambodia’s logistics costs are lower than others, including the Philippines and Indonesia, with informal logistics charges levied by government agencies remain significant, estimated at about 48% of the logistics administration cost, according to the World Bank. This is when compared to the global average of 10-12 percent.

What is the most common method of logistics in Cambodia?

The main mode of transportation in Cambodia is Road transport. It is estimated that the share of road transportation for both passengers and freight represents around 90%. Cambodia’s road network covers 61 543 kilometres, including 2 254 kilometres of national paved roads, 5 007 kilometres of inland national roads, of which 72% are paved, and 9 031 kilometres of provincial roads, of

which only 30% are paved. The remaining 45 242 kilometres are rural roads, of which only 5% are paved. The number of registered trucks more than doubled between 2008 and 2016.

What are the other modes of logistical transportation in Cambodia?

Water transport represents a small proportion of the freight transportation sector in Cambodia. That said, it is

still an important element for the country’s local economy and exports. Cambodia has two international ports – Phnom Penh Autonomous Port (PPAP) and Sihanoukville Autonomous Port (SAP) waterways for freight and passenger traffic.

SAP is the only deep-water seaport in Cambodia and in 2018 recorded container throughput of 541 228 TEUs. While not being a deep-water seaport, the import-export volume through PPAP in 2018 was higher than that of SAP.37 The volume handled by both ports recorded solid growth in 2019 where SAP handled 633 099 TEUs and PPAP handled 275 000 TEUs.

Rail transport for passenger and freight is minuscule in Cambodia compared to street transport. Cambodia’s rail network covers around 640km, which includes the two main routes, namely the Northern line, which connects Phnom Penh

to the Thai border Battambang and finishes at Poi Pet (on the Thai border). The Southern line connect  Phnom Penh to the port of Sihanoukville.

What are the recommendations for improving the logistics sector in Cambodia?

A report in 2019 said that in order to contribute to the continued improved efficiency of the logistics services sector in Cambodia, 30 recommendations on specific legal provisions should be reviewed, amended or removed. The main recommendations are summarised below:

• Road freight transport: In relation to a so-called multi-manning requirement whereby freight transport vehicles with a total weight of more than 16 tonnes must have a driver and an assistant driver, consider offering additional options to ensure road safety, such as appropriate rest requirements for the driver, so that transport operators can select the most suitable approach.
• Maritime freight transport: Consider the advantages and disadvantages of the provision of port services by private entities. If a policy decision was made in favour of private involvement in the provision of port services, create appropriate legal frameworks so that the provision of port services could be tendered based on fair, transparent and non-discriminatory terms to guarantee competition for the market.
• Competition: In cases where competition is limited, limit price regulation to the regulation of maximum prices, not minimum prices for port services. Maximum prices should be regularly revised to ensure they remain in line with market dynamics and provide the necessary incentives for innovation and investment. Registration amendments: The report said that the authorities should remove or limit the discretion of the decision maker in the vessel registration process. If discretion is maintained, publish guidelines on the exercise of this discretion.
• Improve understanding: Ensure applicants have the right to reasons to understand the basis for the decision. In relation to the business license for international transport, clarify the meaning of “single purpose” and any geographical restriction.
• Consider removing the requirement to stipulate a single destination and business objective in the licensing process and the requirement to obtain a second business license. In relation to vessel repairs, limit ex-ante approval and ex-post-inspection to significant renovations, not day-to-day repairs.
• Small-package delivery services • Amend legislation to remove any ability to regulate the rates of small package delivery services (SPDS). The legislation should reflect current practices where there is no price regulation of SPDS and where SPDS providers are free to set their own prices. •
• Clarify the Postal Law to ensure that the monopoly does not include small package delivery services (i.e. courier services). International agreements • Where international agreements contain provisions that limit the number of operators or vehicles that can provide cross-border transport in Cambodia, the OECD makes two recommendations. First, remove these restrictive provisions setting quotas and replace them with a licensing system.
• The licensing criteria should be clearly defined in the international agreement or implementing laws or regulations. Second, assess market need and demand everyone to three years, and consider adapting the number of licenses that can be issued. Both these recommendations would require negotiations between signatory countries.”

• Road freight transport: In relation to a so-called multi-manning requirement whereby freight transport vehicles with a total weight of more than 16 tonnes must have a driver and an assistant driver, consider offering additional options to ensure road safety, such as appropriate rest requirements for the driver, so that transport operators can select the most suitable approach.
• Maritime freight transport: Consider the advantages and disadvantages of the provision of port services by private entities. If a policy decision was made in favour of private involvement in the provision of port services, create appropriate legal frameworks so that the provision of port services could be tendered based on fair, transparent and non-discriminatory terms to guarantee competition for the market.
• Competition: In cases where competition is limited, limit price regulation to the regulation of maximum prices, not minimum prices for port services. Maximum prices should be regularly revised to ensure they remain in line with market dynamics and provide the necessary incentives for innovation and investment.
• Registration amendments: The report said that the authorities should remove or limit the discretion of the decision maker in the vessel registration process. If discretion is maintained, publish guidelines on the exercise of this discretion.
• Improve understanding: Ensure applicants have the right to reasons to understand the basis for the decision. In relation to the business license for international transport, clarify the meaning of “single purpose” and any geographical restriction.
• Consider removing the requirement to stipulate a single destination and business objective in the licensing process and the requirement to obtain a second business license. In relation to vessel repairs, limit ex-ante approval and ex-post-inspection to significant renovations, not day-to-day repairs.
• Small-package delivery services • Amend legislation to remove any ability to regulate the rates of small package delivery services (SPDS). The legislation should reflect current practices where there is no price regulation of SPDS and where SPDS providers are free to set their own prices. •
• Clarify the Postal Law to ensure that the monopoly does not include small package delivery services (i.e. courier services). International agreements • Where international agreements contain provisions that limit the number of operators or vehicles that can provide cross-border transport in Cambodia, the OECD makes two recommendations. First, remove these restrictive provisions setting quotas and replace them with a licensing system.
• The licensing criteria should be clearly defined in the international agreement or implementing laws or regulations. Second, assess market need and demand everyone to three years, and consider adapting the number of licenses that can be issued. Both these recommendations would require negotiations between signatory countries.”
  
  

Why should I invest in Cambodia in 2023?

The post-COVID era and the transition to 2023, despite a gloomy economic outlook, have seen investors searching for the who, what, and where when it comes to smart investment in the ASEAN region. While Cambodia’s recovery has been slow and steady, we talk through the reasons why Cambodia is still a rising giant in the region and what the good news is for businesses looking into the Kingdom.

As always, you can find the latest business and investment news from Cambodia’s leading in-market consultancy on our social media, by viewing our partnership services or getting in touch with one of our team to see how we can facilitate your business ambitions.

Content:

• Should I invest in Cambodia in 2023?
• How is Cambodia growing in 2023?
• Which laws are helping people invest in Cambodia in 2023?
• Why should I begin investing in Cambodia in 2023?
• What are some things to consider when investing in Cambodia in 2023?
• How has the garment industry improved in 2023?
• Will Cambodia become an Asian Tiger in 2023?
• How will foreign talent aid Cambodian development and attract investment?
• Do I need to get citizenship to invest in Cambodia?

Should I invest in Cambodia in 2023?

Cambodia still has a multitude of factors in its favour for business and investment, including a strong labor protection regime, favorable visa conditions, a young and eager workforce, solid laws and regulations surrounding investment – including tax incentives on investments in key sectors – notwithstanding a welcoming attitude towards foreigner talent and investment.

Indeed, despite the adverse effects of COVID-19, Cambodia remains a top-emerging economy in South East Asia. Now, with the pandemic largely behind, Cambodia is looking to regain its position as one of the fastest-growing economies in the region and resume the average 7% GDP pre-pandemic annual growth levels.

The World Bank (WB) estimated that economic growth in Cambodia will be around 4.8 percent at the end of 2022, helped by a rebound in tourism.

A report by WB said that Cambodia’s garment industry, travel goods, and footwear exports have also been resilient through the pandemic, further aiding the country’s economy.

It reported that “The services sector, especially travel and tourism, has done well since the introduction of the “Living with COVID-19” strategy in late 2021, and total international visitor arrivals have steadily increased, reaching 1.2 million in the first nine months of 2022.  Business and consumer confidence have risen and both domestic and foreign investments have increased.”

For this reason, many are looking to invest in Cambodia or set up businesses in Cambodia. In this article, we explore some of the favorable reasons for investing in Cambodia and cover some of the key sectors which will see exponential growth over the next 5 to 10 years, as the Kingdom aims for lower middle-income country status.

How is Cambodia growing in 2023?

Cambodia continues to be boosted by those who invest in Cambodia. Cambodia owes a considerable amount of its economic growth to Foreign Direct Investments (FDI), which have been flowing into the country over the last 10 years. In fact, FDI has increased by more than 800% in this period, which reached record GDP – some $3 billion US dollars in 2018 – before the pandemic temporarily halted the Kingdom’s march forward.

Indeed, between mid-1994 and the end-2021 inflows of FDI amounted to 168.8 trillion riels ($41.0 billion US Dollars), with the Greater China area remaining the Kingdom’s top source.

However, Cambodia saw a surge in new projects outside special economic zones (SEZ) approved by the Council for the Development of Cambodia (CDC) in January-October 2022 compared to the same period in the previous year due to the new investment law and international market access under the trade pacts, with the projects generating around 100,000 new jobs for local people.

The CDC issued final registration certificates for 116 new non-SEZ private investment projects in the ten months of this year, an increase of 24 projects year-on-year, the Ministry of Economy and Finance’s Socio-Economic Trends reported.

In the first 10 months of 2022, the investment situation showed a real improvement, with a total of 116 private investment projects, an increase of 24 projects, and a total investment of $2,758 million, an increase of 136.6 per cent compared to the same period last year.

This is not to mention that Cambodia is capable of producing about 45GWs of power and currently it’s producing 450MWs – that’s not even 0.1% of total capacity.

Cambodia also recently signed a cooperation deal with Singapore to act as a transmission hub for green energy from Laos to the city-state which could presage the country becoming a solar energy exporter.

Which laws are helping people invest in Cambodia in 2023?

When investing in Cambodia, it’s important to learn as much as possible about investment rules and also Qualified Investment Projects (QIPs). Make sure you keep up with the Aquarii website and social media channels for the latest developments.

These QIPs mean that registered foreign companies that qualify can enjoy tax exemptions or special tax depreciations for their business. Some of these benefits are outlined below:

• Special Tax Depreciation: This is equivalent to 40% of the production materials, should a business quality for QIP status.
• Tax exemption: Foreign investors are eligible for a tax holiday of 3 years. The holiday starts when they receive a Final Registration Certificate. They also need to register with the Council for the Development of Cambodia.
• Ongoing tax exemptions: After the 3 years tax holiday, there is another 3 years priority period. This is another 3-year exemption. Duration depends on the type of project and invested capital.
• Special Economic Zones (SEZs): These zones are built around the country. SEZs have special privileges for industries that bring in FDI. These zones have privileges like an additional budget for infrastructure and public works. There are also stationed government officials that provide immediate help if needed.

To read more about business and investment law in Cambodia, view our free library of laws section here.

Why should I begin investing in Cambodia in 2023?

Compared to other neighboring countries in the region, investing in Cambodia is relatively straightforward.

There is a track record for Cambodia in its development, undergoing rapid development since achieving political stability in the 1990s and recording record levels of GDP growth year on year throughout the 2010s. The government is firmly behind this development and has a range of strategies that plan for 2030 and beyond, with key laws created to benefit foreigners who bring capital into Cambodia.

In 2022, Cambodia has also made key trade pacts with countries which will see more investment in Cambodia. The Regional Comprehensive Economic Partnership free trade pact and bilateral free trade agreements are among the key factors attracting foreign direct investment to Cambodia, a senior official says.

In addition to the RCEP free trade agreement Cambodia has bilateral free trade agreements with China and South Korea, and “these pacts are a factor for the attraction of investments to our country.

China has also pledged to increase trade between the two countries further, with the pair committing to increasing bilateral trade to $10 billion by 2023, from $8 billion, according to the Cambodian Ministry of Commerce

The Council for the Development of Cambodia (CDC) also announced in 2022 that it had approved final registration certificates for 10 investment projects across various sectors worth a staggering total of nearly $1.90 billion and expected to create 7,014 jobs.

It also has exciting prospects for powering itself through renewable, clean energy going forward which could see it become an energy exporter in the region.

Cambodia also has a welcoming attitude towards foreigners and foreign investment and garnering foreign investment in Cambodia is very much part of the government’s strategy for development. The ex-pat population in Cambodia is between 100,000 and 150,000 and this is expected to grow in line with foreign investment going forward, meaning a strong and connected community of investors.

Who is recommending investing in Cambodia in 2023?

CEO of Quantum Engineering and Manufacturing, Richard Yim – who was recently selected as ASEAN Top 40 Under 40 – said Investing in Cambodia is a great choice if you’re looking at emerging markets.

“Cambodia is home to more than 16 million people. In recent years, the country’s economy has expanded and undergone significant changes. As a result of this, the market has become more appealing to entrepreneurs and investors.”

“The Cambodian economy has been growing at a staggering pace for over twenty years. Based on statistics, Cambodia’s economy was the sixth fastest growing in the world between 1995 and 2017. Some economists predict that Cambodia’s economy will keep expanding in the years ahead.”

“Ultimately, Cambodia is a promising and dynamic investment destination due to its quick economic growth. With sustained economic development and technological advancement, it stands to further compete to cement its position as a leading Southeast Asian economic powerhouse. As an emerging market, Cambodia is ripe for investment”

To read more about Mr. Yim’s take on Cambodia’s development in 2023 click here.

What are some things to consider when investing in Cambodia in 2023?

A number of things to consider when investing in Cambodia are the following:

• Business registration – you need to make sure that the business and or businesses which you invest in are fully registered and follow the required guidelines within the country. There are a number of ministries and governmental departments, such as the General Department of Tax, which businesses must register with and ongoing requirements too.
• Navigating the local landscape – It is advised to get the services of a Cambodia-based business consultancy service when doing business or investing in Cambodia. This is because they will have many of the essential contacts available to make doing business a lot easier
• The banking system – An issue when investing in Cambodia in the past has been limited access to capital when doing business in Cambodia. This has changed, with commercial banks being a primary source of funding.
• Currency – The Cambodian economy is classified as partially dollarized because the US dollar (USD) circulates alongside the national currency. However, some 80 per cent of deposits and credits in the banking system are made in USD. There is a push from within the government to covert to Riel use in the future and this is worth noting when attempting to embark on business in the Kingdom.

How will Cambodia’s currency protection help investors in 2023?

According to the AmCham President, dollarisation has protected the Khmer Riel and limited the inflationary pressures, while other regional currencies have depreciated as the US dollar is the strongest it has been in two decades.

He said that Cambodia has an open economy and a stable government, and it continues to provide investment incentives. The country has entered into and continues to enter into key trade treaties, and is continually and rapidly upgrading its infrastructure, particularly roads and ports.

The International Monetary Fund (IMF) is projecting that Cambodia will be the region’s fastest-growing economy by 2025. The Kingdom has a remarkable near zero unemployment rate and is finally creating better jobs with rising incomes.

Will the high level of dollarization help Cambodia attract investors in 2023?

Phnom Penh President of Global Real Estate Association Vichet Lor said that the high level of dollarization has helped the country to attract large foreign investments as it protects investors from major currency fluctuations.

He said that with Cambodia being a fully liberalized economy, it attracts foreign investment to key infrastructure projects such as roads, airports, oil drilling and mining,

Lor said, adding that the Kingdom is also having one of the lowest corporate taxes in Asia and will continue to be so for the foreseeable future with the introduction of the New Investment Law that offers tax incentives and tax holidays for up to nine years.

The stability of the economy is also underscored by the fact that the Gross National Debt is only about 40 per cent of the GDP prompting financial institutions like ADB, IMF and World Bank to rate Cambodia as financially safe for the medium term.

Another huge advantage of Cambodia becoming the next ‘Asian Tiger’ is that it has a young population of about 70 per cent under the age of 40 and its unemployment rate is near zero.

In Vichet’s opinion, a bi-lingual or tri-lingual population in Phnom Penh increases the competitiveness and attractiveness of FDIs. After, Singapore and Malaysia, Cambodia is considered to have the largest English-speaking population in the region.

The revised Taxation Law to be adopted by the National Assembly soon will further enhance investor confidence in Cambodia. Emerging capital markets including Cambodia Securities Exchange (CSX) will take the economy to greater heights.

The country also has many unexplored areas for growth such as in fintech and e-commerce that could attract more investment in the near future. The absence of restrictions in foreign currency exchanges or transfers has also boosted the country’s standing in attracting investments from abroad.

Indeed, a rising tax collection year on year has provided the government with more room and flexibility to invest, he added.

What is seen as Cambodia’s leading factor in 2023 growth?

Cambodia’s Special Economic Zone (SEZ) policy is also playing a leading role to stimulate the manufacturing sector as the country has greatly benefitted from the Free Trade Agreements with China and South Korea besides the Regional Comprehensive Economic Partnership (RCEP) Agreement.

The hosting of the South East Asian (SEA) Games next year and the inauguration of the new Phnom Penh International Airport, which is the world’s 9th largest airport, likely in 2023, will further cement Cambodia’s position as an investment destination with adequate infrastructure and facilities to accommodate a burgeoning economy.

Will Cambodia become an Asian Tiger in 2023?

While expressing his confidence in the fast-growing Cambodia economy, Anthony Galliano, President of AmCham, said that the country deserves to be recognised as one of the world’s most attractive investment destinations given its historical economic achievements and by being one of the most promising prospects in the region.

As a result of almost near-perfect governmental management of the Covid-19 pandemic, in maintaining a balance of health and social safety and economic security and stability, Cambodia also emerged as one of the least blemished economies with one of the lowest mortality rates due to the pandemic, Anthony pointed out.

According to him, some of the advantages of investing in Cambodia include 100 per cent ownership of companies of foreign investors except in some categories such as cigarette manufacturing, movie production, rice milling, gemstone mining and processing.

Other advantages include low corporate tax, minimum capital requirement of just $1,000 to set up a company and a youthful population of around eight million under 25 years, Anthony said, adding that “Cambodia is perhaps the safest place on earth to live in.”

How will foreign talent aid Cambodian development and attract investment?

The business community in Cambodia has said it takes not only Cambodia leading the way in post-Covid, but that attracting and fostering the migration of foreign talent is key to a resumption of pre-pandemic growth levels.

The Managing Director of CoGen Consulting Group Narath Chheav said foreign talent is uniquely placed to give a positive impact for the Kingdom.

“While our workforce remains in general a young one, Khmer people are eager to learn knowledge and skills from foreigners, especially professionals, and harness foreign investment that has been generating significant and positive impacts on the Cambodian workforce and the economy as a whole.”

“The sharing and transfer of knowledge exemplify how foreigns and the skills they bring can be beneficial to the country and its economic and social development.”

He continued that foreign professionals bring with them not only technical but different management and leadership styles.

Echoing the statements, Soreasmey Ke Bin, Chairman of the French Cambodian Chamber of Commerce said, “If we want our economy to grow faster, we need more talent. Whether that comes locally, through expatriates, or from Cambodians overseas.”

“The contribution will continue to be as significant across all sectors and this should be valued by employers in the Kingdom. The Cambodian market definitely needs more ex-pats both to create new businesses and to join existing companies.”

“The good management of the pandemic by the Cambodian government and also by the community itself gives even more reason for foreign talents to consider Cambodia as their next place to work,” he added.

How will expat migration positively affect Cambodia’s growth in 2023?

Co-founder of Cambodian-based HR solutions company Next Step International, Josh Downs said that the current foreign workers estimates ¬– which are around 80,000 to 100,000 – will grow and boost Cambodian development in 2023.

“Expat numbers in Cambodia amount to only 0.6 per cent of the population. Yet, the country’s favorable conditions for foreign business and investment will continue to put Cambodia on the map as a destination to live and work.”

“At Next Step, we see the opportunity for international talent coming to Cambodia, which has been proven to aid Cambodia’s development going forward. The effective recruitment of global talent not only helps businesses optimize productivity and performance but help upskill local talent to meet emerging sector demands.

“Especially for middle to upper-level management across burgeoning sectors, there is a huge demand for foreign talent to share skills from other developed countries.”

The Asian Development Bank reports Cambodia’s labor force still has relatively low skills and low educational attainment, a problem facing its overall development agenda.

Therefore, Downs said that foreign migration and employment within the workforce will only be beneficial for Cambodia’s aim for graduation from an LDC within the next five years.

“Therein lies an opportunity for Cambodia, to enhance skillsets on the ground by integrating global workforces in-country,” Downs added. To read more, click here

Do I need to get citizenship to invest in Cambodia?

One of the advantages of investing in Cambodia or owning a business or real estate in Cambodia is that you can enter the market without a change in citizenship.

For businesses, it is 100 per cent legal for foreigners to invest and own companies in Cambodia. They can have 100% ownership and there are no trade restrictions (depending on the type of investment they make, which can be suited to the business in question). Investors can put up any type of business in the country.

Also, there is zero price control in place, which means they can put any price they want on the items that they sell. Money is also allowed to be sent back to home countries.

In the real estate market, foreigners can buy properties thru a Strata title or nominee structure. This is done by 51 per cent of any property being under the name of a Cambodian National, with the remaining 49 per cent being owned by the Foreigner. The property is secured by the pair entering into a Mortgage Agreement, which doesn’t allow nominees to sell, transfer, move or make any changes to the property.

To note: Foreigners are allowed to lease land for 50 years or more. They can build structures or re-purpose the land as long as the lease agreement is in place. As long as it is not stipulated in the lease, the foreigner can do whatever they need to do on the land.

Where do I find in-market consultancies to help me invest in Cambodia in 2023?

Aquarii is a leading in-market consultancy enabling businesses and investors to enter the Cambodian market. If you want expert advice for your ambitions within the Kingdom of Cambodia we offer bespoke services, tailored partnerships and free business resources via our online platform. We also welcome you to chat with one of our team who is ready to assist you and your business ambitions, today.

In January 2023, Cambodia enacted Changes to Tax on Income. In this article, you can find out a full list of the new income tax changes which came into effect in the first month of 2023.

What are the new Income Tax Changes in Cambodia?

On the 28th of September 2022, the Royal Government of Cambodia issued Sub-Decree No. 196 (“Sub-Decree 196”) which detailed an upcoming amendment to the Tables of Taxable Thresholds for Annual Tax on Income and Monthly Tax on Salary. This repeals the previous Sub-decree no. 09 dated 13 February 2020

The amendments to the progressive Annual Tax on Income and Monthly Tax on Salary tables under Sub-Decree 196 take effect from 1 January 2023.

Who do the changes to tax on income affect in Cambodia?

Sub-Decree 196 is designed to amend the annual progressive Tax on Income thresholds in relation to physical persons, sole proprietorships, and the distributive share of partners in a partnership (that are not classified as legal persons under the Law on Taxation). In other words, the new Sub-Decree establishes a new taxable rate for an individual, sole proprietorship, and distributive share income to the non-legal entity as well as the monthly tax on the salary of resident employees.

Sub-Decree 196 also amends the monthly Tax on Salary thresholds which apply to Cambodian resident employees.

Where can I find the full income tax rates following the new law change in Cambodia?

Below, you can find the respective changes to the annual progressive Tax on Income rates for taxpayers that are not considered legal persons and the monthly progressive Tax on Salary rates for tax-resident employees in Cambodia in the tables below.

What are the changes to the Annual Taxable Income in Cambodia?

According to Sub-decree 196 any taxpayer (non-legal entity), who has an annual income starting from above 18 million riels, shall be subject to the following tax rates:

1.) Tax on Income for Physical Persons, Sole Proprietorships, and Partnerships

Prior to January 2023

From 0 Riel to 16,000,000 Riels = 0% tax rate
From 16,000,001 Riels to 24,000,000 Riels = 5% tax rate
From 24,000,001 Riels to 102,000,000 Riels = 10% tax rate
From 102,000,001 Riels to 150,000,000 Riels = 15% tax rate
Great than 150,000,000 Riels = 20% tax rate

From January 1, annual taxable income will be the following:

From 0 Riel to 18,000,000 Riel = 0% tax rate
From 18,000,001 Riels to 24,000,000 Riels = 5% tax rate
From 24,000,001 Riels to 102,000,000 Riel = 10% tax rate
From 102,000,0001 Riel to 150,000,000 Riel = 15% tax rate
Greater than 150,000,000 Riel = 20% tax rate

2.) Monthly Tax on Salary for Tax Resident Employees in Cambodia

Prior to 1 January 2023

From 0 Riel to 1,300,000 Riels = 0% tax
From 1,300,001 Riels to 2,000,000 Riels = 5% tax rate
From 2,000,001 Riels to 8,500,000 Riels = 10% tax rate
From 8,500,001 Riels to 12,500,000 Riels = 15% tax rate
Greater than 12,500,000 Riels = 20% tax rate

From 1 January 2023

From 0 Riel to 1,500,000 Riel = 0% tax rate
From 1,500,001 Riels to 2,000,000 Riels = 5% tax rate
From 2,000,001 Riels to 8,500,000 Riels = 10% tax rate
From 8,500,001 Riels to 12,500,001 Riels = 15% tax rate
Greater than 12,500,000 Riels = 20% tax rate

What happens next after the income tax changes in Cambodia?

