Doing Business
in Cambodia
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Cambodia is a developing market economy in Southeast Asia with a population of nearly 16 million people and a GDP of around USD
18.5 billion (2015). The country’s economy is growing rapidly and liberal trade and investment policies have been introduced to
promote trade and foreign investment. Despite its still challenging business climate, business opportunities can be found in several
sectors, in particular in agri-food, horticulture, garments, tourism and construction/real estate.
Cambodia began its transformation from a planned economy to a progress unevenly distributed among the population. Agriculture
free market economy in the late 1980s and has been one of the fas- still employs 42 percent of the labour force and accounts for around
test growing economies among Asia’s developing economies in a third of the country’s gross domestic product (GDP). Industry is
recent years. Its annual growth averaged 7.5 percent over the last another major economic sector, with garments, tourism and con-
decade, driven by robust garments exports, services, real estate struction being the main industries. The kingdom’s sizeble service
and construction. The country’s economic growth is expected to sector - contributing to around 40 percent of the country’s GDP - is
remain robust in the coming years, although Cambodia is increa- heavily concentrated on trading activities and catering-related
singly exposed to greater competition from other countries in the services.
region, in particular from Myanmar and Vietnam.
Cambodia is keen to attract higher volumes of foreign investment
Cambodia became a member of the World Trade Organisation and as such has developed liberal trade and investment policies in
(WTO) in 2004. Its membership of the Association of Southeast order to create an open business environment in the country. There
Asian Nations (ASEAN) provides businesses in Cambodia the are few restrictions on which sectors foreign investment can be
advantages of the ASEAN Economic Community, a single market of directed towards and the country enjoys a high degree of invest-
over 600 million people covering ten countries in the region. In ment freedom. Investment incentives available to foreign investors
addition, free trade agreements have been concluded between include wholly foreign ownership of companies, corporate tax holi-
ASEAN and China, Japan, South Korea, India, Australia and New days of up to nine years, a 20 percent corporate tax rate after the
Zealand. The US and the EU are Cambodia’s main export markets, incentive period ends, duty-free import of capital goods and no
while its main foreign investors include China, Vietnam, Japan and restrictions on capital repatriation. In addition, the country is com-
South Korea. Despite having has one of the smaller populations in petitive in terms of the corporate taxation, with one of the lowest
the region, Cambodia’s employment rate is comparatively high. headline tax rates in the region and a relatively competitive tax
compliance system, which reduces the fiscal burden placed on
Although poverty rates continue to fall, Cambodia remains one of businesses. As the country is classified as a Least Developed
the poorest countries in the region, with the benefits of economic Country (LDC), it is eligible for duty free or preferential export
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Despite its impressive growth, Cambodia’s agribusiness is basic
and most commodities are exported in raw form. Technological
know-how on production, food safety and post-harvest chains is
often lacking and the country is still heavily relying on the import of
genetics, feed (additives), medicines, vaccines, etc. Increasing pro-
ductivity, diversification of production and commercialization will
be key to sustain the sector’s growth and competitiveness.
Garments and footwear
access to many developed economies, including the EU and US. The garment industry in Cambodia was established in the early
To stimulate FDI inflows, 21 Special Economic Zones have been 1990s when foreign investors started to set up manufacturing faci-
approved, of which 14 are in operation as of September 2015. lities. The garment industry has grown significantly over the past
Projects within the SEZs are offered with incentives benefits such twenty years, contributing to one third of the country’s economy
as tax holidays, zero rate VAT and import duty exemption for raw and employing over 700,000 in more than 1,000 garment factories.
materials, machinery and equipment. The primary authority res- Most factories are foreign owned, using Cambodia for the CMT
ponsible for SEZs is the Cambodia Special Economic Zone Board (cut, make and trim) process and arrange sourcing for textile from
(CSEZB). other countries, in particular from China. Garment exports account
for about 80 percent of the country’s total exports. The two main
Despite its improving business climate, there remain significant export destinations for garments and footwear are the EU and the
challenges to doing business in Cambodia. Those most commonly United States.
cited by the private sector include a weak rule of law, poor infra-
structure, high energy costs, red tape and corruption and under-
developed human resources. Land appropriation and the lack of Construction and real estate
adequate intellectual property protection are also significant risks.
Human rights concerns remain, in particular with respect to free- The construction industry in Cambodia has grown substantially
dom of expression, freedom of assembly and media freedoms. over the last years. The majority of the construction projects con-
cern condominiums, residential units, commercial buildings, shop-
ping malls, hotels and factories. Increasing numbers of tourists
Priority sectors visiting Cambodia supported growth, particularly in Seam Reap.
