Cambodia is one of the ASEAN member who has a responsibility working toward to the framework of AEC in 2015, which business investing sector considers as a tool for ASEAN to move forward to reach the objective of economic growth from 2015 to the nearest future. So business opportunities in Cambodia is the core element which needed to cooperate with and among ASEAN members to work together for free flow of investment, service, goods, labor, and capital to have one ASEAN economic growth as one community.
Business in practice has three kinds for entrepreneur such as sole proprietorship, partnership and limited company, in addition divided into two such as branch and subsidiary. Beside of that, Business also created as the name of state enterprise, public institute and joint venture. But the Law of Commercial created on 19th June, 2005 has divided the name of business into two kinds only such as: Partnership and corporation (limited company). Ministry of Commerce and Ministry of Economic and Finance are legally entities for dealing with registering of company and its patent, which show that company has been set up legally according to existing commercial law and regulation in Cambodia. For all large businesses or large investment businesses are encouraged to register with Council of Development in Cambodia (CDC) in order to get many incentive from state include tax exemption which is so attracted to large investor. Council of Development in Cambodia (CDC) are the state entity was set up in aim of providing the good service for investor in both local and foreign investors who ask for benefit from low to zero tax rate in export their products to Cambodia. Council of Development in Cambodia (CDC) also play as an actor to facilitate the investment management development to encourage investor to come to do business in Cambodia as much as possible in order to reduce poverty and create labor for people as to achieve the objective of economic growth and economic development.
Investment sector is a very important golden opportunity for developing country as Cambodia. It plays an important role for poverty reduction, economic growth and development, infrastructure development and politic stability in country. Without investment, Cambodia must live as a less developing country, without economic growth, people live under poverty line, live as separated country without any communication with other country, no any development for both its own country and people, and will have a bad dream in future prediction from the among the ASEAN member. Because all of these negative points of non investment transaction, the government has worked with local and foreign to create rules, policy, and also enter into agreement of the benefit that Cambodia can gain from these agreement to provide the opportunity to investor who wish to do business in Cambodia. In addition to that, the government impose so many policy and rules to encourages the investor to get incentive from investment so that investor can get benefit from it as well.
One of the most key advantages investing in Cambodia is to demonstrate for economic development in Cambodia. Government is paying much attention on this sector, that why there are so much changes on the drafting exist or new law related to commercial in Cambodia to support and prevent any misleading law conception and there’re many changes dramatically to facilitate the procedure of register new company at ministry in Cambodia to make investor feel secure and safe, get fast service. Investment market in Cambodia attracts both foreign investment and local investment that they come along with challenges and opportunities. Anyway, it is so very vital for both local and foreign investor whom wish to know the procedure and incentive that they can get from before, during and after need to understand and to address their opportunities and its challenges as well before they decide to run their business in Cambodia.
Based on ASEAN BRIEFING in 2017, it was stated that in order to thrive in foreign investment into Asia, challenges environment, the current conditions, as well as opportunities and threats in the market needed to be understood.
Cambodia is the heart of Southeast Asia, which have a good condition for it geography and natural resource for investor to do business such as mining, energy, land, biodiversity and wildlife, timber, forests, mineral resources, oil and natural gas, etc., There are so many million reasons which attracted investor to do business in Cambodia. However, in short it was divided into some parts will be explained later.
According to BNG Legal publisher the Investing in Cambodia report in 2014, the reason to invest business are:
- Preferential market access: Cambodia is open heart to all new investor who interested in doing business. Cambodia joined World Trade Organization (WTO) for get benefit from agreement of trading business across its member countries. Cambodia can get tax exemption from lower rate to zero tax rate and get well to work with trading country in WTO. Cambodia also enter into agreement of ASEAN-China free trade agreement which can get benefit from that too.
- Open economy: Cambodia has created and open for investor to do business within special economic zone and government encourage investor by given tax exemption and low tax rate and provide one-stop service for application to take it easier for investor.