Following implementation, the GDT is likely to issue relevant regulations to provide further details on the changes to the tables. You can keep up to date with these regulations and all other business news via our social media and telegram channels or find out more about doing business in the Kingdom check out our free business resources or contact one of our team here.

At Aquarii, we are committed to keeping business and investors in the know. That’s why we share helpful information from our extensive market info and library of laws sections on our website so you know the latest developments in the Kingdom.

Overview

Here you can find our professional Market Readiness Assistance application and facilitation service, along with tailored services and deliverables below each table. Please note, each application will be different subject to the business model and Aquarii is fully flexible with this process. To find out more about a tailored MRA application, click here to get in contact with our experienced team. To find out more about Market Readiness Assistance grants in general, you can check our in-depth guide and FAQ here.

Market Readiness Assistance Application Assistance

Aquarii BD offers full advisory and facilitation services for all businesses looking to expand into Cambodia.

In particular, we are able to advise and assist Singapore SMEs that are eligible for the Market Readiness Assistance (MRA) grant provided by Enterprise Singapore (ESG) – having gone through the MRA application process and utilization of the grant components, we are able to guide Singapore SMEs in how the relevant components of the grant can be applied for, and utilized appropriately so that their operations can be set up efficiently and how the costs of their market entry setup and activities can be defrayed by the grant.

Market Readiness Assistance Components

For your convenience, we have broken down everything you need to know about the three components of the MRA in the graph below, namely Overseas Market Promotion (OMP), Overseas Business Development (OBD), and Overseas Market Set-up (OMS), with the complete list of service deliverables that Aquarii offers below.

Overseas Market Promotion (OMP) – S$20,000 per new market

What can Aquarii BD do?

• Assist to review and advise on the application form and processes
• Provide inputs and help strategize a marketing and communications plan
• Organize and advise on the marketing and PR activities including instore promotion, road shows, etc **
• Write up PR in both Khmer & English
• Invite local media and relevant businesses to the launch of the client’s products / services 
• Design and print marketing materials and booth design **
• Recommend, engage, and facilitate booth rental (if applicable) and set up at the right Physical and Virtual Trade Fairs **
• Shortlist and recommend to client of service providers for specific services / areas of need

**Aquarii will work with a trusted marketing and PR firm. Alternatively, a client may wish to work directly with our recommended partners which can be facilitated through the Aquarii BD service.

Overseas Business Development (OBD) – S$50,000 per new market 

Please find the OBD components in this table, with Aquarii services listed below.

What Aquarii BD can do?

• Assist to review and advise on the application form and processes
• Identify and recommend list of potential partners/distributors/agents for client’s consideration
• Recommend qualified freight forwarder(s) based on client’s needs/requirements
• Arrange and facilitate business meetings/matchings with selected partners/contacts/resource persons
• Recommend office space and locations based on client’s needs/requirements
• Recommend HR recruitment agency(ies) as necessary
• Recommend and work with local research companies on market feasibility or other surveys on consumer behavior etc in accordance with client’s needs and requirements
• Provide consultancy and updates of local in-market personnel’s progress, and documentation and outcomes of business meetings
• Report on market updates,  including advice on set-up of entity in the market or future strategy plans, etc.

Overseas Market Set-Up (OMS) – S$30,000 per new market 

Please find the OMS components in this table with Aquarii services listed below.

What Aquarii BD can do? 

• Assist to review and advise on the application form and processes
• Advise, assist and facilitate company registration in Cambodia including but not limited to business registration at MoC, GDT, MLVT, and other related ministries based on the company’s business activities and other permits and licenses such as Import & export license, e-commerce license, etc.
• Advise, assist and facilitate on recommended tax structures, common issues, solutions, etc. for tax compliance
• Consult and advise on the Qualified Investment Project (QIP) eligibilities and benefits if the client is qualified for this investment incentive
• Drafting of franchising, licensing, agency, distributorship and joint venture agreement, etc.
• Help draft and hand over templates and documents such as Non-Disclosure Agreements, Service Agreements, Letter of Employment, Employment Contract and other such SOPs that may be essential for entity’s operations
• Recommend Trade Credit Insurance (TCI) 
• Shortlist and recommend service providers for specific services / areas of need as applicable

Points of consideration for Market Readiness Assistance Applications:

To note: The services offered by AquariiBD Cambodia may vary based on the scope of services and needs of the client and the cap of the grant. We offer a unique blend of our advisory and facilitation services by leveraging on our diverse network of strategic partners, business and government contacts, resource persons and industry experts to provide best-in-class trusted services to our clients. That said, we are fully flexible in delivering a service tailored to your business needs. If you need professional assistance with MRA, from a highly connected Cambodia-based business consultancy, find out how we can help you today, here.

If you want to learn more about the basics of MRA, you can do so here, or to find out more about the variety of business consultation services that Aquarii offers, you can do so here.

Do you want to find out if your company meets the requirements for the Market Readiness Assistance grant administered by Enterprise Singapore (ESG) for Singapore SMEs looking to expand their operations overseas? Do you want to know what the guidelines for the MRA grant application are? We have prepared this document specifically to help guide Singapore businesses to utilize the MRA grant and answer some of the most commonly asked questions. Alternatively, if you want MRA grant facilitation services in Cambodia, learn how here.

Table of contents:

• What is a Market Readiness Assistance (MRA) grant?
• Where can I find a guide for MRA eligibility?
• What are the eligibilities for MRA?
• What types of companies can be established under Cambodian law using the MRA grant?
• How do you apply for the MRA?
• How do I submit a claim for MRA?
• What must not be done when applying for an MRA?
• How do I get more information on MRA-funded business setups in Cambodia?
• How does Aquarii BD help with MRA applications?
• How does Aquarii BD help facilitate MRA-funded business in Cambodia?

What is an MRA grant?

A Market Readiness Assistance grant is financial assistance for Singapore small and medium enterprises (SMEs) who are looking to expand their products and services to overseas markets.

Successful applicants will receive financial support from ESG for up to 50% of eligible costs – capped at S$100,000 per company – until 31 March 2025.

The MRA grant is broken down into three components:

• Overseas Market Promotion (OMP) (capped at S$20,000)
• Overseas Business Development (OBD) (capped at S$50,000)
• Overseas Market Set-up (OMS) (capped at S$30,000)

Aquarii offers advisory and facilitation services for all businesses looking to set up their operations in Cambodia. As an in-market consultancy for Cambodia, Aquarii can advise Singapore SMEs on how they can utilize the MRA grant under the three components – OMP, OBD and OMS – to help defray their costs of setting up their businesses in the Kingdom. Get in touch today to find out more about how Aquarii can help you or view our application & facilitation services here.

Where can I find a guide for MRA eligibility?

You can find our full guide to MRA grant application eligibility here. This content is designed to help you navigate eligibility, overseas market promotion, market entry into Cambodia, overseas development issues, and overseas set-up planning and how to approach and conduct business in the Cambodian market space. Learn more about our services here.

What are the eligibilities for MRA?

There are seven core eligibilities for the Market Readiness Assistance Grant which must be met in order to make an application. These include requirements regarding applicant group sales turnovers, rules surrounding payments made to suppliers, vendors and third parties prior to application, contractual agreements made with the above and that Cambodia is a new market for the applicant country, to name but a few. Below, we break down the core eligibilities for the MRA grant:

• The business entity must be registered/incorporated in Singapore
• The applicant has not started work on the project                
• MRA applicant must own at lease 30% local equity              
• The applicant’s group sales turnover is less than or equal to S$100m or the applicant’s group employment size less than or equal to 200                        
• The applicant has not made any payment to any supplier, vendor, or third party prior to applying for this grant             
• The applicant has not signed any contractual agreement with any supplier, vendor, or third party prior to applying for this grant
• Cambodia is a new market for the applicant company which means that the company’s revenue in Cambodia has not exceeded $100,000 for any of the last 3 years
  • To Note:
• Each application is limited to one activity in a single overseas market (e.g. market entry, or participation in a trade fair)
• Employers eligible for the SkillsFuture Enterprise Credits (SFEC) can also qualify for additional subsidies under the scheme.
• There are no pre-approved vendors for the MRA grant (with the exception of Enterprise Singapore’s list of FTA consultants)

If your company is making an Market Readiness Assistance grant application, you should also consider in-country service providers which will help you better execute your business strategy, which is where Aquarii comes in. Aquarii specializes in helping to facilitate MRA grant applications while offering other services which maximize your potential in a new market. Our market expertise within Cambodia, along with our contacts within its growing business sphere, offer multiple advantages when undergoing the MRA application process. To find out more, you can view our specific MRA grant application-orientated services here or get in touch at the top left of the page.

What types of companies can be established under Cambodian law using the MRA grant?

Cambodian Law on Commercial Enterprise allows for the establishment of the following types of companies:

• Sole proprietorship
• Partnership – which includes general partnership and limited partnership
• Limited liability company – which includes private limited liability companies and public limited companies
• Foreign business entities – which includes representative offices, branch offices, and subsidiaries

Cambodian Law on Investment also offers a type of company called Investment Project which includes Qualified Investment Projects (QIP), expanded QIP, and guaranteed investment projects.

To note, the establishment of a business in Cambodia is governed by the Law on Commercial Enterprise, Law on Commercial Rules and Register which are regulated by the Ministry of Commerce, whereas the establishment of an investment company is governed by the Law on Investment under the supervision of the Council for the Development of Cambodia. The Goyal Government of Cambodia attempted to modernize its business registration procedure by introducing various digital programs and various law amendments in an effort to reduce the cost of doing business in the Kingdom. The following are some of the essential questions when it comes to a business establishment in Cambodia. For more information, use our trusted partners RHTLaw for further information.

How do you apply for the MRA?

Applications must be done through the Business Grants Portal (BGP). To note, companies must submit their applications no earlier than six months after the project start date and retrospective applications are not be accepted. An MRA grant application is deemed retrospective if any of the following take place before the application:

• If the company signed an engagement letter with a third-party service provider, vendor or consultant
• If a first payment was made to a third-party service provider, vendor or consultant
• If the project has already commenced with the third-party service provider, vendor or consultant

The processing time for an MRA grant application is around 6 to 12 weeks from submission, assuming that all of the required information has been submitted correctly. Therefore, we suggest submitting any application as far ahead of time as possible in order to allow for due application processing.

How do I submit a claim for MRA?

All claims must be made through the Business Grants Portal within three months from the project end date and all claims will be disbursed strictly on a reimbursement basis. Also, all claims must include any supporting documents and an independent auditor must verify the expenses.

To note, audit grant fees are capped at S$500 or 70% of the audit fee will be given to companies who engaged an ESG-appointed auditor to verify the expenses.

What must not be done when applying for an MRA?

Before applying for an Market Readiness Assistance grant application, the applicant company must ensure that prior to their application, they have not done the following:

• An applicant company must not start work with the third-party vendor, who is part of the MRA application
• Applicant company must not make payment (including initial deposit) to the third-party vendor, who is part of the MRA application
• Applicant company must not sign a contractual agreement with the third-party vendor, who is part of the MRA application
• Cash payment to the vendor is least preferred for MRA-approved projects

How do I get more information on MRA-funded business setups in Cambodia?

For in-depth consultancy, companies can tap into local business consultancy knowledge with Aquarii BD, by contacting us today. 

Aquarii offers both advisory and facilitation services to assist our clients in establishing a successful business operation in Cambodia, not just in the registration of their company or application for the relevant permits/licenses.

Aquarii’s clientele is businesses that prefer a trusted conduit that they can consult with for insights/inputs on their business or market entry strategy and model and rely on our facilitator role to identify and coordinate with competent service providers to help establish a successful business operation in Cambodia (beyond just a simple company registration).

How does AquariiBD help facilitate MRA applications?

Through our advisory and facilitation services, we can help to review our client’s business strategy, market entry approach, and target audience, advise on government relations, can obtain competitive quotations from trusted service providers – such as in legal, tax accounting, rental of office space, HR recruitment, event launch, publicity, among others – for their consideration and decision.

Aquarii are experts in the local Cambodian market and our services are dedicated to aiding the development of investment and business in Cambodia.

We have built up a network of partnerships with leading industry service providers and through our preferred partners, Aquarii is able to help aggregate and provide a comprehensive range of services for businesses and investors that are considering establishing a business, investment or partnership in the Kingdom of Cambodia. For more information, view our full list of services here or get in touch to find out how we can help you do business in Cambodia today.

How does Aquarii help facilitate MRA-funded business in Cambodia?

Aquarii does so through a network of contacts and trusted partners in the logistics, distribution and services industry, government ministries and business circles for their relevant insights, inputs, and facilitation. Aquarii does this by:

Which businesses can I set up with an MRA grant?

There are multiple different types of businesses you can set up using an MRA, if you are interested in finding out more about the types of business and MRA grants in general, get in touch with our team and we can help you further!

If you are interested in learning more about the Cambodian market in order to assess and take advantage of opportunities, the Aquarii platform offers business resources free of charge, as well as a monthly newsletters and publications to keep you up to date on the latest developments in Cambodia.

This will include key points such as Cambodia’s main export products, which are clothing, footwear, travel accessories, machinery & electrical equipment, bike, rice, furniture & lighting equipment, unvulcanized rubber, cane sugar, fruits & vegetables, and others.

To learn more, check out our resources at the top of the page!

Q: How many provinces are in Cambodia?

A: There are 25 provinces.

Q: What is the capital city of Cambodia?

A: Phnom Penh is the capital and business central hub of Cambodia.

Q: What is the population size of Cambodia?

A: Nearly 17 million people (16.83 million in January 2021).

Q: What is the official language in Cambodia?

A: Khmer language

Q: How many languages are generally spoken in Cambodia?

A: Khmer is native language; English, French and Chinese are generally and business spoken languages.

Q: How many seasons are there in Cambodia?

A: Rainy season and Dry season.

Q: What is the official religion of Cambodia?

A: Buddhism.

Q: What is the climate condition in Cambodia?

A: Cambodia’s climate is tropical and has a high temperature that is influenced by the monsoon.

Q: Describe Cambodia’s geographical landscape

A: Cambodia is sandwiched between two larger neighbours – Thailand to the north and west along an 817 km border, and Vietnam to the east and south-east along a 1,158 km border. It also shares a 555 km long border with Laos to its north. Cambodia’s geography consists of several mountain ranges and vast swathes of wetlands and agricultural land. Its agricultural land has been assessed to be one of the most fertile in the region. 

Click here to read more about Geography and Demography in Cambodia.

Economy Outlook

Q: What is Cambodia’s GDP average annual growth rate?

A: According to the World Bank in Oct 2021, the economy of Cambodia has sustained an average annual growth rate of 7.7% from 1998 to 2019

Q: What is the size of Cambodia’s nominal GDP?

A: The Kingdom’s GDP in 2019 reached an all-time high of USD 27.089 billion.

Q: What is Cambodia’s GDP per capita?

A: In 2019, GDP per capita also reached a high of USD 1,700. According to the National Bank of Cambodia, GDP per capita will be upgraded to USD 1,842 in 2022, a 6.4% increase compared to 2021, $1,771, according to the National Bank of Cambodia.

Q: What are the sectoral contributions to GDP in Cambodia?

A: The sectoral contribution to GDP is agriculture, garment, construction, trade, real estate and finance, hotel and restaurant and garment.

Q: What has been the projection of economic growth of Cambodia by the Asian Development Bank, World Bank and Cambodia’s Ministry of Economy and Finance?

A: The economy was significantly impacted by the COVID-19 pandemic in 2020; economic growth fell to -3.1% but according to the Asian Development Bank (ADB), the World Bank (WB) and the Ministry of Economy and Finance (MEF), Cambodia’s economic growth for 2021 rebounded into positive territory, with projections between 2.2% to 3%. 2022 economic growth is projected to be between 4.5% to 5.5%.

Q: How much are Cambodia’s total Exports? What is the total value of Cambodia’s exports?

A: Cambodia is an active trading country and recorded a total export of USD 17.2 billion in 2020, an increase of 16.72% from 2019. 

Q: Which countries are Cambodia’s main export destinations?

A: Main export partners are China, Germany, Japan, the United Kingdom and the United States

Q: What are the main export products from Cambodia?

A: The country’s exports, composed mainly of garments and agricultural products, have increased steadily since the 1990s and account for more than 60% of the GDP.

Q: How many airports are in Cambodia?

A: There are three international airports in Cambodia.

Q: How many deep seaports are in Cambodia?

A: There is a deep-sea in Sihanoukville.

Q: Which are the tariff exemption program and free trade agreements in Cambodia? Does Cambodia enjoy tariff exemption from other countries? Does Cambodia have FTA with other countries?

A: Businesses and investors have yet to fully optimize the tariff exemption/preference schemes that the developing country enjoys from the European Union [Everything-But-Arms (EBA)] and the US [Generalized Scheme of Preferences Plus (GSP+)], and the Free Trade Agreements (FTA) with China and South Korea.

Q: What are the free trade agreements between Cambodia and other countries?

A: Businesses and investors have yet to fully optimize the tariff exemption/preference schemes that the developing country enjoys from the European Union [Everything-But-Arms (EBA)] and the US [Generalized Scheme of Preferences Plus (GSP+)], and the Free Trade Agreements (FTA) with China and South Korea.

Q: What is the total size of Cambodia’s public debt?

A: Cambodia’s debt-to-GDP ratio reached 33.6 percent of GDP (US$8.8 billion in outstanding debt) in 2020 and is projected to increase to 35.2 percent of GDP (US$9.6 billion) in 2021. 

Q: What is Cambodia’s debt to GDP ratio?

A: Cambodia’s debt-to-GDP ratio reached 33.6 percent of GDP (US$8.8 billion in outstanding debt) in 2020 and is projected to increase to 35.2 percent of GDP (US$9.6 billion) in 2021.

Click here to read more about Economy and Finance in Cambodia.

Trade in Cambodia – Facts, Figure, Trends

Q: What constitute trade balance of Cambodia?

A: Trade balance is indicated in this graph

Q: What are Cambodia’s main import and export products?

A: The main import: Textiles, construction materials, steel, and cement while the main export: clothing, footwear and travel accessories.

Q: Which countries are Cambodia biggest trade partners in Asia?

A: Biggest trade partners in Asia are Japan, China, Republic of Korea, India, Thailand and Vietnam.

Q: Which countries are Cambodia biggest trade partners in Europe?

A: The biggest trade partners in Europe is UK, EU and EAEU.

Q: Which country is the biggest export market for Cambodia?

A: Its top export markets in 2019 were the US, EU, Japan, China, UK, Canada, Thailand, Vietnam and Singapore, whereas its top import partners were China, Thailand, Vietnam, Japan, EU, Singapore and the US.

Q: How many bilateral / free trade agreements have Cambodia signed with international counterparts?

A: Not many may be aware that an agreement with the European Patent Organization came into force at the beginning of 2018, providing validation of EU patents in Cambodia and signatory states, or essentially protecting the innovation of manufactured products by EU companies in Cambodia for the Asian market. Moreover, given the tariff exemption/preference schemes under the EBA and GSP that the EU and the US respectively accord to the Kingdom, the Free Trade Agreements (FTA) that Cambodia signed with China (July 2021) and South Korea (Oct 2021), as well as the Regional Comprehensive Economic Partnership (RCEP, Nov 2020), businesses and investors should leverage on the comparative advantage of setting up their manufacturing or assembly facilities in Cambodia for export to these overseas markets.

Click here to read more about Trade in Cambodia.

Investment – Facts, Figures and Trends

Q: What are the main reasons to invest in Cambodia?

A: The attraction of Cambodia to foreign businesses and investors that realized its potential and opportunities were and continue to be attracted by its business-friendly open economy, low labour, and production costs, and its strategic location and close proximity to production facilities in Thailand and Vietnam as well as favourable access to the Chinese, US, EU, Japan, and South Korea markets.

Q: What is the percentage of ownership a foreign investor have for a business in Cambodia?

A: Cambodia’s investment laws allow 100% foreign ownership of companies in most sectors, and provision for the protection of investments from regulated prices and nationalization. 

Q: How many Specialized Economic Zone (SEZ) are in Cambodia?

A: There are 54 SEZs approved, 33 SEZs by Sub Decree, 26 SEZs are operational, 18 SEZs have special admin office, 21 SEZs are seeking funds, 6 SEZs are under construction.

Q: Which countries are Cambodia’s top investment partners?

A: Cambodia’s top investment partners over the past few years have been China, Vietnam, South Korea, Japan, Singapore, Malaysia, Thailand, the UK, Canada, and the US.

Q: Do international businesses need a local partner to start a company / business in Cambodia?

A: Cambodia’s investment laws allow 100% foreign ownership of companies in most sectors, and provision for the protection of investments from regulated prices and nationalization.

Q: What is the total FDI of Cambodia?

A: In 2019 when Cambodia’s GDP hit an all-time high of USD 27.1 b, its total stock of FDI also reached a high of USD 34 b.

Q: Which sectors attract most FDI in Cambodia?

A: Prior to the ban on online gambling which was effective 1 Jan 2020 after it was first announced in Aug 2019, the sectors that attracted the most Foreign Direct Investments (FDI) were real estate and construction, garment manufacturing, tourism, other forms of light manufacturing, services and agriculture.

Q: How has Covid pandemic impacted FDI in Cambodia?

A: The continuing Covid pandemic, disruption to global supply chains, rising costs in raw materials and travel restrictions have severely impacted Cambodia’s open and export-oriented economy. FDIs remained relatively weak at USD 538m or a YOY decline of 83.6% for the first nine months of 2021.

Click here to read more about Investment in Cambodia.

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%).

Click here to read more about Services Sector in Cambodia.

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.

Click here to read more about Tourism and Hospitality in Cambodia.

Legal and Tax

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.

Click here to read more about Legal and Tax in Cambodia.

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.

Click here to read more about Accountancy and Auditing in Cambodia.

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%

Click here to read more about Banking and Finance in Cambodia.

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.

Click here to read more about Insurance and Actuarial in Cambodia.

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

Click here to read more about IT and Telecommunications in Cambodia.

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.

Click here to read more about Human Resource, Recruitment and Training in Cambodia.

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?

• Phillip Bank
• Prince Bank
• ABA Bank

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.

Click here to read more about Fintech and E-Commerce in Cambodia.

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%.

Click here to read more about Real Estate, Property Management and Maintenance in Cambodia.

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.

Click here to read more about Transportation, Logistics and Supply in Cambodia.

Industry Overview

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

A: The industry sector accounts for 34.2% of Cambodia’s GDP. Industries in Cambodia is mostly within the garment, light manufacturing, agricultural, construction, and tourism sectors, with a nascent emerging mining and exploration industry.

Q: What drives Cambodia’s industry sector? What is the industry sector in Cambodia?

A: Industries in Cambodia are mostly within the garment, light manufacturing, agricultural, construction, and tourism sectors, with a nascent emerging mining and exploration industry.

Q: What is the growth of the Industry sector in Cambodia?

A: The contribution of the services sector to the country’s GDP has remained around 40% since 2000, while the contribution of the agriculture sector has been declining, in favour of the industry sector.

Click here to read more about Industry Sector in Cambodia. 

Construction, Engineering and Building Safety

Q: How is the construction sector in Cambodia?

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 have been approved/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: Is there building safety and construction management in Cambodia?

A: Unfortunately, building and workers’ safety lagged behind the frenetic pace of construction activities as unauthorized projects launched by opportunistic developers rushing to capitalize on rising real estate prices were pushed ahead.

Q: Are there / what are the government measures on building safety?

A: The government amended the Law on Construction in November 2019, including stricter requirements on safety measures at work sites, mandating building safety inspections, and further strengthening permit requirements.

Q: What is the / is there a high demand for commercial buildings, high-end offices and residential projects?

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

Q: Is there any impact from covid on Cambodia’s construction sector?

The slowdown in the global economy in 2019 was weighed down further by the Covid pandemic which caused severe disruption in the global supply chain and lockdowns/restrictions on international travel. As foreign investors/buyers accounted for 60-70% of sales in the real estate and property market in Cambodia, external demand for the excess supply of condominiums, apartments, commercial offices, and other mixed development projects was likewise interrupted. This was exacerbated by the lack of supply (and rising prices) of construction materials, labour, and funds. Many projects such as FDI-financed property investment, especially in high-rise development projects in Phnom Penh and Sihanoukville, were suspended.

Q: How has Cambodia’s real estate price evolved? What is the real estate price in Cambodia?

With excess supply and lower foreign investor/buyer appetite to invest in property development projects, the value of approved construction permits has also plummeted, contracting by as much as 63% in 2020. Most observers and experts in the real estate industry expect supply and average property prices to slip further before a slow and gradual recovery.

Click here to read more about Construction, Engineering and Building Safety in Cambodia.

Manufacturing

Q: What are the main manufacturing products in Cambodia?

A: Garment, footwear, and travel goods manufacturing are important components of the manufacturing industry and are considered the main engines of growth for the Cambodian economy. 