Phnom Penh also witnesses a growth in the construction and real
Agri-food and horticulture estate sector, aided by a a regulatory change in 2009 allowing
foreign ownnership of houses, apartments and condominiums
Although the agriculture sector became relatively less important in from the second floor up. Major foreign investors in this sector are
overall GDP in recent years, it remains one of Cambodia’s largest from South Korea, China, Japan, Malaysia, India and Vietnam.
economic sectors. Rice is still the country’s main crop, but over the
past decade production has been diversifying towards more profi-
table products, such as vegetables, sugarcane, cassava, soy bean Infrastructure and logistics
and maize.
Cambodia’s transport infrastructure leaves a great deal to be
Livestock is another fast growing industry. Although pig farming is desired and in many cases is a serious impediment to future growth
traditionally dominating the lifestock market, the poultry industry in the country. Public works and transportation, including the road
is growing fast, despite being highly volatile due to flows of surplus network, are high priorities for the Cambodian government. The
production from Thailand and Vietnam. The market for eggs is
dominated by duck eggs. Layer ducks are most preferred as the
ducks are fed free-range on leftovers from the rice harves. However,
chicken layer hens are becoming more popular due to better feed
efficiency and the milder flavour of their eggs.
Cambodia’s large Tonlé Sap lake and the Mekong rivers, provide
around 500.000 tons of wild fish yearly. Although aquaculture pro-
duction is still low compared to other countries in the region, this
industry is growing rapidly, due to an increasing domestic demand
and export opportunities.
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total investment in infrastructure projects in Cambodia is estima-
ted to be in the range of USD 12-16 billion from 2013 to 2022.
Infrastructure investment is state-led, and the public-sector capital
investment rate as a percentage of GDP is approximately six per-
cent per year. The Japanese government, World Bank, Asian
Development Bank (ADB), and the Chinese government are especi-
ally active in road, bridge, and railway construction in Cambodia.
China’s One Belt One Road (OBOR) initiative and the establishment
of investment vehicles such as the Asian Infrastructure Investment
Bank (AIIB) will provide additional funding sources for infrastruc-
ture projects.
Do’s and don’ts in Cambodia
Tourism
Be prepared
With more direct flights to Cambodia the number of foreign arrivals Good preparation is essential before coming to Cambodia. Get to
reached 4.8 million in 2015, providing USD 3 billion annually, or 13 know the country and its culture, as well as the economic and poli-
percent of the country’s GDP, and emplying around 620,000 peop- tical climate. Make good use of the knowledge and services availa-
le. The majority of tourists are attracted to the historical/cultural ble from branch organizations and government authorities. Talk to
complex of Angkor Wat, but an increasing number of tourists are entrepreneurs with experience doing business in Cambodia.
also visiting the beaches in the southern town of Sihanoukville.
Ecotourism in Cambodia is underdeveloped, but has a large poten- Build relationships
tial together with the development of coastal areas. • Building and maintaining personal relationships is essential for
doing business in Cambodia.
• A reliable local partner can speed up the preparatory work consi-
Starting up a business derably, as it can provide market knowledge and access to esta-
blished networks.
Under Cambodia’s Law on Commercial Enterprise, permitted forms
of business organization include a (wholly foreign owned) limited Understand business etiquette
liability company, branch office, representative office, partnership, • English is the business language. However, reliable interpreters
and sole proprietorship. Investors who are not eligible for invest- are useful for profound business discussions with SMEs.
ment incentives, must register directly with the Ministry of • The safe dress code is to go formal and use conservative colours.
Commerce. Businesses seeking investment incentives must submit Handshakes are common when Cambodians greet foreigners.
an application to the Cambodian Investment Board (CIB). The CIB is • Do show up exactly on the agreed time, especially at meetings
a division of the Council for the Development of Cambodia (CDC), with the authorities and introductory/first business meetings.
which is responsible for accepting and reviewing applications for • Do not show your temper and do avoid conflict. Be patient, very
investment incentives. From the date of submission of the applica- often things do not move at the same pace as in the West.
tion, the CIB has three working days to issue a Conditional
Registration Certificate or a Letter of Non-Compliance to investors. Know your challenges
A Final Registration Certificate must be issued within 28 working Cambodia has a lot to offer, but there are undoubtedly many chal-
days of the issuance of the Conditional Registration Certificate. lenges in doing business here:
Upon receipt of the Final Registration Certificate from the CIB, the • Understand where to expect challenges: culture and language,
registration forms for the formal business license can be filed with laws and regulations, trade barriers, personnel and bureaucracy.
the Ministry of Commerce. • Develop a solid business plan and do market research: set clear
goals and ambitions, know your market and your competitors.