- Competitive asset: Cambodia labor cost is low and people have good education as well. And by its own natural resources which are the basic asset to attract investor.
In addition to that is shall be added as:
- Strong GDP Growth: from 1993 to 2013 Cambodia has the highest average annual growth at 8.2 percent, which grew at 115 percent during that period. Comparing to Thailand, Cambodia has grew as twice as more than Thailand.
- Young and Inexpensive workplace: Cambodia has more intelligence of youth with well speaking of English language. And its labor cost is cheaper that investor be able to do business
- Rising productivity: from 2010 to 201 the import and export of foreign direct investment has increase dramatically which can ensure its market is big for investor to make business. According to World Bank report it showed that Construction and garment sector project would reach 6.9 percent of economic growth in 2017 and 2018.
- Stable politics: Cambodia takes a power “ Democracy Power” with free fair election.
Business, in Cambodia, need to register with related ministries. And the Council of Development in Cambodia (CDC) has role for facilitation the procedure in order to get license from each ministries. However, CDC is working hard to provide the service to facilitate the investors who want to make a contribution as business in Cambodia. Business in Cambodia, have so many kind such as in term of service, merchandised and manufacturing. In Phnom Penh there are crowded of business operations and people are favor in partner with friends, college for work to earn profit. Anyway, there are still has some restriction and problem facing while business are operated. Among of the challenges include the no register license is pre-completed before business started, lack of capital, and so on.
According to law of Commercial there are two types of business: partnership and corporation. For partnership consists of general partnership and limited partnership while the corporation consists of limited private company and limited public company. All business institution shall be Cambodian company, which means at least 51 percent of Cambodian share.
Investment market has many sectors to do in Cambodia such as;
- Office or Commercial Market
- Residential and Housing Market
- Retail Market
- Industrial Market
- Agricultural Market
In addition Construction and garment sector are the most resilience for economic growth in Cambodia to make economic remain strong. So the law regarding to this will be added and revised as more effectively as it could be.
Company registering from offline to online follow The Ministry of Commerce issued a Prakas No. 299 on 29 December 2015 to implement a new procedure for registration of company through the online system.
Website: www.businessregistration.moc.gov.kh. Recently the practice has come up now.
For offline, normally before one-business starts, the Business Registration Department of Ministry of Commerce required the name of company and business objective, in order to check on whether its name was used by other enterprise. If it’s available to use, it will enable to register under that name and the registration will be process. The required documents for company registration at Business Registration Department has include:
- Passport or identity card of shareholder,
- Amount of registered capital
- Source of registered capital in case, kind or expertise
- Bank statement from local bank
- Picture inside and outside of building/office
- Share/value of share
- Location address/
- Lease agreement/ Ownership title
- And other (if necessary)
After investor submits all of above documents the Patent Tax process will get start at Ministry of Economic and Finance in order to issue the Patent Tax certificate for one year.
For the medium or large enterprise, also required to register with CDC to get tax exemption.
In conflict of commercial dispute, Cambodia has constructed and give the power to the general court to deal with it, but it is known that the commercial court will create soon. For labor dispute the Arbitrary Council has power to deal with it. So it means Cambodia has created so many institution to facilitate investor in finding solution due to their problems.
Investment can build trust and make friendship in many ways include the political stability to the other parties as well when they trade business together, so the political stability also builds as well from each leader of those trading country.