Q: What is the size of the Cambodian workforce in the manufacturing sector?

A: Garment manufacturing alone accounts for 80 percent of Cambodia’s exports and employment of more than 600,000 workers, mostly women.

Q: What are the top exports of Cambodia’s manufactured products?

A: Clothing, footwear and travel accessories are the top exports of Cambodia’s manufactured products.

Q: How has tariff exemption programs such as GSP and EBA contributed to the growth of the manufacturing sector in Cambodia? Are there tariff exemption programs for Cambodia?

 A: There is an opportunity for manufacturers to take advantage of the tariff exemption programs that have been accorded to Cambodia by the US (under GSP), the EU (under the EBA), as well as under the provisions of various FTAs that Cambodia has signed with China and South Korea

Q: What is the contribution of the manufacturing sector to Cambodia’s GDP?

A: Garment, footwear, and travel goods manufacturing are important components of the manufacturing industry and are considered the main engines of growth for the Cambodian economy. 

Click here to read more about Manufacturing in Cambodia.

Q: What is the contribution of agriculture to Cambodia’s GDP?

A: Within the sector, crop production has the largest output contribution to total national GDP at 13.0%, followed by fisheries (5.5%), livestock (2.6%), and forestry (1.6%). However, the growth of agriculture value-added has been limited (0.85% annually, on average) since 2013 due to the long-term low labour productivity, lack of rice milling facilities, the downturn in international commodity prices and adverse weather conditions

Q: What is the share of agriculture’s products to Cambodia’s GDP?

A: The share of agriculture value-added to the total GDP averaged around 30% during 2000−2014 but fell to 22.1% in 2019

Q: What are Cambodia’s main exports of agriculture products?

A: The majority of the country’s agriculture exports are still in raw form and heavily dependent on crops. The main export products are rice and rubber, with an increasing share of cassava. From 2010 to 2018, the biggest reduction of export value was seen in maize.

Q: How are Cambodian agriculture products processed?

A: Only about 10% of Cambodia’s total agricultural outputs are processed within the country, whereas processed agricultural exports represent only 8% of total official exports by value. Other than rice milling and basic processing of rubber and pepper, the agro-processing sector is largely underdeveloped.

Q: Which areas in Cambodia produce agricultural crops? Where are Cambodia’s main agricultural areas?

A: Regions surround the Mekong and the Tonle Sap river, with particularly intensive cultivation in Batambang, Kampong Cham, Takeo, and Prey Veng provinces.

Q: What are Geographical Indication (GI) products of Cambodia?

A: The Geographical Indication in Cambodia are

• Kampot Pepper
• Kampong Speu Palm Sugar
• Kratie Pomelo Fruit

Q: What is the size of Cambodia’s wetland/agriculture compared to its total net area? How much agricultural land does Cambodia have?

A: Cambodia’s wetlands cover about 30% of the country and support one of the world’s biggest, most diverse, and intensive freshwater fisheries. 

Q: Are there fisheries in Cambodia? Is there aquaculture in Cambodia?

A: Definitely there are fisheries in Cambodia. Aquaculture production is estimated at 207,443 tons annually in 2017, which is equivalent to 24% of all fisheries production. 

Q: What are export destinations for Cambodian fisheries products/fish exports?

A: Cambodia exports fresh and processed fish (in smoked and frozen forms) to Hong Kong, China; Malaysia; the Republic of Korea; Singapore; Thailand; and Viet Nam. However, the largest volumes by far are informal or unrecorded flows of fresh or dried fish trucked to Thailand, especially from the Tonle Sap region. There is enormous potential to add value to the national fish catch by processing fish at or near the source. This can range from making sauces, fillets, and packaged or convenience meals.

Q: Is there freezing plant or cold chain facilities in Cambodia?

A: There are few freezing plants or cold chain facilities in the country. There are no industrial-scale commercial exporters transporting frozen fish products in reefer containers from Sihanoukville or shipping fresh fish from Phnom Penh. Cambodia could tap into overseas markets, such as China, EU, US or the food security needs of Southeast Asian countries.

Click here to read more about Agriculture and Aquaculture in Cambodia.

Q: What are the business/office hours in Cambodia?

A: In general, Monday to Friday: 8 am to 5 pm and Saturday: 8 am to 12 pm

Q: What are the Public Holidays (PH) in a calendar year in Cambodia? How many public holidays are there in Cambodia?

A: Cambodia has 21 official public holidays (PHs) in a calendar year of which the most important or celebrated is the Khmer New Year in April and the Pchum Ben in September or October. Several PHs are based on the lunar calendar. An official list of PHs indicating their dates is announced by MLVT. Since September 2021, any PH that falls on a Sunday will no longer be carried over to Monday. 

Q: Which government bodies/ministries oversee business setup and registration in Cambodia?

A: On 15 June 2020, the Cambodian Government launched the single portal (https://www.registrationservices.gov.kh/), a new online business registration portal that allows a private limited company to be incorporated at the Ministry of Commerce (MOC), the General Department of Taxation (GDT) and the Ministry of Labor and Vocational Training (MLVT) in one streamlined process. Other relevant ministries/institutions whose involvement is required for a specific license/permit may become involved at a later stage (if any).

Q: What are the required documents and certificates from the Ministry of Commerce (MOC) for a business entity set up in Cambodia?

A: Certificate of incorporation, business Extract; and articles of incorporation, with the ministerial seal.

Q: What are the required documents and certificates from the General Department of Taxation (GDT) for a business entity set up in Cambodia?

A: Value Added Tax (VAT) certificate, patent tax certificate, tax registration identification card; and tax instruction letter.

Q: What are the required documents and certificates from the Ministry of Labor, Vocational Training for a business entity set up in Cambodia?

A: Declaration of Opening of Enterprise.

Q: What are the requirements to register a company in Cambodia?

A: To register a company in Cambodia, a business entity must acquire registration at the Ministry of Commerce (MOC), the General Department of Taxation (GDT), and the Ministry of Labor and Vocational Training (MLVT). Some businesses may involves specific or permit license from other government or regulatory institutions such the Ministry of Economy and Finance (MEF) or the Ministry of Post and Telecommunication (MPTC), etc.

Q: What are the types of company registration in Cambodia?

A: Types of company registration are: Sole proprietorship, General Partnership (partners are personally liable for the partnership’s liability), Limited Partnership (partners are liable only to the extent of their agreed contribution) and Limited Liability Company.

Q: What are the requirements and characteristics of a Private Limited Company in Cambodia?

A: One of the most common types of business entity registered by foreign investors/businesses is the Private Limited Company. Some of its requirements and characteristics include the following:

• Can be 100% foreign owned
• A minimum capital requirement of KHR 4 million (equivalent to USD 1,000) – i.e. minimum of 1,000 shares at KHR 4,000@
• Shareholder(s) liability limited to their value of capital contribution
• Can have one or more directors (Note: Public Limited Company must have at least 5 but not more than 15 directors)
• Corporate governance is simple and requires only one director
• The dissolution process is relatively simple

Q: What are applicable taxes for a business entity in Cambodia? What taxes must companies pay in Cambodia?

A: Foreign businesses are subject to local taxation such as the minimum tax and tax on profit, VAT and other applicable Withholding Tax. See section under Legal and Taxation for more information.

Q: Is there employment contracts in Cambodia?

A: Yes, there are employment contracts in Cambodia that are either Fixed Duration Contracts (FDC) or Undetermined Duration Contracts (UDC).

Click here to read more about Doing Business in Cambodia.

According to the Cambodian Labour Law, Undetermined Duration Contract is an employment contract made between workers and an employer with the following criteria:

1. Both parties agree upon without setting a specific ending date (Article 67, Paragraph 1) or
2. Both parties agree upon, setting a specific ending date but this duration is more than two years (Article 67, Paragraph 2) or
3. This contract is made orally, not in writing (Article 67, Paragraph 7) or
4. In case a Fixed Duration Contract continues quietly (without notice) and the total duration of the previous contract and the new contract exceeds two years. (Article 67, Paragraph 8)

Source: https://www.gmac-cambodia.org/public/pdf_file/1505126368.pdf

Working Hours

Restrictions on Working Hours

Under the Labour Law, normal working hours cannot exceed eight hours per day or 48 hours per week. An employee must consent to work overtime. Proposed amendments to the Labour Law will likely affect the payment regime for employees who regularly work night shifts (between 10:00 pm and 5:00 am).

Special Restrictions Applicable to Shift Workers

“Nightwork” under the Labour Law is a period of at least 11 consecutive hours that includes the interval between 10:00 pm and 5:00 am. In addition to continuous work that is performed by rotating teams who sometimes work during the day and sometimes at night, work at the business may always include a portion of night work. Workers who perform permanent or shift work between 10:00 pm and 5:00 am are entitled to 130% of the normal working payment rate.

Overtime Pay

The employer must provide overtime pay to employees who work beyond the normal working hours. Overtime must be undertaken on a voluntary basis and is subject to prior approval of the MLVT. Approval for overtime can now be requested through an application on the new Ministry of Labor and Vocational Training (MLVT) online system. Overtime is limited to two hours per working day in excess of the normal eight hours. Employees are entitled to overtime pay as follows:

– Overtime work on a normal working day: 150% of the normal working payment rate.

– Overtime work between 10:00 pm to 5:00 am and work performed on a normal weekly day off 200% of the normal working payment rate. Further, workers who work on public holidays are entitled to the normal working payment rate in addition to the normal wage due on paid public holidays.

Source: https://www.dfdl.com/resources/publications/other-publications/cambodia-employment-rights-explained/

Medical Care Services

Medical care services of Occupational Risk for Persons Defined by the Provisions of the Labour Law including personnel serving in air and maritime transportation as well as domestic workers shall be as follows:

• Treatment and care of wound or disease resulting from occupational risk in line with the medical profession technics until recovery despite hospitalization or non-hospitalization;

• Emergency service;

• Supply of medicines and other medical materials for treatment;

• Victim referral service or corpse transportation in the case of emergency;

• Daily allowance provision for caretaker during the treatment in case the victim concerned cannot serve himself.

Daily Allowance for Temporary Disability

In the period of treating any injuries or diseases resulting from occupational risk in the health facilities and the convalescent care prescribed by the medical doctor or physician recognized by NSSF, the victim concerned shall be entitled to enjoy the daily allowance for temporary disability. Daily allowance for temporary disability shall be provided from the second day when the person concerned sustained a work injury or sickness until recovery or passed away plus the period of convalescent care prescribed by the medical doctor.

The first-day wage of a person concerned for abstention from work shall be borne by the employer. Daily allowance for temporary disability shall be equivalent to 70% of the daily average wage within the last 6 (six) months. In case the working period of the person concerned is less than 6 (six) months, the daily average wage shall be calculated based on the actual situation.

Pension for Permanent Disability

The NSSF members who sustain occupational risk leading to permanent disability from 20% or more shall have entitlement to enjoy pension for permanent disability. Formalities and procedures of pension calculation, determination of permanent disability degree and pension provision shall be regulated by Sub-Decree. The National Social Security Funds (NSSF) members who are getting the partial permanent disability pension but sustain the new occupational risk shall receive pension by the total degrees of permanent disability pension.

The total degrees of total permanent disability shall be equivalent to the first permanent disability plus the degree of continual permanent disability of other organs but not exceed 100% Pension for permanent disability shall be considered as a forever temporary pension. NSSF shall renew check-ups and evaluation of the disability degree of the victim regularly.

In case the disability degree of the victim is found the change, the amount of the given pension shall be renewed during the evaluation. A victim cannot oppose the check-up as defined above. In case the victim concerned is absent from the check-up, NSSF shall suspend the pension provision until the victim concerned have a check-up.

Allowance for Permanent Disability

The NSSF members who sustain occupational risk leading to permanent disability less than 20% shall have entitlement to receive an allowance for permanent disability. Allowance for permanent disability shall be given a lump sum. Formalities and procedures of calculating the allowance for permanent disability shall be regulated by Sub-Decree.

Funerary Grant and Survivors’ Pension

For the NSSF members who sustain occupational risk leading to death, NSSF shall provide the funerary grant and survivors’ pension. The funerary grant shall be provided to the beneficiaries under the direct charge of the victim or any person who takes responsibility for holding the funeral. The amount of funerary grant shall be regulated by Prakas of the Minister of the Ministry in charge of social security schemes in compliance with the proposal of the NSSF Governing Body. Survivors’ pensions shall be provided to the beneficiaries under the direct charge of the victim. Calculation, formalities and procedures of providing the survivors’ pension shall be regulated by Sub-Decree.

Rehabilitation Services

The NSSF member who sustains occupational risk leading to permanent disability shall have entitlement to enjoy rehabilitation services including medical rehabilitation, vocational rehabilitation or social rehabilitation services. Medical rehabilitation services shall be provided for supporting the medical care or helping alleviate victims with a permanent disability.

Page 18 of 24 Vocational rehabilitation services shall be provided to the NSSF member who becomes disabled due to occupational risk in a bid to have a chance to receive a new job with earnings suitable with his physical situation. People with disability due to occupational risk shall have entitlement to receive consultation, guidance, mental health education and other social services for the purpose of bettering social psychology and possessing ownership in line with the daily livelihood. Conditions, formalities and procedures of providing rehabilitation service shall be regulated by Sub-Decree.

Source: http://www.nssf.gov.kh/default/wp-content/uploads/2020/09/2.-Law-on-Social-Security-Schemes.pdf

The services sector in Cambodia accounted for 38.9% of Cambodia’s GDP, industry for 34.2%, and agriculture for 20.7% in 2019. 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, and healthcare among others as new products are paired with digital technology offering become increasingly commonplace.

This augurs well for Cambodia because, given its youthful population profile where more than 75% are under the age of 35, more prevalent use of digital technology can help mitigate or address the challenges of low productivity and skills; they can be a catalyst to transform other areas of need and help shorten the time it would take to bridge the gaps in knowledge and skills.

Rather than just focus only on the lack of skilled labour and talent in Cambodia in absolute terms, foreign businesses and investors may find it instructive to note that the contribution from the Services industry to Cambodia’s annual GDP has been growing at an average rate of 8% annually to 39% in 2019. This is a strong testament to how quickly its economy is becoming more sophisticated amidst a youthful population, its high internet and social media penetration (approx. 71% of the population), a growing middle class and rising demand for modern services.

Since 2014, Cambodian businesses have started to diversify beyond tourism and garment/footwear/travel goods exports into niche services such as basic computer animation, software coding and development for local and foreign accounts, insurance and actuarial, information communication technology-related fields, e-commerce and even telemedicine, among others.

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%).

Growth of Service Sector and Subsector 2016-2021

Feel free to enquire with the Aquarii team should you need further advice.

If you are looking for a more nuanced insight or advice in terms of other indicators/observations not commonly found in publications for a better understanding of how a business or investor can navigate the local environment or seek out collaboration opportunities and trustworthy partners, get in touch with our team at Aquarii. Ask to speak to our CEO if you wish to know why he has decided to make Cambodia his 2^nd home, perhaps the strongest testament of his conviction in the potential and opportunities in the Kingdom.

** The following information have been compiled from various official and open sources including but not limited to the Ministry of Commerce (MOC), General Department of Taxation (GDT), Ministry of Labor and Vocational Training (MLVT), Ministry of Foreign Affairs and International Cooperation (MFAIC), Council for Development of Cambodia (CDC), among others. It is not meant to be exhaustive, but to provide foreign businesses and investors keen on establishing a presence, investment or partnership in Cambodia with an adequate understanding and appreciation of what it entails to set up a company.

Cambodia is an open economy with business-friendly regulations that welcome foreign businesses and investors keen on establishing a company, investment or partnership in the Kingdom. For example, it allows 100 percent foreign ownership of companies in most sectors; have legislative provision and safeguards for the protection of foreign investments from regulated prices and nationalization; has no foreign exchange restriction on the remittance of profits and no capital gains tax (yet). Although several international surveys do not rate Cambodia well in terms of the ease of doing business, foreign businesses that have been operating here may not share the same dire assessment. Similar to other emerging markets, one should keep an open mind and take the time to understand and appraise the local operating environment; there are often much simpler conduits and local practices that are in fact not as complicated or cumbersome as some have made them out to be. In this section, we provide some of the pertinent information that may be useful to foreign businesses setting up their companies in Cambodia.

Business Hours in Cambodia

In general, Monday to Friday: 8 am to 5 pm and Saturday: 8 am to 12 pm.

What are the Public Holidays in Cambodia?

Cambodia has 21 official public holidays (PHs) in a calendar year of which the most important or celebrated are the Khmer New Year in April and the Pchum Ben in September or October. Several PHs are based on the lunar calendar. An official list of PHs indicating their dates is announced by MLVT. Since September 2021, any PH that falls on a Sunday will not longer be carried over to Monday. 

Setting up a Business in Cambodia – Registration and Formation of a Company

On 15 June 2020, the Cambodian Government launched the single portal (https://www.registrationservices.gov.kh/), a new online business registration portal that allows a private limited company to be incorporated at the Ministry of Commerce (MOC), the General Department of Taxation (GDT) and the Ministry of Labor and Vocational Training (MLVT) in one streamlined process. Other relevant ministries/institutions whose involvement is required for specific license/permit may become involved at a later stage (if any).

In the case of the most common registration of a private limited company, the entire process takes around 8 working days from the date of submission of all required documents to obtaining the digital certificates from the following ministries:

•  MOC

• Certificate of incorporation;
• Business Extract; and
• Articles of incorporation, with the ministerial seal.

•  GDT

• Value Added Tax (VAT) certificate;
• Patent Tax certificate;
• Tax Registration Identification Card; and
• Tax Instruction letter.

•  MLVT

• Declaration of Opening of Enterprise.

With effect from 1 September, 2021, 4 other ministries/institutions including the Ministry of Tourism (MOT), the Ministry of Post and Telecommunications (MPTC), the Ministry of Industry Science Technology and Innovation (MISTI) and the Real Estate Business and Pawnshop Regulator of the Non-Bank Financial Services Authority (RPR of NBFSA) were included in the portal.

Requirements for naming a Company in Cambodia

Some of the requirements in registering the name of a private limited company are as follows:

• Must include the words “Company Limited” or the appropriate abbreviation, “Co., LTD.” at the end.
• Must not be similar to company names that have been previously registered.
• Must not be contrary to public order (i.e. names that are offensive or a public nuisance).

Establishment of Business Entities in Cambodia

Cambodia’s Law on Commercial Enterprises (LCE) was promulgated in September 2005 to provide the legal framework for the establishment and operation of businesses in the Kingdom. It allows for the establishment of the following types of businesses.

• Sole proprietorship
• General Partnership (partners are personally liable for the partnership’s liability)
• Limited Partnership (partners are liable only to the extent of their agreed contribution)
• Limited Liability Company
  • Private Limited Company (may not have more than 30 shareholders; restrict share transfer; may not offer shares to the public)
  • Public Limited Company (may offer shares to the public)

One of the most common types of business entity registered by foreign investors/businesses is the Private Limited Company. Some of its requirements and characteristics include the following:

• Can be 100% foreign owned
• A minimum capital requirement of KHR 4 million (equivalent to USD 1,000) – i.e. minimum of 1,000 shares at KHR 4,000@
• Shareholder(s) liability limited to their value of capital contribution
• Can have one or more directors (Note: Public Limited Company must have at least 5 but not more than 15 directors)
• Corporate governance is simple and requires only one director
• The dissolution process is relatively simple

Legal Entity / Personality of Companies in Cambodia

There are broadly three types of legal entity / personality for foreign businesses that can be registered in Cambodia under the Law on Commercial Entities (LCE).

• Representative Office in Cambodia. This is established primarily to facilitate sourcing of local goods/services, collect information and market intelligence (i.e. market research) and to promote and market the offshore parent company’s goods/services in Cambodia. It does not conduct commercial transactions per se, and can negotiate commercial contracts but only its parent company can enter into such agreements. not the most appropriate form for foreign investors, because it is usually created for the purposes of marketing, market research, and business networking. It is subject to withholding tax on salaries etc.
• Branch Office in Cambodia. This is the same legal entity as the parent company and carries the same name of the latter, and is considered an extension of the parent company. It is created to conduct a professional service or particular commercial activity in Cambodia. It is legally liable for the losses and debts of the parent company.
• Subsidiary Office in Cambodia. This is a separate legal entity from the parent company, the latter for which holds at least 51% of the capital / equity of the locally registered entity. It conducts commercial activities and are liable for local tax obligations. The major practical difference between a branch office and a subsidiary office is that the parent company is not jointly liable for the debts or losses of a subsidiary office.

Taxation in Cambodia

Foreign businesses are subject to local taxation such as the minimum tax and tax on profit, VAT and other applicable Withholding Tax. See section under Legal and Taxation for more information.

Employment and Contracts in Cambodia

Employment contracts in Cambodia are either Fixed Duration Contracts (FDC) or Undetermined Duration Contract (UDC).

A FDC must contain the following:

• Contract duration – the date of commencement and expiry – with a renewal option so long as the total duration of the contract does not exceed the maximum duration of two years
• Remuneration (Salaries and Benefits)
• Working Hours
• Job Description and Work conditions
• Other Terms and Conditions

A written UDC must contain the following:

• Contract duration – the date of commencement and expiry – with a renewal option so long as the total duration of the contract does not exceed the maximum duration of two years
• Remuneration (Salaries and Benefits)
• Working Hours
• Job Description and Work conditions
• Other Terms and Conditions

Rental, Recruitment and Office Fit-out in Cambodia

Use the Business Tools at no charge to estimate business set up costs, or shortlist service providers from the Business Directory to assist your business registration and set up, as well as the various operational and administrative compliances, including taxation.

Feel free to enquire with the Aquarii team should you need further advice.

If you are looking for a more nuanced insight or advice in terms of other indicators / observations not commonly found in publications for a better understanding of how a business or investor can navigate the local environment or seek out collaboration opportunities and trustworthy partners, get in touch with our team at Aquarii. Ask to speak to our CEO if you wish to know why he has decided to make Cambodia his 2^nd home, perhaps the strongest testament of his conviction in the potential and opportunities in the Kingdom.

Tourism and hospitality is the Cambodian economy’s second-largest growth driver, and by World Bank (WB)’s estimates, contributed about 21% to the GDP in 2019. According to the Ministry of Tourism, this translated into a gross revenue of around USD 4.92 b, a 13% YOY increase. Without a doubt, the tourism sector which has been on the rise for the past decade, is an important foreign exchange earner, attracting 6.61m international tourists which were a 6.6% YOY increase. China was the largest source at 2.36m visitors, followed by Vietnam and Thailand.

Prior to the Covid pandemic, the growth of tourism and hospitality in Cambodia was already encountering a slowdown. Its over-reliance on Angkor Wat in Siem Reap and Chinese visitors were often highlighted by many as warning signs that should not be ignored, but the fallout from the ban on online gambling in Aug 2019 (effective 1 Jan 2020) further catalyzed the slowdown in arrivals to Angkor sites and elsewhere in the country the following year. The Covid pandemic then dealt a severe blow to the global travel and hospitality industry, and the tourism industry in Cambodia was brought to its knees.

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. Industry experts estimate that it would take 3 to 5 years for Cambodia’s tourism sector to get back on its feet, assuming the pre-Covid fundamental challenges are being adequately addressed.

Eco-Tourism in Cambodia

Although low-lying central plains make up about three-quarters of its geography, Cambodia has several distinct landscapes that offer very rich biodiversity of flora and fauna. These very vibrant ecosystems are home to hundreds of different species of wildlife including migratory birds, and thousands of species of plants, and are well suited for eco-tourism.

• Forested highlands (including the Cardamon, Dangrek and Chhlong mountains) and flooded forests at the foot of the mountains;
• The largest natural freshwater lake in Southeast Asia, the Tonle Sap and the Mekong River system and its many tributaries;
• The eastern plains or highlands in Rattanakiri and Mondulkiri boasts a landscape and temperate climate resembling that in Europe;
• The coastal region includes mangrove wetlands; and
• Offshore islands a short ride by boat from the coastal provinces of Koh Kong and Sihanouk.

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. Trends of increased visitors to ecotourism sites in Cambodia suggest that ecotourism is a product that could be further developed in terms of sophistication and quality control to optimize its potential.

This can not only help create innovative revenue streams for the Cambodian government and its local communities, but help to preserve and protect its natural forests and habitat; these two endeavors or goals need not be mutually exclusive, and indeed, more private sector players are venturing into ecotourism and proving that they could be as good, if not better, at achieving both goals more efficiently and productively than projects that are run or managed on strictly conservation agenda.

Feel free to enquire with the Aquarii team should you need further advice.

If you are looking for a more nuanced insight or advice in terms of other indicators/observations not commonly found in publications for a better understanding of how a business or investor can navigate the local environment or seek out collaboration opportunities and trustworthy partners, get in touch with our team at Aquarii. Ask to speak to our CEO if you wish to know why he has decided to make Cambodia his 2^nd home, perhaps the strongest testament of his conviction in the potential and opportunities in the Kingdom.

Legal Situation in Cambodia

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).