• Make sure you do due diligence prior to entering into contracts
or other commercial arrangements.
Act responsible
• Corruption can pose a serious barrier for doing business in
Cambodia. The Embassy offers counselling to avoid corruption
and reduce the risks of doing business in Cambodia.
• Dutch businesses are expected to integrate social, environmen-
tal, ethical and human rights concerns into their business stra-
tegy and operations.
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Cambodia
Official name The Kingdom of Cambodia
Constitutional Monarchy
Government type Head of State: H.M. King Norodom Sihamoni
Head of Government: H.E. Prime Minister Hun Sen (Cambodian People’s Party, CPP)
Population 16 million (January 2016)
Area 181,035 km2 (4.4 times bigger than the Netherlands), coastline 443 km . Phnom Penh
Main cities Phnom Penh (capital, around 1.55 million), Sihanouk Ville, Koh Kong
Time difference + 6 hrs. (NL winter time), + 5 hrs. (NL summer time)
Currency Cambodian Riel (KHR), 1 EUR = 4,635 KHR (29/04/2016). US dollars are widely accepted in Cambodia.
GDP growth rate 7.0% (2015), 7.1% (2014), 7.4 % (2013), 7.3% (2012), 7.1% (2011)
FDI Registered FDI (USD billion): 1.41 (2015), 1.04 (2014), 1,63 (2013), 1.68 (2012), 3.35 (2011)
Trade volume Export USD 8.2 billion (2015), import USD 11.5 billion (2015)
Inflation 3.0% (2015 est.)
Global Competitiveness Index Rank 90/140 (2015/2016)
Ease of Doing Business Rank 127/189 (2016)
Global Corruption Perception Index 2015: Rank 150/168 (Score 21/100)
Memberships WCO, WTO, ASEAN, APEC, GMS, ACMECS
Main trading partners EU, US, China, Korea, Japan, Thailand, Vietnam, Singapore and Malaysia
Major exports Textile goods, vehicles, footwear, natural rubber and fish
Petroleum products, fabrics, vehicles, wholesale yarn, cigarettes, electrical communications equipment
Major imports
and medicines
Dutch – Cambodian trade Export to NL: EUR 167 million (2015), import from NL: EUR 28 million (2015)
Bilateral treaties Bilateral Investment Treaty between the Netherlands and Cambodia (2006)
We support your business Trade fairs
The number of Dutch businesses active in Cambodia is limited, but Interesting trade fairs are mostly to be found outside Cambodia in
steadily increasing. The Netherlands does not have a diplomatic or the Southeast Asian region. At several of these exhibitions,
consular representation in Cambodia. However, the Embassy in Netherlands Embassies and Consulates organise events, such as
Bangkok offers active support to Dutch companies interested in Holland pavillions, visiting programs or networking events. Please
doing business in Cambodia. contact us for more information on relevant trade fairs and events.
Our main services are the following:
• Finding potential business partners. Business support instruments
• Providing information on sectors and rules and regulations.
• Supporting trade missions and visiting programs to Thailand. The Netherlands government has developed several instruments
• Organising meetings with relevant authorities at local, provincial to support Dutch companies in doing business in Cambodia. For
or government level. more information, please visit the country page for Cambodia on
• Monitoring business opportunities. the website of the Netherlands Enterprise Agency at www.rvo.nl/
• Trouble shooting and assistance in conflict situations. cambodja (in Dutch).
• Advising on available instruments and services.
• Promoting Dutch business in Cambodia.
Other relevant links and contacts
If your company is in need of support, do not hesitate to contact
the Netherlands Embassy in Bangkok. ‘NL exporteert’ App
A free export app, designed for entrepreneurs with international
ambitions. It provides information on events, the do’s and don’ts
of doing business, economic data and financing possibilities.
Published by: Download the app in the App Store (iOS) or in Google Play.
Netherlands Embassy in Bangkok EuroCham Cambodia
Follow us on Facebook (Netherlands Embassy in Bangkok) and www.eurocham-cambodia.org
LinkedIn (ASEAN-Neth: Dutch Business in Southeast Asia)
Cambodian Investment Board (CIB)
© Ministry of Foreign Affairs | May 2016 www.cambodiainvestment.gov.kh
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