(Chanthol 2015) There are many reasons to invest in Cambodia. He rose up many points such as:
- Macroeconomic Stability: Cambodia had 14.7 million populations in 2013 and population growth rate increased 1.46 % at the same year. Cambodia had stable macroeconomic environment that GDP growth averaged 7.6% per annum compare to last ten years (2005-2014). In addition, GDP per capita was US$ 1,220 (2015) and projected GDP growth for 2015 is 6.9 % (World Bank). Inflation rate was 1.0% (2015). It has stable exchange rate. There is low budget deficit. International reserves increased to US$ 3.6 billion (2013) and rose to US$ 4.4 billion (2014) – nearly 4 months of prospective imports. It reached to US$ 4.7 billion in first half of 2015. After 12 years, it increased from US$ 100 million to US$ 1 billion (1994-2006). But it just took 2 years to increase from US$ 2 billion to US$ 3 billion (2006-2008)
The most nation who come to invest in Cambodia are China, Korea, EU, Malaysia, Vietnam, USA, Taiwan, Thailand, Hong Kong, Singapore and Japan.
Following some opportunity investment in Cambodia, now you are going to acknowledge about the challenges invest your business. There are some challenges that Cambodia faces such as:
- Weak law enforcement: After Cambodia resilient political stability after last decade, Cambodia is still developing legal system and it will take much time to catch up with international standard both content and enforcement. For example: There is non-transparency occurring at administration level and some foreign businesses complaint to competitors who are doing such these activities.
- High energy costs: Due to developing infrastructure in Cambodia, energy cost tends to be in a highest price compare to competitors countries among regional as well as South East Asia. To continue Economic activities, Cambodia needs to import electricity from neighbors’ countries. The high cost of energy is a major drag in Cambodia economy.
- Skills gap: Cambodia citizens are struggled with education after fighting with Khmer Rouge. Cambodia has to build citizen’s capacity to compete with AEAN itself and in the global market economy. Cambodia is taking time to reform and improvement on Education system. So, it is such a hard for Cambodia citizens to compete with competitors’ countries. Based in Eurocam report, survey conducted in 2012 shows that there are about 28% of labor force had finished elementary education despite only 2.8% has finished post-secondary education.
- Dispute Settlement: It is so complicate around land dispute in Cambodia. Investment can develop economic whereas also can damage the property of poor people by excavate the land to build the space for large business. After that, the dispute will be arise such as case of B
- Environment Protection: Industries are going fast in Cambodia society and also make Cambodia environment become worst because of industrial activities. It destroys natural resources such as forest and land for farming, mining, oil, and sea. CO2 emission for industry broke environment and makes climate change and global warming.
Cambodia is a big target to invest your business. As Cambodia has a strong economic and many opportunities. Natural resources have gained more advantages for all investors especially low labor cost than other countries. Two major factors reinforce Cambodia’s economic stronger such as construction and garment. We saw that Cambodia has increase economic dramatically in many decades because of investment. Cambodia has effectively law for implement investment development as well to attract investor by giving tax exemption and other incentive. However, while the large investment benefit from low tax rate, there are still at risk for small and medium enterprise which always face of bankruptcy if government does not pay attention to that because of lack of capital to invest in business. So government shall provide the low interest rate of loan for last long business to SMEs as much as possible. Investment builds, just name a few, infrastructure development, grow economic, poverty reduction, employment increasing while investment also affect to environment as well to public health and to the whole country. Beside of above, boosting productivity for rising wages by strengthen quality of basis education and to promote vocational and technical skills, reducing energy cost to attract and compete in high value-added for sophisticated manufacturing, public service delivery improvement for private sector development and enhanced efforts to improve public investment management legal framework and implementation is a must from our recommendation to sustain investment sector to boost it freely, safety and last long healthy in object to have economic growth and development in Cambodia.
- Any comment let me know. Thank you for your reading.
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 Bou Saroeun (2017). World Bank: Growth in Camboida Remains Strong. Retrived from http://www.worldbank.org/en/news/press-release/2017/05/17/growth-in-cambodia-remains-strong-while-productivity-improvements-needed-going-forward
 BNG Legal (2014): Investing in Cambodia report in 2014
 Sear Rithy (2017). Invest in Phnom Penh: Why Invest in Cambodia property? Dated http://www.investphnompenh.com/invest-cambodia/
 World Bank (2017): A world Bank Group Flagship Report 2017 : Doing Business 2017 14th edition