For foreign businesses and investors, it is unavoidable that legal contracts on investments, projects and partnerships here must adhere to the jurisdictional law of the host country, and this may understandably be an issue of anxiety and concern. However, that need not be the case if the right local partner and some commonsense due diligence are undertaken before entering into any formal agreement.

After all, legal protection as enshrined in contractual agreements is supposed to be just that – a contingency, a safeguard, a safety net and for some, the dreaded last resort of choice to ensure an agreeable outcome for all signatory parties. But this requires some familiarity of the local operating context, access to a network of diverse contacts and a conduit that elicits trust, integrity and reasonableness in the conduct of business transactions.

It will be worthwhile to devote more time, attention and resources to ensure these fundamental prerequisites are in place rather than be overly hasty in a business deal on account of the personal referral of persons or entities claiming to have the right “political connection”. A simple anecdote that may be all too familiar to those who had previous business/investment experience in any emerging economy is when someone claims to be well connected to a general (or a few); the reality is that there are more police and military generals per capita in Cambodia than countries that boast much larger security and armed forces.

Nevertheless, foreign business and investors should peruse the Business Directory in this platform at no charge to shortlist legal firms to consult for not only its contractual needs but on a variety of other operational and administrative compliances, including taxation. It would be prudent to pay more attention to clauses on disputes settlement in contractual agreements beyond the usual standard refrains; Aquarii strongly advocates the inclusion of stipulations on amenable resolution, mediation and arbitration.

Feel free to enquire with the Aquarii team should you need further advice.

Taxation in Cambodia

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. The tax registration can be concurrently filed with the General Department of Taxation (GDT) when the application for company registration is submitted to the Ministry of Commerce (MOC).

Some of the more common taxes that foreign businesses and investors would have to file declaration and comply with are listed below but note that they are not exhaustive and other taxes and duties may be applicable:

1. Taxes on Employment

An individual is considered a tax resident if they have been in Cambodia for more than 182 days in any 12-month period ending in the current year of tax assessment;

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;    

2. Tax on Company vehicle

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

4. Stamp tax (exempt for newly established companies) but applicable for mergers, dissolution, transfer of shares and immovable properties and assets.

5. Tax on Income depending on the industry (Note: There is also Prepayment Tax on Profit calculated at the base rate of 1% of the company’s annual turnover which is to be paid by or before the 20^th of each month. The cumulative amount shall be deducted against the tax on profit at the annual declaration).

6. Minimum Tax is at the rate of 1% of the annual turnover (inclusive of all taxes except VAT) and is payable along with the tax on profit.

7. Withholding Tax is the tax that a resident taxpayer business withholds when it makes payment in cash or in-kind to a resident or non-resident taxpayer, including bank interest, royalties, rental, dividends, etc.

8. VAT – Value-Added Tax at 10% of the value of the goods or services to be supplied must be charged/added.

9. Capital Gains Tax of 20% was promulgated on 1 April 2020 to be effective from 1 July of the same year, but the implementation was subsequently deferred to 2023 due to economic pressures from the Covid pandemic.

Note: Qualified Investment Projects (QIPs) are exempted from selected taxes and duties

Double Tax Agreements of Cambodia (DTA)

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

We advocate seeking the professional advice and services of a qualified and reliable accountancy firm to ensure that your tax filing is done correctly and in compliance with GDT requirements from the onset.

Feel free to enquire with the Aquarii team should you need further advice.

If you are looking for a more nuanced insight or advice in terms of other indicators/observations not commonly found in publications for a better understanding of how a business or investor can navigate the local environment or seek out collaboration opportunities and trustworthy partners, get in touch with our team at Aquarii. Ask to speak to our CEO if you wish to know why he has decided to make Cambodia his 2^nd home, perhaps the strongest testament of his conviction in the potential and opportunities in the Kingdom.

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”)

Similar to most countries and jurisdictions around the world, Accountancy and Audit are subject matters that require professional expert advice and services to ensure corporate compliance and adherence to host country legal and taxation regulations. This is especially important in emerging markets when the bureaucracy and institutions are still developing or undergoing reform, and where there may be variances in the interpretation of obligations and requirements because of different country systems, cultural practices and expectations, among other variables.

Unlike Multinational Corporations (MNCs), SMEs may have smaller operating budgets and hence find it challenging when considering which of these professional service providers should they consider. Factors such as the affordability, reliability, customer service, attention to details among others would weigh heavily in their considerations. We encourage you to peruse the Business Directory in this platform at no charge to shortlist Accounting and Audit service providers for your company’s operational and compliance needs. If you are unable to decide whether it is necessary to engage the services of a big accounting audit firm with an international reputation or a lesser known local or foreign firm that is not as well known, or any other number of choices in between, feel free to enquire with the Aquarii team for further advice.

Feel free to enquire with the Aquarii team should you need further advice.

If you are looking for a more nuanced insight or advice in terms of other indicators/observations not commonly found in publications for a better understanding of how a business or investor can navigate the local environment or seek out collaboration opportunities and trustworthy partners, get in touch with our team at Aquarii. Ask to speak to our CEO if you wish to know why he has decided to make Cambodia his 2^nd home, perhaps the strongest testament of his conviction in the potential and opportunities in the Kingdom.

When it comes to banking and finance in Cambodia, the National Bank of Cambodia (NBC) is Cambodia’s central bank and monetary authority. It is the supervisory regulator of all financial institutions in the Kingdom, including Microfinance Institutions (MFIs), Microfinance Deposit-taking Institutions (MDIs), specialized banks and commercial banks, and operators of e-wallets, remittance services, insurance companies among others. NBC has the authority to inter alia license banks and issue permits for e-wallet providers, regulate money transfers and remittances, manage and conduct foreign exchange transactions, provide credit, and establish credit ceilings and interest rate guidelines.

In recent years, NBC has proactively promoted the use of the Khmer Riel to mitigate the risks inherent in a highly dollarized economy; as Cambodia aspires towards middle-income status, high dollarization leaves the country vulnerable to external shocks and can threaten its hard-earned economic gains. This will serve to bolster its role as the country’s central bank as a more effective monetary policy will be one of the policy instruments it needs to promote price stability and sustainable economic development for the Kingdom.  For example, all taxes and utilities are to be paid in the local currency, and the value of the Khmer Riel is maintained through a stable exchange rate.

The minimum capital requirement for commercial banks is USD 75 million, but this will be raised gradually to USD 200 million over the next few years. Specialized banks must maintain at least USD 15 million in registered capital whereas that for MFIs is USD 1.5 million. MFIs are generally authorized to engage in credit services and savings, but an MDI license is required for the collection of deposits from members of the public. According to NBC’s record as of 31 December 2020, there were 47 commercial banks, 12 specialized banks, 6 MDIs and 73 MFIs in the Kingdom. These numbers would be subject to change due to the exacting and cumulative challenges brought about by the Covid pandemic over the past two years, as some could have undergone mergers and acquisitions. A quick survey of the banking landscape reveals a broad spectrum of representation from various countries such as Canada, China, Cambodia, France, Japan, Malaysia, South Korea, Singapore, Thailand, and Vietnam.

The only Singaporean-owned bank in the Kingdom is Phillip Bank, a member of Phillip Capital Group established since 1975.

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). Accordingly, local loans are not cheap and are typically for the short term; interest rates are in fact relatively high compared to those found in developed countries, and security or collateral is often a necessity. In spite of the higher cost of lending, lending activities have increased in the past decade, keeping pace with the Kingdom’s rapid rate of economic development, especially in the infrastructure, construction and tourism activities. Aquarii’s preferred banker of choice, Phillip Bank is one of the largest commercial banks in Cambodia in terms of branch network, with more than 80 branches throughout the country. Phillip Bank offers a wide range of financial services and products catering to Corporate, SME and Retail customers.

Supplementary

Banking System in Cambodia

Inflation and Exchange Rate 2015-2021

Feel free to enquire with the Aquarii team should you need further advice.

If you are looking for a more nuanced insight or advice in terms of other indicators/observations not commonly found in publications for a better understanding of how a business or investor can navigate the local environment or seek out collaboration opportunities and trustworthy partners, get in touch with our team at Aquarii. Ask to speak to our CEO if you wish to know why he has decided to make Cambodia his 2^nd home, perhaps the strongest testament of his conviction in the potential and opportunities in the Kingdom.

Cambodia’s insurance market is still at 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. 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.

According to a report from the Insurance Association of Cambodia (IAC), the insurance sector continued its positive momentum through the first quarter of 2021 with a growth rate of 16.3%, down from 20.8% YOY. 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. 

ICA 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.

Feel free to enquire with the Aquarii team should you need further advice.

If you are looking for a more nuanced insight or advice in terms of other indicators/observations not commonly found in publications for a better understanding of how a business or investor can navigate the local environment or seek out collaboration opportunities and trustworthy partners, get in touch with our team at Aquarii. Ask to speak to our CEO if you wish to know why he has decided to make Cambodia his 2^nd home, perhaps the strongest testament of his conviction in the potential and opportunities in the Kingdom.

Cambodia’s telecommunications sector is fast developing and its overall outlook is promising and likely to enjoy robust growth in the years to come. In this article we discuss some of the key points and ‘must knows’ of the telecommunications sector in Cambodia. To find out more about doing business in Cambodia, contact our team today.

How developed is Cambodia’s telecommunications sector?

Cambodia’s telecommunications sector is fast developing and its overall outlook is promising and likely to enjoy robust growth in the years to come. There are several key observations to note:

The lack of regulatory restrictions or limitations on foreign ownership of telecommunications players

Government efforts to liberalize the telco market by allowing private investment and promoting competition has also attracted several foreign and local investments, a few of which are Chinese private entities

With lower-than-average mobile phone tariffs compared to other Southeast Asian countries, mobile services in Cambodia have surpassed the growth of fixed-line systems, the latter of which remains relatively underdeveloped

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

Some telecom operators are upgrading their internet infrastructure to 5G, offering faster speeds and more reliable internet connections on smart devices. Reforms in telecommunications regulatory environment, and clearer delineation of the duties and responsibilities of Telecommunication Regulator of Cambodia (TRC) from the parent Ministry of Post and Telecommunications (MPTC).

What are the top telecommunications companies in Cambodia?

Launched in 1997, Cellcard is Cambodia’s longest-serving and only 100% Cambodian-owned operator, reputed for its long history of first-to-market innovations, outstanding customer service and the fastest, most reliable mobile network. Considered as one of the biggest telco companies in Cambodia, Cellcard services over four million customers with nationwide coverage and an expansive dealer and distribution network. Find out more about Cellcard and Cellcard business services today.

With a vision towards providing connectivity for all and enhancing the way customers live, work and play, Cellcard’s portfolio continues to expand to accommodate and build the esports and gaming community, provide digital entertainment services to address the need for real-time and on-demand content, and offer innovative and insightful enterprise solutions to support businesses.

Cellcard’s leadership team has an entrepreneurial mindset with significant operational experience in telecommunications in both emerging and mature markets. The team has a tremendous depth of knowledge of the Cambodian market and understands customer behavior and psyche as market dynamics.

Other major telecommunications operators include:

• CamGSM Co., Ltd. (Cellcard)
• Smart Axiata Co., Ltd. (Smart Axiata)
• Viettel (Cambodia) Pte. Ltd. (Metfone)
• South East Asia Telecom (Cambodia) Co., Ltd. (Seatel Cambodia)

Which IT and telecommunications companies have gone public?

Cellcard is the only telecommunications company to go public, after it announced its plans to pursue an Initial Public Offering (IPO) in May 2023. This move is just the latest in a long line of innovative business developments that have helped Cellcard become a leader in the Cambodian telecommunications market.

Cellcard’s decision to pursue an IPO is just the latest in a long line of innovative business developments that have helped the company become a leader in the Cambodian telecommunications market. By going public, Cellcard will be able to raise additional capital to fund further innovation and expansion, and the company’s continued success is a testament to its commitment to providing the best possible products and services to its customers.

As a leading mobile network operator with over 4 million customers, Cellcard’s listing on the Cambodia Securities Exchange (CSX) is expected to attract further attention from local investors about the stock market as well as increase stubbornly low liquidity in the market. The listing comes amidst positive growth signs for 2023, despite global economic headwinds and rising borrowing rates.

In conclusion, Cellcard’s decision to pursue an IPO is just the latest in a long line of innovative business developments that have helped the company maintain its leadership position in the Cambodian telecommunications market. Through its focus on introducing new technologies, supporting entrepreneurship, and providing excellent customer service, Cellcard has become a trusted and respected brand in Cambodia, and the company’s future looks bright as it continues to innovate and grow.

Which telecommunications companies have been instrumental in helping develop the Cambodian IT and telecommunications sector?

To use an example for innovation in it and telecommunications, Cellcard – the longest running and only 100% Khmer owned company – has been a pioneer in introducing new technologies and services to the Cambodian market. For example, Cellcard was the first company to introduce 3G technology to Cambodia, providing customers with faster internet speeds and a more reliable network.

In addition to 3G, Cellcard has also been at the forefront of mobile payment services in Cambodia. The company’s Cellcard Cash service allows customers to make payments and transfer money using their mobile phones, making transactions faster, more convenient, and more secure.

Cellcard has also been a leader in the development of telco loyalty programmes in Cambodia. The company’s Cellcard Club programme rewards customers for their loyalty with discounts, special offers, and exclusive promotions.

Another area where Cellcard has been a leader is in supporting entrepreneurship in Cambodia. The company’s entrepreneur accelerator programmes provide support and resources to aspiring entrepreneurs, helping them turn their ideas into successful businesses.

In addition to these achievements, Cellcard has also been the first in Cambodia to open a digital experience service center, where customers can test out the latest devices and get expert advice on their purchases. The company has also hosted the first-ever software developers exhibit in Cambodia, showcasing the latest innovations in software development and providing a platform for local developers to showcase their work.

What is the Cambodian Government’s policy for the telecommunications sector?

MPTC’s digital government policy for 2021-2035 to serve as a roadmap for providing better public services through the use of digital technology, with priority emphasis on building more telecommunications infrastructure, improving telephone and internet services, etc

According to MPTC, as of April 2021, Cambodia has:

• 5 mobile service providers – Smart Axiata, Cellcard, Viettel, Cootel and SEAtel
• 47 ISP licenses were issued
• 12 m social media users or 71.3% of total population, a 24% YOY increase or 2.3 m over the same period in 2020
• 17.48 m Mobile internet subscribers or 104% of total population, a 7% YOY increase

Supplementary

Telecommunication Infrastructure Index of Cambodia 2020

Number of Mobile Phones in Cambodia

Internet Service Subscribers in Cambodia

Feel free to enquire with the Aquarii team should you need further advice.

If you are looking for a more nuanced insight or advice in terms of other indicators/observations not commonly found in publications for a better understanding of how a business or investor can navigate the local environment or seek out collaboration opportunities and trustworthy partners, get in touch with our team at Aquarii. Ask to speak to our CEO if you wish to know why he has decided to make Cambodia his 2^nd home, perhaps the strongest testament of his conviction in the potential and opportunities in the Kingdom.

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).  With rising awareness of labor/employee rights and an increase in trade unions, foreign businesses and investors in Cambodia, especially those that employ large numbers of employees/workers, should be familiar and have a good working knowledge of the Labor Law and its regulations, terms, and conditions.

There are no restrictions on the employment of Cambodians, but foreign businesses will have to apply for a business visa (or E-visa) and work permit for each foreigner they choose to hire and must comply with MLVT’s foreign employee quota system. 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 labor, and 1% can be unskilled.

This quota may be increased, at the discretion of the MLVT, particularly if the specific skills required by the company are currently unavailable or difficult to source in Cambodia. Businesses that flout the quota regulation can be fined between USD 630 to USD 900.

While there is generally a lack of skilled and experienced human resources for certain positions and job responsibilities, what is more, important is to identify the right recruitment conduits through which competent, qualified and reliable candidates can be shortlisted and interviewed.

A few salient matters that foreign businesses may wish to note concerning the local employment practices and regulation:

Seniority Payments

In response to rising incidents of factory owners reneging on salary payments to garment workers, an important vote bank in local elections, MLVT introduced new regulations requiring employers to pay employees under Undefined Duration Contract (UDC) seniority payments payable once every 6 months in June and December each year.  This is akin to advance payment of severance payment in other countries. The employee will be entitled to seniority payment equal to 7.5 days for each particular half-year or 15 days per year.

Wages

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). The minimum wage is subject to negotiated change every year through their tripartite mechanism between the Garment Manufacturers Association of Cambodia (GMAC, on behalf of factory owners), the trade unions (on behalf of the workers), and MLVT (representing government). Other mandatory benefits that only workers in the garments, textile, and footwear sector are entitled to include attendance bonuses, seniority bonuses, and allowances for travel, accommodation, and overtime meals.

Mandatory Employee Benefits

• 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

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.

Supplementary

Working Age Population in Cambodia in 2020

Employment Population (aged 15-64 years) by Main Industry and Sex

Feel free to enquire with the Aquarii team should you need further advice.

If you are looking for a more nuanced insight or advice in terms of other indicators/observations not commonly found in publications for a better understanding of how a business or investor can navigate the local environment or seek out collaboration opportunities and trustworthy partners, get in touch with our team at Aquarii. Ask to speak to our CEO if you wish to know why he has decided to make Cambodia his 2^nd home, perhaps the strongest testament of his conviction in the potential and opportunities in the Kingdom.

Cambodia’s economy has been growing at a steady pace in recent years, and much of this growth can be attributed to the efforts of chambers and associations in Cambodia. These organisations play a crucial role in developing the market, fostering innovation, and connecting local and global business interests. Through their efforts, they create a beneficial ecosystem that empowers the business community, which is essential for sustained economic growth. 

In this article we discuss what these entities represent, who the prominent chambers and associations in Cambodia are, and the impact they have in the Kingdom’s development. For more in-market information in Cambodia, you can view business and investor resources right here, on our free to use platform.

What are chambers and business associations in Cambodia?

Chambers and associations in Cambodia are made up of a network of business people designed to promote and protect the interests of the members. Generally, they are made up of business owners that share a locale, or common interests. Chambers and associations in Cambodia can be regional, national, and international in scope. Corporate make-up, leadership, and representation vary depending on the chamber.

There are many types of chambers and associations in Cambodia, such as Community Chamber, State Chamber, City Chamber, National or International Chamber as well as many business associations. The board of directors of a chamber or association in Cambodia may includes Chief Paid Executive, Operations Executive, Finance, Communications and Membership.

From an international perspective, chambers and associations exist in almost all countries of the world. Their primary function is to promote business exchanges between the countries they represent and the host country they are in. This is achieved through building attractive communities, ensuring the advancement of the community via a pro-business climate, promoting the community, representing the voice of the business community, and reducing transactional friction by maintaining a network.

Generally, chambers and associations in Cambodia represent sovereign nations, but can also represent bodies such as the European Union, or non-sovereign entities.

What are the main chambers and associations in Cambodia?

There are several noticeable Business Chambers and associations in Cambodia such as AmCham, EuroCham, IBC, IndoCham, MBCC, CCC, JBAC, YEAC, CWEA, Khmer Enterprise etc.

What do the main chambers and associations in Cambodia do?

Here are prominent examples of business associations or chambers in Cambodia that are contributing significantly to the country’s economic development, and how they do so:

• American Chamber of Commerce in Cambodia (AmCham): Established in 1996, AmCham is a non-profit organization that aims to promote trade and investment between the United States and Cambodia. The chamber provides networking opportunities, business advocacy, and information services to its members.
• Khmer Enterprise: Khmer Enterprise is a government agency that supports the development of small and medium-sized enterprises (SMEs) in Cambodia. It provides training, mentoring, and financial support to help entrepreneurs start and grow their businesses.
• Young Entrepreneurs Association Cambodia (YEAC): YEAC is an organization that supports the development of young entrepreneurs in Cambodia. It provides training, mentoring, and networking opportunities to help young people start and grow their businesses.
• Cambodia Chamber of Commerce (CCC): CCC is an organization that represents the interests of Cambodian businesses. 
• Cambodian Women Entrepreneurs Association (CWEA): CWEA is an organization that supports the development of women entrepreneurs in Cambodia. It provides training and networking opportunities, as well as access to financial resources to help women start and grow their businesses.

There is also the British Chamber of Commerce in Cambodia (BritCham), Australian Chamber of Commerce in Cambodia (AusCham), French Chamber of Commerce and Industry in Cambodia (CCIFC), European Chamber of Commerce in Cambodia (EuroCham), CCIFC represents the interests of French businesses in Cambodia and the German Business Group Cambodia (ADW) which all also provides networking opportunities, business advocacy, and information services to members.

What role do chambers and associations in Cambodia play in its development?

Chambers and associations in Cambodia play a vital role in the country’s economic development by providing a range of services to their members. Here are some examples of the role played by these organisations in Cambodia’s economy:

• Provide Networking Opportunities: Chambers and associations provide a platform for businesses to connect with each other, share ideas, and build relationships. For example, the American Chamber of Commerce in Cambodia (AmCham) organises regular events and networking opportunities for its members, which helps them to expand their business networks and identify new opportunities.
• Business Advocacy: Chambers and associations represent the collective interests of their members to the government and other stakeholders. For example, the Cambodia Chamber of Commerce (CCC) works to promote the interests of Cambodian businesses by advocating for policies and regulations that are favorable to the business community.
• Information Services: Chambers and associations provide information and resources to their members to help them make informed business decisions. For example, the European Chamber of Commerce in Cambodia (EuroCham) provides its members with access to market research, industry reports, and other relevant information.
• Training and Mentoring: Chambers and associations provide training and mentoring to entrepreneurs to help them start and grow their businesses. For example, the Cambodian Women Entrepreneurs Association (CWEA) provides training and mentoring to women entrepreneurs in Cambodia to help them overcome challenges and build successful businesses.
• Access to Financial Resources: Chambers and associations provide access to financial resources, such as loans and grants, to help businesses start and grow. For example, Khmer Enterprise is a government agency that provides financial support to small and medium-sized enterprises (SMEs) in Cambodia to help them access the capital they need to grow.

Through these services, chambers and associations in Cambodia create a beneficial ecosystem that empowers the business community, fosters innovation, and connects local and global business interests. This, in turn, contributes significantly to the country’s economic growth and development.

What are the Indonesian chambers or associations in Cambodia?

Indonesian Chamber of Commerce (IndoCham) is another prominent business association in Cambodia that represents the interests of Indonesian businesses. The chamber was established in 2011 and provides networking opportunities, business advocacy, and information services to its members. IndoCham also supports the development of trade and investment between Indonesia and Cambodia, as well as other countries in the region. The chamber organises various events, seminars, and workshops to help its members stay up-to-date with the latest business trends and opportunities. Through its efforts, IndoCham is playing a significant role in promoting economic growth and business development in Cambodia.

The Indonesian Chamber of Commerce and Industry (KADIN) is an association for businesses in Indonesia, with links to Cambodia It was founded in 1968 and is headquartered in Jakarta. KADIN has over 30,000 members, including private companies, cooperatives, and state-owned enterprises.

KADIN’s mission is to develop Indonesian entrepreneurs and to create a healthy and dynamic business climate. It does this by providing a forum for businesses to meet and network, by advocating for business interests to the government, and by providing training and support to businesses. KADIN works by:

• Promoting trade and investment: KADIN organises trade missions and business delegations, and it provides information and support to businesses that are looking to export or invest in Indonesia.
• Developing human resources: KADIN provides training and development programs for businesses, and it works to improve the skills of the Indonesian workforce.
• Improving the business climate: KADIN advocates for policies that are favourable to businesses, and it works to reduce corruption and bureaucracy.

What are the Singaporean chambers or associations in Cambodia?

There are several active Singaporean chambers and associations in Cambodia:

• The Singapore Club Cambodia (SCC): A social club for Singaporeans living and working in Cambodia. It was established in 2006. The SCC’s mission is to provide a sense of community and support for Singaporeans in Cambodia, and to promote the interests of Singapore in Cambodia.
• Singapore Business & Investment Forum (SBIF): SBIF objective is to provide support and update on current Government policy and investment in Cambodia. To provide relevant information and network for Singapore Investor to Cambodia. There is a focus on business networking, business matching, investment opportunity, investment update, inter Business Chamber networking, trade, law government updates. Find out about the Aquarii event involving SBIF here.

Are chambers and associations in Cambodia useful in Cambodia? 

Chambers and associations in Cambodia play a crucial role in advancing the interests of their members, promoting economic growth, and creating a favourable business environment. Through their efforts, they help to build a beneficial ecosystem that empowers the business community, fosters innovation, and connects local and global business interests. 

Chambers and business associations in Cambodia are essential components of the country’s economic development. By fostering collaboration, promoting innovation, and connecting the business community, they create a favourable environment for businesses to thrive. The examples of chambers and associations mentioned above are only a few of the many organisations working to empower the business community in Cambodia.

To contribute to this section, please contact us here.

Medical Care Services

Medical care services for the NSSF members who are defined by the provisions of the Labour Law including personnel serving in air and maritime transportation as well as domestic workers shall be entitled to enjoy medical care services only if they have registered and paid contributions to the Health Care Scheme.

