Investing in Cambodia

In 2003, as Cambodia celebrates its Year of Tourism, tourism has become the leading growth area. This country presents enormous economic potential and excellent incentives for foreign investment. Aside from abundant natural resources and low-cost labor, the Royal Government of Cambodia (RGC) has enacted legislation specifically designed to attract foreign investors.

Aside from Thailand, Cambodia is the first country in the Mekong region to set about establishing a free market economy. In 1993, the principle of free enterprise was enshrined in the national constitution and, in 1994 the National Assembly adopted a liberal investment regime embodied in the Investment Law.

To achieve its social and economic development goals, the RGC has looked beyond foreign aid and assistance schemes to extend generous, very competitive concessions for private direct foreign investment. Investment is especially encouraged in tourism, energy sectors, physical infrastructure, industries protective of the environment, and industries contributing to provincial and rural development, with Cambodia a particularly attractive location for low-cost, labor intensive, export-oriented manufacturing. The Council for the Development of Cambodia (CDC), established under the 1994 Investment Law serves as a one-stop shop for investors, radically reducing bureaucratic red tape where representatives of related ministries help investors with the needed work permits, license and registrations.

With the exception of land ownership, which is restricted to locals although foreigners can lease for up to 70 years with the possibility of renewal domestic and foreign investors are to be treated similarly under law. There is legal protection against nationalization of assets and imposition of price controls on goods and services, as well as legal assurances that capital, interest and other financial obligations may be freely repatriated. 

Investment projects may be 100 percent foreign owned and, where needed, skilled oversea workers may be employed. Tax incentives include a generous 9 percent corporate income tax rate and tax exemption on profits of up to 8 years.

Cambodia enjoys most-favoured national (MFN) and system of preferences (GSP) privileges with regard to its major trading partners including Australia, Canada, European Union, Japan and USA. The RGC is also seeking ever more access to international sources of finance for private sector investment. A member of the IFC and MIGA, Cambodia is currently applying for membership in the International Center for Settlement of Investment Disputes (ICSID). Agreement with the Asean Development Bank (ADB) are in place, and this international financing instruction is making funding available to private-sector investors.

Consult the CDC website for a summary of the new legislative investment incentives. Amendments to the tax laws are still required to bring this legislation fully into line with the provisions of the Investment Law, but investors pronounce themselves highly satisfied what is seen as a generous and rationalized investment climate, remarkably free of red tape. 

Source: CAMBODIA OFFICIAL TOURIST GUIDE, January - December 2004, by Ministry of Tourism