Cambodia offers several attractive opportunities for investors, many of which are not widely recognized outside the country. The nation’s strong economic growth is one of its key advantages, supported by its strategic location that serves as a crucial hub for regional trade. The investment environment is appealing, with abundant natural resources and a competitive, cost-effective workforce. Additionally, Cambodia benefits from strategic trade agreements, expanding infrastructure, and a supportive legal framework. The country’s stable social and political environment also plays an important role in creating a favorable atmosphere for sustained investment.
The market is very open to foreign investors, allowing 100 percent foreign ownership in almost every sector.
Recent updates to the regulatory framework, including new laws on investment, consumer protection, competition, and taxation, along with new tax exemptions and agreements to avoid double taxation, have made the investment environment even more attractive for foreign investors.
Cambodia’s involvement in various free trade agreements ensures its regulations meet international standards.
The country is rich in natural resources, such as land, water, minerals, and potentially oil and gas.
Labor and operational costs are competitive. With a population of 16 million, over 50 percent of whom are under 35, Cambodia has a young and growing workforce. According to a 2021 survey, the labor force participation rate was 83.7 percent. The literacy rate has also been improving, reaching 84 percent in 2021, according to the World Bank.
There is a growing middle class and expatriate community, and the local population is generally welcoming to foreigners.
Investors also have easy access to larger nearby economies like Thailand, Vietnam, and China.
Business is conducted in English, and the US dollar is widely accepted for transactions.
Cambodia has experienced strong economic growth, with an average annual GDP growth rate of about 7 percent before the COVID-19 pandemic. This growth is driven by investments in infrastructure, a thriving tourism sector, and a vibrant garment and textile industry. The country has also attracted significant foreign direct investment, especially from China and Japan. The government’s commitment to economic reforms and creating a favorable business environment has played a crucial role in this growth. Cambodia has also made significant progress in improving its electricity infrastructure, with costs decreasing and capacity increasing fifteen-fold over the past 15 years. Investments in logistical infrastructure, such as expressways, road expansions, port upgrades, and airport improvements, have also been substantial.
Cambodia’s economy is open to both foreign and domestic investors, with no requirement for local equity participation when setting up a business. The government does not regulate the prices of products or services in investment projects. There are also no restrictions on foreign currency convertibility and repatriation.
Qualified Investment Projects (QIP) in Cambodia
Qualified Investment Projects (QIP) in Cambodia receive significant benefits such as income tax exemptions for up to nine years, special depreciation allowances, and full exemptions from export taxes. These projects also enjoy exemptions from import duties on construction materials, equipment, and production inputs, along with value-added tax (VAT) exemptions for locally sourced production inputs. Additionally, they get a 150 percent tax deduction for research and development, innovation, training, employee welfare services, and machinery upgrades.
Efficient Approval Process, Open Investment Environment
Investment project proposals are reviewed and approved by the Cambodian Development Council (CDC) or the Provincial-Municipal Investment Subcommittee (PMIS) through a streamlined process. If the proposed investment is not on the Negative List, the CDC or PMIS will issue the registration certificate within 20 working days.
Investments in Special Economic Zones (SEZs) receive the same benefits as those outside these zones, but with additional administrative support and the advantage of being part of industrial clusters.