Medical care services are as follows:

1. Inpatient department includes:

– Treatment and care services with medical professional technics

– Diagnosis, laboratory and other medical screening services

– Surgical apparatus and other medical equipment in the need of treatment

– Prescribed medicine

– Inpatient room.

2. Outpatient department includes:

– Treatment and care services with medical professional technics

– Diagnosis, laboratory and other medical screening services

– Surgical apparatus and other medical equipment in the need of treatment

– Prescribed medicine.

3. Delivery and prenatal-and-postnatal services

4. Physiotherapy and kinesitherapy services or other medical rehabilitation services

5. Emergency service: in the case of an emergency, the victim can access medical care services at the nearest health facility. If such a health facility does not have an agreement with NSSF, the person concerned or representative of the victim shall inform NSSF promptly.

6. Health prevention services.

7. Patient or victim referral services and corpse transportation.

Patient or victim referral services shall be provided in the case of emergency by the ambulance of the health facility only.

Hopeless patient or corpse transportation shall be provided based on the price of health facilities recognized by NSSF.

8. Medical rehabilitation services

Medical rehabilitation services for supporting the medical care or helping alleviate patient or victim during treatment.

Daily Allowance for Sick Leave

The NSSF members who are defined by the provisions of the Labour Law including personnel serving in air and maritime transportation as well as domestic workers shall have entitlement to enjoy daily allowance for sick leave only if they: – Registered in Health Care Scheme – Paid contributions in a qualifying period of 2 (two) consecutive months or 6 (six) months within a period of the last 12 (twelve) months. – Hospitalized in the health facility for 8 (eight) days or more.

A daily allowance shall be provided from the first day of the abstention from work because of the hospitalization in the health facilities. A daily allowance shall be equivalent to 70% of the daily average wage for contribution payment in a qualifying period of not exceeding 6 (six) months before encountering health problems. Page 14 of 24 Conditions, formalities, and procedures of providing a daily allowance for sick leave shall be regulated by Prakas of Minister of the Ministry in charge of social security schemes in compliance with the proposal of the NSSF Governing Body.

Maternity Allowance

The NSSF members who are defined by the provisions of the Labour Law including personnel serving in air and maritime transportation as well as domestic workers shall be entitled to enjoy the maternity allowance only if they: – Registered in Health Care Scheme – Paid contributions for at least 9 (nine) months within the last 12 (twelve) months until the date of delivery.

The maternity allowance shall be equivalent to 70% of contributory wage in a qualifying period of not exceeding 6 (six) months before the delivery month for 90-day maternity leave. Conditions, formalities and procedures of providing maternity allowance are regulated by Prakas of Minister of the Ministry in charge of social security schemes in compliance with the proposal of the NSSF Governing Body.

Source: http://www.nssf.gov.kh/default/wp-content/uploads/2020/09/2.-Law-on-Social-Security-Schemes.pdf

We welcome service providers or subject matter experts for this sector to provide relevant insights and pertinent information, which shall be attributed to your business (subject to Aquarii’s curation and edits).

To contribute to this section, please contact us here.

We welcome service providers or subject matter experts for this sector to provide relevant insights and pertinent information, which shall be attributed to your business (subject to Aquarii’s curation and edits).

To contribute to this section, please contact us here.

Supplementary

Indicative Recurrent Budget Expenditure for Public Health in Cambodia (in million USD)

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. 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.

The Kingdom of Cambodia has made significant progress to regulate the digital economy. The promulgation of the first Cambodian Law on E-commerce has created a significant improvement for electronic commerce in the country. The law covers the issues of electronic communication, electronic record and signature, intermediary and e-commerce service providers, electronic evidence, and so on. 

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.  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.

According to the ASEAN+3 Macroeconomic Research Office (AMRO), the Fintech ecosystem in Cambodia, particularly in digital payments and transfers, has greatly expanded in recent years. In fact, the Covid pandemic may have helped to catalyze this shift to cashless transactions. It assessed that this increased pace of adoption of digital payments and mobile banking has helped to lower the costs of financial services (for the unbanked) and operational costs (for the payment service institutions), providing an overall more efficient, convenient, and secure services to all. AMRO noted that despite a late start:

• Mobile money services have expanded rapidly within 5 years from just 34 agents per 100,000 adults in 2015 to 400 per 100,000 adults in 2020
• 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
• 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

Some of the commercial banks that offer their own mobile payment gateways are:

• Phillip Bank
• Prince Bank
• ABA Bank

Some of the e-wallet / e-payment industry players are:

• Pi Pay
• UPay
• DaraPay
• Smart Luy

Supplementary

Startup Landscape by Category

Cambodian Payments Topology

Feel free to enquire with the Aquarii team should you need further advice.

If you are looking for a more nuanced insight or advice in terms of other indicators/observations not commonly found in publications for a better understanding of how a business or investor can navigate the local environment or seek out collaboration opportunities and trustworthy partners, get in touch with our team at Aquarii. Ask to speak to our CEO if you wish to know why he has decided to make Cambodia his 2^nd home, perhaps the strongest testament of his conviction in the potential and opportunities in the Kingdom.

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. 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. But according to the National Bank of Cambodia’s estimates, MLMUPC approved USD 11.4 b worth of new construction projects in 2019 alone. The residential, commercial, and industrial segments accounted for about 46-50%, 30-35%, and 14-15% share of new projects respectively.

Most of the money going into these projects was locally sourced, with China accounting for most of the foreign investment. 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. If the cityscape of Phnom Penh has changed drastically, then the port city of Sihanoukville has been transformed beyond recognition as the coastal provinces of Koh Kong and Preah Sihanouk were also changed with numerous tourism and mixed development projects.

However, 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%. This was exacerbated by the Covid pandemic which wreaked havoc in the global supply chain and caused unprecedented travel restrictions to be imposed, severely disrupting the availability and pricing of construction materials and labour, as well as shutting out buyers, investors and businesses. In 2021, the total number of approved projects was 4,303 at an estimated total investment value of USD 5.33 billion.

However, given Cambodia’s high vaccination rate where nearly 90% of its population have been fully vaccinated and the bold steps are taken to reopen its economy by lowering quarantine measures for vaccinated travelers to the Kingdom, the construction and real estate sector in Cambodia should rebound in 2022. According to NBC’s outlook for 2022, the latter will eventually catch up with its economic growth, supported by the inflows of domestic revenue and investments to Cambodia. In tandem with the rapid growth of the construction and real estate sector, the number of agencies and service providers in real estate, property management and maintenance has also grown. In particular, real estate agency services have witnessed a larger footprint in the online and digital space, although it will require more international players and brand names such as Century 21 to be the benchmark the market in terms of the level of professionalism, value-added service, transparency in information, and the quality of customer and after-sales service.

Supplementary

Share of Approved Projects by Sector by Surface Area in 2020 (left) and Import of Construction Materials 2016-2020 (right)

Feel free to enquire with the Aquarii team should you need further advice.

If you are looking for a more nuanced insight or advice in terms of other indicators/observations not commonly found in publications for a better understanding of how a business or investor can navigate the local environment or seek out collaboration opportunities and trustworthy partners, get in touch with our team at Aquarii. Ask to speak to our CEO if you wish to know why he has decided to make Cambodia his 2^nd home, perhaps the strongest testament of his conviction in the potential and opportunities in the Kingdom.

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. Connectivity in Cambodia has improved drastically in the past decade, thanks mainly to the huge private and Overseas Development Assistance (ODA) investment projects spearheaded by China, Japan, and South Korea among other development partners.

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.

The salient characteristics of Cambodia’s logistics sector are briefly appended below.

Largely dominated by Road Freight Transport

• The primary road network has 2,254 km of national paved roads (1-digit roads) that connect the country with its borders, the GMS, and the ASEAN network; 5,007 km of inland national roads (2-digit roads), of which 72% are paved; and 9,031 km of provincial roads (3- and 4-digit roads), of which only 30% are paved.
• The number of registered trucks more than doubled between 2008 and 2016.
• Continues to be the dominant mode of transport in Cambodia.
• Fixed costs are low as the physical transport infrastructure, such as roads and highways are publicly funded.
• Variable costs include fuel costs (subject to oil prices), maintenance charges, road use and congestion.
• Often the transport mode of choice as it allows door-to-door delivery without need to transfer cargo between different vehicles, which means lower costs for senders / recipients and reduced risks of loss or damage.
• Border cities of Poipet (Cambodia-Thailand border) and Bavet (Cambodia-Vietnam) see thriving cross-border trade; several SEZs are also located in proximity.

Inland waterway and maritime freight transport

• Represents a smaller proportion of the freight transportation sector in Cambodia, but remains an important element for the country’s local economy and exports.
• Two international ports – Phnom Penh Autonomous Port (PPAP) and Sihanoukville Autonomous Port (SAP) – as well as inland waterways for freight and passenger traffic. 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).

Airports and Air Cargo

• 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.

Rail Freight Transport (linking Phnom Penh and Sihanoukville)

• 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.
• Nonexistent in 2010, but Southern line reopened to freight traffic in 2013 mostly for bulky, non-perishable goods such as rice and petroleum. Northern line is still undergoing significant rehabilitation.
• Overall freight volume negligible compared to road transport.

Freight forwarding and warehousing

• Several freight forwarding companies that rely on large and medium trucks, vans and motorbikes. Low use of digital technology to track goods / cargos, or in management of inventory.
• Warehousing is fragmented and largely built by supply chain and logistics companies (eg: supermarkets, food distributors, etc) for their own use.
• Cold chain warehousing is severely lacking.

Impact of Covid on Logistic and Transportation

• Covid pandemic has severely disrupted supply chains and limited the flows of trade and investments. According to the Cambodia Freight Forwarders Association (CAMFFA), about 10 to 15% of logistics providers were heading for bankruptcy as of June 2020.

Supplementary

Logistics Performance Ranking of Cambodia and Its Neighbors, 2010–2018

Cambodia’s Ranking based on Indicators in the Logistics Performance Indicators, 2016 and 2018 (Score)

Cambodia Road Indicator

Railway Traffic Volume (in thousand tons)

Feel free to enquire with the Aquarii team should you need further advice.

If you are looking for a more nuanced insight or advice in terms of other indicators/observations not commonly found in publications for a better understanding of how a business or investor can navigate the local environment or seek out collaboration opportunities and trustworthy partners, get in touch with our team at Aquarii. Ask to speak to our CEO if you wish to know why he has decided to make Cambodia his 2^nd home, perhaps the strongest testament of his conviction in the potential and opportunities in the Kingdom.

There are many publications, reports, statistics and analyses on the performance of Cambodia’s economy. However, a foreign business or investor can often find it difficult and perhaps frustrating to know which figure or report is the most representative of the prevailing ground situation. In this section, we have sieved through various sources to provide, at a glance, facts, figures and analysis or considered opinion that are easy to understand and that hopefully will help elucidate the next step of your business consideration.

Cambodia Economy

According to the World Bank in Oct 2021, the economy of Cambodia has sustained an average annual growth rate of 7.7% from 1998 to 2019, making it one of the fastest-growing economies in the world. The Kingdom’s GDP in 2019 reached an all-time high of USD 27.089 billion. The services sector accounted for 38.9% of the GDP, industry for 34.2% and agriculture for 20.7%. In 2019, GDP per capita also reached a high of USD 1,700. According to the National Bank of Cambodia, GDP per capita will be upgraded to $1,842 in 2022, a 6.4 percent increase compared to $,1771 in 2021, $1,771.

The country has attained Lower Middle-Income (LMI) status in 2015 according to the World Bank’s classification and aims to recover from COVID-19 and become an upper-middle-income country by 2030. 

The economy was significantly impacted by the COVID-19 pandemic in 2020, registering a contraction of 3.1%. However, according to an estimate from the World Bank’s publication “The Macro Poverty Outlook (MPO) for East Asia and the Pacific Report, Cambodia’s economy will return to positive growth at 4.5% in 2022 and 5.5% in 2023 in tandem with its socio-economic recovery on the back of ultra-high vaccination rates and the easing of travel restrictions for domestic and foreign travelers.

Cambodia is an active trading country and recorded a total export of USD 15.61 billion in the first eleven month of 2021. The country’s exports, composed mainly of garments and agricultural products, have increased steadily since the 1990s and account for more than 60% of the GDP. Exports of Cambodian agricultural products such as rice, rubber, cassava, mangoes, bananas, pepper, cashew nuts, corn, palm oil, and tobacco, among others have increased 7.98 million tons year-on-year and generated a gross revenue of USD 4.96 billion in 2021, an increase of 63.8 percent from the previous year.

Total exports in January and February 2022 showed a remarkable increase. Exports of Cambodian agricultural products such as rice, rubber, cassava, mangoes, bananas, pepper, cashew nuts, corn, palm oil, and tobacco, among others have increased 7.98 million tons year-on-year and generated a gross revenue of $4.96 billion in 2021, an increase of 63.8 percent from the previous year.

Cambodia’s geostrategic location in the heart of mainland Southeast Asia is within easy reach by flight from most major cities in Asia, by road through its border checkpoints with Thailand, Vietnam and Laos, and complemented by a deep-sea port in Sihanoukville, an autonomous port in Phnom Penh and numerous smaller river ports throughout Cambodia’s provinces.

Businesses and investors have yet to fully optimize the tariff exemption/preference schemes that the developing country enjoys from the European Union Everything-But-Arms (EBA)and the US Generalized Scheme of Preferences Plus (GSP+), and the Free Trade Agreements (FTA) with China and South Korea.

Cambodia’s public debt which consists solely of external debt is rising but the risk of debt distress remains low due largely to the authorities’ borrowing principle of only contracting external debt on concessional terms. Cambodia’s debt-to-GDP ratio reached 33.6 percent of GDP (US$8.8 billion in outstanding debt) in 2020 and is projected to increase to 35.2 percent of GDP (US$9.6 billion) in 2021. Unlike during the past several years, when the largest contributions to loan disbursement growth came mostly from bilateral creditors such as China and France, in 2020, the contribution of loan disbursement by the ADB was the largest, accounting for 30.4 percentage points of the 40.3 percent increase in total loan disbursement. Disbursement from the ADB peaked at US$421.9 million in 2020, up from US$159.11 million in 2019. The contribution of debt disbursement from Japan was next, accounting for 7.6 percentage points (US$149.8 million) of the increase, followed by those from China and the World Bank, accounting 4.0 percentage points and 3.5 percentage points, respectively.

A new Law on Government Securities was adopted in December 2020, paving the way for issuance of the first government securities in the near future for the establishment of a domestic debt market and providing an overall legal and regulatory framework for issuing, trading, and managing government securities to support public debt management and debt sustainability. When established, the domestic debt market will help gradually diversify financing sources with a shift toward public domestic debt, while promoting domestic savings.

Supplementary

Real GDP Growth Contribution

Cambodia’s Budget in Brief 2021

Budget Framework (2021)

Feel free to enquire with the Aquarii team should you need further advice.

If you are looking for a more nuanced insight or advice in terms of other indicators/observations not commonly found in publications for a better understanding of how a business or investor can navigate the local environment or seek out collaboration opportunities and trustworthy partners, get in touch with our team at Aquarii. Ask to speak to our CEO if you wish to know why he has decided to make Cambodia his 2^nd home, perhaps the strongest testament of his conviction in the potential and opportunities in the Kingdom.

Cambodia’s major export products are garments, footwear, travel goods, bicycles, furniture and agriculture. It mainly imports refined petroleum, knitted fabric, gold, vehicles, construction raw materials and all sorts of consumer goods due to the lack of manufacturing facilities. Its top export markets in 2019 were the US, EU, Japan, China, UK, Canada, Thailand, Vietnam and Singapore, whereas its top import partners were China, Thailand, Vietnam, Japan, EU, Singapore and the US. The trade volume between Cambodia and US increased by 42% to USD 7.8 billion in 2021, compared to USD 5.5 billion in 2020 despite the impacts of the Covid-19 pandemic. China-Cambodia trade volume reached USD 3.75 billion, up 39.2% year-on-year, the highest growth rate in bilateral trade with China and another ASEAN member country while EU trade volume is 3.8 billion in 2020.

According to statistics from the General Department of Customs and Excise (GDCE), Cambodia’s trade volume clocked in at USD 17.65 billion in the first four months of 2022. Export volume reached USD 7.61 billion, an increase of 32.06% from USD 5.76 billion in the same period last year. Import volume was USD 10.04 billion, a year-on-year increase of 5.44% from USD 9.52 billion. Trade deficit in the same period fell by 35.27 per cent from 3.76 billion to USD 2.44 billion.

(Note: These are based on Cambodian official figures and publications by other foreign sources may show different results as their computation and collation of trade figures vary. However, the top 3 remain the same across different methodologies).

According to various reports/publications in 2020/2021 by the Organization for Economic Cooperation and Development (OECD), the World Bank (WB), Garment Manufacturing Association of Cambodia (GMAC), the Ministry of Foreign Affairs and International Cooperation (MFAIC) among others, Cambodia continues to be an active trading economy, recording a robust 16.72% YOY increase in total exports in 2020 despite the Covid pandemic, a plummet in global demand and the partial withdrawal of the EU’s Everything But Arms (EBA) tariff exemption for Cambodia which affected about 20% of its exports to the EU. Amazingly, Cambodia’s total exports for 2021 looks set to equal or exceed that in 2020 with diversification of merchandise exports beyond just garments despite rising costs of logistics amidst a global disruption of the supply chain.

Analysts and observers attribute Cambodia’s resilience and rebound to several factors – the (still) low cost of labour and production despite the increase in the minimum wage in recent years (US$194 per month in 2022, up from US$192 a month in 2021), its political stability, business-friendly economy (despite what some publications have claimed otherwise), and its geostrategic location in the heart of mainland Southeast Asia. The latter means that Cambodia is within easy reach by flight from most major cities in Asia, by road through its border checkpoints with Thailand, Vietnam and Laos, and by sea through its deep-sea port in Sihanoukville, the autonomous port in Phnom Penh and its many smaller ports along the Mekong and its tributaries that course through Cambodia.

Quick Facts of Trade in Cambodia: In first nine months of 2021

• Total merchandize exports (excluding gold) rose 23% YOY to US$12.6 billion (compared to 25.5% YOY in January 2020)
• Top four manufacturing exports (67.5% of total merchandize exports): garment, travel goods, footwear, and bicycle products

• The fifth- and sixth- largest exported products are agricultural commodities, and milled rice and rubber, totaling USD 285 million and USD 266 million respectively.
• New manufacturing products that have emerged include electrical, electronic, vehicle parts, and cables with a combined total of USD 412 million, a YOY increase of 23.1 %.
• US continues to be Cambodia’s largest export market with exports to the world’s largest economy surging by 31.9% to USD 3.4 b despite uncertainty in the renewal of the Generalized System of Preferences (GSP) where developing countries are able to export their goods to the US exempt from tariff; Cambodia is a beneficiary of the program
• The EU continues to be Cambodia’s 2^nd largest export market. Cambodia’s exports to the EU grew 15% to USD 2.2 b despite the August 2020 partial withdrawal of EU’s EBA tariff exemption for Cambodia (announcement in Feb 2020 and affecting 20% of exports to the EU; prompted withdrawals by certain manufacturers/labels and caused others to shelf plans to open in Cambodia, causing much uncertainty to the industry, resulting in 35% decline in Cambodia’s exports of garments, footwear and travel goods to the EU in 2020)

Not many may be aware that an agreement with the European Patent Organization came into force at the beginning of 2018, providing validation of EU patents in Cambodia and signatory states, or essentially protecting the innovation of manufactured products by EU companies in Cambodia for the Asian market. Moreover, given the tariff exemption/preference schemes under the EBA and GSP that the EU and the US respectively accord to the Kingdom, the Free Trade Agreements (FTA) that Cambodia signed with China (July 2021) and South Korea (Oct 2021), as well as the Regional Comprehensive Economic Partnership (RCEP, Nov 2020), businesses and investors should leverage on the comparative advantage of setting up their manufacturing or assembly facilities in Cambodia for export to these overseas markets.

Supplementary

Export, Import, Trade Balance (percentage of GDP)

Feel free to enquire with the Aquarii team should you need further advice.

If you are looking for a more nuanced insight or advice in terms of other indicators/observations not commonly found in publications for a better understanding of how a business or investor can navigate the local environment or seek out collaboration opportunities and trustworthy partners, get in touch with our team at Aquarii. Ask to speak to our CEO if you wish to know why he has decided to make Cambodia his 2^nd home, perhaps the strongest testament of his conviction in the potential and opportunities in the Kingdom.

The attraction of Cambodia to foreign businesses and investors that realized its potential and opportunities were and continue to be attracted by its business-friendly open economy, low labour, and production costs, and its strategic location and close proximity to production facilities in Thailand and Vietnam as well as favourable access to the Chinese, US, EU, Japan, and South Korea markets.

Cambodia’s investment laws allow 100% foreign ownership of companies in most sectors, and provision for the protection of investments from regulated prices and nationalization. There has been no foreign exchange restriction on the remittance of profits and no capital gains tax, although new legislation on the latter that was introduced in April 2020 has seen its implementation postponed to 2023 due to the economic pressures brought about by the Covid pandemic.

The Kingdom’s many Special Economic Zones (SEZ) are a good option to consider for export-based manufacturing, and most are located in border cities with Thailand or Vietnam, and/or near ports, airports and national highways. Tenants in SEZs enjoy inter alia corporate tax exemption up to 8 years as well as exemption on profits if they are reinvested in the country; complete duty and tax exemption on imports and exports; among other incentives.

Cambodia’s top investment partners over the past few years have been China, Vietnam, South Korea, Japan, Singapore, Malaysia, Thailand, the UK, Canada, and the US. The ranking of the countries may be slightly different depending on whether it is a cumulative investment or for a particular year, and the classification of investment under a particular country could be subjective (eg: a company incorporated in X country but listed in Y country invests in Cambodia with equal shareholdings by A, B, and C of different nationalities), but China is indisputably the top investor in the Kingdom.

The establishment of Capital-Provincial Investment Sub-Committees (CPISC) under the Council for the Development of Cambodia (CDC) allows the sub-committee to review and approve private investment with capital under USD 5 million and resolve disputes related to investment projects. The sub-committee is responsible for reviewing and deciding on the registration, providing incentives, purchasing and assurance, merging, deleting and resolving disputes related to private investment projects.

Investment by Country (Flow)

In 2019 when Cambodia’s GDP hit an all-time high of USD 27.1 b, its total stock of FDI also reached a high of USD 34 b. Prior to the ban on online gambling which was effective 1 Jan 2020 after it was first announced in Aug 2019, the sectors that attracted the most Foreign Direct Investments (FDI) were real estate and construction, garment manufacturing, tourism, other forms of light manufacturing, services and agriculture. Cambodia’s major export products are garments, footwear, travel goods, bicycles, furniture, and agriculture. In 2020, FDI in the real estate and construction sector plummeted to less than 10% (USD 140m) of that in 2019 (USD1.79b), with a larger proportion going to energy, healthcare, and manufacturing including signs of recovery in the garment industry. Tourism has seen a rebound in investment figures, but it is not broad-based due to a large investment in a hotel/theme park project. The tourism industry will likely only recover when international travel resumes in earnest. According to the National Bank of Cambodia (NBC), FDI for 2020 was USD 3.5 b, one percent lower than that in the previous year.

The continuing Covid pandemic, disruption to global supply chains, rising costs in raw materials and travel restrictions have severely impacted Cambodia’s open and export-oriented economy. FDIs remained relatively weak at USD 538m or a YOY decline of 83.6% for the first nine months of 2021.

Cambodia still remains as the second most vaccinated country in South East Asia with 90.1% of its population with the fourth dose starts rolling out throughout the country. As the result of the vaccination campaign of the country, Cambodia was one of the very first few countries to open borders to vaccinated passengers without quarantine.

Prime Minister has recently announced to begin vaccinating 3 and 4-year-olds after finding young children accounting for many new infections. The 3 to 5-year-olds vaccination campaign targets 700,000 children across the country and will go nationwide later this month. However, given Cambodia’s high vaccination rate where 90.1% of its population have been fully vaccinated and the bold steps to reopen its economy by lowering quarantine measures for vaccinated travelers to the Kingdom, the growth trajectory for its economy for 2022 and beyond looks promising. Both the World Bank (WB) and the Asian Development Bank (ADB) have projected Cambodia’s economic growth for 2022 to be between 4.5% to 5.5% respectively.

Supplementary

Investment by Sector (Flow) – in Million USD

Feel free to enquire with the Aquarii team should you need further advice.

If you are looking for a more nuanced insight or advice in terms of other indicators/observations not commonly found in publications for a better understanding of how a business or investor can navigate the local environment or seek out collaboration opportunities and trustworthy partners, get in touch with our team at Aquarii. Ask to speak to our CEO if you wish to know why he has decided to make Cambodia his 2^nd home, perhaps the strongest testament of his conviction in the potential and opportunities in the Kingdom.

According to the OECD Competition Assessment Reviews: Logistics Sector in Cambodia in 2021 in 2019, the services sector accounted for 38.9% of Cambodia’s GDP, industry for 34.2% and agriculture for 20.7%. The contribution of the services sector to the country’s GDP has remained around 40% since 2000, while the contribution of the agriculture sector has been declining, in favor of the industry sector.

Industries in Cambodia are mostly within the garment, light manufacturing, agricultural, construction, and tourism sectors, with a nascent emerging mining and exploration industry.

Feel free to enquire with the Aquarii team should you need further advice.

If you are looking for a more nuanced insight or advice in terms of other indicators/observations not commonly found in publications for a better understanding of how a business or investor can navigate the local environment or seek out collaboration opportunities and trustworthy partners, get in touch with our team at Aquarii. Ask to speak to our CEO if you wish to know why he has decided to make Cambodia his 2^nd home, perhaps the strongest testament of his conviction in the potential and opportunities in the Kingdom.

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. 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. But according to the National Bank of Cambodia’s estimates, MLMUPC approved USD 11.4 b worth of new construction projects in 2019 alone. The residential, commercial, and industrial segments accounted for about 46-50%, 30-35%, and 14-15% share of new projects respectively.

Unfortunately, building and workers’ safety lagged behind the frenetic pace of construction activities as unauthorized projects launched by opportunistic developers rushing to capitalize on rising real estate prices were pushed ahead. Just 6 months following the death of 3 workers in the collapse of a temple under construction in Siem Reap, a seven-story building under construction in Sihanoukville collapsed in Jun 2019, killing 28 workers sleeping inside. The government amended the Law on Construction in November 2019, including stricter requirements on safety measures at work sites, mandating building safety inspections, and further strengthening permit requirements. Several illegally constructed buildings in Sihanoukville and elsewhere were declared unsafe and demolished. Buildings under construction now require the safety and quality of their structures to be inspected by independent inspectors licensed by MLMUPC.

Construction Continued to be Subdued Due to Excess Supply

The slowdown in the global economy in 2019 was weighed down further by the Covid pandemic which caused severe disruption in the global supply chain and lockdowns/restrictions on international travel. As foreign investors/buyers accounted for 60-70% of sales in the real estate and property market in Cambodia, external demand for the excess supply of condominiums, apartments, commercial offices, and other mixed development projects was likewise interrupted. This was exacerbated by the lack of supply (and rising prices) of construction materials, labor, and funds. Many projects such as FDI-financed property investment, especially in high-rise development projects in Phnom Penh and Sihanoukville, were suspended.

See also section under Real Estate, Property Management and Maintenance

Real estate sale and rental prices in residential, commercial, and industrial sectors have been declining. Condominium and private apartment prices have been hit particularly hard. With excess supply and lower foreign investor/buyer appetite to invest in property development projects, the value of approved construction permits has also plummeted, contracting by as much as 63% in 2020. Most observers and experts in the real estate industry expect supply and average property prices to slip further before a slow and gradual recovery.

Feel free to enquire with the Aquarii team should you need further advice.

If you are looking for a more nuanced insight or advice in terms of other indicators/observations not commonly found in publications for a better understanding of how a business or investor can navigate the local environment or seek out collaboration opportunities and trustworthy partners, get in touch with our team at Aquarii. Ask to speak to our CEO if you wish to know why he has decided to make Cambodia his 2^nd home, perhaps the strongest testament of his conviction in the potential and opportunities in the Kingdom.

The energy sector in Cambodia has grown rapidly over the past decade, driven by the Royal Government of Cambodia’s (RGC) key priorities to increase energy access, reduce the cost of energy, and diversify energy security for the country. There are two sources of energy generation: (1) domestic generation and (2) import from neighboring countries.

Source of Energy

According to Electricity Authority of Cambodia, as of 2021, 51.17% of the country’s domestic energy production are from renewable sources. The majority was hydropower 44.17%, while solar and biomass accounted for around 7%. Almost 49% source of energy production comes from non-renewable sources which include coal and fuel oil.

The country was able to meet its power demands with domestic generation resources during the rainy season. However, it still relies on imports, mainly from Vietnam, to cover shortfalls in hydro power production during the dry season, as well as to meet peak daytime demands and for grid stabilization throughout the year.

The increase in consumption has been supported by the build-out of a national transmission backbone, expansion of domestic energy generation capabilities and an electrification program which has connected more than 99.88% of all villages and 86.43% of all households at the end of 2021.

Development of Energy Sector

In recent years, however, the RGC has moved with global trends to construct and commission new large-scale solar power projects, functioning as power plants, in an effort to further diversify Cambodia’s energy portfolio and to include more renewables.

National Grid

Under the Kingdom’s Development Plan of the National Grid by 2025, the three main objectives are:

1. Provide an opportunity to develop and integrate all power sources in the country into one grid system
2. Control power sources based on time and season to meet the electricity demand
3. Transmit power to all cities and provinces throughout the country

By the end of 2021, four transmission lines covering 3,443.42 km had been installed. This allows electricity access to 54 substations which supply directly to 24 cities/provinces throughout Cambodia.

In addition to that, in 2022, a project worth EUR 86.41 million (USD 92 million) to build electricity transmission lines and distribution networks in 3 provinces (Kampong Cham, Kratie and Koh Kong) to improve energy supply for the region’s rural population has been officially launched. The financing for the project was arranged by Electricité du Cambodge (EDC) with loans and grants from the French and the EUEDC. Foreign investments in solar panels are expected to grow after a US government announcement to grant temporary suspension on import duties on solar and modules from Cambodia and three other Southeast Asia countries.

Hydropower

Blessed with vast water resources including the Mekong River, hydropower is Cambodia’s main source of electricity. In 2018 the country took an important step forward in achieving its energy goals with the commissioning of the 400 MW Lower Sesan II, the Kingdom’s largest hydropower project. Located in the northeast of the country on a major tributary of the Mekong River, it was built at a cost of USD 780 million and is a joint-venture between China, Cambodia and Vietnam. Lower Sesan II will boost electricity production by 20 per cent with the electricity being sold to the state-owned utility Electricité du Cambodge (EDC) at a base price of USD 0.0695 cents/kWh.

With Lower Sesan II entering into operation, Chinese built hydropower projects in Cambodia have an installed capacity of over 1,300 MW and account for half of the country’s total installed capacity from all energy sources.

Several more hydropower projects have been proposed in recent years including the 2,600 MW Sambor project located on the mainstream of the Mekong River. An additional 7 hydro power plants sized between 36 MW and 120 MW are scheduled to come into operation in 2022 and 2023 for a total added capacity of 544 MW. In 2025 the first phase (600 MW) of the proposed Sambor hydro dam is scheduled to come into operation with phase 2 and 3 to come online in 2026 and 2027, adding an additional 1,200 MW to the grid.

Solar

Cambodia has some of the best solar resources in the region, due to high average irradiation. Theoretically, the Kingdom has around 134,500 km2 of land with potential for photovoltaics (PV) development. It is by far the cheapest source of new power supply, with sale prices to EDC between 3.9–6.9 cents per kilowatt hour (kWh).

The RGC has been working with ADB to deploy phase two of the solar park, which will include tendering the remaining 40MW of capacity. In late 2017, the RGC started an initial feasibility study for the development of a 100 MW solar park. The solar park was developed in two phases of approximately 30 MW and 70 MW.

In a press release by the Ministry of Mines and Energy, Cambodia will add 495MW of solar power capacity from seven projects by 2023, which will represent 20% of the total energy supply.

Coal

Over half of Cambodia’s electricity is generated in coal power plants, almost all built with Chinese involvement. Coal’s share in the energy mix was set to increase to 75 percent by 2030. The Kingdom’s coal power capacity is projected to reach 4,675 megawatts (MW) within the next 10 years. Of that, only 675 MW is operational, and over 900 MW is under construction. The remaining 3,100 MW, two-thirds of the planned capacity, may be at risk, including the 2,400 MW which is supposed to be imported from projects planned in neighboring Laos.

The Challenges

According to a recent release by RHTLaw Asia, despite the RGC’s efforts to increase renewable energy supply,​ Cambodia still faces some challenges as follows:

• Demand outstrips Supply: This has in fact been recently confirmed by the Ministry of Mines and Energy in its recent Power Development Plan of 2021.
• Aging Network & System: According to the ADB, there has been a substantial lack of investment into the electricity infrastructure of the country, and this was clearly evident in the wide spread power cuts and outages in 2019 that cause a deficit of not less than 400 MW daily, lasting from two to five hours every day and this persisted for the entire hot season that year.
• Uncompetitive Prices: The cost of electricity is probably the biggest most critical factor. Compared to its Southeast Asian neighbors, the county’s electricity tariffs are significantly higher and this creates a huge deterrent when companies are deciding where to set up their factories.

RGC’s Initiative Toward the Development of Energy Sector

In its attempt to attract more investments into the energy sector, the RGC has enacted a new Law on Investment (LOI) in October 2021 which focuses on renewable energy as one of the sectors to be incentivised.  It provides additional tax incentives for green energy producers by registering as Qualified Investment Projects (QIPSs) (read RHTLaw Asia’s article on Solar Power: A Beacon of Hope for Cambodia).

Additionally, the Environmental Code of Cambodia is being reviewed by the government and once promulgated, it should provide much needed clarity and certainty for green energy producers. Potentially, these include the following:

• Access to companies and consumers using solar energy to connect to the national grid;
• Development of a net metering system.
• Up to 20% reduction in profit taxes for any company generating at least 20% of its own renewable energy.
• Implementation of a one-year pilot for a feed-in-tariff system with a fixed rate for solar energy fed into the grid

It is predicted that the adoption of the new Investment Law incentives and clarity from the Environmental Code and its implementation regulations will be a strong catalyst for further for investment into renewable energy in this Kingdom.

Feel free to enquire with the Aquarii team should you need further advice.

If you are looking for a more nuanced insight or advice in terms of other indicators/observations not commonly found in publications for a better understanding of how a business or investor can navigate the local environment or seek out collaboration opportunities and trustworthy partners, get in touch with our team at Aquarii. Ask to speak to our CEO if you wish to know why he has decided to make Cambodia his 2^nd home, perhaps the strongest testament of his conviction in the potential and opportunities in the Kingdom.

Garment, footwear, and travel goods manufacturing are important components of the manufacturing industry and are considered the main engines of growth for the Cambodian economy. Garment manufacturing alone accounts for 80 percent of Cambodia’s exports and employment of more than 600,000 workers, mostly women.

Garment (No.1) and footwear (No. 2) continue to be the two largest exports of manufactured products to Cambodia’s overseas markets. Food and beverage is another prospective sector of export products to overseas and there is an opportunity for manufacturers to take advantage of the tariff exemption programs that have been accorded to Cambodia by the US (under GSP), the EU (under the EBA), as well as under the provisions of various FTAs that Cambodia has signed with China and South Korea.

See also section under Trade – Facts, Figures, and Trends

We welcome service providers or subject matter experts for this sector to provide relevant insights and pertinent information, which shall be attributed to your business (subject to Aquarii’s curation and edits).

To contribute to this section, please contact us here.

According to the OECD Competition Assessment Reviews: Logistics Sector in Cambodia in 2021, in 2019, the services sector accounted for 38.9% of Cambodia’s GDP, industry for 34.2%, and agriculture for 20.7%.

Agriculture

Some salient facts concerning Cambodia’s agriculture sector, according to Asian Development Bank (ADB)’s report in July 2021, are briefly appended below.

• The share of agriculture value-added to the total GDP averaged around 30% during 2000−2014 but fell to 22.1% in 2019
• Within the sector, crop production has the largest output contribution to total national GDP at 13.0%, followed by fisheries (5.5%), livestock (2.6%), and forestry (1.6%). However, the growth of agriculture value-added has been limited (0.85% annually, on average) since 2013 due to the long-term low labor productivity, lack of rice milling facilities, downturn in international commodity prices and adverse weather conditions
• Only about 10% of Cambodia’s total agricultural outputs are processed within the country, whereas processed agricultural exports represent only 8% of total official exports by value. Other than rice milling and basic processing of rubber and pepper, the agro-processing sector is largely underdeveloped.
• Cambodia’s fertilizer use per hectare of cropland increased from 10 kg in 2005 to 33 kg in 2018. Pesticides are also imported, but are allegedly either poorly regulated or unregulated.
• Notwithstanding, many of Cambodia’s agricultural products that are not for export market (i.e. from individual farms or smaller plantations) are either organically grown or use very little pesticide. If these sources can be better organized and incentivized, there is great opportunity to exploit growing global demand for organic products for export.
• Access to markets, transport, and logistics continue to be limited or dictated by the larger buyers from Thailand and Vietnam. Farmers are predominantly price takers. Most sell their crops to traders from Thailand and Vietnam just after harvest (or take up loans from them before the next season, thus owning a debt which they are obligated to pay by selling the following season’s harvest to them).
• Varieties are mixed and only small volumes of pure varieties are found, which hinder value recognition and addition. this includes organic or naturally grown products that use very little pesticide. For further value addition in agriculture, access to international markets and early funding for farmers is important. Efficient transport and logistic infrastructure and services are also necessary to strengthen agri-food value chains.
• The majority of the country’s agriculture exports are still in raw form and heavily dependent on crops. The main export products are rice and rubber, with an increasing share of cassava. From 2010 to 2018, the biggest reduction of export value was seen in maize.
• Some previously cultivated cash crops (e.g., soybean, peanuts, sesame, sugar cane, jute, tobacco) have seen area and production declines of almost half compared to 2012. However, subsidiary annual crops (e.g., maize, cassava, sweet potatoes, vegetables, and mung bean) saw cultivated area increases from 727,740 ha in 2017 to 1,006,542 ha in 2018.
• Perennial crop area (including cashew nut, mango, banana, coconut, orange, jackfruit, durian, and black pepper) expanded from 953,597 ha in 2014 to 1,091,000 ha in 2018. Similarly, perennial crop production increased from over 14.7 million tons in 2014 to 16.6 million tons in 2018, up 10.5% over the past 5 years.

Geographical indication (GI) protection is available where the quality or reputation of the goods is essentially attributable to its place of origin. To date, the following have been accepted for GI protection in Cambodia:

• Kampot Pepper
• Kampong Speu Palm Sugar
• Kratie Pomelo Fruit

Cambodia also plans to submit six products for GI registration in the EU:

• Pursat oranges
• Kampot durians
• Kampot salt (produced in Banteay Meanchey Province’s Phnom Srok district)
• Steamed balut (fertilized duck egg) from Takeo province’s Sre Ronong commune
• Rice from Battambang province’s Thma Koul district

Aquaculture

Cambodia’s wetlands cover about 30% of the country and support one of the world’s biggest, most diverse, and intensive freshwater fisheries. Most harvested fish are from the Tonle Sap and are migratory species. At least 20 species are important for both domestic consumption as well as exports. Some salient facts concerning Cambodia’s aquaculture, according to Asian Development Bank (ADB)’s report in July 2021, are briefly appended below.

• Capture fisheries reaching their sustainable limits. Fisheries production has increased by nearly 20% since 2013, but the majority of fisheries output still comes from capture fisheries. Volumes of inland capture fisheries have remained roughly static with 527,795 tons of catch recorded in 2017 and marine capture with just over 121,025 tons.
• Increasing aquaculture production. Aquaculture production is estimated at 207,443 tons annually in 2017, which is equivalent to 24% of all fisheries production. Production has increased by about 30,000 tons a year in the preceding two years.
• Current policy emphasis is on community fisheries development. There are presently 475 inland community fisheries and 41 marine community fisheries. This community-based model is suitable for high-value fisher exports but lacks an appropriate value chain structure and organization.
• Cambodia exports fresh and processed fish (in smoked and frozen forms) to Hong Kong, China; Malaysia; the Republic of Korea; Singapore; Thailand; and Viet Nam. However, the largest volumes by far are informal or unrecorded flows of fresh or dried fish trucked to Thailand, especially from the Tonle Sap region. There is enormous potential to add value to the national fish catch by processing fish at or near the source. This can range from making sauces, fillets, and packaged or convenience meals.
• At present, there are few freezing plants or cold chain facilities in the country. There are no industrial-scale commercial exporters transporting frozen fish products in reefer containers from Sihanoukville or shipping fresh fish from Phnom Penh. Cambodia could tap into overseas markets, such as China, EU, US or the food security needs of Southeast Asian countries.

Feel free to enquire with the Aquarii team should you need further advice.

If you are looking for a more nuanced insight or advice in terms of other indicators/observations not commonly found in publications for a better understanding of how a business or investor can navigate the local environment or seek out collaboration opportunities and trustworthy partners, get in touch with our team at Aquarii. Ask to speak to our CEO if you wish to know why he has decided to make Cambodia his 2^nd home, perhaps the strongest testament of his conviction in the potential and opportunities in the Kingdom.

Investment activities registered as QIP are entitled to choose basic incentives under the following two options:

Option 1: Income Tax Exemption

• Income Tax exemption for 3 (three) to 9 (nine) years, depending on the sector and investment activities, from the time of earning its first income. Sectors and investment activities, as well as the period of income tax exemption, shall be determined in the law on financial management and/or the Sub-Decree.
• After the income tax exemption period has expired, the QIP is entitled to paying income tax at a progressive rate proportional to the total tax due as follows:
• 25 (twenty five) percent for the first 2 (two) years;
• 50 (fifty) percent for the next 2 (two) years; and
• 75 (seventy-five) percent for the last 2 (two) years.

Further, this option includes:

• Prepayment Tax exemption during income tax exemption period;
• Minimum Tax exemption provided that an independent audit report has been carried out;
• Export Tax exemption, unless otherwise provided in other laws and regulations; or

Option 2: Special Depreciation

• Deduction of capital expenditure through special depreciation as stated in the tax regulations in force;
• Eligibility of deducting up to 200 (two hundred) percent of specific expenses incurred for up to 9 (nine) years.  Sectors and investment activities, specific expenses, as well as the deductible period, shall be determined in the Law on Financial Management and/or the Sub-Decree;
• Prepayment Tax exemption for a specific period of time based on sectors and investment activities to be determined in the Law on Financial Management and/or the Sub-Decree;
• Minimum Tax exemption provided that an independent audit report has been carried out;
• Export Tax exemption, unless otherwise provided in other laws and regulations.

In addition to the incentives of option 1 or option 2:

A.       Export QIP and Supporting Industry QIP are entitled to customs duty, special tax and value-added tax exemption for the import of Construction Material, Construction Equipment, Production Equipment and Production Inputs;

B.       Domestically Oriented QIP is entitled to customs duty, special tax and value-added tax exemption for the import of Construction Material, Construction Equipment, and Production Equipment. The incentives for Production Inputs shall be determined in the Law on Financial Management and/or the Sub-Decree.

Additional Incentives

In addition to the basic incentives, investment activities registered as QIP receive additional incentives as below:

1. Value-added tax exemption for the purchase of locally made Production Inputs for the implementation of the QIP.
2. Deduction of 150 (one hundred and fifty) percent from the tax base for any of the following activities:
   • Research, development and innovation;
   • Human resource development through the provision of vocational training and skills to Cambodian workers/employees;
   • Construction of accommodation, food courts or canteens where reasonably priced foods are sold, nurseries and other facilities for workers/employees;
   • Upgrade of machinery to serve the production line;
   • Provision of welfare for Cambodian workers/employees, such as comfortable means of transportation to commute from their homes to factories, accommodation, food courts or canteens where foods are sold at reasonable prices, nurseries and other facilities.
3. Entitlement to income tax exemption for the Expansion of QIP which will be determined in the Sub-Decree.

Special Incentives

Any specific sector and investment activities having high potential to contribute to Cambodia’s national economic development may receive specific special incentives to be set out in the Law on Financial Management.

The new Law on Investment provides tax exceptions on imported capital goods for both QIPs and Supporting Industry QIPs. However, the incentives are different between the Export QIP and Domestically Oriented QIP. The Export QIP and Supporting Industry QIP are entitled to customs duty, special tax and value-added tax exemption for the import of Construction Material, Construction Equipment, Production Equipment and Production Inputs. Domestically Oriented QIP is entitled to customs duty, special tax and value added tax exemption for the import of Construction Material, Construction Equipment, and Production Equipment. The Law on Financial Management and/or the Sub-Decree shall determine the incentives for Production Inputs.

Source: http://www.cambodiainvestment.gov.kh/wp-content/uploads/2021/12/LOI_English-Updated-13Dec21.pdf

Source: RHT Legal Update

The following investment sectors and activities are entitled to investment incentives:

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

More information can be found here: http://www.cambodiainvestment.gov.kh/
Online registration: https://qip.cdc.gov.kh/login

Investment Projects that have obtained a Registration Certificate may be implemented automatically, but it does not exempt the Investment Project from obtaining other permits as required by the laws and regulations in force. All Investment Projects shall be subject to monitoring and inspection through the One Stop Service mechanism coordinated by the CDC to ensure their compliance with the laws and requirements for obtaining the Registration Certificate. The person carrying out an Investment Project shall provide a report on the implementation of the project according to the specific schedule set by the CDC. The detailed format of the report template shall be determined by the CDCs guidelines.

Source: http://www.cambodiainvestment.gov.kh/wp-content/uploads/2021/12/LOI_English-Updated-13Dec21.pdf

Overview of Cambodia

The better you understand the business environment and what makes it tick, the less likely your decision will be premised on emotion, hearsay or just because someone claiming to be ‘connected’ said so. Not unlike Singapore, Cambodia is sandwiched between two larger neighbours – Thailand to the north and west along an 817 km border, and Vietnam to the east and south-east along a 1,158 km border. It also shares a 555 km long border with Laos to its north. Cambodia’s geography consists of several mountain ranges and vast swathes of wetlands and agricultural land. Its agricultural land has been assessed to be one of the most fertile in the region. 

The kingdom’s 25 provinces (the capital city of Phnom Penh is a municipality and is generally regarded as having the same status as a province) are connected by national roads and highways which in recent years, the government has invested in improving highways with the assistance of foreign aid and loans from its development partners (see map below). Most notably National Highway 6, connecting Siem Reap & Phnom Penh,  National Highway 4 connected Phnom Penh to the coastal province of Sihanoukville, and the government is scheduled to complete roadworks in 2022 on National Highway 5 connecting Phnom Penh and Battambang (leading subsequently to the Thai border). 

Cambodia enjoys a strategic location in the heart of mainland Southeast Asia and is well connected with countries in the Asia Pacific and beyond through multiple international flights a week. Because of its high vaccination rate (90.1% as of February 2022) and ability to acquire or procure vaccines from different sources and through COVAX, some international flights to Cambodia have resumed. Consistent with its business-friendly approach, it is one of the first countries in the region to open its economy and borders to vaccinated business and leisure travellers. Its new international airport in Kandal (35 km from the centre of Phnom Penh) is on track to be completed in the upcoming years. 

Source: Cambodia Airports – Passenger Traffic, Aircrafts Movements & Cargo Statistics 2019-2021

The train route from Bangkok – Poipet – Phnom Penh, currently operating for cargo with the goal of opening public transport by 2024. The Southern Economic Corridor is a proposed transport route that would connect the port of Dawei in Myanmar to ports in Vietnam, via Thailand and Cambodia. This is an alternative route to the East-East Economic Corridor and will be very beneficial to Cambodia which is in the epicentre of all proposed routes.

Source: MFAIC – International flight routes around Cambodia

See our section on Airport in Cambodia for more information. 

Population of Cambodia

Cambodia has a population of nearly 17 million people (16.83 million in January 2021, with a 1.5% growth rate). The average age is 26.6 years old and 81.7% of the population aged 15-59 years are in the labour force with unemployment estimated at 1.2%. However, it is estimated that unemployment may rise to 4.8% due to the economic impact of Covid 19. The labour force is becoming increasingly skilled as nation-wide literacy and graduation rates rise however, employers often struggle to find local skilled labour and should be prepared to conduct extensive training programmes for their local staff. 70% of the population of Cambodia are under 35 years of age there are stark differences between the younger and older generation regarding their level of education and consumer behaviour. Young Cambodians have more consumer awareness and purchasing power than ever before as and their appetite for quality goods and services is being met in urban areas with dozens of malls, commercial centres and international franchises launching every week.

Rural, Urban & Housing

In the past decade, Cambodia has seen an increase in rural to urban migration with 40% of the population now living in urban areas. Most people in rural areas are involved in the agriculture sector with 90.6% homeownership compared to 81.9% in urban areas. Although there has been a notable boom in Cambodia’s construction and real estate markets Cambodia’s real estate market, these properties are typically being sold to foreigners with 60% of all sales in 2018 to Chinese investors alone.

See our section on Real Estate for more information. 

Mobile & Internet

Only 38% of urban households have access to wifi however, there were a total of 21.42 million mobile phones accounted for in 2020, which corresponds to an average of 1.3 per person, the fourth-highest phones per capita in the world. 

The number of social media users in Cambodia was equivalent to 71.3% of the total population in January 2021, with users favouring Facebook, YouTube, Tik Tok and Instagram. Social media marketing is crucial for businesses in Cambodia, most local businesses will have Facebook pages for their companies instead of websites.

See our section on IT & Telecommunication for more information.

Transport 

The majority of the country travel by motorbike with 95% of households owning motorbikes compared to 12% car ownership according to the 2019 census. Public transport is limited in urban areas with a handful of bus routes available in Phnom Penh, however, this is offset by the low cost of ride-hailing apps such as Grab and Pass App charging as low as 3000R (75c) per kilometer. Minibusses and taxis are used for travel to provinces and remote areas. Road safety has increased substantially in recent however many Cambodians are still reluctant to travel at night, particularly women. If you are considering developing a business in a remote location you may need to consider providing safe transport options for your staff, this is common practice in garment factories. 

See our section on Transportation, Logistics, and Supply for more Information.

Language

Khmer

The Khmer language is the official language of Cambodia which is widely spoken by 90% of the population, Khmer has the longest alphabet and is considered one of the most difficult languages in the world to learn as its alphabet has never been simplified like Thai, Vietnamese, Chinese, Korean, Japanese etc. For this reason, coupled with poor quality education in the post-war era, much of the older generation of Cambodians are illiterate in Khmer but can read in the Roman alphabet.

English

Most business is conducted in English however if you are dealing with the Royal Cambodian Government and ministries Khmer is used for contracts and formal documentation. Foreigners are not expected to learn Khmer however any efforts to do so are much appreciated by the local community. Due to the prevalence of western media most Cambodians in urban areas speak English quite well, especially when compared to neighbouring Thailand and Vietnam. English is less common in rural areas.

French

Cambodia is a former French colony however, most Khmer French speakers were assassinated during the Khmer Rouge so the language is not spoken as widely as before. Academic subjects such as Medicine are still taught in French but typically it is not required for doing business in Cambodia.

Chinese

Chinese is considered an important language for business in the country albeit not essential. Many investors in Cambodia are Chinese, often they will speak English as a second language and less frequently Khmer. The Chinese language has become a popular choice with Khmer students in recent years as the demand for business translators increases. 

Religion & Holidays

Buddhism is the national religion with 90% of the population identifying as Buddhist and the remaining 10% as Muslim, Christian, or other. Religion does not typically interfere with the business however, there are many religious holidays throughout the year, mandated by the Ministry of Labour. Most notably business grinds to a halt twice a year for at least one week (lunar calendar dependent);  Pchum Ben Festival (Sep-Oct). Some businesses may also close for Chinese New Year,  western holidays are formally recognized but may be celebrated socially.

Elections

Cambodia is a one-party dominant state with the Cambodian People’s Party currently in power. Cambodia’s legislature is chosen through a national election. The country has the longest-serving prime minister in the world, H.E Samdech Hun Sun who has been in power since 1985. The general election is held every five years in the fourth Sunday of July. The Parliament of Cambodia has two chambers. The National Assembly has 125 members, each elected for a five-year term by proportional representation. The Senate has 62 members, mostly indirectly elected. Cambodia’s upcoming elections are;

The 2022 Cambodian Communal Elections will be held in Cambodia on 5 June 2022. 1,652 communes in all 25 provinces of Cambodia will be contested, for a total of 11,622 commune council seats. Elected councillors will go on to determine the majority in the 2024 Senate election.

The 2023 General Elections will be held in Cambodia in July that year to elect members of the seventh National Assembly. The Cambodian People’s Party (CPP) currently holds all seats in parliament. Prime minister Hun Sen will seek another term in office, with his eldest son Hun Manet expected to take over on an unspecified date, either after 2023 or 2028.

Climate

Cambodia’s climate is tropical and has a high temperature that is influenced by the monsoon. There are only two main seasons in Cambodia – the rainy season, which lasts from May to October, and the dry season, which runs from November to April. Due to its geographical advantages, Cambodia is considered one of the countries with a low risk of encountering natural disasters except for storms, floods, and droughts.

In the current day, Cambodia is raising numerous awareness campaigns toward climate change. The global campaign known as Race to Zero brings together real economy actors such as cities, businesses, and investors to build momentum towards a net-zero-emission economy by the middle of the century. It is worth noting that Cambodia is in the rapid development stage and is known as an investment-friendly country, it is also time to bring the country toward a greener environment. Local businesses must also take part in the corporate climate ambitions, not just business from foreign investors. In 2021 the Ministry of Environment hosted the first Climate Change Summit and attended COP26 in the UK. 

Feel free to enquire with the Aquarii team should you need further advice.

If you are looking for a more nuanced insight or advice in terms of other indicators/observations not commonly found in publications for a better understanding of how a business or investor can navigate the local environment or seek out collaboration opportunities and trustworthy partners, get in touch with our team at Aquarii. Ask to speak to our CEO if you wish to know why he has decided to make Cambodia his 2^nd home, perhaps the strongest testament of his conviction in the potential and opportunities in the Kingdom.

The Labor Law provides for both severance pay and redundancy pay. Payments at the end of the contract include payment of last month’s wage, payment for unused leave and severance pay as applicable.

On the expiry or termination of a fixed-term contract, the employee has the right to receive severance pay. Severance pay must be at least 5% of the total wages paid to the worker during the length of a fixed-term contract.

On termination of the employment, severance pay is payable to retrenched workers (terminated for economic reasons and other reasons except for serious misconduct), depending upon the length of service, at the following rates:

• 7 days wages for employment from 06 months to 12 months; and

• 15 days wages for every year of employment (up to a maximum of 6 months wages)

Workers are also entitled to severance pay on contract termination due to health reasons. No severance payment is granted if a worker’s employment contract is terminated due to serious misconduct. The limit on severance pay to the maximum of 6 months’ wages has been removed in the 2018 amendment. If a worker cancels the fixed-term contract without any legal reason, he/she must pay the employer for any damages suffered by him/her as a result. On the other hand, if an employer cancels a fixed-term contract without any legal reason, he must pay the worker the full amount (of wages) that the worker would have received if he/she had been allowed to work until the end of the contract.

The calculation of severance/redundancy payment is based on average earnings over the past 12 months. The Arbitration Council has however found that the overtime and bonuses received by the worker in the 12 months prior to dismissal should also be included in the calculation. The severance pay is not payable in the case of serious misconduct on the part of the worker or resignation by the employee. However, severance pay is payable if the employer pushed the worker to resign through serious misconduct (on the part of the employer).

An employer is required to pay damages (in addition to severance/redundancy pay) if they terminate an indefinite term contract without a valid reason. Workers, unfairly dismissed, are entitled to the damages of at least the same amount which they received as severance compensation on contract termination.

The normal remedy for unfair dismissal is damaged however a court may award reinstatement. Employers are also eligible for such damages if workers terminate the employment contracts without valid reasons. These damages are not the same as compensation in lieu of notice. The worker, however, can request to be given a lump sum equal to the dismissal indemnity. In this case, he is relieved of the obligation to provide proof of damage incurred.

The damages for breach of the labour contract without valid reasons, as well as those owned by the employer as per provision of Article 90, are determined by the competent court and based on local custom, the type and importance of the service rendered, the worker’s seniority and age, the pay deductions or payments for pension, and other circumstances that justify the existence and extent of the damage.

If a worker unfairly terminates an employment contract and takes a new job, the new employer is jointly liable for damages caused to the former employer if it is proven that he encouraged the worker to leave the earlier job.

Source: https://prake.org/labour-law/employment-security/notice-and-severance

Clarifications on Fixed Duration Contracts and Renewals

On March 17, 2019, the MLVT enacted its Instruction on Determination of Type of Employment Contracts, which clarifies the duration of an FDC. Under the instruction, an employer can enter into an initial FDC with any local or foreign employee for a duration not to exceed two years.

After the initial contract, the employer can renew the FDC one or more times so long as the total duration of the renewals does not exceed two years. If the renewals exceed two years, then the FDC will be deemed a UDC.

For instance, if the initial FDC had a fixed term of six months, then the maximum duration of the FDCs could be two years and six months. If the initial FDC had a fixed term of one year, then the maximum duration of the FDCs would be three years. Likewise, if the initial FDC had a term of two years, then the maximum duration of FDCs could be four years. 

If an employee reaches the maximum duration for an FDC and the employer wants to continue the employment on an FDC basis, a one-month break must be inserted between the expiration of the FDC and the start of a new one. If there is no one-month break in employment, the employee will be deemed to be working under a UDC.

Source: https://www.tilleke.com/insights/cambodia-issues-new-rules-contracts-and-compensation/

There is no personal income tax, per se, in Cambodia. Instead, a monthly salary tax is imposed on individuals who derive income from employment. General consulting income is excluded from salary tax but is subject to tax on income (see the Taxes on corporate income section in the Corporate tax summary for more information on CIT), although rules exist that may deem certain consultants as employees.

A Cambodian resident’s worldwide salary is subject to Cambodia salary tax, while non-residents are taxed on Cambodian-sourced salary.

Salary tax rates

1. Residents

The monthly cash salary of residents is taxed at the following rates:

Monthly salary (KHR*) 

– 0 to 1,300,000 = 0%

– 1,300,001 to 2,000,000  = 5%

– 2,000,001 to 8,500,000  = 10%

– 8,500,001 to 12,500,000 = 15%

– Over 12,500,000 = %20

2. Non-residents

Non-residents are taxed at a flat rate of 20%, which constitutes a final tax.

3. Fringe benefits

Fringe benefits are taxable at the flat rate of 20% of the amount paid.

Source: https://taxsummaries.pwc.com/cambodia/individual/taxes-on-personal-income

Residents are persons domiciled in or having a principal place of abode in Cambodia or present in Cambodia for more than 182 days in a 12-month period.

Source: https://taxsummaries.pwc.com/cambodia/individual/residence

Resident taxpayers must pay monthly 1% PTP on monthly turnover inclusive of all taxes, except VAT. The PTP must be paid by the 25th day of the following month. The PTP can be used to offset against the annual TOP or MT liability, whichever is higher.

The following entities are exempt from paying the 1% PTP:

• QIP industry during the Tax Holiday Period

• Any legal entities which purchase and cultivate paddy rice, and produce milled rice for exportation during the tax incentive period

• Non-for-profit organization recognized by MEF

Source: https://bun-associates.com/wp-content/uploads/2018/07/BA-Tax-Practice-eBrochure.pdf

Fringe benefits provided directly or indirectly to physical persons in cash or in-kind are subject to TOFB at a rate of 20% of the gross value of the benefits. The value of the fringe benefit is the fair market value inclusive of all taxes. The following benefit will be considered fringe benefits:

• a vehicle of any kind;

• food;

• a house or housing;

• utilities;

• loan less than market rate of interest;

• discount on the sale of goods;

• educational assistance not related to the work of the employee;

• life and health insurance premium unless the same benefit is provided to each employee regardless of employment or job classification;

• the un-reasonable and un-necessary expense to the business of the employer;

• contribution to social security funds in excess of the levels provided in law;

• pension plan in excess of 10% of the employees’ monthly salary exclusive fringe benefits;

• expenses on entertainment, amusement, or recreation which is not part of an employment relationship.

Source: https://bun-associates.com/wp-content/uploads/2018/07/BA-Tax-Practice-eBrochure.pdf

The Tax Administration imposes 2 (two) VAT rates. The standard VAT rate of 10% applies to all taxable supplies. Additionally, goods exported from Cambodia and services rendered outside of Cambodia will be subject to a VAT rate of 0%.

Source: https://bun-associates.com/wp-content/uploads/2018/07/BA-Tax-Practice-eBrochure.pdf

The AT is imposed at 2% of the accommodation charge/fee in a hotel while including other taxes and service charges except VAT. In addition, “Hotel” refers to Hotel, Hotel Apartment, Suite Hotel, Resort Hotel, Motel, Bungalow, Guesthouse, Tourist Camping, and other accommodation services.

Source: https://bun-associates.com/wp-content/uploads/2018/07/BA-Tax-Practice-eBrochure.pdf

PLT is a tax imposed on locally produced and imported alcohol and cigarettes at a rate of 3%. Further redistribution, the PLT base is at 20% of the Sale price.

Source: https://www2.deloitte.com/content/dam/Deloitte/kh/Documents/tax/kh-tax-guide-to-taxation-in-cambodia-2020.pdf

The TOI rate for registered entities in Cambodia ranges with the following business Activities:

• Enterprises oil or natural gas production or exploitation of natural resources, including timber, ore, gold and previous stones (30%)

• QIPs during tax holiday period (0%)
• The gross premium realised by general insurance, reinsurance, and micro-insurance enterprises (5%*)
• The income realised by a legal person, life insurance, and reinsurance enterprises (20%)
• TOI shall be determined at 5% of the gross premiums received in the tax year while 20% TOI is applicable for other income.

Source: https://www2.deloitte.com/content/dam/Deloitte/kh/Documents/tax/kh-tax-guide-to-taxation-in-cambodia-2020.pdf

The default tax year for all registered entities is the calendar year commencing from 1 January to 31 December. However, any registered entity with 51% foreign ownership is allowed to request for new tax year-end different from the calendar year.

Source: https://www2.deloitte.com/content/dam/Deloitte/kh/Documents/tax/kh-tax-guide-to-taxation-in-cambodia-2020.pdf

Level of turnover:

• From KHR250 million (~USD62.5K) to KHR700 million (~USD175K); or

• Join in bidding, price consulting or price surveying in supplying goods and services

Source: https://www2.deloitte.com/content/dam/Deloitte/kh/Documents/tax/kh-tax-guide-to-taxation-in-cambodia-2020.pdf

Level of turnover:

– From KHR700 million (~USD175K) to KHR4,000 million (~USD1M); or

– A registered legal entity, representative office; or

– A national and sub-national institution, association and non-governmental organization; or

– Foreign diplomatic and consular mission, international organization and other governement’s technical cooperation agencies

Source: https://www2.deloitte.com/content/dam/Deloitte/kh/Documents/tax/kh-tax-guide-to-taxation-in-cambodia-2020.pdf

Level of turnover:

– More than KHR4,000 million (~USD1M);

– A subsidiary of a multinational company, a foreign branch; or

– A Qualified Investment Project (QIP)

Source: https://www2.deloitte.com/content/dam/Deloitte/kh/Documents/tax/kh-tax-guide-to-taxation-in-cambodia-2020.pdf

According to Law on Commercial Enterprise (LOCE) in Cambodia, the investor intending to open a business is required to set up an entity either in the form of a sole proprietorship, general or limited liability, partnership, public limited liability company, the foreign branch, and the RO, with either a foreign or Cambodian national.

Private Limited Company

To establish a Private Limited Company, the entity should have from 1 to 30 shareholders. The Private Limited Company is not allowed to offer its shares or other securities to the public; however, it is allowed to transfer its shares to the other shareholders.

Public Limited Company

The process of running a Public Limited Company is regulated and has more restrictions compared to other forms of entities. There shall be at least three directors managing the Public Limited Company. The shareholders shall elect directors by an ordinary resolution of shareholders who have the right to vote.

The form of this entity may offer the securities to the public – financial institution and insurance company; however, it is required to have the approval from the relevant authorities.

Foreign Company

A foreign company may set up a branch to start up a business operation in Cambodia which has the same legal entity as its principal.

– Foreign branch: Before commencing a business, a foreign branch should apply for the business registration with the MoC. The procedure of registration of the foreign branch is similar to the Private Limited Company except its own articles of incorporation. In addition, all the liabilities of the branch office will belong to its principle.

– Representative Office (RO): Foreign companies that wish to explore the feasibility of doing business in Cambodia may register as a RO with the MoC. The RO’s activities are confined to market research, feasibility studies, advertising and marketing activities on behalf of its head office. The RO is prohibited from entering into any contractual arrangements facilitation for selling goods or services.

– Subsidiary: Foreign investors who wish to have at least 51% shareholding of a legal entity in Cambodia should establish their entity in the form of a limited company which maintains nationality as a foreign entity. However, a foreign nationality in Cambodia is not eligible to hold the land right as mentioned above.

Source: https://www2.deloitte.com/content/dam/Deloitte/kh/Documents/tax/kh-tax-guide-to-taxation-in-cambodia-2020.pdf

The Ministry of Labor and Vocational Training (“MLVT”) has recently issued Prakas No. 243/22 on Public Holidays for 2024, dated 26 September 2023 with a total of 21 Public Holidays. The purpose of this Prakas is to inform that workers/employees of all factories/enterprises stipulated in Article 1 of the Cambodian Labor Law shall be entitled to the following paid holidays in the year 2023:

• 01 January International New Year’s Day – 01 day off
• 07 January Victory Over Genocide Day – 01 day off
• 08 March International Women’s Day – 01 day off
• 13-14-15-16 April Khmer New Year’s Days – 04 days off
• 01 May International Labor Day – 01 day off
• 14 May King Norodom Sihamoni’s Birthday – 01 day off
• 22 May Visak Bochea Day – 01 day off
• 26 May Royal Plowing Ceremony – 01 day off
• 18 June Queen Norodom Monineath Sihanouk’s Birthday – 01 day off
• 24 September Constitutional Day – 01 day off
• 01-02-03 October Pchum Ben Festival – 03 days off
• 15 October Commemoration Day of Former King Norodom Sihanouk – 01 day off
• 29 October King Norodom Sihamoni’s Coronation Day – 01 day off
• 09 November National Independence Day – 01 day off
• 14-15-16 November Water Festival – 03 days off

Source: Prakas No. 274/23 on 2024 Public Holidays by MLVT

(Effective Date: 31-Mar-1997): The employer has the right to grant his worker special leave during the event directly affecting the worker’s immediate family.

If the worker has not yet taken his annual leave, the employer can deduct the special leave from the worker’s annual leave.

If the worker has taken all his annual leave, the employer cannot deduct the special leave from the worker’s annual leave for the next year.

Hours lost during the special leave can be made up under the conditions set by a Prakas of the Ministry in Charge of Labor.

Source: https://www.mlvt.gov.kh/index.php/en/official-docs/royal-code/40-%E1%9E%96%E1%9F%92%E1%9E%9A%E1%9F%87%E1%9E%9A%E1%9E%B6%E1%9E%87%E1%9E%80%E1%9F%92%E1%9E%9A%E1%9E%98/88-%E1%9E%85%E1%9F%92%E1%9E%94%E1%9E%B6%E1%9E%94%E1%9F%8B%E1%9E%9F%E1%9F%92%E1%9E%8A%E1%9E%B8%E1%9E%96%E1%9E%B8%E1%9E%80%E1%9E%B6%E1%9E%9A%E1%9E%84%E1%9E%B6%E1%9E%9A-labour-law.html

(Effective Date: 31-Mar-1997): Unless there are more favourable provisions in collective agreements or individual labour contracts, all workers are entitled to paid annual leave to be given by the employer at the rate of one and a half workdays of paid leave per month of continuous service.

LABOR LAW (1997)

Any worker who has not worked for two continuous months is entitled, at the termination of his labour contract, to compensation for paid leave calculated in proportion to the amount of time he worked in the enterprise.

For jobs that are not performed regularly throughout the year, a worker is considered to have met the condition of continuous service if he works an average of 21 days per month.

The length of paid leave as stated above is increased according to the seniority of workers at the rate of one day per three years of service. Official paid holidays and sick leave are not counted as paid annual leave.

Source: https://www.mlvt.gov.kh/index.php/en/official-docs/royal-code/40-%E1%9E%96%E1%9F%92%E1%9E%9A%E1%9F%87%E1%9E%9A%E1%9E%B6%E1%9E%87%E1%9E%80%E1%9F%92%E1%9E%9A%E1%9E%98/88-%E1%9E%85%E1%9F%92%E1%9E%94%E1%9E%B6%E1%9E%94%E1%9F%8B%E1%9E%9F%E1%9F%92%E1%9E%8A%E1%9E%B8%E1%9E%96%E1%9E%B8%E1%9E%80%E1%9E%B6%E1%9E%9A%E1%9E%84%E1%9E%B6%E1%9E%9A-labour-law.html

In this article we discuss the latest law updates on the minimum wage in Cambodia. For more information on the labor law, investment law, commercial enterprise law and more, check out our Library of Laws section on the website.

What is the minimum wage in Cambodia?

The Ministry of Labour and Vocational Training (“MLVT”) issued Prakas 247 on 21 September 2022 that Cambodia’s government has agreed to increase the monthly minimum wage to USD200 from the current USD198. Under Prakas 247, this raise in the minimum wage in Cambodia was effective from 1 January 2023 and only applies to the textile, garment, and footwear and travel goods industries.

Workers will continue to receive their benefits such as attendance bonuses, travel and accommodation bonuses, meal allowances, and overtime pay.

Who determines the minimum wage in Cambodia?

The National Council on Minimum Wage (NCMW), a tripartite body comprising equal representation of labor unions, employer’s associations, and the government sets the minimum wage. The Ministry of Labor and Vocational Training announced the results of a tripartite vote on four possible wage increases: USD198, USD206, USD210, and USD213. Of the 51 council members, 46 voted for USD198 which was increased to USD200 after an intervention by Cambodia’s Prime Minister Hun Sen.

In determining the minimum wage, the NCMW studies the following criteria:

• Inflation;
• Cost of living;
• Productivity;
• Competitiveness;
• Sector profitability; and
• The current labor market situation.

What benefits do workers receive under the minimum wage in Cambodia?

In addition to the minimum wage, workers will also receive the following benefits:

• Attendance bonus — USD10 per month;
• Travel and accommodation expenses — USD7 per month;
• Meal allowances — USD 0.50 per day; and
• Overtime and seniority bonus — USD2-USD11 per month for those between their second to the eleventh year of work.

To note: workers who are paid based on productivity can earn more than the minimum wage; however, if the amount they produce earns them less than the minimum wage, then the employer has to add the remainder to a total of USD200 or USD198 for workers on probation.

What was the previous minimum wage in Cambodia before the increase?

On 28 September 2021, the Ministry of Labour and Vocational Training (“MLVT”) issued Prakas 264 on the Determination of Minimum Wage in Cambodia for Workers in the Garment, Textile, Footwear, Travel Product and Bag Sectors, to set new minimum wage in Cambodia, which was effective from 1 January 2022.

Under Prakas 264, workers in the relevant sectors were entitled to:

• For regular workers, USD 194 per month.
• For probationary workers, USD 192 per month.

Prakas 264 set the minimum wage in Cambodia for piece-rate workers.  For such workers, the pay rate is to be determined based on their level of production and, in case such production gives rise to a higher pay rate than the minimum wage in Cambodia, the workers will be entitled to such a higher amount.

However, if their production gives rise to a pay rate lower than the minimum wage, the employer must adjust the workers’ pay, such that the total pay is at least equal to the minimum wage in Cambodia (USD 194 for regular workers and USD 192 for probationary workers).

Other benefits that such workers have received remain unchanged, such as compensation for transportation or accommodation allowance of USD 7 per month, attendance bonus of USD 10 per month, the food allowance of USD 0.5 per day (or one free meal per day) for those who work overtime and seniority bonus from USD 2 to USD 11 per month for those in their second to the eleventh year of work. 

Under the Law on Minimum Wage in Cambodia, which was promulgated on 6 July 2018, the key factors in determining the minimum wage include social considerations (such as inflation rates and living expenses); and (2) economic considerations (such as productivity, competition, job market status and profitability of a particular industry). The discussions on the minimum wage are conducted on an annual basis unless decided otherwise by the National Council on the Minimum Wages, and such minimum wage is determined by a Prakas issued by the MLVT.

Source: Prakas No. 247/22 on Minimum Wage by MLVT

From 8 September 2021 non-resident entities who provide digital goods/services or e-commerce activities to Cambodian consumers and who expect to have sales of USD15k or more before the end of the year, over three consecutive months, have 30 days to register for VAT with the General Department of Taxation (GDT) in Cambodia.

From 2022 onward the same non-resident entities, as described above, expect to have sales of USD62.5k or more in 2022 or future years, or expected sales in any calendar year of USD15k or more for three consecutive months, will need to register for VAT within 30 days.

Once registered for VAT non-resident entities will need to invoice customers in Cambodia with respect to B2C and B2B transactions. The VAT registered non-resident will need to file monthly VAT declarations and pay the 10% VAT on B2C sales to the GDT.

Registered taxpayers who receive digital goods/services or e-commerce activities from a non-resident (B2B transaction), whether the non-resident has registered for VAT or not, will need to pay 10% VAT to the GDT on behalf of the non-resident under a VAT reverse charge mechanism.

Detailed Analysis

In April of this year, Sub-decree No. 65 S.E on the Implementation of Valued Added Tax on E-Commerce (“Sub-decree 65”) was enacted with the stated purpose of introducing the conditions and mechanism for the collection of VAT on the provision of digital products, services and e-commerce activity by non-resident entities to consumers in Cambodia. Please refer to our earlier update here.

The issuance of Sub-decree 65 was a response by the Cambodian authorities to the growth of e-commerce trade in the Kingdom which has allowed overseas suppliers to provide digital goods and services to customers in Cambodia without the need to have a brick and mortar office in-country thereby making it difficult to tax these transactions. This type of special circumstance was contemplated in Article 75(2) of the Law on Taxation.

Article 75(2) of the Law on Taxation provided the ability to the Cambodian Government to issue a Sub-decree to impose special conditions concerning the liability to collect, declare and pay VAT where the supplier of the taxable supply that is consumed in Cambodia is not engaged in business in Cambodia or where there are other obstacles relating to the collection of VAT from the supplier.

Prakas 542 MEF.P on the Rules and Procedure for the Implementation of VAT on E-Commerce (“Prakas 542”) was passed on the 8th of September 2021 and as its name suggests it provides further detail on how Sub-decree 65 will be implemented. We provide further detail on the salient points of Prakas 542 below.

Who is Impacted?

Those parties primarily impacted by the recent regulatory updates are non-resident suppliers of digital goods, services and e-commerce activity (“Non-resident E-Supplier”) and importantly those registered taxpayers in Cambodia (“Taxable Person”) who transact with the aforementioned non-resident suppliers under a B2B transaction. The obligations for both Non-resident E-Suppliers and Taxable Persons are far-reaching and the failure to comply with these obligations could result in severe penalties.

Non-resident E-Supplier in Cambodia

Under a Prakas 542 a Non-resident E-Supplier who expects to have annual turnover to its Cambodia consumers (both individual and business) of Khmer Riel 250 million (approximately USD62.5k) or expected turnover within any three consecutive months that end in the current calendar year that exceed Khmer Riel 60 million (approximately USD15k) are now obliged to register for VAT within 30 days.

Practically what this means is that from September 2021 Non-resident E-Suppliers need to ask themselves will my revenue generated from sales to Cambodia customers exceed USD15k by the end of 2021? If the answer is yes then those suppliers would have 30 days to register for VAT – if the answer is no then the suppliers can wait until 1 January 2022 and then make an assessment at that time whether they will have turnover in 2022 of more than USD62.5k or expect to have turnover in any three consecutive months in 2022 that exceeds USD15k.

For those Non-resident E-Suppliers who do meet the threshold to register for VAT the new Prakas outlines the process and documentation that is required. Practically speaking Non-resident E-Suppliers may need to use a registered Tax Agent in Cambodia to complete the Tax Registration process for them which requires the following documents, (if not in Khmer or English language translated documents are required), to be submitted:

• VAT registration application,
• Non-resident taxpayer registration documents,
• Valid identification documents of owner or representative (ID card or passport),
• Two current 35 x 45mm passport photos not older than 3 months of the director or representative,
• Bank account details of the non-resident issued by or printed from the bank.

The fee to register for VAT is Khmer Riel 400,000 (approximately USD100) and should there need to be any updates to the information provided the fee for such updates is Khmer 200,000 (approximately UDS50).

Upon completion of the VAT registration process the Non-resident E-Supplier shall receive the following:

• A simplified VAT registration certificate,
• Tax registration certificate,
• Notice on tax compliance.

If a Non-resident E-Supplier fails to register for VAT, whether voluntarily or at the invitation of the tax authority in Cambodia, the tax authority can unilaterally register the Overseas E-Supplier and issue a tax re-assessment of the taxes that they believe have not been paid – along with penalties and interest. Obstruction of the tax law includes failure to register with the tax authority and an entity that obstructs the implementation of the tax law is liable to a fine from 5 million Khmer riel (approximately USD1,250) to 10 million Khmer riel (approximately USD2,500) and/or to imprisonment from 1 month to 1 year.

Invoicing

Once registered for VAT in Cambodia the Non-resident E-Supplier will need to issue tax invoices for each transaction it makes to consumers in Cambodia. That would include transactions with individuals (B2C) and transactions with Taxable Persons in Cambodia (B2B).

Invoices issued by the VAT registered Non-resident E-Supplier would need to include:

• The name, address, and VAT registration number of the Non-resident E-Supplier
• Name and address of the customer, and in a B2B transaction their VAT registration number
• Invoice number and date of issuance,
• Description of the good/service
• The taxable value and VAT (in a B2B transaction) or the total value of the supply inclusive of VAT (in a B2C transaction).
• In a B2C transaction the Non-resident E-Supplier would need to declare and pay the VAT charged to the GDT by the 20th of the month following the month in which the supply was made. A supply is determined to be made at the earlier of when the invoice was issued, goods delivered or payment received.

In a B2B transaction, the Non-resident E-Supplier would need to show the VAT charged as a separate line item in the issued invoice and declare the VAT charged in its monthly VAT declaration however the obligation to actually pay the VAT charged by the Non-Resident E-Supplier to the GDT rests with the Taxable Person under the VAT reverse charge mechanism.

Taxable Person

The VAT reverse charge mechanism is novel to Cambodia and increases the compliance obligation significantly for those Taxable Persons in Cambodia who transact with Non-resident E-Suppliers. An important point to note is that the obligation for a Taxable Person to apply the VAT reverse charge exists regardless of whether the Non-resident E-Supplier has registered for VAT in Cambodia or not.

Under the VAT reverse charge mechanism a Taxable Person who receives a supply of digital goods, services or e-commerce activities from a Non-resident E-Supplier, regardless of whether or not they are registered for VAT, will need to declare and make the payment of the VAT to the GDT by the 20th of the following month in which the supply takes place.

This works in a similar fashion to the withholding tax regime in Cambodia whereby a registered taxpayer who makes payments of Cambodian sourced income to a non-resident is obliged to withhold and pay withholding tax to the GDT on their behalf. In practice, however, the compliance obligation for a Taxable Person under Prakas 542 seems to be somewhat higher than that of a Withholding Agent.

Under Prakas 542 a Taxable Person would need to undertake the following:

When dealing with a Non-resident E-Supplier that has not registered for VAT, the Taxable Person would need to make a judgment as to whether or not the supply constitutes a digital good, service or e-commerce activity.

The latter is a little complex as can be seen by the extensive and non-exhaustive list of e-commerce activities annexed in Sub-decree 65 which can include for example tangible products purchased online, online advertising, customer support, online consultancy, data-warehousing, streamed content, online shopping portals etc.

Tax advisors and internal finance personnel will now be required to learn very quickly what constitutes e-commerce activities to ensure that the requirement to pay the VAT reverse charge is adhered to by their clients and businesses respectively.

A Taxable Person will also need to be aware that for VAT invoices issued by Non-resident E-Suppliers who have registered for VAT that they will also be responsible for paying the 10% VAT to the GDT, on behalf of the VAT registered Non-resident E-Supplier, under the reverse charge mechanism.

When it comes to the Taxable Person actually declaring and making the payment of the VAT reverse charge there is also currently uncertainty as to how this is done. A bank receipt could be provided evidencing that the VAT reverse charge has been paid to the GDT but there is currently no provision in the monthly VAT declaration to show the VAT reverse charge details.

VAT Input Credit

A Taxable Person is allowed to claim a VAT input credit on the supplies it receives from a Non-resident E-Supplier provided that the Taxable Person has paid the VAT reverse charge to the GDT. Interestingly a VAT input credit appears to be allowed even in the event that the Non-resident E-Supplier has not registered for VAT which is re-enforced by the obligation under Article 40 of the Sub-decree on VAT, requiring a tax invoice or bill of entry for import, being deliberately excluded from the criteria under which an input credit can be claimed in Article 8 of Prakas 542.

Commentary

The enactment of Sub-decree 65 and Prakas 542 in Cambodia were inevitable when we look at global development trends with respect to the taxation of e-commerce as governments around the world become more concerned around tax leakages arising from the inability to tax a supplier who does not have a physical presence in their jurisdiction.

It will be interesting over the coming months to see how many of the large players in the e-commerce sector feel compelled to register for VAT in Cambodia under this new development. Concerns still linger with respect to the interplay of the VAT registration requirement under Prakas 542 and the expansive definition of permanent establishment (PE) under Cambodia’s Tax on Income regulations which provide that a non-resident taxpayer who carries out e-commerce activities is considered to have a created a PE if the goods or services are supplied or used in Cambodia.

By specifically stating that VAT registration is required for Non-resident E-Suppliers who do not have a PE in Cambodia the new e-commerce regulations appear to have knocked back the wide expanse of the PE definition. If the tax authority wishes to encourage compliance and VAT registration by the large e-commerce players we suggest that it should clarify this issue which could be seen as a deal breaker for some when it comes to the registration obligation.

Some may also see the liberal allowance of obtaining VAT input credit in the instance that a Non-resident E-Supplier does not register for VAT as not incentivizing voluntary VAT registration. If a VAT input credit was not allowed, in the scenario where the Non-resident E-Supplier was not VAT registered, the tax registered consumer in Cambodia would need to bear the cost of making the VAT reverse charge but would not be allowed the input credit thereby dis-incentivizing it to transact with unregistered Non-resident E-Suppliers.

What is also problematic is the additional compliance obligation that is now place on those registered taxpayers who in a number of cases may be the unwitting consumer of an e-commerce activity that would be captured under the expansion list of e-commerce activities in Sub-decree 65. Failure of a registered taxpayer to pay the VAT reverse charge from September 2021 is going to result in re-assessed tax, penalties and interest and the potential to be unable to obtain a corresponding VAT input credit. The stakes are quite high and it will be incumbent for tax advisors and internal finance teams alike to educate themselves on the types of transactions that will create a VAT reverse charge obligation for their clients and businesses respectively.

We understand and sincerely hope, that further clarification will be forthcoming over the coming weeks from the GDT regarding the implementation of Prakas 542.

Source: https://www.dfdl.com/resources/legal-and-tax-updates/cambodia-new-prakas-on-vat-for-e-commerce/

Pursuant to Prakas 448 on the Registration of Enterprises and their employees with the National Social Security Fund (“NSSF”) for persons governed by the Labour Law (“Prakas 448”), all enterprises regulated by the Law on Social Security Schemes must immediately register themselves and their employees for the occupational risk scheme (covering work-related accidents and occupational disease insurance) and healthcare scheme. Enterprises that are already operating but are yet to register with the NSSF must do so by 10 December 2017.

Enterprises that are established after the issuance of Prakas 448, must register with the NSSF within 30 days from the commencement of operations.

Enterprises that are already registered with the NSSF for the occupational risk and health care schemes are not required to re-register with the NSSF.

Moving forward, enterprises must register their employees with the NSSF no more than three days after the commencement of employment, except for employees who already hold an NSSF membership card. This requirement does not apply to employees who already possess a valid NSSF membership card.

Every business employing one or more workers must register its business and workers with the NSSF for the Occupational Risk Scheme (for work-related accidents and occupational diseases) and the Health Care Scheme. Once registered, the business must pay to the National Social Security Fund (NSSF):

• A monthly contribution equivalent to 0,8% of each worker’s monthly average wages (between USD0.40 and USD2.40 per month per worker) for the Occupational Risk Scheme.
• A monthly contribution equivalent to 2.6% of a worker’s monthly average wages (between USD1.30 and USD7.80 per month per worker) for the Health Care Scheme.

The government issued Sub-Decree No. 32 dated 4 March 2021 on the Pension Fund Scheme for persons defined in the Labour Law (Sub-Decree 32). Under Sub-Decree 32, a business that employs one or more employees must register with the National Social Security Fund (NSSF) for the Pension Fund Scheme within 30 days after the sub-decree becomes effective.

If the business is already registered for the Health Care Scheme and Occupational Risk Scheme, it must register workers with the Pension Scheme within three days from the date of the worker’s commencement of employment. Contribution to the compulsory pension scheme will be jointly paid by the employer and the employee at the same rate of 2% (total of 4%) of the contributable wage for the first five years. Sub-Decree 32 does not indicate the date on which the Pension Scheme will be implemented. It merely states that this will be determined by a separate joint Prakas of the MLVT and MEF.

Source: https://www.dfdl.com/resources/legal-and-tax-updates/cambodia-legal-alert-new-national-social-security-fund-registration-requirements/

QIP refers to an investment project that has received a registration certificate from the Council for the Development of Cambodia or a Municipal-Provincial Investment Sub-Committee.

Under new Law on Investment, a QIP is defined as an investment project which has received a registration certificate from the Council for the Development of Cambodia (CDC) or a Municipal-Provincial Investment Sub-Committee. QIP is issued to a project, not to an investor or investing enterprise. QIP is entitled to certain investment incentives, one of which is tax exemption or special depreciation.

The procedure of investment applications under the new law is simplified as the following:

The Investor must submit the investment project application directly to CDC or Provincial/Municipal Investment Subcommittee (PMIS) or via an online portal.

The investment application shall be reviewed and decided via One-Stop-Service mechanism which is conducted by the representatives of the ministries or institutions seconded to the CDC according to the appointment and assignment of authority from the head of relevant ministries and institutions under the coordination of CDC.

CDC shall issue the Certificate of Registration within 20 working days upon the receipt of the application. The date of issuance of the CR shall be the commencement date of the QIP. However, CR does not exempt that project from receiving permits or approval from the relevant ministries or institutions as required by the law and regulations.

• Does the New Investment Law Impact Existing QIP Projects?

The New Investment Law states that investment projects that receive investment incentives and guarantees from the CDC/PMIS under the Former Investment Law shall be considered as QIPs or an IGP under the New Investment Law and related Sub-Decrees. The New Investment Law clarifies that existing QIPs which receive tax on income exemption prior to the adoption of this law shall continue to receive profit tax exemption for the remaining period.

Source: http://www.cambodiainvestment.gov.kh/wp-content/uploads/2021/12/LOI_English-Updated-13Dec21.pdf

A QIP that sells or transfers any proportion of its products to purchasers or recipients outside the Kingdom of Cambodia.

Source: http://www.cambodiainvestment.gov.kh/wp-content/uploads/2021/12/LOI_English-Updated-13Dec21.pdf

MLVT Notification No. 023/19 dated 8 July 2019 on the entitlement to retroactive seniority payments (prior to 2019) and ongoing seniority payments (from 2019 onwards) for the textile, garment, and footwear industries.

Once again, 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.
Employees employed under a fixed duration contract (“FDC”) are instead entitled to severance pay, proportional to their wages and the duration of the contract. The exact severance amount may be determined in a collective bargaining agreement, but if it is not, the severance pay will be set at 5% of the wages employees have been entitled to during the duration of their contract.

Per prior MLVT regulations, the duration of an FDC cannot be longer than two years. The FDC may be renewed or extended one or more times as long as the total duration of all renewals or extensions does not exceed two years. If an FDC exceeds such limits, it automatically becomes a UDC. Employers who have been using FDCs that exceed the maximum duration will have those FDCs become UDCs by the end of 2019 at the latest, and must then pay seniority payments from the date that the FDC became a UDC, in accordance with Prakas No. 443 and other applicable regulations.

If employees under such converted UDCs have already received severance pay of 5%, they are not entitled to claim a seniority payment.
Both retroactive and ongoing seniority payments are exempt from taxes.
Employees are not entitled to a seniority payment in the case of an employee’s unilateral resignation or serious misconduct.

Ministerial Instruction No. 057/19 dated 10 June 2019 on the payment of retroactive seniority payments by employers in the textile, garment, and footwear industries

This is applicable to employers and employees in the textile, garment, and footwear industries, and covers retroactive seniority payments only.

METHOD TO COUNT AN EMPLOYEE’S WORK SENIORITY IN CAMBODIA

Years of service prior to 2008 are not subject to the retroactive seniority payment. The maximum ceiling of the retroactive seniority payment to be paid is capped at six months (equal to 156 days) of the actual average wages(excluding fringe benefits) of each particular year for service years from 2008 to 2018.

In the first year of employment, a confirmed employee who has continuously worked for an employer for from one to six months (excluding the probation period) is entitled to a seniority payment calculated at 7.5 days. If s/he has worked longer than six months, the retroactive seniority payment would be for the full year, calculated at 15 days.

METHOD TO CALCULATE THE RETROACTIVE SENIORITY PAYMENT

Ministerial Instruction No. 057/19 provides a formula with examples (not discussed here) to calculate the retroactive seniority payment for each applicable year from 2008 to 2018.

Step 1: Calculate the average actual wage per month
Average actual wage per month = Total monthly actual wages during the period for which the retroactive seniority payment applies ÷ Number of total months during the period for which the retroactive seniority payment applies

Step 2: Calculate the average actual wage per day
Average actual wage per day = Average actual wage per month ÷ 261

Step 3: Multiply the average actual wage per day with the number of days of the retroactive seniority payment
Retroactive seniority payment per year = Average actual wage per day × 152

METHOD OF PAYMENT FOR THE RETROACTIVE SENIORITY PAYMENT

Payments equal to 15 days of average actual wages must be made twice a year. The first payment is payable at the same time as the second installment payment of wages due in June, and the second must be paid at the same time as the second installment payment of wages due in December. Retroactive seniority payments must be paid based on the actual years of service of each employee for the period from 2008 to 2018.
Employers must separate employees’ monthly wages from the retroactive seniority payment to avoid any confusion regarding tax obligations.

RETROACTIVE SENIORITY PAYMENTS BASED ON EMPLOYMENT CONTRACT CATEGORY

If an FDC was used for a period exceeding the limits of the law (as explained above), counted as of 2018, the retroactive seniority payment must be determined as below.

If an employee has already received severance pay (5%) at each FDC’s expiration date, s/he is not entitled to a retroactive seniority payment.
If an employee has not received severance pay (5%) at each FDC’s expiration date, a retroactive seniority payment must be made and calculated as explained above by counting the employee’s seniority from the date of signing the first employment contract.
If an FDC becomes a UDC in any year up to the end of 2018, the retroactive seniority payment must be paid as follows:

If an employee has already received severance pay (5%) at each FDC’s expiration date during the period when the FDC was used, the employer must pay retroactive seniority payments that have not been paid from the time when the UDC was put in place up through 2018 only.
If an employee has NOT received severance pay (5%) at each FDC’s expiration date, the employer must pay retroactive seniority payments in compliance with the basis, formula, and methods described above. In such a case, work seniority must be counted from the date the employee signed the first employment contract.

EMPLOYEE TERMINATION

If employees are terminated without a valid reason, they are entitled to the following items:
Unpaid wages up to the termination date
Compensation in cash in lieu of prior notice (applicable in a case where an employer has not given prior notice as required by the applicable laws and regulations)
Compensation in cash for untaken annual leave up to the termination date
Seniority payment entitlement for the half-year in which the employees are terminated, equal to 7 days of wages and fringe benefits if employees have remaining work seniority of from one month to less than six months
Total retroactive seniority payments that have not been paid
Besides items 1 to 4 above, employees may claim damages equal to the seniority payment owed to them, but not exceeding six months of wages and fringe benefits. In this case, employees are released from obligations to provide proof of their damages claim. However, if the employer does not agree with the damages claim, the employee may submit the case to the competent ordinary court for a decision.
Employees terminated for serious misconduct are entitled to the following items:
Unpaid wages up to the termination date
Compensation in cash for untaken annual leave up to the termination date

Common Principles

The work seniority used to calculate the retroactive seniority payment must be counted from the date the confirmed employee signed the employment contract excluding the probation period.
Confirmed employees who have worked for employers at least 21 days are considered as having worked for one full month and are entitled to receive the retroactive seniority payment.
The actual wages used for the basis of calculating the retroactive seniority payment due are the actual wages excluding other benefits such as healthcare benefits, occupational risk benefits, and overtime payments.
For employees who have retired or died any time from 2019 onwards, employers must pay all of the remaining seniority payments to those employees or their living heirs.
Periods of maternity leave, sick leave, and work-related accident leave are counted as employees’ work seniority for the purpose of calculating the retroactive seniority payment.
Retroactive seniority payments must be paid together with the second instalment payment of wages for June and December. Thus, when employers pay the second instalment payment of wages for June and December each year, employees in the textile, garment, and footwear industries who have work seniority before 2019 will receive: (i) the second instalment payment of wages for June and December; (ii) the current seniority payment of each half-year calculated at 7.5 days; and (iii) the retroactive seniority payment (if any).
Employees and employers must keep evidentiary documents, such as payslips or receipts or the equivalent and have them signed or thumb-printed by both parties for each retroactive seniority payment.
Ministerial Instruction No. 058/19 dated 10 June 2019 on the payment of ongoing seniority payments

The instruction applies in general to all employers within the scope of the Labor Law, regardless of whether they are or not they are in the textile, garment, and footwear industries.

METHOD TO COUNT WORK SENIORITY

From 2019 onward, employees’ work seniority for ongoing seniority payments are counted each half-year: the first half-year is counted from January to June, and the second from July to December.
Confirmed employees who have worked for from one to six months within each half-year and have worked until the end of each half-year (June and December) are entitled to an ongoing seniority payment equal to 7.5 days of wages and fringe benefits for each particular half-year.
Employees that have resigned before the end of June or December are NOT entitled to the ongoing seniority payment for that particular half-year.

METHOD TO CALCULATE ONGOING SENIORITY PAYMENTS

Step 1: Calculate wages and fringe benefits per month
Wages and fringe benefits per month = Total wages and fringe benefits for the half-year ÷ 6 months or the number of actual months worked3

Step 2: Calculate wages and fringe benefits per day
Wages and fringe benefits per day = Wages and fringe benefits per month ÷ 22 days or 24 days or 26 days (based on the actual number of working days per month)

Step 3: Calculate the ongoing seniority payment for each half-year
Ongoing seniority payment for each half-year = Wages and fringe benefits per day × 7.5

METHOD TO PAY THE ONGOING SENIORITY PAYMENT

Ongoing seniority payments must be paid together with the second instalment payment of wages to employees (paid twice a month) for June and December.
Employers must divide the monthly wages and ongoing seniority payment into two separate payment packages for ease of tax payment.

EMPLOYEE TERMINATION

If employees are terminated without a valid reason, they are entitled to the following items:
Wages that have not been paid up to the termination date
Compensation in cash in lieu of prior termination notice (if employees have not been given the notice as required by the applicable laws and regulations)
Compensation in cash for annual leave that has not been taken up to the termination date
Ongoing seniority payment for the particular half-year in which the employees are terminated, equal to 7 days of wages and fringe benefits if employees still have work seniority of from one to six months
Total retroactive seniority payment that has not been paid to the employees

Besides the first four points above, employees have the right to claim damages equal to the ongoing seniority payment employees are entitled to, but not exceeding six months of wages and fringe benefits. in such a case, employees are released from obligations to provide evidence of their damages claim. However, if the employer does not agree with the damages claim, the employee may submit the case to the competent ordinary court for a decision.

Employees terminated for serious misconduct are entitled to the following items:
Wages that have not been paid up to the termination date
Compensation in cash in lieu of the remainder of all untaken annual leave.

COMMON PRINCIPLES

The work seniority used to calculate employees’ ongoing seniority payments must be counted from the date the confirmed employee signed the employment contract excluding the probation period.
Confirmed employees who have worked for employers for at least 21 days are considered as having worked for one full month and consequently, will be entitled to ongoing seniority payment.
Wages and fringe benefits used for the basis of calculating the ongoing seniority payment due from 2019 onward are the gross amount before tax.
For employees who have retired or died any time from 2019 onward, those employees or their heirs will receive the following:
The remaining retroactive seniority payment they are entitled to
The ongoing seniority payment of any particular half-year during which employees have retired or died, equal to 7 days of wages and fringe benefits if they have work seniority with the employer of from one to less than six months
Periods of maternity leave, work-related accident leave, and sick leave are counted as work seniority for the basis of calculating the ongoing seniority payment. In contrast, other benefits, such as occupational risk benefits and healthcare benefits received during the above-listed leaves are not included in the calculation of the ongoing seniority payment.
From 2019 onward, each time employers make the second installment payment of wages for June and December, they must make the following payments:
The second installment of wages for June and December
The ongoing seniority payment of 7.5 days for each particular half-year
The retroactive seniority payment, if any
Employees and employers must keep evidentiary documents, such as payment slips or receipts or the equivalent and have them signed or thumb-printed by both parties for each half-year seniority payment.

Source https://www.vdb-loi.com/kh_publications/cambodia-legal-update-seniority-payments-new-regulations-bring-some-things-into-clearer-focus/

A QIP in which any proportion of its products is supplied to export industries.

Source: http://www.cambodiainvestment.gov.kh/wp-content/uploads/2021/12/LOI_English-Updated-13Dec21.pdf

EQIP refers to an expansion of a Qualified Investment Project (QIP) in any form, including expansion of existing production, expansion through product line diversification within the same lines, expansion through the use of new technologies that enhance productivity or protect the environment, expansion of infrastructure to serve basic telecommunications services, or expansion in any other forms to be determined by the Sub-Decree.

The New Investment Law allows investors to register their investment projects such as a QIP, an expansion of a qualified investment project (“EQIP”) and a project that is eligible for only an investment guarantee (“IGP”) with the CDC/PMIS. An EQIP that is registered with the CDC/PMIS under this New Investment Law is entitled to receive investment incentives under the New Investment Law.

Source: http://www.cambodiainvestment.gov.kh/wp-content/uploads/2021/12/LOI_English-Updated-13Dec21.pdf

Qualified Investment Project, an Expanded Qualified Investment Project or a Guaranteed Investment Project.

Source: http://www.cambodiainvestment.gov.kh/wp-content/uploads/2021/12/LOI_English-Updated-13Dec21.pdf

A QIP that does not export.

Source: http://www.cambodiainvestment.gov.kh/wp-content/uploads/2021/12/LOI_English-Updated-13Dec21.pdf

GIP refers to an investment project registered with the Council for the Development of Cambodia or a Municipal-Provincial Investment Sub- Committee, and being clearly mentioned as a GIP not eligible for tax incentives.

Source: http://www.cambodiainvestment.gov.kh/wp-content/uploads/2021/12/LOI_English-Updated-13Dec21.pdf